10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x	Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the fiscal year ended December 31, 2017
o	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Commission file number 000-50254

LAKE AREA CORN PROCESSORS, LLC
(Exact name of registrant as specified in its charter)
South Dakota	46-0460790
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
46269 SD Highway 34 P.O. Box 100 Wentworth, South Dakota	57075
(Address of principal executive offices)	(Zip Code)
(605) 483-2676
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Membership Units

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

o Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

o Yes x No

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

x Yes    o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) 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. x

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

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

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

As of June 30, 2017, the last day of the registrant's most recently completed second fiscal quarter, the aggregate market value of the registrant's membership units held by non-affiliates of the registrant was $14,311,625 computed by reference to the most recent public offering price on Form S-4.

As of March 2, 2018, there were 29,620,000 membership units of the registrant outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The registrant has incorporated by reference into Part III of this Annual Report on Form 10-K portions of its definitive information statement to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year covered by this Annual Report (December 31, 2017). This information statement is referred to in this report as the 2018 Information Statement.

INDEX

	Page No.
Cautionary Statements	3
PART I	3
Item 1. Business	3
Item 1A. Risk Factors	12
Item 2. Properties	17
Item 3. Legal Proceedings	17
Item 4. Mine Safety Disclosures	17
PART II	17
Item 5. Market for Registrant's Common Equity, Related Member Matters and Issuer Purchases of Equity Securities	17
Item 6. Selected Financial Data	19
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	29
Item 8. Financial Statements and Supplementary Data	32
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	52
Item 9A. Controls and Procedures	52
Item 9B. Other Information	53
PART III	53
Item 10. Directors, Executive Officers and Corporate Governance	53
Item 11. Executive Compensation	53
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Member Matters	53
Item 13. Certain Relationships and Related Transactions, and Director Independence	53
Item 14. Principal Accounting Fees and Services	53
PART IV	53
Item 15. Exhibits, Financial Statement Schedules	53
Item 16. Form 10-K Summary	56
SIGNATURES	56

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CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

This annual report contains historical information, as well as forward-looking statements that involve known and unknown risks and relate to future events, our future financial performance, or our expected future operations and actions. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "future," "intend," "could," "hope," "predict," "target," "potential," or "continue" or the negative of these terms or other similar expressions. These forward-looking statements are only our predictions based upon current information and involve numerous assumptions, risks and uncertainties. Our actual results or actions may differ materially from these forward-looking statements for many reasons, including the reasons described in this report. While it is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by us include:

• Reductions in the corn-based ethanol use requirement in the Federal Renewable Fuels Standard;

• Oversupply in the ethanol industry resulting in lower market ethanol prices;

• Negative operating margins which result from lower ethanol prices;

• Lower ethanol prices due to the Chinese and Brazilian ethanol tariffs;

• Lower distillers grains prices due to the Chinese antidumping and countervailing duty tariffs;

• Lower gasoline prices may negatively impact ethanol prices which could hurt our profitability;

• Availability and costs of raw materials, particularly corn and natural gas;

• Changes in the price and market for ethanol, distillers grains and corn oil;

• Our ability to maintain liquidity and maintain our risk management positions;

• Changes in the availability and cost of credit;

• Changes and advances in ethanol production technology;

• The effectiveness of our risk management strategy to offset increases in the price of our raw materials and decreases in the prices of our products;

• Overcapacity within the ethanol industry causing supply to exceed demand;

• Our ability to market and our reliance on third parties to market our products;

• The decrease or elimination of governmental incentives which support the ethanol industry;

• Changes in the weather or general economic conditions impacting the availability and price of corn;

• Our ability to generate free cash flow to invest in our business and service our debt;

• Changes in plant production capacity or technical difficulties in operating the plant;

• Changes in our business strategy, capital improvements or development plans;

• Our ability to retain key employees and maintain labor relations;

• Our liability resulting from potential litigation;

• Competition from alternative fuels and alternative fuel additives; and

• Other factors described elsewhere in this report.

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

PART I

ITEM 1.BUSINESS.

Overview

Lake Area Corn Processors, LLC is a South Dakota limited liability company that owns and manages an ethanol plant that has a nameplate production capacity of 40 million gallons of ethanol per year through its wholly-owned subsidiary Dakota Ethanol, L.L.C. The ethanol plant producers in excess of 50 million gallons of ethanol per year. The ethanol plant is located near Wentworth, South Dakota. Lake Area Corn Processors, LLC is referred to in this report as "LACP," the "Company," "we," or "us." Dakota Ethanol, L.L.C. is referred to in this report as "Dakota Ethanol" or the "ethanol plant."

Since September 4, 2001, we have been engaged in the production of ethanol and distillers grains. Fuel grade ethanol is our primary product accounting for the majority of our revenue.  We also sell distillers grains and corn oil, the principal co-products of the ethanol production process.

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General Development of Business

LACP was formed as a South Dakota cooperative on May 25, 1999. On August 20, 2002, our members approved a plan to reorganize into a South Dakota limited liability company. The reorganization became effective on August 31, 2002, and the assets and liabilities of the cooperative were transferred to the newly formed limited liability company. Following the reorganization, our legal name was changed to Lake Area Corn Processors, LLC.

Our ownership of Dakota Ethanol represents our primary asset and source of revenue. Since we operate Dakota Ethanol as a wholly-owned subsidiary, all net income generated by Dakota Ethanol is passed to LACP. We make distributions of the income received from Dakota Ethanol to our unit holders in proportion to the number of units held by each member compared to the units held by our members generally.

On July 11, 2017, we made a $10 million investment in Ring-neck Energy & Feed, LLC. Ring-neck Energy & Feed, LLC plans to construct an ethanol plant in Onida, South Dakota. We have the right to appoint a member of Ring-neck Energy & Feed, LLC's board of managers.

On August 1, 2017, we executed an amendment to our credit agreement with Farm Credit Services of America, PCA and Farm Credit Services of America, FLCA (collectively "FCSA") to create a new $8 million term loan which we used to finance a portion of our investment in Ring-neck Energy & Feed, LLC. We agreed to make annual principal payments of $1 million plus accrued interest starting on August 1, 2018 and annually thereafter until the maturity date on August 1, 2025.

Subsequently, on February 6, 2018, we executed an Amended and Restated Credit Agreement (the "Amended and Restated Credit Agreement") with FCSA. Pursuant to the Amended and Restated Credit Agreement, we increased our total credit availability to $40 million to support our plant expansion project. Further, the maturity date of this increased credit availability under our Amended and Restated Credit Agreement was extended to January 1, 2026. Until February 1, 2023, interest will accrue pursuant to the Credit Agreement on our increased credit availability at the one month London Interbank Offered Rate ("LIBOR") plus 3.25% per year. We agreed to pay a fee of 0.50% on the unused portion of the increased credit availability.  

We are moving forward with plans to expand our production capacity to approximately 90 million gallons of ethanol per year. The cost of the expansion is expected to be approximately $33 million. We commenced the project in December 2017 and we anticipate that the expansion will be complete during our second quarter of 2019.

During our 2017 fiscal year, we paid a total of $5,924,000 in distributions to our members or approximately $0.20 per membership unit.

Financial Information

Please refer to "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations" for information regarding our results of operations and "Item 8 - Financial Statements and Supplementary Data" for our audited consolidated financial statements.

Principal Products

The principal products produced at the ethanol plant are fuel grade ethanol, distillers grains and corn oil. The table below shows the approximate percentage of our total revenue which is attributed to each of our primary products for each of our last three fiscal years.

Product	Fiscal Year 2017	Fiscal Year 2016	Fiscal Year 2015
Ethanol	79%	78%	76%
Distillers Grains	17%	18%	20%
Corn Oil	4%	3%	3%

Ethanol

Ethanol is ethyl alcohol, a fuel component made primarily from corn and various other grains. Ethanol is primarily used as: (i) an octane enhancer in fuels; (ii) an oxygenated fuel additive for the purpose of reducing ozone and carbon monoxide vehicle emissions; and (iii) a non-petroleum-based gasoline substitute. Ethanol produced in the United States is primarily used for blending

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with unleaded gasoline and other fuel products. Ethanol blended fuel is typically designated in the marketplace according to the percentage of the fuel that is ethanol, with the most common fuel blend being E10, which includes 10% ethanol. The United States Environmental Protection Agency ("EPA") has approved the use of gasoline blends that contain 15% ethanol, or E15, for use in all vehicles manufactured in model year 2001 and later. In addition, flexible fuel vehicles can use gasoline blends that contain up to 85% ethanol called E85.

An ethanol plant is essentially a fermentation plant. Ground corn and water are mixed with enzymes and yeast to produce a substance called "beer," which contains approximately 15% alcohol, 11% solids and 74% water. The "beer" is boiled to separate the water, resulting in ethyl alcohol, which is then dehydrated to increase the alcohol content. This product is then mixed with a certified denaturant, such as gasoline, to make the product unfit for human consumption which allows it to be sold commercially.

Distillers Grains

A principal co-product of the ethanol production process is distillers grains, a high protein, high-energy animal feed supplement primarily marketed to the dairy and beef industry. We primarily produce distillers grains in two forms, modified/wet distillers grains and dried distillers grains. Modified/wet distillers grains have a higher moisture content than dried distillers grains. Our modified/wet distillers grains are sold primarily in our local market because they have a shorter shelf life and are more expensive to transport than dried distillers grains.

Corn Oil

We separate a portion of the corn oil contained in our distillers grains which we market separately from our distillers grains. The corn oil that we produce is not food grade corn oil and therefore cannot be used for human consumption. The primary uses for the corn oil that we produce are animal feed, industrial uses and biodiesel production.

Principal Product Markets

Ethanol

The primary market for our ethanol is the domestic fuel blending market. However, in recent years the United States has experienced increased ethanol exports. This increase in ethanol exports follows a conscious effort by the United States ethanol industry to expand ethanol exports along with lower ethanol prices which encouraged exports. During 2017, the primary export markets served by the United States ethanol industry were Canada, Brazil, India, China, South Korea, the Philippines and Peru. However, ethanol export demand is more unpredictable than domestic demand and tends to fluctuate throughout the year as it is subject to monetary and political forces in other nations. Both Brazil and China, each a major source of export demand in the past, have instituted tariffs on ethanol produced in the United States during 2017. The imposition of these tariffs have resulted in a decline in demand from these top importers requiring United States producers to seek out alternative markets.

In 2011, the European Union launched anti-dumping and anti-subsidy investigations related to ethanol exports from the United States. In August 2012, the European Union concluded the anti-subsidy investigation and decided not to impose a tariff related to the anti-subsidy portion of the investigation. However, the European Union decided to impose a tariff on ethanol imported from the United States based on the anti-dumping portion of the investigation. While this tariff has negatively impacted ethanol exports to the European Union, other countries have increased their ethanol imports. Further, some ethanol exports to the European Union have continued despite the tariff due to the relatively lower price of ethanol produced in the United States.

Ethanol is generally blended with gasoline before it is sold to the end consumer. Therefore, the primary purchasers of ethanol are fuel blending companies which mix the ethanol we produce with gasoline. As discussed below in the section entitled "Distribution of Principal Products," we have a third party marketer that sells all of our ethanol. Our ethanol marketer makes substantially all decisions regarding where our ethanol is sold.

Distillers Grains

Distillers grains are primarily used as animal feed. Distillers grains are typically fed to animals instead of other traditional animal feeds such as corn and soybean meal. Distillers grains exports have increased in recent years as distillers grains have become a more accepted animal feed. Currently, the United States ethanol industry exports a significant amount of distiller grains. During 2017, the largest importers of United States distiller grains were Mexico, Turkey, South Korea, Thailand, China and Canada. During 2016, China began an anti-dumping and countervailing duty investigation related to distillers grains imported from the United States which contributed to a decline in distillers grains shipped to China. In September 2016, China issued a preliminary ruling on the anti-dumping investigation imposing an immediate duty on distillers grains that are produced in the United States.

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In addition, China implemented an anti-subsidy duty as of September 30, 2016. In January 2017, the Chinese finalized the anti-dumping and anti-subsidy duties at rates higher than the preliminary rates set in September 2016.  The anti-dumping duties range from 42.2% to 53.7%, an increase from the preliminary duty of 33.8% issued in September 2016. The final anti-subsidy tariffs range from 11.2% to 12%, up from 10% to 10.7% issued in September 2016. The trade actions taken by the Chinese have resulted in further declines in distillers grains demand and prices. The significant reduction in distillers grains exports to China requires United States distillers grains producers to seek out alternative markets.

We anticipate that the vast majority of our distillers grains will continue to be sold in the domestic market due to our plant's location. Further, management anticipates that we will continue to sell a large proportion of our distillers grains in the modified/wet form which is marketed locally.

Corn Oil

The primary markets for corn oil are the industrial chemicals market, animal feeding market and the biodiesel production market. Corn oil demand was higher during 2017 due to increased biodiesel production. This biodiesel blenders' tax credit expired at the end of 2016. However, in early 2018 the biodiesel blenders' tax credit was reinstated retroactively for 2017 after it expired at the end of 2016, but no forward looking extension was included so this may not provide support for corn oil prices during our 2018 fiscal year. Since corn oil can be used as a feedstock to produce biodiesel, when biodiesel production increases it has a positive impact on corn oil prices. Further, additional corn oil supply has continued to enter the market which has negatively impacted corn oil prices. The market for corn oil is expected to continue to shift as changes in supply and demand of corn oil interact. Our corn oil is primarily marketed in the United States and we do not expect that significant exports of corn oil will occur in the near future.

Distribution of Principal Products

Ethanol Distribution

We have an ethanol marketing agreement with RPMG, Inc. ("RPMG"), a professional third party marketer, which is the sole marketer of our ethanol. We are an equity owner of Renewable Products Marketing Group, LLC ("RPMG, LLC"), the parent company of RPMG, which allows us to realize favorable marketing fees in the sale of our ethanol, distillers grains and corn oil. Our ethanol marketing agreement provides that we can sell our ethanol either through an index arrangement or at a fixed price agreed to between us and RPMG. The term of our ethanol marketing agreement is perpetual, until it is terminated according to the terms of the agreement. The primary reasons our ethanol marketing agreement would terminate are if we cease to be an owner of RPMG, LLC, if there is a breach of our ethanol marketing agreement which is not cured, or if we give advance notice to RPMG that we wish to terminate our ethanol marketing agreement. Notwithstanding our right to terminate our ethanol marketing agreement, we may be obligated to continue to market our ethanol through RPMG for a period of time after termination. Further, following termination we agreed to accept an assignment of certain railcar leases which RPMG has secured to service our ethanol sales. If our ethanol marketing agreement is terminated, it would trigger a redemption by RPMG, LLC of our ownership interest in RPMG, LLC.

Distillers Grains Distribution

Other than the distillers grains that we market locally without a third party marketer, our distillers grains are marketed by RPMG. Our distillers grains marketing agreement with RPMG automatically renews for additional one-year terms unless notice of termination is given as provided by the distillers grains marketing agreement. We pay RPMG a commission based on each ton of distillers grains sold by RPMG.

We market a portion of our distillers grains to our local market without the use of an external marketer. Currently, we market approximately 65%, based on volume, of our distillers grains internally. Shipments of these products are made to local markets by truck. This has allowed us to sell less distillers grains in the form of dried distillers grains which has decreased our natural gas usage and improved our margins from the sale of distillers grains.

Corn Oil Distribution

We market all of our corn oil through RPMG. Our corn oil marketing agreement automatically renews for additional one year terms unless either party gives 180 days notice that the agreement will not be renewed. We pay RPMG a commission based on each pound of our corn oil that is sold by RPMG.

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New Products and Services

We did not introduce any new products or services during our2017 fiscal year.

Patents, Trademarks, Licenses, Franchises and Concessions

We do not currently hold any patents, trademarks, franchises or concessions. We were granted a license by Broin and Associates, Inc. ("Broin"), the company that designed and built the ethanol plant, to use certain ethanol production technology necessary to operate our ethanol plant. The cost of the license granted by Broin was included in the amount we paid Broin to design and build our ethanol plant.

Sources and Availability of Raw Materials

Corn Feedstock Supply

The major raw material required for our ethanol plant to produce ethanol, distillers grains and corn oil is corn.  The plant operates in excess of its nameplate capacity of 40 million gallons of ethanol per year, producing approximately 51 million gallons of ethanol annually from approximately 18 million bushels of corn.  The area surrounding the ethanol plant currently provides an ample supply of corn to meet and exceed our raw material requirements for the production capacity of the plant.

Corn prices have been volatile in recent years due to changes in corn demand as well as yield and production fluctuations that have had a significant impact on corn prices. Corn prices were lower during our 2017 fiscal year as a result of five consecutive years of favorable corn crops which has increased the amount of corn available to us. As a result of these favorable corn crops, we have not had difficulty securing the corn we need to operate the ethanol plant at prices that have allowed us to operate profitably. However, as we experienced during 2012, an unfavorable corn crop can have a significant negative impact on our profitability. We could experience a drought or other unfavorable weather condition during our 2018 fiscal year which could impact the price we pay for corn and could negatively impact the availability of corn near our plant. If we experience a localized shortage of corn, we may be forced to purchase corn from producers who are farther away from our ethanol plant which can increase our transportation costs. In addition, if new corn customers enter the market, it can increase demand for corn which could result in higher corn prices. Since corn is the primary raw material we use to produce our products, the availability and cost of corn can have a significant impact on the profitability of our operations.

Corn is supplied to us primarily from our members who are local agricultural producers and from purchases of corn on the open market. We anticipate purchasing corn from third parties should our members fail to supply us with enough corn to operate the ethanol plant at capacity. We do not anticipate experiencing difficulty purchasing the corn we require to operate the ethanol plant.

We have an agreement with John Stewart & Associates ("JSA") to provide us with consulting services related to our risk management strategy. We pay JSA a fee of $2,500 per month to assist us in making risk management decisions regarding our commodity purchases. The agreement renews on a month-to-month basis.

Natural Gas

Natural gas is an important input to our manufacturing process.  We purchase our natural gas on the open market and the price for our natural gas is based on market rates. We have a contract with Northern Natural Gas for the interstate transportation of our natural gas. We contract with NorthWestern Energy for the local transportation of our natural gas. Both contracts expire in 2018. We have had no interruptions or shortages in the supply of natural gas to the plant since operations commenced in 2001. We anticipate that we will be able to purchase sufficient natural gas to continue to operate the ethanol plant during our 2018 fiscal year.

Electricity

Electricity is necessary for lighting and powering much of the machinery and equipment used in the production process. We contract with Sioux Valley Energy, Inc. to provide all of the electric power and energy requirements for the ethanol plant. We have had no interruptions or shortages in the supply of electricity to the plant since operations commenced in 2001.

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Water

Water is a necessary part of the ethanol production process. It is used in the fermentation process and to produce steam for the cooking, evaporation, and distillation processes. We contract with Big Sioux Community Water System, Inc. to meet our water requirements. Our current agreement with Big Sioux is for a five-year term commencing in December 2014 and is renewable for additional five year terms. Since our operations commenced in September 2001, we have had no interruption in the supply of water and all of our requirements have been met.

Seasonal Factors in Business

We experience some seasonality of demand for our ethanol, distillers grains and corn oil. Since ethanol is predominantly blended with gasoline for use in automobiles, ethanol demand tends to shift in relation to gasoline demand. As a result, we experience some seasonality of demand for ethanol in the summer months related to increased driving and, as a result, increased gasoline demand. In addition, we experience some increased ethanol demand during holiday seasons related to increased gasoline demand. We also experience decreased distillers grains demand during the summer months due to natural depletion in the size of herds at cattle feed lots. Further, we expect some seasonality of demand for our corn oil since the biodiesel industry is a major corn oil user and biodiesel plants typically reduce production during the winter months. We experience some seasonality in the price we pay for natural gas with premium pricing during the winter months. This increase in natural gas prices coincides with increased natural gas demand for heating needs in the winter months.

Working Capital

We primarily use our working capital for purchases of raw materials necessary to operate the ethanol plant, for payments on our credit facilities, for distributions to our members and for capital expenditures to maintain and upgrade the ethanol plant. Our primary sources of working capital are income from our operations and investments as well as our revolving lines of credit with our primary lender, FCSA. For our 2018 fiscal year, we anticipate using cash from our operations and our credit facilities for our plant expansion project and to maintain our current plant infrastructure. Management believes that our current sources of working capital are sufficient to sustain our operations for our 2018 fiscal year and beyond.

Dependence on One or a Few Major Customers

As discussed above, we have entered into marketing agreements with RPMG to market our ethanol, distillers grains and corn oil. Therefore, we rely on RPMG to market almost all of our products, except for the modified/wet distillers grains that we market locally. Our financial success will be highly dependent on RPMG's ability to market our products at competitive prices. Any loss of RPMG as our marketing agent or any lack of performance under these agreements or inability to secure competitive prices could have a significant negative impact on our revenues. While we believe we can secure new marketers if RPMG were to fail, we may not be able to secure such new marketers at rates which are competitive with RPMG's.

Our Competition

Ethanol Competition

We are in direct competition with numerous ethanol producers in the sale of our products and with respect to raw material purchases related to those products. Many of the ethanol producers with which we compete have greater resources than we do. While management believes we are a lower cost producer of ethanol, larger ethanol producers may be able to take advantage of economies of scale due to their larger size and increased bargaining power with both ethanol, distillers grains and corn oil customers and raw material suppliers. As of January 23, 2018, the Renewable Fuels Association estimates that there are213 ethanol production facilities in the United States with capacity to produce approximately 16.2 billiongallons of ethanol per year. According to RFA estimates, approximately 3%of the ethanol production capacity in the United States was not operating as ofJanuary 23, 2018. The largest ethanol producers include Archer Daniels Midland, Flint Hills Resources, Green Plains Renewable Energy, POET Biorefining, and Valero Renewable Fuels, each of which is capable of producing significantly more ethanol than we produce.

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The following table identifies the largest ethanol producers in the United States along with their production capacities.

U.S. FUEL ETHANOL PRODUCTION CAPACITY

BY TOP PRODUCERS

Producers of Approximately 700

million gallons per year (MMgy) or more

Company	Current Capacity (MMgy)	Percent of Total
Archer Daniels Midland	1,716	11%
POET Biorefining	1,629	10%
Green Plains Renewable Energy	1,475	9%
Valero Renewable Fuels	1,400	9%
Flint Hills Resources	840	5%

Updated: January 23, 2018

The products that we produce are commodities. Since our products are commodities, there are typically no significant differences between the products we produce and the products of our competitors that would allow us to distinguish our products in the market. As a result, competition in the ethanol industry is primarily based on price and consistent fuel quality.

We have experienced increased competition from oil companies that have purchased ethanol production facilities. These oil companies are required to blend a certain amount of ethanol each year. Therefore, the oil companies may be able to operate their ethanol production facilities at times when it is unprofitable for us to operate our ethanol plant. Further, some ethanol producers own multiple ethanol plants which may allow them to compete more effectively by providing them flexibility to run certain production facilities while they have other facilities shut down. Finally some ethanol producers who own ethanol plants in geographically diverse areas of the United States may spread the risk they encounter related to feedstock prices due to localized corn shortages or poor growing conditions.

We anticipate increased competition from renewable fuels that do not use corn as the feedstock. Many of the current ethanol production incentives are designed to encourage the production of renewable fuels using raw materials other than corn. One type of ethanol production feedstock that is being explored is cellulose. Cellulose is the main component of plant cell walls and is the most common organic compound on earth. Cellulose is found in wood chips, corn stalks, rice straw, amongst other common plants. Cellulosic ethanol is ethanol produced from cellulose. There are several commercial scale cellulosic ethanol production facilities either in production or in the construction phase. If this technology can be profitably employed on a commercial scale, it could potentially lead to ethanol that is less expensive to produce than corn based ethanol, especially when corn prices are high. Cellulosic ethanol may also capture more government subsidies and assistance than corn based ethanol. This could decrease demand for our product or result in competitive disadvantages for our ethanol production process.

A number of automotive, industrial and power generation manufacturers are developing alternative clean power systems using fuel cells, plug-in hybrids, electric cars or clean burning gaseous fuels. Electric car technology has recently grown in popularity, especially in urban areas, and continues to represent a source of competition for the ethanol industry. While there are currently a limited number of vehicle recharging stations, making electric cars not feasible for all consumers, there has been increased focus on developing these recharging stations to make electric car technology more widely available in the future. Additional competition from these other sources of alternative energy, particularly in the automobile market, could reduce the demand for ethanol, which would negatively impact our profitability.

Distillers Grains Competition

Our ethanol plant competes with other ethanol producers in the production and sales of distillers grains. Distillers grains are primarily used as an animal feed supplement which replaces corn and soybean meal. As a result, we believe that distillers grains prices are positively impacted by increases in corn and soybean prices. In addition, in recent years the United States ethanol industry has increased exports of distillers grains which management believes has positively impacted demand and prices for distillers grains in the United States. In the event these distillers grains exports decrease, including as a result of the Chinese tariffs which have significantly reduced export demand for distillers grains, it could lead to an oversupply of distillers grains in the United States. An oversupply of distillers grains could result in increased competition among ethanol producers for sales of distillers grains which could negatively impact market distillers grains prices in the United States.

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Corn Oil Competition

We compete with many ethanol producers for the sale of corn oil. Many ethanol producers have installed the equipment necessary to separate corn oil from the distillers grains they produce which has increased competition for corn oil sales and has resulted in lower market corn oil prices.

Research and Development

We do not conduct any research and development activities associated with the development of new technologies for use in producing ethanol, distillers grains or corn oil. However, we continually work to develop new methods of operating our ethanol plant more efficiently.

Governmental Regulation

Federal Ethanol Supports

The ethanol industry is dependent on several economic incentives to produce ethanol, the most significant of which is the Federal Renewable Fuels Standard (the "RFS"). The RFS requires that in each year, a certain amount of renewable fuels must be used in the United States. The RFS is a national program that does not require that any renewable fuels be used in any particular area or state, allowing refiners to use renewable fuel blends in those areas where it is most cost-effective. The RFS statutory volume requirement increases incrementally each year until the United States is required to use 36 billion gallons of renewable fuels by 2022. Starting in 2009, the RFS required that a portion of the RFS must be met by certain "advanced" renewable fuels. These advanced renewable fuels include ethanol that is not made from corn, such as cellulosic ethanol and biomass based biodiesel. The use of these advanced renewable fuels increases each year as a percentage of the total renewable fuels required to be used in the United States.

The United States Environmental Protection Agency (the "EPA") has the authority to waive the RFS statutory volume requirement, in whole or in part, provided one of the following two conditions have been met: (1) there is inadequate domestic renewable fuel supply; or (2) implementation of the requirement would severely harm the economy or environment of a state, region or the United States. Annually, the EPA is supposed to pass a rule that establishes the number of gallons of different types of renewable fuels that must be used in the United States which is called the renewable volume obligations.

The RFS statutory Renewable Volume Obligation (RVO) for all renewable fuels for 2017 was 24 billion gallons, of which corn-based ethanol could meet 15 billion gallons of the RVO. However, the EPA rule decreased the total RVO to 19.28 billion gallons and maintained the 15 billion gallon corn-based ethanol limit. On November 30, 2017, the final RVO for 2018 was set at 19.29 billion gallons and the corn-based ethanol RVO was set at 15 billion gallons.

In February 2010, the EPA issued new regulations governing the RFS. These new regulations are called RFS2. The most controversial part of RFS2 involves what is commonly referred to as the lifecycle analysis of greenhouse gas emissions. Specifically, the EPA adopted rules to determine which renewable fuels provided sufficient reductions in greenhouse gases, compared to conventional gasoline, to qualify under the RFS program. RFS2 establishes a tiered approach, where regular renewable fuels are required to accomplish a 20% greenhouse gas reduction compared to gasoline, advanced biofuels and biomass-based biodiesel must accomplish a 50% reduction in greenhouse gases, and cellulosic biofuels must accomplish a 60% reduction in greenhouse gases. Any fuels that fail to meet this standard cannot be used by fuel blenders to satisfy their obligations under the RFS program. The scientific method of calculating these greenhouse gas reductions has been a contentious issue. Many in the ethanol industry were concerned that corn based ethanol would not meet the 20% greenhouse gas reduction requirement based on certain parts of the environmental impact model that many in the ethanol industry believed was scientifically suspect. However, RFS2 as adopted by the EPA provides that corn-based ethanol from modern ethanol production processes does meet the definition of a renewable fuel under the RFS program. Our ethanol plant was grandfathered into the RFS due to the fact that it was constructed prior to the effective date of the lifecycle greenhouse gas requirement and is not required to prove compliance with the lifecycle greenhouse gas reductions. Many in the ethanol industry are concerned that certain provisions of RFS2 as adopted may disproportionately benefit ethanol produced from sugarcane which could make sugarcane based ethanol, which is primarily produced in Brazil, more competitive in the United States ethanol market. If this were to occur, it could reduce demand for the ethanol that we produce.

Most ethanol that is used in the United States is sold in a blend called E10. E10 is a blend of 10% ethanol and 90% gasoline. E10 is approved for use in all standard vehicles. Estimates indicate that gasoline demand in the United States is approximately 140 billion gallons per year. Assuming that all gasoline in the United States is blended at a rate of 10% ethanol and 90% gasoline, the maximum demand for ethanol is 14.0 billion gallons per year. This is commonly referred to as the "blend wall," which represents a theoretical limit where more ethanol cannot be blended into the national gasoline pool. This is a theoretical

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limit because it is believed that it would not be possible to blend ethanol into every gallon of gasoline that is being used in the United States and it discounts the use of higher percentage blends such as E15 or E85. These higher percentage blends may lead to additional ethanol demand if they become more widely available and accepted by the market.

Many in the ethanol industry believe that it will be impossible to meet the RFS requirement in future years without an increase in the percentage of ethanol that can be blended with gasoline for use in standard (non-flex fuel) vehicles. The EPA has approved the use of E15, gasoline which is blended at a rate of 15% ethanol and 85% gasoline, in vehicles manufactured in the model year 2001 and later. However, there are still state hurdles that need to be addressed in some states before E15 will become more widely available. Many states still have regulatory issues that prevent the sale of E15. Sales of E15 may be limited because it is not approved for use in all vehicles, the EPA requires a label that management believes may discourage consumers from using E15, and retailers may choose not to sell E15 due to concerns regarding liability. In addition, different gasoline blendstocks may be required at certain times of the year in order to use E15 due to federal regulations related to fuel evaporative emissions which may limit E15 sales in these markets. As a result, the approval of E15 by the EPA has not had an immediate impact on ethanol demand in the United States.

Effect of Governmental Regulation

The government's regulation of the environment changes constantly. We are subject to extensive air, water and other environmental regulations and we have been required to obtain a number of environmental permits to construct and operate the ethanol plant. It is possible that more stringent federal or state environmental rules or regulations could be adopted, which could increase our operating costs and expenses. It also is possible that federal or state environmental rules or regulations could be adopted that could have an adverse effect on the use of ethanol. Plant operations are governed by the Occupational Safety and Health Administration ("OSHA"). OSHA regulations may change such that the costs of operating the ethanol plant may increase. Any of these regulatory factors may result in higher costs or other adverse conditions effecting our operations, cash flows and financial performance.

We have obtained all of the necessary permits to operate the ethanol plant. During our2017 fiscal year, our costs of environmental compliance were approximately $166,000. We anticipate that our environmental compliance costs will be approximately $292,000 during our2018 fiscal year. Although we have been successful in obtaining all of the permits currently required, any retroactive change in environmental regulations, either at the federal or state level, could require us to obtain additional or new permits or spend considerable resources in complying with such regulations.

In late 2009, California passed a Low Carbon Fuels Standard ("LCFS"). The California LCFS requires that renewable fuels used in California must accomplish certain reductions in greenhouse gases which is measured using a lifecycle analysis, similar to the RFS. The LCFS could have a negative impact on demand for corn-based ethanol and result in decreased ethanol prices affecting our ability to operate profitably.

The European Union concluded an anti-dumping investigation related to ethanol produced in the United States and exported to Europe. As a result of this investigation, the European Union imposed a tariff on ethanol which is produced in the United States and exported to Europe. This tariff resulted in decreased exports of ethanol to Europe which negatively impacted the market price of ethanol in the United States. The anti-dumping tariff is scheduled to expire in 2018 which may result in additional exports to the European Union during our 2018 fiscal year. However, the decision to remove the tariff is under review.

In August 2017, Brazil instituted an import quota for ethanol produced in the United States and exported to Brazil, along with a 20% tariff on ethanol imports in excess of the quota. This tariff and quota have reduced exports of ethanol to Brazil and may continue to negatively impact ethanol exports from the United States. Any reduction in ethanol exports could negatively impact market ethanol prices in the United States. Recently Brazil announced it may remove this tariff.

We are subject to environmental oversight by the EPA. There is always a risk that the EPA may enforce certain rules and regulations differently than South Dakota's environmental administrators. South Dakota or EPA rules are subject to change, and any such changes could result in greater regulatory burdens on plant operations. We could also be subject to environmental or nuisance claims from adjacent property owners or residents in the area arising from possible foul smells or other air or water discharges from the ethanol plant. Such claims may result in an adverse result in court if we are deemed to engage in a nuisance that substantially impairs the fair use and enjoyment of property.

Employees

As ofDecember 31, 2017, we had a total of 39 full-time employees. We do not expect to hire a significant number of employees in the next 12 months.

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Financial Information about Geographic Areas

All of our operations are domiciled in the United States. All of the products sold to our customers for fiscal years 2017, 2016 and 2015 were produced in the United States and all of our long-lived assets are domiciled in the United States. We have engaged a third-party professional marketer that decides where the majority of our products are marketed and we have limited control over the marketing decisions made by our third-party professional marketer. Therefore, some of our products may be sold outside of the United States based on decisions made by our marketer.

ITEM 1A. RISK FACTORS.

You should carefully read and consider the risks and uncertainties below and the other information contained in this report. The risks and uncertainties described below are not the only ones we may face. The following risks, together with additional risks and uncertainties not currently known to us or that we currently deem immaterial could impair our financial condition and results of operation.

Risks Relating to Our Business

The spread between ethanol and corn prices can vary significantly which can negatively impact our financial condition. Our only source of revenue comes from sales of our ethanol, distillers grains and corn oil. The primary raw materials we use to produce our ethanol, distillers grains and corn oil are corn and natural gas. In order to operate the ethanol plant profitably, we must maintain a positive spread between the revenue we receive from sales of our products and our corn and natural gas costs. This spread between the market price of our products and our raw material costs has been volatile in the past. If we were to experience a period of time where this spread is negative, and the negative margins continue for an extended period of time, it may prevent us from profitably operating the ethanol plant which could decrease the value of our units.

Decreasing gasoline prices may lower ethanol prices which could negatively impact our ability to operate profitably. In recent years, the price of ethanol has been less than the price of gasoline which increased ethanol demand. However, in recent years, at times gasoline prices decreased significantly which reduced the spread between the price of gasoline and the price of ethanol. This trend has negatively impacted ethanol prices. If this trend continues for a significant period of time, it could hurt our ability to profitably operate the ethanol plant which could decrease the value of our units.

Distillers grains demand and prices may be negatively impacted by the Chinese antidumping and countervailing duty investigation. China was historically the world's largest importer of distillers grains produced in the United States. On January 12, 2016, the Chinese government announced that it would commence an anti-dumping and countervailing duty investigation related to distillers grains imported from the United States. On September 23, 2016, the Chinese instituted a preliminary anti-dumping duty of 33% in response to this investigation and an anti-subsidy duty on September 30, 2016 of approximately 10%. In January 2017, the Chinese finalized the anti-dumping and anti-subsidy duties at rates higher than the preliminary rates set in September 2016.  The anti-dumping duties range from 42.2% to 53.7%, an increase from the preliminary duty of 33.8% issued in September 2016. The final anti-subsidy tariffs range from 11.2% to 12%, up from 10% to 10.7% issued in September 2016. Both during the investigation and after the announcement of the duty, distillers grains demand and prices have been negatively impacted. While we expect China to continue to import some distillers grains, we do not anticipate that the imports will be at the same level as previous years which could continue to negatively impact market distillers grains demand and prices. This reduction in demand along with lower domestic corn prices could negatively impact our ability to profitably operate the ethanol plant.

A reduction in ethanol exports to Brazil due to the imposition by the Brazilian government of a tariff on U.S. ethanol could have a negative impact on ethanol prices. Brazil has historically been a top destination for ethanol produced in the United States. However, in 2017, Brazil imposed a 20% tariff on ethanol which is produced in the United States and exported to Brazil. This tariff has resulted in a decline in demand for ethanol from Brazil and could negatively impact the market price of ethanol in the United States and our ability to profitably operate the ethanol plant.

We may be forced to reduce production or cease production altogether if we are unable to secure the corn we require to operate the ethanol plant. We require a significant amount of corn to operate the ethanol plant at capacity. In recent years, the supply of corn in the market has been higher and we have not had difficulty securing the corn we require at prices that allow us to operate profitably. However, poor weather conditions can have a significant impact on corn production. If the corn crop harvested in future years is smaller than we have recently experienced, it is possible that we could experience corn shortages in the future which could negatively impact our ability to operate the ethanol plant. We may also experience a shortage of corn in our local market which may not increase national corn prices but may require us to increase our corn basis in order to attract corn which can impact our overall corn costs. If we are unable to secure the corn we require to continue to operate the ethanol plant, or we

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are unable to secure corn at prices that allow us to operate profitably, we may have to reduce production or cease operating altogether which may negatively impact the value of our units.

Our revenue will be greatly affected by the price at which we can sell our ethanol, distillers grains and corn oil. Our ability to generate revenue is dependent on our ability to sell the ethanol, distillers grains and corn oil that we produce. Ethanol, distillers grains and corn oil prices can be volatile as a result of a number of factors. These factors include overall supply and demand, the market price of corn, the market price of gasoline, levels of government support, general economic conditions and the availability and price of competing products. Ethanol, distillers grains and corn oil prices tend to fluctuate based on changes in energy prices and other commodity prices, such as corn and soybean meal. Exports of our products and the various trade actions taken by China and Brazil have impacted the market prices for our products. If we experience lower prices for our products for a significant period of time, the value of our units may be negatively affected.

Our business is not diversified. Our success depends primarily on our ability to profitably operate our ethanol plant. We do not have any other lines of business or any other significant source of revenue if we are unable to operate our ethanol plant and manufacture ethanol, distillers grains and corn oil. If economic or political factors adversely affect the market for ethanol, distillers grains and corn oil, we may not be able to continue our operations. Our business would also be significantly harmed if our ethanol plant could not operate at full capacity for any extended period of time, which could reduce or eliminate the value of our units.

Our inability to secure credit facilities we may require in the future may negatively impact our liquidity. While we do not currently require more financing than we have, in the future we may need additional financing. If we require financing in the future and we are unable to secure such financing, or we are unable to secure the financing we require on reasonable terms, it may have a negative impact on our liquidity which could negatively impact the value of our units.

Our product marketer may fail to market our products at competitive prices which may cause us to operate unprofitably.RPMG is the sole marketer of all of our ethanol, corn oil and some of our distillers grains, and we rely heavily on its marketing efforts to successfully sell our products. Because RPMG sells ethanol, corn oil and distillers grains for a number of other producers, we have limited control over its sales efforts. Our financial performance is dependent upon the financial health of RPMG as most of our revenue is attributable to RPMG's sales. If RPMG breaches our marketing agreements or it cannot market all of the ethanol, corn oil and distillers grains we produce, we may not have any readily available means to sell our ethanol, corn oil and distillers grains and our financial performance could be negatively affected. While we market a portion of our distillers grains internally to local consumers, we do not anticipate that we would have the ability to sell all of the distillers grains, corn oil and ethanol we produce ourselves. If our agreements with RPMG terminate, we may seek other arrangements to sell our ethanol, corn oil and distillers grains, including selling our own products, but we may not be able to achieve results comparable to those achieved by RPMG which could harm our financial performance. Switching marketers may negatively impact our cash flow and our ability to continue to operate the ethanol plant. If we are unable to sell all of our ethanol, distillers grain and corn oil at prices that allow us to operate profitably, it may decrease the value of our units.

We engage in hedging transactions which involve risks that could harm our business. We are exposed to market risk from changes in commodity prices. Exposure to commodity price risk results from our dependence on corn and natural gas in the ethanol production process. We seek to minimize the risks from fluctuations in the prices of corn, natural gas and ethanol through the use of hedging instruments. These hedging instruments can be risky and can negatively impact our liquidity. In times when commodity prices are volatile, we may be required to use significant amounts of cash to make margin calls as a result of our hedging positions. The effectiveness of our hedging strategies is dependent on the price of corn, natural gas and ethanol and our ability to sell sufficient products to use all of the corn and natural gas for which we have futures contracts. Our hedging activities may not successfully reduce the risk caused by price fluctuation which may leave us vulnerable to corn and natural gas prices. We may choose not to engage in hedging transactions in the future and our operations and financial conditions may be adversely affected during periods in which corn and/or natural gas prices increase. These hedging transactions could impact our ability to profitably operate the ethanol plant and negatively impact our liquidity.

We may incur casualty losses that are not covered by insurance which could negatively impact the value of our units. We have purchased insurance which we believe adequately covers our potential losses from foreseeable risks. However, there are risks that we may encounter for which there is no insurance or for which insurance is not available on terms that are acceptable to us. If we experience a loss which materially impairs our ability to operate the ethanol plant which is not covered by insurance, the value of our units could be reduced or eliminated.

Our operations may be negatively impacted by natural disasters, severe weather conditions, and other unforeseen plant shutdowns which can negatively impact our operations. Our operations may be negatively impacted by events outside of our control such as natural disasters, severe weather, strikes, train derailments and other unforeseen events which may negatively

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impact our operations. If we experience any of these unforeseen circumstances which negatively impact our operations, it may affect our cash flow and negatively impact the value of our business.

We depend on our management and key employees, and the loss of these relationships could negatively impact our ability to operate profitably. We are highly dependent on our management team to operate our ethanol plant. We may not be able to replace these individuals should the decide to cease their employment with us, or if they become unavailable for any other reason. While we seek to compensate our management and key employees in a manner that will encourage them to continue their employment with us, they may choose to seek other employment. Any loss of these managers or key employees may prevent us from operating the ethanol plant profitably and could decrease the value of our units.

We may violate the terms of our loan agreements and financial covenants which could result in our lender demanding immediate repayment of our loans. We have a credit facility with Farm Credit Services of America ("FCSA"). Our credit agreements with FCSA include various financial loan covenants. We are currently in compliance with all of our financial loan covenants. Current management projections indicate that we will be in compliance with our loan covenants for at least the next 12 months. However, unforeseen circumstances may develop which could result in us violating our loan covenants. If we violate the terms of our loan agreements, FCSA, our primary lender, could deem us in default of our loans and require us to immediately repay any outstanding balance of our loans. If we do not have the funds available to repay the loans and we cannot find another source of financing, we may fail which could decrease the value of our units.

Risks Related to Ethanol Industry

Excess ethanol supply in the market could put negative pressure on the price of ethanol which could lead to tight operating margins and may impact our ability to operate profitably. In the past the ethanol industry has confronted market conditions where ethanol supply exceeded demand which led to unfavorable operating conditions. Most recently, in 2012, profitability in the ethanol industry was reduced due to increased ethanol imports from Brazil at a time when gasoline demand in the United States was lower and domestic ethanol supplies were higher. This disconnect between ethanol supply and demand resulted in lower ethanol prices at a time when corn prices were higher which led to unfavorable operating conditions. We may experience periods of time when ethanol supply exceeds demand which could negatively impact our profitability. The United States benefited from additional exports of ethanol in recent years which may not continue to occur during our 2018 fiscal year. We may experience periods of ethanol supply and demand imbalance during our 2018 fiscal year. If we experience excess ethanol supply, either due to increased ethanol production or lower gasoline demand, it could negatively impact the price of ethanol which could hurt our ability to profitably operate the ethanol plant.

Demand for ethanol may not increase past current levels unless higher percentage blends of ethanol are more widely used. Currently, ethanol is primarily blended with gasoline for use in standard (non-flex fuel) vehicles to create a blend which is 10% ethanol and 90% gasoline. Estimates indicate that approximately 140 billion gallons of gasoline are sold in the United States each year. Assuming that all gasoline in the United States is blended at a rate of 10% ethanol and 90% gasoline, the maximum demand for ethanol is 14.0 billion gallons. This is commonly referred to as the "blend wall," which represents a theoretical limit where more ethanol cannot be blended into the national gasoline pool. Many in the ethanol industry believe that the ethanol industry has reached this blend wall. In order to expand demand for ethanol, higher percentage blends of ethanol must be utilized in standard vehicles. Such higher percentage blends of ethanol are a contentious issue. Automobile manufacturers and environmental groups have fought against higher percentage ethanol blends. The EPA approved the use of E15 for standard (non-flex fuel) vehicles produced in the model year 2001 and later. The fact that E15 has not been approved for use in all vehicles and the labeling requirements associated with E15 may lead to gasoline retailers refusing to carry E15. In addition, restrictions on the evaporative emissions of E15 during the summer months can limit the availability of E15 in some markets. Without an increase in the allowable percentage blends of ethanol that can be used in all vehicles, demand for ethanol may not continue to increase which could decrease the selling price of ethanol and could result in our inability to operate the ethanol plant profitably, which could reduce or eliminate the value of our units.

Technology advances in the commercialization of cellulosic ethanol may decrease demand for corn-based ethanol which may negatively affect our profitability. The current trend in ethanol production research is to develop an efficient method of producing ethanol from cellulose-based biomass, such as agricultural waste, forest residue, municipal solid waste, and energy crops. This trend is driven by the fact that cellulose-based biomass is generally cheaper than corn, and producing ethanol from cellulose-based biomass would create opportunities to produce ethanol in areas of the country which are unable to grow corn. The Energy Independence and Security Act of 2007 and the 2008 Farm Bill offer strong incentives to develop commercial scale cellulosic ethanol. The RFS requires that 16 billion gallons per year of advanced bio-fuels must be consumed in the United States by 2022. Additionally, state and federal grants have been awarded to several companies which are seeking to develop commercial scale cellulosic ethanol plants. This has encouraged innovation and has led to several companies that are either in the process of building or have completed and are operating commercial scale cellulosic ethanol plants. If an efficient method of producing

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ethanol from cellulose-based biomass is developed, we may not be able to compete effectively. If we are unable to produce ethanol as cost-effectively as cellulose-based producers, our ability to generate revenue and our financial condition will be negatively impacted.

Changes and advances in ethanol production technology could require us to incur costs to update our plant or could otherwise hinder our ability to compete in the ethanol industry or operate profitably.  Advances and changes in the technology of ethanol production are expected to occur.  Such advances and changes may make the ethanol production technology installed in our plant less desirable or obsolete.  These advances could also allow our competitors to produce ethanol at a lower cost than we are able.  If we are unable to adopt or incorporate technological advances, our ethanol production methods and processes could be less efficient than our competitors, which could cause our plant to become uncompetitive or completely obsolete.  If our competitors develop, obtain or license technology that is superior to ours or that makes our technology obsolete, we may be required to incur significant costs to enhance or acquire new technology so that our ethanol production remains competitive.  Alternatively, we may be required to seek third-party licenses, which could also result in significant expenditures.  These third-party licenses may not be available or, once obtained, they may not continue to be available on commercially reasonable terms.  These costs could negatively impact our financial performance by increasing our operating costs and reducing our net income.

Decreases in ethanol demand may result in excess production capacity in our industry. The supply of domestically produced ethanol is at an all-time high. According to the Renewable Fuels Association, as of January 23, 2018, there are 213 ethanol plants in the United States with capacity to produce approximately 16.2 billion gallons of ethanol per year. Excess ethanol production capacity may have an adverse impact on our results of operations, cash flows and general financial condition. According to the Renewable Fuels Association, approximately 3% of the ethanol production capacity in the United States was idled as of January 23, 2018. Further, ethanol demand may be negatively impacted by reductions in the RFS. While the United States is currently exporting ethanol which has resulted in increased ethanol demand, these ethanol exports may not continue. If ethanol demand does not grow at the same pace as increases in supply, we expect the selling price of ethanol to decline. If excess capacity in the ethanol industry continues to occur, the market price of ethanol may decline to a level that is inadequate to generate sufficient cash flow to cover our costs, which could negatively affect our profitability.

We operate in an intensely competitive industry and compete with larger, better financed companies which could impact our ability to operate profitably.  There is significant competition among ethanol producers. There are numerous producer-owned and privately-owned ethanol plants operating throughout the Midwest and elsewhere in the United States.  We also face competition from ethanol producers located outside of the United States. The largest ethanol producers include Archer Daniels Midland, Flint Hills Resources, Green Plains Renewable Energy, POET Biorefining, and Valero Renewable Fuels, each of which is capable of producing significantly more ethanol than we produce. Further, many believe that there will be consolidation occurring in the ethanol industry which will likely lead to a few companies that control a significant portion of the United States ethanol production market. We may not be able to compete with these larger producers. These larger ethanol producers may be able to affect the ethanol market in ways that are not beneficial to us which could negatively impact our financial performance and the value of our units.

Competition from the advancement of alternative fuels and other technologies may lessen demand for ethanol. Alternative fuels, gasoline oxygenates and ethanol production methods are continually under development. A number of automotive, industrial and power generation manufacturers are developing alternative clean power systems using fuel cells, plug-in hybrids, and electric cars or clean burning gaseous fuels. Like ethanol, these emerging technologies offer an option to address worldwide energy costs, the long-term availability of petroleum reserves and environmental concerns. If these alternative technologies continue to expand and gain broad acceptance and become readily available to consumers for motor vehicle use, we may not be able to compete effectively. This additional competition could reduce the demand for ethanol, resulting in lower ethanol prices that might adversely affect our results of operations and financial condition.

Consumer resistance to the use of ethanol based on the belief that ethanol is expensive, adds to air pollution, harms engines and/or takes more energy to produce than it contributes or based on perceived issues related to the use of corn as the feedstock to produce ethanol may affect demand for ethanol.  Certain individuals believe that the use of ethanol will have a negative impact on gasoline prices at the pump. Some also believe that ethanol adds to air pollution and harms car and truck engines. Still other consumers believe that the process of producing ethanol actually uses more fossil energy, such as oil and natural gas, than the amount of energy that is produced. Further, some consumers object to the fact that ethanol is produced using corn as the feedstock which these consumers perceive as negatively impacting food prices. These consumer beliefs could potentially be wide-spread and may be increasing as a result of recent efforts to increase the allowable percentage of ethanol that may be blended for use in vehicles. If consumers choose not to buy ethanol based on these beliefs, it would affect demand for the ethanol we produce which could negatively affect our profitability and financial condition.

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If exports of ethanol are reduced, including as a result of the imposition by tariffs on U.S. ethanol, ethanol prices may be negatively impacted. The United States ethanol industry was supported during our 2017 fiscal year with exports of ethanol which increased demand for our ethanol. Management believes these additional exports of ethanol were due to lower market ethanol prices in the United States and increased global demand for ethanol. However, these ethanol exports may not continue. In 2012, the European Union concluded an anti-dumping investigation related to ethanol produced in the United States and exported to Europe. As a result of this investigation, the European Union has imposed a tariff on ethanol which is produced in the United States and exported to Europe. Further, in 2017 both Brazil and China implemented tariffs on ethanol produced in the United States. These tariffs have resulted in decreased demand for ethanol from these countries which has negatively impacted ethanol prices in the United States. Any decrease in ethanol prices or demand may negatively impact our ability to profitably operate the ethanol plant.

Overcapacity within the ethanol industry could cause an oversupply of ethanol and a decline in ethanol prices. Excess ethanol production capacity could have an adverse impact on our results of operations, cash flows and general financial condition. If demand for ethanol does not grow at the same pace as increases in supply, we would expect the price of ethanol to decline. If excess capacity in the ethanol industry occurs, the market price of ethanol may decline to a level that is inadequate to generate sufficient cash flow to cover our costs which could reduce the value of our units.

Many ethanol producers are expanding their production capacity which could lead to an oversupply of ethanol in the United States. Recently, many ethanol producers have commenced projects to expand their ethanol production capacities. These expansions could result in a significant increase in the supply of ethanol in the United States. Currently, ethanol prices are supported by ethanol exports which may not continue at their current levels. While many in the ethanol industry are working to increase the amount of ethanol that is used domestically, specifically in the form of E15, which contains 15% ethanol as compared to the 10% ethanol which is used in most current blends, adoption of E15 has not been as rapid as most ethanol producers would like. Also, the additional ethanol capacity which is being constructed may exceed current domestic and export demand. An oversupply of ethanol negatively impacts domestic ethanol prices which could negatively impact our ability to profitably operate the ethanol plant.

We made significant investments in Guardian Hankinson, LLC and Ring-neck Energy & Feed, LLC which may fail. In December 2013, we made a $12 million investment in Guardian Hankinson, LLC, an entity that owns an ethanol plant in North Dakota. In addition, in July 2017, we made a $10 million investment in Ring-neck Energy & Feed, LLC. Both of these companies will face many of the same risks that we face in operating our ethanol plant. Further, we have limited control over the management decisions made by Guardian Hankinson, LLC and Ring-neck Energy & Feed, LLC. If Guardian Hankinson, LLC or Ring-neck Energy & Feed, LLC is ultimately unsuccessful, it could negatively impact the return we receive on our investment which could negatively impact our financial performance and the value of our units.

Risks Related to Regulation and Governmental Action

Government incentives for ethanol production may be eliminated in the future, which could hinder our ability to operate at a profit. The ethanol industry is assisted by various federal ethanol incentives, including the RFS set forth in the Energy Policy Act of 2005. The RFS helps support a market for ethanol that might disappear without this incentive. The United States Environmental Protection Agency ("EPA") has the authority to waive the RFS statutory volume requirement, in whole or in part, provided certain conditions have been met. Annually, the EPA is supposed to pass a rule that establishes the number of gallons of different types of renewable fuels that must be used in the United States which is called the renewable volume obligations. In the past, the EPA has set the renewable volume obligations below the statutory volume requirements. On November 30, 2017, the EPA released its final rule and set the 2018 total volume obligation at 19.29 billion gallons of which 15.0 billion gallons could be met by corn-based ethanol. If the EPA were to significantly reduce the volume requirements under the RFS or if the RFS were to be otherwise reduced or eliminated by the exercise of the EPA waiver authority or by Congress in the future, the market price and demand for ethanol could decrease which will negatively impact our financial performance.

The California Low Carbon Fuel Standard may decrease demand for corn-based ethanol which could negatively impact our profitability. California passed a Low Carbon Fuels Standard ("LCFS") which requires that renewable fuels used in California must accomplish certain reductions in greenhouse gases which reductions are measured using a lifecycle analysis. Management believes that these regulations could preclude corn-based ethanol produced in the Midwest from being used in California. California represents a significant ethanol demand market. If the ethanol industry is unable to supply corn-based ethanol to California, it could significantly reduce demand for the ethanol we produce. This could result in a reduction of our revenues and negatively impact our ability to profitably operate the ethanol plant.

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Recently passed tax reform legislation could impact our members. On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act (the "Tax Reform Act"), which amends certain provisions of the Internal Revenue Code of 1986, as amended (the "Code"). The Tax Reform Act has wide ranging impacts, including changes to the taxation of limited liabilities companies such as the Company. The Tax Reform Act includes changes to U.S. federal tax rates, limits the deductibility of interest and allows for the expensing of capital expenditures. The impact of this tax reform on the Company and its members is uncertain but the effect of the Tax Reform Act and any implementing regulations and interpretations could adversely affect our business and financial condition and require that we restructure the Company.

Changes in environmental regulations or violations of these regulations could be expensive and reduce our profitability.  We are subject to extensive air, water and other environmental laws and regulations. In addition, some of these laws require our plant to operate under a number of environmental permits. These laws, regulations and permits can often require expensive pollution control equipment or operational changes to limit actual or potential impacts to the environment. A violation of these laws and regulations or permit conditions can result in substantial fines, damages, criminal sanctions, permit revocations and/or plant shutdowns. In the future, we may be subject to legal actions brought by environmental advocacy groups and other parties for actual or alleged violations of environmental laws or our permits. Additionally, any changes in environmental laws and regulations, both at the federal and state level, could require us to spend considerable resources in order to comply with future environmental regulations. The expense of compliance could be significant enough to reduce our profitability and negatively affect our financial condition.

Carbon dioxide may be regulated in the future by the EPA as an air pollutant requiring us to obtain additional permits and install additional environmental mitigation equipment, which could adversely affect our financial performance. In 2007, the Supreme Court decided a case in which it ruled that carbon dioxide is an air pollutant under the Clean Air Act for motor vehicle emissions. In 2011 the EPA issued a tailoring rule that deferred greenhouse gas regulations for ethanol plants until July of 2014. However, in July of 2013 the D.C. Circuit issued an opinion vacating the EPA's deferral of those regulations for biogenic sources, including ethanol plants. On June 23, 2014 the U.S. Supreme Court affirmed in part and reversed in part the D.C. Circuit’s decision. For plants that already hold PSD permits the court generally affirmed the EPA's ability to regulate greenhouse gas regulations. Our plant produces a significant amount of carbon dioxide. While there are currently no regulations restricting carbon dioxide emissions, if the EPA or the State of South Dakota were to regulate carbon dioxide emissions by plants such as ours, we may have to apply for additional permits or we may be required to install carbon dioxide mitigation equipment or take other as yet unknown steps to comply with these potential regulations. Compliance with any future regulation of carbon dioxide, if it occurs, could be costly and may prevent us from operating the ethanol plant profitably which could decrease or eliminate the value of our units.

ITEM 2. PROPERTIES.

We own Dakota Ethanol as a wholly-owned subsidiary. The ethanol plant is located on Dakota Ethanol's 210-acre rural site near Wentworth, South Dakota. All of our operations occur at our plant in Wentworth, South Dakota.

All of Dakota Ethanol's tangible and intangible property, real and personal, serves as the collateral for debt financing with FCSA described below under "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Indebtedness."

ITEM 3. LEGAL PROCEEDINGS.

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

ITEM 4.     MINE SAFETY DISCLOSURES

None.

PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED MEMBER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Recent Sales of Unregistered Equity Securities

None.

Market Information

There is no public trading market for our units. Our units may only be transferred in accordance with our Capital Units Transfer System, which provides for transfers by gift to family members, upon death, and through a qualified matching service, subject to approval by our board of managers. Our qualified matching service is operated through Variable Investment Advisors, Inc., a registered broker-dealer based in Sioux Falls, South Dakota. Variable Investment Advisor's Alternative Trading System may be accessed at www.agstocktrade.com. The matching service consists of an electronic bulletin board that provides information to prospective sellers and buyers of our units. We do not receive any compensation relating to the matching service. We have no role in effecting the transactions beyond approval, as required under our operating agreement, and the issuance of new certificates. So long as we remain a publicly reporting company, information about us will be publicly available through the SEC's filing system.

Unit Holders

As of March 2, 2018, we had 29,620,000 membership units issued and outstanding and a total of approximately 1,069 unit holders.

Bid and Asked Prices

The following table contains information concerning completed unit transactions that occurred during our last two fiscal years. Our bulletin board trading system does not track bid and asked prices and therefore we only have information concerning completed unit transactions.

Quarter	Low Price		High Price		Average Price		Number of Units Traded
First Quarter 2016	$	2.87	$	3.80	$	3.27	23,500
Second Quarter 2016	2.79		3.00		2.88		64,500
Third Quarter 2016	4.00		4.00		4.00		2,000
Fourth Quarter 2016	3.05		4.15		3.77		19,000
First Quarter 2017	3.95		4.15		4.01		28,000
Second Quarter 2017	3.86		4.10		3.89		45,000
Third Quarter 2017	3.50		3.51		3.51		20,000
Fourth Quarter 2017	3.39		3.50		3.45		12,500

Distributions

Under the terms of our Third Amended and Restated Operating Agreement, we are required to make distributions to our members and may not retain more than $200,000 of net cash from operations, unless: (1) a 75% super-majority of our board of managers decides otherwise; (2) it would violate or cause a default under the terms of any debt financing or other credit facilities; or (3) it is otherwise prohibited by law. Our ability to make distributions to our members is dependent upon the distributions made to us by Dakota Ethanol. All net income generated from plant operations is distributed by Dakota Ethanol to us since Dakota Ethanol is our wholly-owned subsidiary. We distribute the net income received from Dakota Ethanol to our unit holders in proportion to the number of units held by each unit holder. A unit holder's distribution percentage is determined by dividing the number of units owned by such unit holder by the total number of units outstanding. We anticipate continuing to monitor our financial performance and projected financial performance and we expect to make distributions at such times and in such amounts as will allow us to continue to profitably operate the ethanol plant, maintain compliance with our loan covenants and maintain our liquidity.

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2017 Distributions

Our board of managers declared two distributions during our 2017 fiscal year. The two distributions were each for $0.10 per membership unit for a total of $0.20 per membership unit during our 2017 fiscal year. Our distributions were declared and paid in February and November 2017. The total amount of the distributions we paid was $5,924,000.

2016 Distributions

Our board of managers declared three distributions during our 2016 fiscal year. Two distributions were for $0.10 per membership unit and the third was for $0.20 per membership unit for a total of $0.40 per membership unit during our 2016 fiscal year. Our distributions were declared and paid in May, July and November 2016. The total amount of the distributions we paid was $11,848,000.

Performance Graph

The following graph shows a comparison of cumulative total member return since December 31, 2012, calculated on a dividend reinvested basis, for the Company, the NASDAQ Composite Index (the "NASDAQ Market Index") and an index of other companies that have the same SIC code as the Company (the "SIC Code Index"). The graph assumes $100 was invested in each of our units, the NASDAQ Market Index, and the SIC Code Index on December 31, 2012. Data points on the graph are annual. Note that historic unit price performance is not necessarily indicative of future unit price performance. The data for this performance graph was compiled for us by Zacks Investment Research, Inc.

Pursuant to the rules and regulations of the Securities and Exchange Commission, the performance graph and the information set forth therein shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, and shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected consolidated financial data, which is derived from our audited financial statements for the periods indicated. The selected consolidated balance sheet financial data as of December 31, 2015, 2014 and 2013 and the selected consolidated income statement data and other financial data for the years ended December 31, 2014 and 2013 have been derived from our audited consolidated financial statements that are not included in this Form 10-K. The selected consolidated balance sheet financial data as of December 31, 2017and 2016 and the selected consolidated income statement data and other

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financial data for each of the years in the three year period ended December 31, 2017 have been derived from the audited Consolidated Financial Statements included elsewhere in this Form 10-K. You should read the following table in conjunction with (i) the consolidated financial statements and accompanying notes included elsewhere in this Form 10-K; (ii) "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations"; and (iii) "Item 1A - Risk Factors"found elsewhere in this Form 10-K. Among other things, those items include more detailed information regarding the basis of presentation for the following consolidated financial data.

Statement of Operations Data:	2017		2016		2015		2014		2013
Revenues	$	84,821,788	$	88,812,550	$	88,997,947	$	124,469,094	$	145,412,968
Cost of Revenues	76,253,945		76,097,861		81,445,770		89,068,125		129,091,165
Gross Profit	8,567,843		12,714,689		7,552,177		35,400,969		16,321,803
Operating Expense	3,717,291		3,642,087		1,827,789		3,550,980		3,511,026
Income From Operations	4,850,552		9,072,602		5,724,388		31,849,989		12,810,777
Other Income (Expense)	1,534,531		2,332,606		2,929,142		7,957,330		494,070
Net Income	$	6,385,083	$	11,405,208	$	8,653,530	$	39,807,319	$	13,304,847
Capital Units Outstanding	29,620,000		29,620,000		29,620,000		29,620,000		29,620,000
Net Income Per Capital Unit	$	0.22	$	0.39	$	0.29	$	1.34	$	0.45
Cash Distributions per Capital Unit	$	0.20	$	0.40	$	0.30	$	1.00	$	0.20
Balance Sheet Data:	2017		2016		2015		2014		2013
Working Capital	$	6,131,109	$	11,313,046	$	8,443,572	$	6,634,185	$	17,836,992
Net Property, Plant & Equipment	39,968,930		34,824,202		34,184,059		28,349,272		22,958,064
Total Assets	84,072,240		78,116,089		79,746,514		78,574,975		82,577,805
Long-Term Obligations	6,983,944		26,556		106,475		226,940		9,170,592
Members' Equity	68,282,537		67,821,454		68,264,246		68,600,228		58,455,182
Book Value Per Capital Unit	$	2.31	$	2.29	$	2.30	$	2.32	$	1.97

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Comparison of the Fiscal Years Ended December 31, 2017 and 2016

The following table shows the results of our operations and the percentage of revenues, cost of revenues, operating expenses and other items to total revenues in our consolidated statements of operations for the fiscal years ended December 31, 2017 and 2016:

	2017			2016
Income Statement Data	Amount		%	Amount		%
Revenue	$	84,821,788	100.0	$	88,812,550	100.0
Cost of Revenues	76,253,945		89.9	76,097,861		85.7
Gross Profit	8,567,843		10.1	12,714,689		14.3
Operating Expense	3,717,291		4.4	3,642,087		4.1
Income from Operations	4,850,552		5.7	9,072,602		10.2
Other Income	1,534,531		1.8	2,332,606		2.6
Net Income	$	6,385,083	7.5	$	11,405,208	12.8

Revenues

Revenue from ethanol sales decreased by approximately 3% during our 2017 fiscal year compared to the same period of 2016. Revenue from distillers grains sales decreased by approximately 12% during our 2017 fiscal year compared to the same period of 2016. Revenue from corn oil sales increased by approximately 8% during our 2017 fiscal year compared to the same period of 2016.

Ethanol

Our ethanol revenue decreased by approximately $1.9 million during our 2017 fiscal year compared to our 2016 fiscal year, a decrease of approximately 3%. This decrease in ethanol revenue was due to a decrease in the average price we received for our ethanol of approximately $0.03 per gallon along with a decrease in the total gallons of ethanol we sold. Management attributes this decrease in ethanol prices with increased ethanol supply in the market which was not met with corresponding increases in demand during our 2017 fiscal year. Ethanol in recent years has sold at a discount compared to gasoline prices which has made ethanol an attractive fuel for blending with gasoline and has increased export demand for ethanol. Ethanol provides additional octane to fuels and the lower price of ethanol positively impacts the overall cost of ethanol blended fuels. Management expects continued lower ethanol prices during our 2018 fiscal year due to anticipated increases in market ethanol supply. If ethanol exports increase during our 2018 fiscal year, the supply and demand balance may be more favorable. However, export demand for ethanol is less certain compared to domestic demand. As a result, if ethanol demand decreases in the future, it could negatively impact the price we receive for our ethanol. In addition, gasoline prices have been increasing recently which management believes will positively impact ethanol prices. If the spread between the price of ethanol and the price of gasoline increases during our 2017 fiscal year, it may lead to additional domestic ethanol demand which could positively impact prices.

Ethanol sales volumes were lower during our 2017 fiscal year compared to the same period of 2016 due to increased inventory during our 2017 fiscal year partially offset by an increase in ethanol production during our 2017 fiscal year compared to our 2016 fiscal year. Our total gallons of ethanol sold during our 2017 fiscal year was comparable to the same period of 2016, with a decrease of approximately 71,000 gallons. Management anticipates increased ethanol production and sales during our 2018 fiscal year compared to our 2017 fiscal year due to efficiency improvements we have made to the plant.

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Distillers Grains

Our total distillers grains revenue decreased for our 2017 fiscal year compared to the same period of 2016. For our 2017 fiscal year, we sold approximately 35% of our total distillers grains, by volume, in the dried form and approximately 65% of our total distillers grains in the modified/wet form. For our 2016 fiscal year, we sold approximately 36% of our total distillers grains, by volume, in the dried form and approximately 64% of our total distillers grains in the modified/wet form. The average price we received for our dried distillers grains was approximately 12% less during our 2017 fiscal year compared to the same period of 2016, a decrease of approximately $14 per ton. Management attributes this decrease in dried distillers grains prices with significantly decreased export demand from China during our 2017 fiscal year along with lower corn and soybean prices. Since distillers grains are typically used as a feed substitute for corn and soybean meal, as the prices of corn and soybeans decrease, the price of distillers grains typically also decreases. In recent years, China has imported a significant amount of distillers grains from the United States. However, at the request of Chinese distillers grains producers, China commenced an anti-dumping and countervailing duty investigation against the United States during 2016. In September 2016, the Chinese implemented a preliminary anti-subsidy duty of between 10% and 10.7% in addition to a preliminary anti-dumping duty of 33.8%. Further, in January 2017, China finalized the duties to between 11.2% and 12% for the anti-subsidy duty and between 42.2% and 53.7% for the anti-dumping duty. As a result, distillers grains exports decreased sharply during our 2017 fiscal year which significantly impacted distillers grains prices. The average price we received for our modified/wet distillers grains was approximately 13% less for our 2017 fiscal year compared to the same period of 2016, a decrease of approximately $16 per dry equivalent ton.

Management anticipates continued low distillers grains prices and lower export demand for distillers grains until the Chinese increase their imports. However, the low price of distillers grains has resulted in increased export demand to other countries and may be positively impacting domestic distillers grains demand.

Corn Oil

Our total corn oil revenue increased by approximately 8% during our 2017 fiscal year compared to the same period of 2016. Our total pounds of corn oil sold increased by approximately 8% during our 2017 fiscal year compared to the same period of 2016, an increase of approximately 854,000 pounds, primarily due to decreased downtime on our extraction equipment during our 2017 fiscal year compared to our 2016 fiscal year. Management anticipates relatively stable corn oil production during our 2018 fiscal year compared to our 2017 fiscal year, depending on the amount of oil in the corn harvested in the fall of 2017.

The average price we received for our corn oil was comparable in our 2017 fiscal year and the same period of 2016. Management expects corn oil prices to remain lower during our 2018 fiscal year unless the biodiesel blenders' tax credit is extended for 2018. If not, biodiesel production may be lower which may negatively impact corn oil demand and prices.

Government Incentives

We did not receive any revenue from the State of South Dakota during our 2017 fiscal year compared to approximately $378,000 during the same period of 2016 due to the end of our eligibility for this state ethanol production incentive.

Cost of Revenues

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

Corn

Our cost of revenues relating to corn was approximately 3% less for our 2017 fiscal year compared to the same period of 2016. Our average cost per bushel of corn decreased by approximately 2% for our 2017 fiscal year compared to our 2016 fiscal year. Management attributes the decrease in corn prices to several years of large corn crops and additional corn carryover from the 2016 corn crop. This increase in corn supply resulted in lower market corn prices during our 2017 fiscal year. Management anticipates relatively stable corn prices during our 2018 fiscal year due to strong corn supplies and anticipated stable corn demand.

We used approximately 2% fewer bushels of corn during our 2017 fiscal year compared to the same period of 2016 due to improved corn to ethanol yields during our 2017 fiscal year due to running the plant slower and a new yeast we used which improved our operating efficiency. Management expects our corn consumption will be consistent in our 2018 fiscal year compared to our 2017 fiscal year.

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Natural Gas

Our cost of revenues related to natural gas increased by approximately $489,000, an increase of approximately 12%, for our 2017 fiscal year compared to our 2016 fiscal year. This increase was due primarily to an increase in market natural gas prices during our 2017 fiscal year compared to the same period of 2016. Natural gas prices rose due to increased demand. Additionally, we experienced a spike in natural gas prices in December 2017 due to the colder weather. Our average cost per MMBtu of natural gas during our 2017 fiscal year was approximately 19% greater compared to the cost for our 2016 fiscal year. Management anticipates stable natural gas prices during 2018 due to adequate supplies.

We used approximately 6% less MMBtus of natural gas during our 2017 fiscal year compared to the same period of 2016 due to producing less dried distillers grain and more modified distillers grains. Management anticipates that our natural gas consumption during our 2018 fiscal year will be comparable to our consumption during our 2017 fiscal year.

We experienced approximately $815,000 of combined realized and unrealized loss for our 2017 fiscal year related to our corn derivative instruments which increased our cost of goods sold. By comparison, We experienced approximately $167,000 of combined realized and unrealized gains for our 2016 fiscal year related to our corn derivative instruments which decreased our cost of goods sold. We recognize the gains or losses that result from the changes in the value of our derivative instruments from corn in cost of goods sold as the changes occur.  As corn prices fluctuate, the value of our derivative instruments are impacted, which affects our financial performance.

Operating Expense

Our operating expenses were higher for our 2017 fiscal year compared to the same period of 2016 due primarily to increased costs relating to recruiting efforts to fill vacant staff positions within our Company.

Other Income and Expense

Our interest income was higher during our 2017 fiscal year compared to our 2016 fiscal year due to higher cash on hand during the 2017 period. Our equity in the net income of our investments was lower during our 2017 fiscal year compared to our 2016 fiscal year due to less profitability in the ethanol industry which negatively impacts the income generated by our investments. Our net income of investments was also lower due to a write-down of the value of our investment in Prairie Gold Venture Partners as it was deemed impaired.

Comparison of the Fiscal Years Ended December 31, 2016 and 2015

The following table shows the results of our operations and the percentage of revenues, cost of revenues, operating expenses and other items to total revenues in our consolidated statements of operations for the fiscal years ended December 31, 2016 and 2015:

	2016			2015
Income Statement Data	Amount		%	Amount		%
Revenue	$	88,812,550	100.0	$	88,997,947	100.0
Cost of Revenues	76,097,861		85.7	81,445,770		91.5
Gross Profit	12,714,689		14.3	7,552,177		8.5
Operating Expense	3,642,087		4.1	1,827,789		2.1
Income from Operations	9,072,602		10.2	5,724,388		6.4
Other Income	2,332,606		2.6	2,929,142		3.3
Net Income	$	11,405,208	12.8	$	8,653,530	9.7

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Revenues

Revenue from ethanol sales increased by approximately 3% during our 2016 fiscal year compared to the same period of 2015. Revenue from distillers grains sales decreased by approximately 10% during our 2016 fiscal year compared to the same period of 2015. Revenue from corn oil sales decreased by approximately 4% during our 2016 fiscal year compared to the same period of 2015.

Ethanol

Our ethanol revenue increased by approximately $1.8 million during our 2016 fiscal year compared to our 2015 fiscal year, an increase of approximately 3%. This increase in ethanol revenue was due to an increase in the average price we received for our ethanol of approximately $0.02 per gallon along with an increase in the total gallons of ethanol we sold. Ethanol in recent years has sold at a discount compared to gasoline prices which has made ethanol an attractive fuel for blending with gasoline and has increased export demand for ethanol. Ethanol provides additional octane to fuels and the lower price of ethanol positively impacts the overall cost of ethanol blended fuels. The RFS requires the EPA to establish renewable volume obligations (RVO) for various types of renewable fuels on an annual basis. In recent years, the EPA proposed RVOs for corn-based ethanol which were less than the statutory requirements in the RFS. Further, the preliminary RVO for corn-based ethanol for 2017 was less than the statutory requirement. However, when the final RVO was released in late 2016, the RVO for corn-based ethanol was set at the statutory limit. While the RVO for 2017 was a positive step, it came late in the year and as a result may not have had a significant impact on ethanol prices during our 2016 fiscal year.

Ethanol sales volumes were higher during our 2016 fiscal year compared to the same period of 2015 due to a reduction in inventory during our 2016 fiscal year partially offset by a slight decrease in ethanol production during our 2016 fiscal year compared to our 2015 fiscal year. Our total gallons of ethanol sold during our 2016 fiscal year was approximately 1% greater than during the same period of 2015, an increase of approximately 602,000 gallons.

Distillers Grains

Our total distillers grains revenue decreased for our 2016 fiscal year compared to the same period of 2015. For both our 2016 fiscal year and 2015 fiscal year, we sold approximately 36% of our total distillers grains, by volume, in the dried form and approximately 64% of our total distillers grains in the modified/wet form. The average price we received for our dried distillers grains was approximately 12% less during our 2016 fiscal year compared to the same period of 2015, a decrease of approximately $15 per ton. Management attributes this decrease in dried distillers grains prices with significantly decreased export demand from China during our 2016 fiscal year along with lower corn and soybean prices. Since distillers grains are typically used as a feed substitute for corn and soybean meal, as the prices of corn and soybeans decrease, the price of distillers grains typically also decreases. The average price we received for our modified/wet distillers grains was approximately 6% less for our 2016 fiscal year compared to the same period of 2015, a decrease of approximately $8 per dry equivalent ton.

Corn Oil

Our total corn oil revenue decreased by approximately 4% during our 2016 fiscal year compared to the same period of 2015. Our total pounds of corn oil sold decreased by approximately 10% during our 2016 fiscal year compared to the same period of 2015, a decrease of approximately 1,162,000 pounds, primarily due to decreased corn oil yield from the corn we used during our 2016 fiscal year compared to our 2015 fiscal year.

The average price we received for our corn oil increased by approximately 7% for our 2016 fiscal year compared to the same period of 2015, an increase of approximately $0.02 per pound. The biodiesel blenders' tax credit was reinstated for 2016 which had a positive impact on biodiesel production. Since corn oil can be used as a feedstock to produce biodiesel, when biodiesel production increases it has a positive impact on corn oil prices.

Government Incentives

We received less revenue from the State of South Dakota during our 2016 fiscal year compared to the same period of 2015 due to the end of our eligibility for this state ethanol production incentive. We received approximately $378,000 in incentive revenue during our 2016 fiscal year and approximately $417,000 during our 2015 fiscal year.

Cost of Revenues

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

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Corn

Our cost of revenues relating to corn was approximately 7% less for our 2016 fiscal year compared to the same period of 2015. Our average cost per bushel of corn decreased by approximately 7% for our 2016 fiscal year compared to our 2015 fiscal year. Management attributes the decrease in corn prices with several years of large corn crops and additional corn carryover from the 2015 corn crop. This increase in corn supply resulted in lower market corn prices during our 2016 fiscal year.

We used a comparable volume of corn during our 2016 fiscal year compared to the same period of 2015 due to improved corn to ethanol yields during our 2016 fiscal year.

Natural Gas

Our cost of revenues related to natural gas decreased by approximately $560,000, a decrease of approximately 12%, for our 2016 fiscal year compared to our 2015 fiscal year. This decrease was due to a decrease in market natural gas prices during our 2016 fiscal year compared to the same period of 2015. During our 2016 fiscal year, we experienced strong natural gas supplies and relatively stable natural gas demand which positively impacted our natural gas costs. Our average cost per MMBtu of natural gas during our 2016 fiscal year was approximately 13% less compared to the price for our 2015 fiscal year.

We used approximately 1% more MMBtus of natural gas during our 2016 fiscal year compared to the same period of 2015 due to increased sales volumes which increased our natural gas needs.

We experienced approximately $167,000 of combined realized and unrealized gains for our 2016 fiscal year related to our corn and natural gas derivative instruments which decreased our cost of goods sold. By comparison, We experienced approximately $331,000 of combined realized and unrealized gains for our 2015 fiscal year related to our corn and natural gas derivative instruments which decreased our cost of goods sold.

Operating Expense

Our operating expenses were higher for our 2016 fiscal year compared to the same period of 2015 due primarily to property and casualty insurance proceeds we received during our 2015 fiscal year which decreased our operating expenses. The insurance proceeds in excess of the loss equaled approximately $1.8 million in 2015.

Other Income and Expense

Our interest income was lower during our 2016 fiscal year compared to our 2015 fiscal year due to decreased cash on hand during the 2016 period. In addition, our other income was lower during our 2016 fiscal year compared to our 2015 fiscal year due to approximately $600,000 in business interruption insurance proceeds which were included in our other income for the 2015 period. Our equity in the net income of our investments was higher during our 2016 fiscal year compared to our 2015 fiscal year due to more income being generated by our investments which are in the ethanol industry and are directionally consistent with our performance during the 2016 period.

Changes in Financial Condition for the Fiscal Year Ended December 31, 2017 compared to the Fiscal Year Ended December 31, 2016.

Current Assets

We had less cash and cash equivalents at December 31, 2017 compared to December 31, 2016, primarily due to decreased net income generated, increased capital spending and our investment in Ring-neck Energy & Feed, LLC during our 2017 fiscal year. We had fewer accounts receivable at December 31, 2017, compared to December 31, 2016, due to lower ethanol values at December 31, 2017. We had less inventory at December 31, 2017, compared to December 31, 2016, due primarily to having less corn inventory at December 31, 2017. The volume of corn on hand at the end of our 2017 fiscal year was less than the end of our 2016 fiscal year which impacts the value of our corn inventory. The value of our derivative financial instruments was less at December 31, 2017 compared to December 31, 2016, primarily because we had less unrealized gains on our futures corn positions along with less cash in our margin account as of December 31, 2017 compared to December 31, 2016.

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Property and Equipment

The value of our property and equipment was higher at December 31, 2017 compared to December 31, 2016 due to plant improvement projects which were in progress during our 2017 fiscal year. This increase in the value of our property and equipment was partially offset by the regular depreciation of our assets during our 2017 fiscal year.

Other Assets

The value of our investments was higher at December 31, 2017, compared to December 31, 2016, mainly due to our investment in Ring-neck Energy & Feed, LLC.

Current Liabilities

At December 31, 2017, we had fewer checks which were issued in excess of the amount of cash we had in our bank accounts, compared to at December 31, 2016, due to the timing of transfers between our accounts. Any checks which are presented for payment in excess of the balances in our bank accounts are paid from our revolving lines of credit. Our accounts payable was lower at December 31, 2017, compared to December 31, 2016, due to decreased corn payables at the end of our 2017 fiscal year. We had less accrued liabilities at December 31, 2017, compared to December 31, 2016 due to decreased payroll accruals due to the timing of payroll. The liability on our balance sheet related to our derivative instruments was lower at December 31, 2017, compared to December 31, 2016, due to having less unrealized losses on our forward corn purchases at December 31, 2017, compared to at December 31, 2016.

Long-Term Liabilities

Our long-term liabilities were higher at December 31, 2017, compared to December 31, 2016, due to the long-term debt we incurred to purchase an investment in Ring-neck Energy & Feed, LLC during our 2017 fiscal year.

Liquidity and Capital Resources

Our main sources of liquidity are cash from our continuing operations, distributions we receive from our investments and amounts we have available to draw on our revolving credit facilities. Taking into account the Amended and Restated Credit Agreement we executed on February 6, 2018, management does not anticipate that we will need to raise additional debt or equity financing in the next twelve months and management believes that our current sources of liquidity will be sufficient to continue our operations during that time period. We anticipate that any the capital expenditures we undertake related to our expansion project will be paid out of cash from operations and existing loans, but will not require any additional debt or equity financing.

Currently, we have two revolving loans which allow us to borrow funds for working capital. These two revolving loans are described in greater detail below in the section entitled "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Indebtedness." As of December 31, 2017, we had $1,000 outstanding and $12,546,000 available to be drawn on these revolving loans. Management anticipates that this is sufficient to maintain our liquidity and continue our operations.

The following table shows cash flows for the fiscal years ended December 31, 2017 and 2016:

	Fiscal Years Ended December 31
	2017			2016
Net cash provided by operating activities	$	11,567,864		$	15,679,756
Net cash (used in) investing activities	(18,134,893		)	(2,680,173		)
Net cash provided by (used in) financing activities	1,676,653			(11,335,414		)

Cash Flow From Operations. Our operating activities generated less cash during our fiscal year ended December 31, 2017, compared to the same period of 2016, primarily due to having less net income during the 2017 period along with decreased distributions from our investments.

Cash Flow From Investing Activities. Our investing activities used more cash during our fiscal year ended December 31, 2017, compared to the same period of 2016, primarily due to our investment in Ring-neck Energy & Feed, LLC along with capital costs we incurred related to our expansion project.

26

Cash Flow From Financing Activities. Our financing activities provided more cash during our fiscal year ended December 31, 2017, compared to the same period of 2016, primarily due to the proceeds from borrowing we incurred during the 2017 period along with decreased distributions to our members.

The following table shows cash flows for the fiscal years ended December 31, 2016 and 2015:

	Fiscal Years Ended December 31
	2016			2015
Net cash provided by operating activities	$	15,679,756		$	19,475,629
Net cash (used in) investing activities	(2,680,173		)	(8,409,309		)
Net cash (used in) financing activities	(11,335,414		)	(8,841,537		)

Cash Flow From Operations. Our operating activities generated less cash during our fiscal year ended December 31, 2016, compared to the same period of 2015, primarily due to the net effect of decreased distributions in excess of earnings from our investments offset by increased net income during the 2016 period.

Cash Flow From Investing Activities. Our investing activities used less cash during our fiscal year ended December 31, 2016, compared to the same period of 2015, primarily due to the net effect of less capital purchases during our 2016 fiscal year, partially offset by greater insurance proceeds we received during our 2015 fiscal year due to storm damage at the ethanol plant.

Cash Flow From Financing Activities. Our financing activities used more cash during our fiscal year ended December 31, 2016, compared to the same period of 2015, primarily due to increased distributions to our members during our 2016 fiscal year compared to our 2015 fiscal year.

Indebtedness

We entered into a comprehensive credit facility with Farm Credit Services of America, PCA and Farm Credit Services of America, FLCA (collectively "FCSA"). We have a $10 million revolving operating line of credit (the "Operating Line") and a $15 million reducing revolving loan (the "Reducing Revolving Loan"). All of our assets, including the ethanol plant and equipment, its accounts receivable and inventory, serve as collateral for our loans with FCSA.

On August 1, 2017, we executed an amendment to our credit agreement to create a new $8 million term loan which we used to finance a portion of our investment in Ring-neck Energy & Feed, LLC. Subsequently, on February 6, 2018, we executed an Amended and Restated Credit Agreement (the "Amended and Restated Credit Agreement") with FCSA. Pursuant to the Amended and Restated Credit Agreement, we increased our total credit availability to $40 million to support our expansion project. Further, the maturity date of this increased credit availability under our Amended and Restated Credit Agreement was extended to January 1, 2026. Until February 1, 2023, interest will accrue pursuant to the Credit Agreement on our increased credit availability at the one month London Interbank Offered Rate ("LIBOR") plus 3.25% per year. We agreed to pay a fee of 0.50% on the unused portion of the increased credit availability.  

Operating Line

The Operating Line was renewed on November 1, 2016. The Operating Line's maturity date is November 1, 2018. The total amount that we can draw on the Operating Line is restricted by a formula based on the amount of inventory, receivables and equity we have in certain CBOT futures positions. Interest on the Operating Line accrues at the one month LIBOR plus 300 basis points. There is a fee of 0.25% on the portion of the Operating Line that we are not using, which is billed quarterly. The interest rate for this loan at December 31, 2017 was 4.35%. As of December 31, 2017, we had $0 outstanding on the Operating Line and approximately $2 million available to be drawn, taking into account the borrowing base calculation.

Reducing Revolving Loan

We have a $15 million Reducing Revolving Loan. Interest accrues on the Reducing Revolving Loan at a rate of 325 basis points in excess of the one-month LIBOR and we agreed to pay a fee of 50 basis points for any unused amount of the Reducing Revolving Loan. The amount we can borrow on the Reducing Revolving Loan decreases by $750,000 semi-annually starting on April 1, 2015 until the maximum balance reaches $7.5 million on October 1, 2019. The Reducing Revolving Loan matures on October 1, 2024. The interest rate for this loan at December 31, 2017 was 4.60%. As of December 31, 2017, we had $1,000 outstanding on the Operating Line and $10,499,000 available to be drawn.

27

Term Loan

On August 1, 2017, Dakota Ethanol executed a term note with FCSA in the amount of $8,000,000. Dakota Ethanol agreed to make monthly interest payments starting September 1, 2017 and annual principal payments of $1,000,000 starting on August 1, 2018. The notes matures on August 1, 2025. Interest on the outstanding principal balance will accrue at 325 basis points above the 1 month LIBOR rate and is not subject to a floor. The rate was 4.60% at December 31, 2017. On December 31, 2017, Dakota Ethanol had $8,000,000 outstanding on the note.

Covenants

Our credit facilities with FCSA are subject to various loan covenants. If we fail to comply with these loan covenants, FCSA can declare us to be in default of our loans. The material loan covenants applicable to our credit facilities are our working capital covenant, local net worth covenant and our debt service coverage ratio. We are required to maintain working capital (current assets minus current liabilities plus availability on our revolving loan) of at least $6 million. We are required to maintain local net worth (total assets minus total liabilities minus the value of certain investments) of at least $18 million. We are required to maintain a debt service coverage ratio of at least 1.25:1.00. In the Amended and Restated Credit Agreement, we agreed to increase our working capital covenant to $13.5 million and our local net worth requirement to $28 million.

As of December 31, 2017, we were in compliance with our financial covenants under the FCSA loans. Management's current financial projections indicate that we will be in compliance with our financial covenants for the next 12 months and we expect to remain in compliance thereafter. Management does not believe that it is reasonably likely that we will fall out of compliance with our material loan covenants in the next 12 months. If we fail to comply with the terms of our credit agreements with FCSA, and FCSA refuses to waive the non-compliance, FCSA may require us to immediately repay all amounts outstanding on our loans.

County Bond Obligation

We have a long-term debt obligation on a portion of a tax increment revenue bond series issued by Lake County, South Dakota of which we were the recipient of the proceeds. Taxes levied on our property are used for paying the debt service on the bonds. We are obligated to pay any shortfall in debt service on the bonds should the property taxes collected not be sufficient to pay the entire debt service. The interest rate on the bonds is 7.75% annually.  The bonds require semi-annual payments of interest on December 1 and June 1, in addition to a payment of principal on December 1 of each year. While our obligation under the guarantee is expected to continue until maturity in 2018, such obligation may cease at some point in time if the property on which the plant is located appreciates in value to the extent that Lake County is able to collect a sufficient amount in taxes to cover the principal and interest payments on the taxable bonds. Our estimated liability related to this bond was approximately $10,000 as of December 31, 2017. The guarantee liability is included in other liabilities on the balance sheet.

Contractual Cash Obligations

In addition to our debt obligations, we have certain other contractual cash obligations and commitments.  The following table provides information regarding our consolidated contractual obligations and commitments as of December 31, 2017:

	Payments Due By Period
Contractual Cash Obligations	Total		Less than One Year		One to Three Years		Three to Five Years		After Five Years
Long-Term Debt Obligations	$	8,001,000	$	1,000,000	$	2,000,000	$	2,000,000	$	3,001,000
Estimated Interest on Long-Term Debt	1,533,336		352,667		567,334		383,334		230,001
Operating Lease Obligations	—		—		—		—		—
Purchase Obligations	8,886,822		8,886,822		—		—		—
Other Liabilities	25,556		13,556		8,000		4,000		—
Total Contractual Cash Obligations	$	18,446,714	$	10,253,045	$	2,575,334	$	2,387,334	$	3,231,001

Application of Critical Accounting Policies

Management uses estimates and assumptions in preparing our consolidated financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities,

28

the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Of the significant accounting policies described in the notes to our consolidated financial statements, we believe that the following are the most critical:

Derivative Instruments

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

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

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

Goodwill

Annually, as well as when an event triggering impairment may have occurred, the Company performs an impairment test on goodwill. The Company performs a quantitative analysis that tests for impairment. The second step, if necessary, measures the impairment. The Company performs the annual analysis on December 31 of each fiscal year. The Company determined that there was no impairment of goodwill at December 31, 2017 and 2016.

Inventory Valuation

Inventories are generally valued using methods which approximate the lower of cost (first-in, first-out) or net realizable value. In the valuation of inventories and purchase commitments, net realizable value is based on estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation.

Revenue Recognition

Revenue from the production of ethanol and related products is recorded when title transfers to customers. Generally, ethanol and related products are shipped FOB shipping point, based on written contract terms between Dakota Ethanol and its customers. Collectability of revenue is reasonably assured based on historical evidence of collectability between Dakota Ethanol and its customers. Interest income is recognized as earned.

Shipping costs incurred by the Company in the sale of ethanol, dried distillers grains and corn oil are not specifically identifiable and as a result, revenue from the sale of those products is recorded based on the net selling price reported to the Company from the marketer.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

29

Interest Rate Risk

We are exposed to market risk from changes in interest rates. Exposure to interest rate risk results primarily from holding loans which bear variable interest rates. As of December 31, 2017, we had $8,001,000 outstanding on our variable interest rate loans with interest accruing at a rate of 4.60%. Our variable interest rates are calculated by adding a set basis to LIBOR. If we were to experience a 10% increase in LIBOR, the annual effect such change would have on our statement of operations, based on the amount we had outstanding on our variable interest rate loans as of December 31, 2017, would be approximately $11,000.

Commodity Price Risk

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

The immediate recognition of hedging gains and losses can cause net income to be volatile from quarter to quarter due to the timing of the change in value of the derivative instruments relative to the cost and use of the commodity being hedged.  We recorded an increase to our cost of revenues of approximately $815,000 related to derivative instruments for our fiscal year ended December 31, 2017. We recorded a decrease to our cost of revenues of approximately $167,000 related to derivative instruments for the fiscal year ended December 31, 2016. There are several variables that could affect the extent to which our derivative instruments are impacted by price fluctuations in the cost of corn or natural gas.  However, it is likely that commodity cash prices will have the greatest impact on the derivatives instruments with delivery dates nearest the current cash price.

As of December 31, 2017, we were committed to purchasing approximately 2.5 million bushels of corn with an average price of $3.30 per bushel. These corn purchases represent approximately 14% of our expected corn usage for the next 12 months. As corn prices move in reaction to market trends and information, our statement of operations will be affected depending on the impact such market movements have on the value of our derivative instruments. Depending on market movements, crop prospects and weather, these price protection positions may cause immediate adverse effects to our financial results, but are designed to produce long-term positive growth for us.

As of December 31, 2017, we were committed to purchasing approximately 40,000 MMBtus of natural gas with an average price of $3.10 per MMBtu. Under these arrangements, the Company assumes the risk of a price decrease in the market price of natural gas between the time the price is fixed and the time the natural gas is delivered. The Company accounts for these transactions as normal purchases, and accordingly, does not mark these transactions to market. The natural gas purchases represent approximately 3% of the projected annual plant requirements.

As of December 31, 2017, the Company is committed to selling approximately 38,000 dry equivalent tons of distillers grains with an average price of $101 per ton.  The distillers grains sales represent approximately 26% of the projected annual plant production.

As of December 31, 2017, the Company is committed to selling approximately 770,000 pounds of distillers corn oil with an average price of $0.24 per pound.  The distillers corn oil sales represent approximately 7% of the projected annual plant production.

The Company does not have any firm-priced sales commitments for ethanol as of December 31, 2017.

A sensitivity analysis has been prepared to estimate our exposure to ethanol, corn and natural gas price risk. Market risk related to these factors is estimated as the potential change in income resulting from a hypothetical 10% adverse change in the average cost of our corn and natural gas prices and average ethanol price as of December 31, 2017, net of the forward and future contracts used to hedge our market risk for corn and natural gas usage requirements. The volumes are based on our expected use and sale of these commodities for a one year period from December 31, 2017. The results of this analysis, which may differ from actual results, are as follows:

30

	Estimated Volume Requirements for the next 12 months (net of forward and futures contracts)	Unit of Measure	Hypothetical Adverse Change in Price		Approximate Adverse Change to Income
Ethanol	52,500,000	Gallons	10	%	$	6,352,500
Corn	16,275,632	Bushels	10	%	$	4,898,965
Natural Gas	1,141,250	MMBTU	10	%	$	1,029,408

For comparison purposes, our sensitivity analysis for our 2016 fiscal year is set forth below.

	Estimated Volume Requirements for the next 12 months (net of forward and futures contracts)	Unit of Measure	Hypothetical Adverse Change in Price		Approximate Adverse Change to Income
Ethanol	52,500,000	Gallons	10	%	$	8,190,000
Corn	16,539,575	Bushels	10	%	$	4,994,952
Natural Gas	1,181,250	MMBTU	10	%	$	429,975

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Members and the Board of Managers of Lake Area Corn Processors, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Lake Area Corn Processors, LLC and its subsidiary (the Company) as of December 31, 2017 and 2016, the related consolidated statements of operations, changes in members’ equity and cash flows for each of the three years in the period ended December 31, 2017, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ RSM US LLP

We have served as the Company's auditor since 2007.

Des Moines, Iowa

March 2, 2018

32

LAKE AREA CORN PROCESSORS, LLC

Consolidated Balance Sheets

	December 31, 2017			December 31, 2016
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	5,102,959		$	9,993,335
Accounts receivable	3,186,530			4,054,667
Other receivables	38,704			25,216
Inventory	5,526,094			6,212,619
Derivative financial instruments	862,840			1,057,465
Prepaid expenses	219,741			237,823
Total current assets	14,936,868			21,581,125
PROPERTY AND EQUIPMENT
Land	874,473			874,473
Land improvements	8,558,720			9,449,920
Buildings	8,955,206			8,955,206
Equipment	53,060,482			52,614,358
Construction in progress	8,475,840			—
	79,924,721			71,893,957
Less accumulated depreciation	(39,955,791		)	(37,069,755		)
Net property and equipment	39,968,930			34,824,202
OTHER ASSETS
Goodwill	10,395,766			10,395,766
Investments	18,739,259			11,192,032
Other	31,417			122,964
Total other assets	29,166,442			21,710,762
TOTAL ASSETS	$	84,072,240		$	78,116,089

See Notes to Consolidated Financial Statements

33

LAKE AREA CORN PROCESSORS, LLC

Consolidated Balance Sheets

	December 31, 2017		December 31, 2016
LIABILITIES AND MEMBERS’ EQUITY
CURRENT LIABILITIES
Outstanding checks in excess of bank balance	$	674,936	$	1,035,671
Accounts payable	6,123,995		7,670,550
Accrued liabilities	582,487		592,749
Derivative financial instruments	410,785		827,786
Current portion of notes payable	1,000,000		—
Other	13,556		141,323
Total current liabilities	8,805,759		10,268,079
LONG-TERM LIABILITIES
Notes payable	6,971,944		1,000
Other	12,000		25,556
Total long-term liabilities	6,983,944		26,556
COMMITMENTS AND CONTINGENCIES
MEMBERS' EQUITY (29,620,000 units issued and outstanding)	68,282,537		67,821,454
TOTAL LIABILITIES AND MEMBERS' EQUITY	$	84,072,240	$	78,116,089

See Notes to Consolidated Financial Statements

34

LAKE AREA CORN PROCESSORS, LLC

Consolidated Statements of Operations

	Year Ended December 31, 2017			Year Ended December 31, 2016			Year Ended December 31, 2015
REVENUES	$	84,821,788		$	88,812,550		$	88,997,947
COSTS OF REVENUES	76,253,945			76,097,861			81,445,770
GROSS PROFIT	8,567,843			12,714,689			7,552,177
OPERATING EXPENSES	3,717,291			3,642,087			1,827,789
INCOME FROM OPERATIONS	4,850,552			9,072,602			5,724,388
OTHER INCOME (EXPENSE)
Interest and other income	77,033			40,367			117,471
Business interruption claims recovery	—			—			617,771
Equity in net income of investments	1,459,806			2,293,928			2,195,535
Interest expense	(2,308		)	(1,689		)	(1,635		)
Total other income (expense)	1,534,531			2,332,606			2,929,142
NET INCOME	$	6,385,083		$	11,405,208		$	8,653,530
BASIC AND DILUTED EARNINGS PER UNIT	$	0.22		$	0.39		$	0.29
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING FOR THE CALCULATION OF BASIC & DILUTED EARNINGS PER UNIT	29,620,000			29,620,000			29,620,000

See Notes to Consolidated Financial Statements

35

LAKE AREA CORN PROCESSORS, LLC

Consolidated Statements of Changes in Members' Equity

Years Ended December 31, 2017, 2016 and 2015

	Members'
	Equity
Balance, December 31, 2014	$	68,600,228
Net income	8,653,530
Distributions paid ($.30 per capital unit)	(8,989,512		)
Balance, December 31, 2015	68,264,246
Net income	11,405,208
Distributions paid ($.40 per capital unit)	(11,848,000		)
Balance, December 31, 2016	67,821,454
Net income	6,385,083
Distributions paid ($.20 per capital unit)	(5,924,000		)
Balance, December 31, 2017	$	68,282,537

See Notes to Consolidated Financial Statements

36

LAKE AREA CORN PROCESSORS, LLC

Consolidated Statements of Cash Flows

	December 31, 2017			December 31, 2016			December 31, 2015
OPERATING ACTIVITIES
Net income	$	6,385,083		$	11,405,208		$	8,653,530
Adjustments to reconcile net income to cash provided by operating activities
Depreciation and amortization	2,977,582			3,375,012			3,373,935
Distributions in excess of earnings from investments	2,598,644			4,032,960			8,004,464
(Gain) on insurance proceeds for damage to equipment	—			—			(2,818,955		)
Loss on disposal of property and equipment	—			—			849,734
(Increase) decrease in
Receivables	816,730			(2,432,676		)	759,945
Inventory	686,526			1,352,871			(1,458,844		)
Prepaid expenses	18,080			43,732			24,796
Derivative financial instruments	(222,375		)	(160,259		)	(59,474		)
Increase (decrease) in
Accounts payable	(1,550,377		)	(2,017,964		)	2,211,376
Accrued and other liabilities	(142,029		)	80,872			(64,878		)
NET CASH PROVIDED BY OPERATING ACTIVITIES	11,567,864			15,679,756			19,475,629
INVESTING ACTIVITIES
Insurance proceeds received for damage to equipment	—			1,318,955			1,500,000
Purchase of property and equipment	(7,989,022		)	(3,999,128		)	(9,894,309		)
Purchase of investments	(10,145,871		)	—			(15,000		)
NET CASH (USED IN) INVESTING ACTIVITIES	(18,134,893		)	(2,680,173		)	(8,409,309		)
FINANCING ACTIVITIES
Increase (decrease) in outstanding checks in excess of bank balance	(360,736		)	558,505			230,319
Proceeds from issuance of notes payable	8,000,000			—			—
Payments for long-term debt	(38,611		)	(45,919		)	(82,344		)
Distributions to members	(5,924,000		)	(11,848,000		)	(8,989,512		)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	1,676,653			(11,335,414		)	(8,841,537		)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(4,890,376		)	1,664,169			2,224,783
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	9,993,335			8,329,166			6,104,383
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	5,102,959		$	9,993,335		$	8,329,166
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for interest, net of capitalized interest of $116,650, $2,940 and $6,175 in 2017, 2016 and 2015, respectively	$	2,317		$	1,687		$	1,689
Capital expenditures in accounts payable	111,390			69,647			52,989

See Notes to Consolidated Financial Statements

37

LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017, 2016 AND 2015    

NOTE 1    .    NATURE OF OPERATIONS

Principal Business Activity

Lake Area Corn Processors, LLC and subsidiary (the Company) is a South Dakota limited liability company.

The Company owns and manages Dakota Ethanol, LLC (Dakota Ethanol), a 40 million-gallon (annual nameplate capacity) ethanol plant located near Wentworth, South Dakota. Dakota Ethanol sells ethanol and related products to customers located primarily in North America.

In addition, the Company has investment interests in six companies in related industries. See note 4 for further details.

NOTE 2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements of the Company include the accounts of its wholly owned subsidiary, Dakota Ethanol. All significant inter-company transactions and balances have been eliminated in consolidation.

Revenue Recognition

Revenue from the production of ethanol and related products is recorded when title transfers to customers. Generally, ethanol and related products are shipped FOB shipping point, based on written contract terms between Dakota Ethanol and its customers. Collectability of revenue is reasonably assured based on historical evidence of collectability between Dakota Ethanol and its customers. Interest income is recognized as earned.

Shipping costs incurred by the Company in the sale of ethanol, dried distillers grains and corn oil are not specifically identifiable and as a result, revenue from the sale of those products is recorded based on the net selling price reported to the Company from the marketer.

Cost of Revenues

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

Shipping costs on modified and wet distillers grains are included in cost of revenues.

Inventory Valuation

Inventories are generally valued using methods which approximate the lower of cost (first-in, first-out) or net realizable value. In the valuation of inventories and purchase commitments, net realizable value is based on estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation.

Cash and Cash Equivalents

Cash and cash equivalents consist of demand accounts and other accounts with original maturities of three months or less that provide withdrawal privileges.

Receivables and Credit Policies

Accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within fifteen days from the invoice date. Unpaid accounts receivable with invoice dates over thirty days old bear interest at 1.5% per month. Accounts receivable are stated at the amount billed to the customer. Payments of accounts receivable are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the earliest unpaid invoices.

38

LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017, 2016 AND 2015    

The carrying amount of trade receivables is reduced by a valuation allowance that reflects management’s best estimate of the amounts that will not be collected. Management regularly reviews trade receivable balances and based on an assessment of current creditworthiness, estimates the portion, if any, of the balance that will not be collected. The valuation allowance was $2,131 and $51,791 as of December 31, 2017 and 2016 respectively.

Investment in commodities contracts, derivative instruments and hedging activities

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

The Company is subject to market risk with respect to the price and availability of corn, the principal raw material the Company uses to produce ethanol and ethanol by-products.  In general, rising corn prices result in lower profit margins and, therefore, represent unfavorable market conditions.  This is especially true when market conditions do not allow us to pass along increased corn costs to our customers.  The availability and price of corn is subject to wide fluctuations due to unpredictable factors such as weather conditions, farmer planting decisions, governmental policies with respect to agriculture and international trade and global demand and supply.

Certain contracts that literally meet the definition of a derivative may be exempted from derivative accounting as normal purchases or normal sales.  Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business.  Contracts that meet the requirements of normal purchases or sales are documented as normal and exempted from the accounting and reporting requirements of derivative accounting.

The Company does not apply the normal purchase and sales exemption for forward corn purchase contracts. As of December 31, 2017, the Company is committed to purchasing approximately 2.5 million bushels of corn on a forward contract basis with an average price of $3.30 per bushel. The total corn purchase contracts represent 14% of the projected annual plant corn usage.

The Company enters into firm-price purchase commitments with natural gas suppliers under which the Company agrees to buy natural gas at a price set in advance of the actual delivery.  Under these arrangements, the Company assumes the risk of a price decrease in the market price of natural gas between the time the price is fixed and the time the natural gas is delivered.  At December 31, 2017, the Company is committed to purchasing approximately 40,000 MMBtus of natural gas with an average price of $3.10 per MMBtu. The Company accounts for these transactions as normal purchases, and accordingly, does not mark these transactions to market. The natural gas purchases represent approximately 3% of the projected annual plant requirements.

The Company enters into firm-price sales commitments with distillers grains customers under which the Company agrees to sell distillers grains at a price set in advance of the actual delivery.  Under these arrangements, the Company assumes the risk of a price increase in the market price of distillers grain between the time the price is fixed and the time the distillers grains are delivered.  At December 31, 2017, the Company is committed to selling approximately 38,000 dry equivalent tons of distillers grains with an average price of $101 per ton.  The Company accounts for these transactions as normal sales, and accordingly, does not mark these transactions to market. The distillers grains sales represent approximately 26% of the projected annual plant production.

The Company enters into firm-price sales commitments with distillers corn oil customers under which the Company agrees to sell distillers corn oil at a price set in advance of the actual delivery.  Under these arrangements, the Company assumes the risk of a price increase in the market price of distillers corn oil between the time the price is fixed and the time the distillers corn oil is delivered.  At December 31, 2017, the Company is committed to selling approximately 770,000 pounds of distillers corn oil with an average price of $0.24 per pound.  The Company accounts for these transactions as normal sales, and accordingly, does not mark these transactions to market. The distillers corn oil sales represent approximately 7% of the projected annual plant production.

The Company does not have any firm-priced sales commitments for ethanol as of December 31, 2017.

The Company enters into short-term forward, option and futures contracts for ethanol, corn and natural gas as a means of managing exposure to changes in commodity and energy prices. All of the Company's derivatives are designated as non-hedge derivatives,

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LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017, 2016 AND 2015    

and accordingly are recorded at fair value with changes in fair value recognized in net income. Although the contracts are considered economic hedges of specified risks, they are not designated as and accounted for as hedging instruments.

As part of our trading activity, The Company uses futures and option contracts offered through regulated commodity exchanges to reduce risk of loss in the market value of inventories and purchase commitments. To reduce that risk, the Company generally takes positions using forward and futures contracts and options.

Derivatives not designated as hedging instruments at December 31, 2017 and December 31, 2016 were as follows:

	Balance Sheet Classification	December 31, 2017			December 31, 2016
Forward contracts in gain position		$	3,856		$	6,491
Futures contracts in gain position		119,825			246,900
Futures contracts in loss position		(1,363		)	(12,575		)
Total forward and futures contracts		122,318			240,816
Cash held by broker		740,522			816,649
	Current Assets	$	862,840		$	1,057,465
Forward contracts in loss position	(Current Liabilities)	$	(410,785	)	$	(827,786	)

Futures contracts and cash held by broker are all with one party and the right of offset exists. Therefore, on the balance sheet, these items are netted in one balance regardless of position.

Forward contracts are with multiple parties and the right of offset does not exist. Therefore, these contracts are reported at the gross amounts on the balance sheet.

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

	Statement of Operations	Years Ended December 31,
	Classification	2017			2016			2015
Net realized and unrealized gains (losses) related to purchase contracts:
Futures contracts	Cost of Revenues	$	608,250		$	1,874,523		$	1,325,265
Forward contracts	Cost of Revenues	(1,423,330		)	(1,707,414		)	(994,242		)

Investments

The Company has investment interests in six companies in related industries. All of these interests are at ownership shares less than 20%. These investments are flow-through entities. Per ASC 323-30-S99-1, they are being accounted for by the equity method of accounting under which the Company’s share of net income is recognized as income in the Company’s statements of operations and added to the investment account.  Distributions or dividends received from the investments are treated as a reduction of the investment account. The Company consistently follows the practice of recognizing the net income based on the most recent reliable data. 

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LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017, 2016 AND 2015    

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the fair value of derivative financial instruments, lower of cost or net realizable value accounting for inventory and forward purchase contracts and goodwill impairment evaluation.

Concentrations of Credit Risk

The Company’s cash balances are maintained in bank depositories and regularly exceed federally insured limits. The Company has not experienced any losses in connection with these balances.

Property and Equipment

Property and equipment is stated at cost. Significant additions and betterments are capitalized, while expenditures for maintenance, repairs and minor renewals are charged to operations when incurred. Depreciation on assets placed in service is computed using the straight-line method over estimated useful lives as follows:

	Minimum	Maximum
Land improvements	20 years	40 years
Equipment	5 years	20 years
Buildings	15 years	40 years

Equipment relates to two general categories: mechanical equipment and administrative and maintenance equipment. Mechanical equipment generally relates to equipment for handling inventories and the production of ethanol and related products, with useful lives of 15 to 20 years, including boilers, cooling towers, grain bins, centrifuges, conveyors, fermentation tanks, pumps and drying equipment. Administrative and maintenance equipment is equipment with useful lives of 5 to 15 years, including vehicles, computer systems, security equipment, testing devices and shop equipment.

The Company reviews its property and equipment for impairment whenever events indicate that the carrying amount of an asset group may not be recoverable. An impairment loss is recorded when the sum of the undiscounted future cash flows is less than the carrying amount of the asset group. An impairment loss is measured as the amount by which the carrying amount of the asset group exceeds its fair value. No indicators of impairment were identified at December 31, 2017 and 2016.

Goodwill

Annually, as well as when an event triggering impairment may have occurred, the Company performs an impairment test on goodwill. The Company performs a quantitative analysis that tests for impairment. The second step, if necessary, measures the impairment. The Company performs the annual analysis on December 31 of each fiscal year. The Company determined that there was no impairment of goodwill at December 31, 2017 and 2016.

Earnings Per Unit

For purposes of calculating basic earnings per unit, units issued are considered outstanding on the effective date of issuance. Diluted earnings per unit are calculated by including dilutive potential equity units in the denominator. There were no dilutive equity units for the years ending December 31, 2017, 2016, and 2015.

Income Taxes

The Company is taxed as a limited liability company under the Internal Revenue Code. The income of the Company flows through to the members to be taxed at the member level rather than the corporate level. Accordingly, the Company has no tax liability.

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LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017, 2016 AND 2015    

Management has evaluated the Company’s tax positions under the Financial Accounting Standards Board issued guidance on accounting for uncertainty in income taxes and concluded that the Company had taken no uncertain tax positions that require adjustment to the financial statements to comply with the provisions of this guidance. Generally, the Company is no longer subject to income tax examinations by the U.S. federal, state or local authorities for the years before 2014.

Environmental Liabilities

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

Operating Segment

The Company uses the “management approach” for reporting information about segments in annual and interim financial statements. The management approach is based on the way the chief operating decision-maker organizes segments within a company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure and any other manner in which management disaggregates a company. Based on the “management approach” model, the Company has determined that its business is comprised of a single operating segment.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, "Revenue from Contracts with Customers (Topic 606)" (ASU 2014-09). ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. Generally Accepted Accounting Principles (GAAP) when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. The updated standard becomes effective for the Company in the first quarter of fiscal year 2018. The Company has completed a comparison of the current revenue recognition policies to the ASU 2014-09 requirements for each of the Company’s major revenue categories. Results indicate that the guidance will not materially change the amount or timing of revenues recognized by the Company. The Company will adopt ASU 2014-09 using the retrospective with cumulative effect transition method. The Company expects to have enhanced disclosures but does not expect this standard to have a material impact on the Company's consolidated financial statements.

In February 2016, FASB issued ASU No. 2016-02, "Leases (Topic 842)” (ASU 2016-02). ASU 2016-02 requires the recognition of lease assets and lease liabilities by lessees for all leases greater than one year in duration and classified as operating leases under previous GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and for interim periods within that fiscal year. The Company does not expect this standard to have a material impact on the Company's consolidated financial statements.

In January 2017, FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350)” (ASU 2017-04). ASU 2107-04 simplifies the test for goodwill impairment. It eliminates the two-step process of assessing goodwill impairment and replaces it with one step which compares the fair value of the reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying value exceeds the fair value up to the amount of the goodwill attributed to the reporting unit. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, and for interim periods within that fiscal year. The Company does not expect this standard to have a material impact on the Company's consolidated financial statements.

Risks and Uncertainties

The Company has certain risks and uncertainties that it will experience during volatile market conditions, which can have a severe impact on operations. The Company's revenues are derived from the sale and distribution of ethanol and distiller grains to customers

42

LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017, 2016 AND 2015    

primarily located in the United States. Corn for the production process is supplied to the plant primarily from local agricultural producers and from purchases on the open market. For the twelve months ended December 31, 2017, ethanol sales averaged approximately 79% of total revenues, while approximately 17% of revenues were generated from the sale of distiller grains and 4% of revenues were generated from the sale of corn oil. For the twelve months ended December 31, 2017, corn costs averaged approximately 71% of cost of goods sold.

The Company's operating and financial performance is largely driven by the prices at which it sells ethanol and the net expense of corn. The price of ethanol is influenced by factors such as supply and demand, weather, government policies and programs, and unleaded gasoline and the petroleum markets. Excess ethanol supply in the market, in particular, puts downward pressure on the price of ethanol. The Company's largest cost of production is corn. The cost of corn is generally impacted by factors such as supply and demand, weather, and government policies and programs. The Company's risk management program is used to protect against the price volatility of these commodities.

NOTE 3.     INVENTORY

Inventory consisted of the following as of December 31, 2017 and 2016:

	December 31, 2017		December 31, 2016
Raw materials	$	2,466,493	$	3,217,822
Finished goods	1,193,552		1,124,660
Work in process	516,362		593,197
Parts inventory	1,349,687		1,276,940
	$	5,526,094	$	6,212,619

NOTE 4.    INVESTMENTS

Dakota Ethanol has a 7% investment interest in the Company’s ethanol marketer, Renewable Products Marketing Group, LLC (RPMG).  The net income which is reported in the Company’s income statement for RPMG is based on RPMG’s September 30, 2017, 2016 and 2015 audited results. The carrying amount of the Company’s investment was approximately $1,206,000 and $1,283,000 as of December 31, 2017 and 2016, respectively.

Dakota Ethanol has a 6% investment interest in Prairie Gold Venture Partnership, LLC (PGVP), a venture capital fund investing in cellulosic ethanol production.  The net income which is reported in the Company’s income statement for PGVP is based on PGVP’s June 30, 2017, 2016 and 2015 unaudited interim results. The carrying amount of the Company’s investment was approximately $0 and $308,000 as of December 31, 2017 and 2016, respectively. During 2017, Dakota Ethanol determined an other than temporary decline in value had occurred and wrote off the remaining $308,000 balance of the investment as it was considered impaired and worthless. This charge in included in the equity in net income of investments on the consolidated statements of operations for the year ended December 31, 2017.

Dakota Ethanol has a 10% investment interest in Lawrenceville Tanks, LLC (LT), a partnership to construct and operate an ethanol storage terminal in Georgia.  The net income which is reported in the Company’s income statement for LT is based on LT’s December 31, 2017, 2016 and 2015 unaudited results. The carrying amount of the Company’s investment was approximately $327,000 and $460,000 as of December 31, 2017 and 2016 respectively.

Lake Area Corn Processors has a 10% investment interest in Guardian Hankinson, LLC (GH), a partnership to operate an ethanol plant in North Dakota.  The net income which is reported in the Company’s income statement for GH is based on GH’s December 31, 2017, 2016 and 2015 audited results. The carrying amount of the Company’s investment was approximately $7,151,000 and $9,108,000 as of December 31, 2017 and 2016 respectively.

Lake Area Corn Processors has a 17% investment interest in Guardian Energy Management, LLC (GEM), a partnership to provide management services to ethanol plants.  The net income which is reported in the Company’s income statement for GEM is based

43

LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017, 2016 AND 2015    

on GEM’s December 31, 2017, 2016 and 2015 unaudited interim results. The carrying amount of the Company’s investment was approximately $33,000 and $33,000 as of December 31, 2017 and 2016.

Lake Area Corn Processors has an 11% investment interest in Ring-neck Energy & Feed, LLC (REF), a partnership to operate an ethanol plant in South Dakota.  The net income which is reported in the Company’s income statement for REF is based on REF’s December 31, 2017 unaudited interim results. The carrying amount of the Company’s investment was approximately $10,023,000 as of December 31, 2017. 2017 is the initial year for the investment in REF and the ethanol plant is currently under construction. The carrying amount of the investment exceeds the underlying equity in net assets by approximately $619,000. The excess will be amortized over 10 years when the plant becomes operational. The amortization will be recorded in equity in net income of investments.

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

Balance Sheet	12/31/2017		12/31/2016		12/31/2015
Current assets	$	212,154,680	$	178,539,108	$	157,550,341
Other assets	164,254,183		151,378,628		163,122,840
Current liabilities	131,152,747		140,898,148		115,222,336
Long-term liabilities	54,754,437		49,924,355		37,502,031
Member's equity	190,501,679		139,095,233		167,948,814
Revenue	255,154,945		255,245,069		259,096,005
Gross Profit	33,033,635		42,635,837		35,135,377
Net Income	19,482,340		29,555,855		25,650,869

The following table shows the condensed financial information of Guardian Hankinson; the earnings in which represents greater than 10% of the Company's net income for the year ended December 31, 2017.

Balance Sheet	12/31/2017		12/31/2016		12/31/2015
Current assets	$	22,771,808	$	31,337,860	$	30,957,066
Other assets	117,344,930		133,415,881		144,336,737
Current liabilities	17,619,748		23,822,812		21,819,143
Long-term liabilities	51,352,566		49,856,355		37,502,031
Members' equity	71,144,424		91,074,574		115,972,629
Revenue	239,421,949		237,885,377		240,928,085
Gross Profit	22,456,677		30,731,135		21,352,587
Net Income	17,422,533		25,601,946		19,838,398

44

LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017, 2016 AND 2015    

The following table shows the condensed financial information of Ring-neck Energy & Feed; the investment in which represents greater than 10% of the Company's assets as of December 31, 2017.

Balance Sheet	12/31/2017
Current assets	$	50,000,088
Other assets	42,640,650
Current liabilities	4,716,781
Long-term liabilities	3,230,871
Members' equity	84,693,086
Revenue	—
Gross Profit	—
Net Income	(253,522		)

The Company recorded equity in net income of approximately $1,742,000, $2,561,000 and $1,984,000 from GH for the years ended December 31, 2017, 2016 and 2015 respectively. The Company recorded equity in net (loss) of approximately ($123,000) from REF for the year ended December 31, 2017. The Company recorded equity in net income (loss) of approximately $(160,000), $267,000 and $212,000 from our other investments for the years ended December 31, 2017, 2016 and 2015 respectively. The Company has undistributed net earnings in investees of approximately $627,000 and $680,000 as of December 31, 2017 and 2016, respectively.

NOTE 5.    REVOLVING OPERATING NOTE

On November 1, 2016, Dakota Ethanol executed a revolving promissory note with Farm Credit Services of America (FCSA) in the amount up to $10,000,000 or the amount available in accordance with the borrowing base calculation. Interest on the outstanding principal balances will accrue at 300 basis points above the 1 month LIBOR rate and is not subject to a floor. The rate was 4.35% at December 31, 2017. There is a non-use fee of 0.25% on the unused portion of the $10,000,000 availability. The note is collateralized by substantially all assets of the Company. The note expires on November 1, 2019. On December 31, 2017, Dakota Ethanol had $0 outstanding and approximately $2,047,000 available to be drawn on the revolving promissory note under the borrowing base.

NOTE 6.    LONG-TERM NOTES PAYABLE

On November 11, 2014, Dakota Ethanol executed a reducing revolving promissory note from FCSA in the amount of $15,000,000. The amount Dakota Ethanol can borrow on the note decreases by $750,000 semi-annually starting on April 1, 2015 until the maximum balance reaches $7.5 million on October 1, 2019. The note matures on October 1, 2024. Interest on the outstanding principal balance will accrue at 325 basis points above the 1 month LIBOR rate and is not subject to a floor. The rate was 4.60% at December 31, 2017. The note contains a non-use fee of 0.50% on the unused portion of the note. On December 31, 2017, Dakota Ethanol had $1,000 outstanding and $10,499,000 available to be drawn on the note.

On August 1, 2017, Dakota Ethanol executed a term note from FCSA in the amount of $8,000,000. Dakota Ethanol agreed to make monthly interest payments starting September 1, 2017 and annual principal payments of $1,000,000 starting on August 1, 2018. The notes matures on August 1, 2025. Interest on the outstanding principal balance will accrue at 325 basis points above the 1 month LIBOR rate and is not subject to a floor. The rate was 4.60% at December 31, 2017. On December 31, 2017, Dakota Ethanol had $8,000,000 outstanding on the note.

As part of the note payable agreement, Dakota Ethanol is subject to certain restrictive covenants establishing financial reporting requirements, distribution and capital expenditure limits, minimum debt service coverage ratios, net worth and working capital requirements. The note is collateralized by substantially all assets of the Company.

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LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017, 2016 AND 2015    

The balances of the notes payable are as follows:

	December 31, 2017			December 31, 2016*
Note Payable - FCSA	$	8,001,000		$	1,000
Less unamortized debt issuance costs	(29,056		)	—
	7,971,944			1,000
Less current portion	(1,000,000		)	—
	$	6,971,944		$	1,000
*Derived from audited financial statements

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

Years Ending December 31,	Principal
2018	$	1,000,000
2019	1,000,000
2020	1,000,000
2021	1,000,000
2022	1,000,000
thereafter	3,001,000

NOTE 7.    EMPLOYEE BENEFIT PLANS

Dakota Ethanol maintains a 401(k) plan for the employees who meet the eligibility requirements set forth in the plan documents. Dakota Ethanol matches a percentage of the employees' contributed earnings. Employer contributions to the plan totaled approximately $104,000, $103,000 and $103,000 for the years ended December 31, 2017, 2016 and 2015, respectively.

NOTE 8.    FAIR VALUE MEASUREMENTS

The Company complies with the fair value measurements and disclosures standard which defines fair value, establishes a framework for measuring fair value, and expands disclosure for those assets and liabilities carried on the balance sheet on a fair value basis.

The Company’s balance sheet contains derivative financial instruments that are recorded at fair value on a recurring basis. Fair value measurements and disclosures require that assets and liabilities carried at fair value be classified and disclosed according to the process for determining fair value. There are three levels of determining fair value.

Level 1 uses quoted market prices in active markets for identical assets or liabilities.

Level 2 uses observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3 uses unobservable inputs that are not corroborated by market data.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

Derivative financial instruments. Commodity futures and options contracts are reported at fair value utilizing Level 1 inputs. For these contracts, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes and live trading levels from the CBOT and NYMEX markets. Over-the-counter commodity options contracts are reported at fair value utilizing Level 2 inputs. For these contracts, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may

46

LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017, 2016 AND 2015    

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

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of December 31, 2017 and 2016, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	Total			Level 1			Level 2			Level 3
December 31, 2017
Assets:
Derivative financial instruments, futures contracts	$	119,825		$	119,825		$	—		$	—
forward contracts	3,856			—			3,856			—
Liabilities:
Derivative financial instruments, futures contracts	$	(1,363	)	$	(1,363	)	$	—		$	—
forward contracts	(410,785		)	—			(410,785		)	—
December 31, 2016
Assets:
Derivative financial instruments, futures contracts	$	246,900		$	246,900		$	—		$	—
forward contracts	6,491			—			6,491			—
Liabilities:
Derivative financial instruments, futures contracts	$	(12,575	)	$	(12,575	)	$	—		$	—
forward contracts	(827,786		)	—			(827,786		)	—

During the years ended December 31, 2017 and 2016, the Company did not make any changes between Level 1 and Level 2 assets and liabilities. As of December 31, 2017 and 2016, the Company did not have any Level 3 assets or liabilities.

Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). Financial assets and financial liabilities measured at fair value on a non-recurring basis were not significant at December 31, 2017 and 2016.

Disclosure requirements for fair value of financial instruments require disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or nonrecurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or non recurring basis are discussed above. The methodologies for other financial assets and financial liabilities are discussed below.

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

47

LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017, 2016 AND 2015    

The carrying amount of long-term obligations (level 3) at December 31, 2017 of $8,001,000 had an estimated fair value of approximately $8,001,000 based on estimated interest rates for comparable debt. The carrying amount of long-term obligations at December 31, 2016 of $1,000 had an estimated fair value of approximately $1,000 based on estimated interest rates for comparable debt.

NOTE 9.    COMMITMENTS, CONTINGENCIES AND AGREEMENTS

Dakota Ethanol has entered into contracts and agreements regarding the operation of the ethanol plant as follows:

Natural Gas - The agreement provides Dakota Ethanol with a fixed transportation rate for natural gas for a ten-year term through August 2021, and is renewable annually thereafter. The agreement does not require minimum purchases of natural gas during their initial term.

Electricity - The agreement provides Dakota Ethanol with electric service for a term of one year. The contract automatically renews unless prior notice of cancellation is given. The agreement sets rates for energy usage based on market rates and requires a minimum purchase of electricity each month during the term of the agreement.

Expenses related to the agreement for the purchase of electricity and natural gas were approximately $7,259,000, $6,510,000, and $7,013,000, for the years ended December 31, 2017, 2016 and 2015, respectively.

Minimum annual payments during the term of the electricity agreement are as follows:

Years Ending December 31,	Amount
2018	$584,280

Ethanol Fuel Marketing Agreement - Dakota Ethanol has an agreement with RPMG (a related party, see note 10), a joint venture of ethanol producers, for the sale, marketing, billing and receipt of payment and other administrative services for all ethanol produced by the plant. The agreement continues indefinitely unless terminated under terms set forth in the agreement.

Distillers Grain Marketing Agreement - Dakota Ethanol has an agreement with RPMG (a related party, see note 10), for the marketing of all distillers dried grains produced by the plant. The agreement expires on July 15, 2018 and is automatically renewed for successive one year terms unless terminated 180 days prior to expiration.

Corn Oil Marketing Agreement - Dakota Ethanol has an agreement with RPMG (a related party, see note 10), for the marketing of all corn oil produced by the plant. The agreement expires on August 11, 2018 and is automatically renewed for successive one year terms unless terminated 180 days prior to expiration.

During the years ended December 31, 2016 and 2015, Dakota Ethanol received an incentive payment from the State of South Dakota to produce ethanol. In accordance with the terms of this arrangement, revenue is recorded based on gallons of ethanol sold. Incentive revenue of $0, $378,307 and $416,667, was recorded for the years ended December 31, 2017, 2016 and 2015, respectively. Dakota Ethanol reached the lifetime maximum under the program during 2016 and will no longer receive funds under the program.

From time to time in the normal course of business, the Company can be subject to litigation based on its operations. There is no current litigation nor any litigation that is considered probable at this time.

NOTE 10.    RELATED PARTY TRANSACTIONS

Dakota Ethanol has a 7% interest in RPMG, and Dakota Ethanol has entered into marketing agreements for the exclusive rights to market, sell and distribute the entire ethanol, dried distillers grains, and corn oil inventories produced by Dakota Ethanol.  The marketing fees are included in net revenues.

48

LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017, 2016 AND 2015    

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

	Years Ended December 31,
	2017		2016		2015
Revenues ethanol	$	67,186,350	$	69,398,350	$	67,581,517
Revenues distillers grains	4,225,707		5,254,492		6,205,391
Revenues corn oil	3,088,510		2,860,912		2,979,581
Marketing fees ethanol	249,645		187,431		168,796
Marketing fees distillers grains	31,993		32,979		35,289
Marketing fees corn oil	19,481		18,239		29,724
Accounts receivable balance at period end	2,749,502		3,695,561		939,705

The Company purchased corn and services from members of its Board of Directors that farm and operate local businesses. The Company also purchased ingredients from RPMG. Purchases from these related parties during the fiscal years ended December 31, 2017, 2016 and 2015 totaled approximately $1,099,000, $1,890,000 and $1,694,000, respectively. As of December 31, 2017 and 2016, the amount we owed to related parties was approximately $45,000 and $40,000, respectively.

NOTE 11.    TIF BOND GUARANTEE

During December 2003, Dakota Ethanol entered into an agreement to guarantee a bond issued by Lake County, South Dakota. The bond issue was in conjunction with the refunding of the tax increment financing (TIF) bond issued by Lake County in 2001, of which Dakota Ethanol was the recipient of the proceeds. During 2003, Lake County became aware that the taxes collected based on the incremental tax would not be sufficient to cover the debt service of the 2001 bond issue. Based on the aforementioned deficiency and changes in interest rate during December of 2003, Lake County refunded the 2001 bond issue replacing it with two separate bonds. A tax-exempt bond in the amount of $824,599 and a taxable bond in the amount of $1,323,024 were issued. As a part of the refunding, Dakota Ethanol entered into the agreement to guarantee the taxable bond issue. The taxes levied on Dakota Ethanol's property will first go towards the semiannual debt service of the tax-exempt bonds and any remaining taxes will be used for the debt service of the taxable bonds. Dakota Ethanol guarantees any shortfall in debt service for the taxable bonds. The guarantee expires in December 2018.

The maximum amount of estimated future payments on the taxable bond debt service is $152,217 as of December 31, 2017. The carrying amount of the guarantee liability on Dakota Ethanol's balance sheet at December 31, 2017 is $9,555, which represents the estimated shortfall between the taxable bond amount and the amount of taxes estimated to be collected on Dakota Ethanol's property.

Estimated maturities of the guarantee are as follows:

Years Ending December 31,	Amount
2018	$	9,555

Dakota Ethanol has no recourse to third parties or collateral held by third parties related to the guarantee.

NOTE 12.    CAPTIVE INSURANCE

The Company participates, along with other plants in the industry, in a group captive insurance company (Captive). The Captive insures losses related to workman's compensation, commercial property and general liability. The Captive reinsures catastrophic losses for all participants, including the Company, in excess of predetermined amounts. The Company's premiums are accrued by a charge to income for the period to which the premium relates and is remitted by the Company's insurer to the captive reinsurer.

49

LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017, 2016 AND 2015    

These premiums are structured such that the Company has made a prepaid collateral deposit estimated for losses related to the above coverage. The Captive insurer has estimated and collected an amount in excess of the estimated losses but less than the catastrophic loss limit insured by the Captive. The Company cannot be assessed over the amount in the collateral fund.

NOTE 13.    INSURANCE CLAIMS

Dakota Ethanol experienced property damage to grain handling equipment in June 2014. The damages were covered by property and business interruption insurance policies. The Company continued to use the equipment through May 2015, at which time the equipment was disposed of resulting in a loss of approximately $674,000. Insurance proceeds of $3,436,727, consisting of $2,818,955 from the property insurance claim and $617,771 from the business interruption claim were paid. The loss on disposal of damaged assets and property insurance proceeds are both recorded in operating expenses in the statements of operations.

NOTE 14 - COMMITMENTS

Dakota Ethanol has committed to a contract for the design and construction of a new regenerative thermal oxidizer (RTO) to replace its existing RTO. The value of the contract is approximately $4.6 million. There is approximately $1.7 million remaining as of December 31, 2017. The project is expected to be completed in the second quarter of 2018. The Company will pay for the project with cash flows from operations and the long-term revolving debt currently in place.

Dakota Ethanol entered into a design-build agreement with Nelson Engineering Co. for the design and construction of the plant expansion to increase its production capacity to approximately 90 million gallons of ethanol per year. The cost of the expansion is expected to be approximately $33 million. The Company has commenced engineering work with the contractor and has secured financing with its lender for the expansion project. The Company anticipates that the expansion will be complete during the Company's second quarter of 2019. The Company will pay for the project with cash flows from operations and the long-term revolving debt as amended on February 6, 2018.

NOTE 15.    QUARTERLY FINANCIAL REPORTING (UNAUDITED)

Summary quarterly results are as follows:

	First Quarter			Second Quarter		Third Quarter		Fourth Quarter
Year ended December 31, 2017
Total revenues	$	22,713,628		$	21,612,598	$	19,479,798	$	21,015,764
Gross profit	2,220,455			2,015,355		1,968,680		2,363,353
Income from operations	1,213,883			1,151,750		1,134,221		1,350,698
Net income	1,610,424			1,314,299		1,815,347		1,645,013
Basic and diluted earnings per unit	0.05			0.04		0.06		0.07
Year ended December 31, 2016
Total revenues	$	21,623,796		$	21,944,230	$	20,983,806	$	24,260,718
Gross profit	1,254,612			2,839,644		2,806,148		5,814,285
Income from operations	319,378			1,979,265		1,927,830		4,846,129
Net income	659,621			2,529,919		2,610,395		5,605,273
Basic and diluted earnings per unit	0.02			0.09		0.09		0.19
Year ended December 31, 2015
Total revenues	$	20,715,145		$	23,680,338	$	22,038,423	$	22,564,041
Gross profit	709,131			2,860,830		2,221,102		1,761,114
Income (loss) from operations	(367,802		)	2,816,205		1,448,138		1,827,847
Net income	238,949			4,572,389		1,850,884		1,991,308
Basic and diluted earnings per unit	0.01			0.15		0.06		0.07

50

LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017, 2016 AND 2015    

NOTE 16.            SUBSEQUENT EVENTS

On February 6, 2018, Dakota Ethanol executed an Amended and Restated Credit Agreement (the "Credit Agreement") with FCSA. Pursuant to the Credit Agreement, Dakota Ethanol increased the total credit availability to $40 million. Further, the maturity date of this increased credit availability under the Credit Agreement was extended to January 1, 2026. Until February 1, 2023, interest will accrue pursuant to the Credit Agreement on the increased credit availability at the one month London Interbank Offered Rate ("LIBOR") plus 3.25% per year. The note contains a non-use fee of 0.50% on the unused portion of the note.

During February 2018, the Company declared a distribution to its members of $2,962,000, or $0.10 per capital unit, to unit holders of record as of January 1, 2018.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

Our management, including our President and Chief Executive Officer (the principal executive officer), Scott Mundt, along with our Chief Financial Officer (the principal financial officer), Rob Buchholtz, have reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of December 31, 2017.  Based on this review and evaluation, these officers have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods required by the forms and rules of the Securities and Exchange Commission; and to ensure that the information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting

Inherent Limitations Over Internal Controls

Our internal control over financial reporting is designed 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. Our internal control over financial reporting includes those policies and procedures that:

    (i)    pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

    (ii)    provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

    (iii)    provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods is subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in 2013. Based on this evaluation, management has concluded that our internal control over financial reporting was effective as of December 31, 2017.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. As we are a non-accelerated filer, management's report is not subject to attestation by our registered public accounting firm pursuant to Section 404(c) of the Sarbanes-Oxley Act of 2002 that permits us to provide only management's report in this annual report.

52

Changes in Internal Control Over Financial Reporting.

There were no changes in our internal control over financial reporting during the fourth quarter of our fiscal year ended December 31, 2017 which were identified in connection with management's evaluation required by paragraph (d) of rules 13a-15 and 15d-15 under the Exchange Act that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.     OTHER INFORMATION.

None.

PART III

ITEM 10. MANAGERS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item is incorporated by reference to the definitive information statement from our 2018 annual meeting of members to be filed with the Securities and Exchange Commission within 120 days after our 2017 fiscal year end on December 31, 2017. This information statement is referred to in this report as the 2018Information Statement.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by this Item is incorporated by reference to the 2018 Information Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER MATTERS.

The information required by this Item is incorporated by reference to the 2018 Information Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND MANAGER INDEPENDENCE.

The information required by this Item is incorporated by reference to the 2018Information Statement.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The information required by this Item is incorporated by reference to the 2018Information Statement.

PART IV

ITEM 15.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

The following exhibits and financial statements are filed as part of, or are incorporated by reference into, this report:

(1)The financial statements appear beginning on page 32 of this report.

(2)All supplemental schedules are omitted because of the absence of conditions under which they are required or because the information is shown in the Consolidated Financial Statements or notes thereto.

(3)The exhibits we have filed herewith or incorporated by reference herein are identified in the Exhibit Index set forth below.

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

53

Exhibit No.	Exhibit	Filed Herewith	Incorporated by Reference
3.2	Amended and restated operating agreement of the registrant.		Filed as Exhibit 3.6 on the registrant's Form 10-K filed with the Commission on March 31, 2005 and incorporated by reference herein.
3.3	First amendment to the amended and restated operating agreement of the registrant.		Filed as Exhibit 99.1 on the registrant's Form 8-K filed with the Commission on March 19, 2007 and incorporated by reference herein.
3.4	Third Amendment to the Third Amended and Restated Operating Agreement of Lake Area Corn Processors, LLC dated January 9, 2018		Filed as Exhibit 99.1 on the registrant's Form 8-K filed with the Commission on January 10, 2018 and incorporated by reference herein.
10.1	Distillers Grains Marketing Agreement dated July 15, 2008 between RPMG, Inc. and Dakota Ethanol, L.L.C. +		Filed as Exhibit 10.1 on the registrant's Form 10-Q filed with the Commission on August 14, 2008 and incorporated by reference herein.
10.2	Contribution Agreement between Renewable Products Marketing Group, LLC and Dakota Ethanol, L.L.C. dated April 1, 2007.		Filed as Exhibit 10.1 on the registrant's Form 10-Q filed with the Commission on August 14, 2007 and incorporated by reference herein.
10.3	Addendum to Water Purchase Agreement dated February 28, 2007 between Big Sioux Community Water Systems, Inc. and Dakota Ethanol, L.L.C.		Filed as Exhibit 10.1 on the registrant's Form 10-K filed with the Commission on March 30, 2007.
10.4	Risk Management Agreement dated November 28, 2005 between FCStone, LLC and Dakota Ethanol, L.L.C.		Filed as Exhibit 10.1 on the registrant's Form 8-K filed with the Commission on December 2, 2005 and incorporated by reference herein.
10.5	Employment Agreement between Scott Mundt and Dakota Ethanol, L.L.C. dated April 1, 2009		Filed as Exhibit 10.1 on the registrant's Form 10-Q filed with the Commission on May 15, 2009 and incorporated by reference herein.
10.6	First Amended and Restated Construction Loan Agreement dated June 18, 2009 between First National Bank of Omaha and Dakota Ethanol, L.L.C.		Filed as Exhibit 10.1 on the registrant's Form 10-Q filed with the Commission on August 12, 2009 and incorporated by reference herein.
10.7	Corn Oil Marketing Agreement dated August 11, 2009 between RPMG, Inc. and Dakota Ethanol, L.L.C. +		Filed as Exhibit 10.2 on the registrant's Form 10-Q filed with the Commission on August 12, 2009 and incorporated by reference herein.
10.8	First Amendment to First Amended and Restated Construction Loan Agreement between Dakota Ethanol, L.L.C. and First National Bank of Omaha dated May 13, 2010.		Filed as Exhibit 10.1 on the registrant's Form 10-Q filed with the Commission on August 13, 2010 and incorporated by reference herein.
10.9	Long Term Reducing Revolving Promissory Note between Dakota Ethanol, L.L.C. and First National Bank of Omaha dated May 13, 2010.		Filed as Exhibit 10.2 on the registrant's Form 10-Q filed with the Commission on August 13, 2010 and incorporated by reference herein.
10.10	Operating Line of Credit Promissory Note between Dakota Ethanol, L.L.C. and First National Bank of Omaha dated May 13, 2010.		Filed as Exhibit 10.3 on the registrant's Form 10-Q filed with the Commission on August 13, 2010 and incorporated by reference herein.
10.11	Member Ethanol Fuel Marketing Agreement between Dakota Ethanol, LLC and RPMG, Inc. dated March 26, 2010. +		Filed as Exhibit 10.22 on the registrant's Form 10-K filed with the Commission on March 30, 2011 and incorporated by reference herein.
10.12	Second Amendment of First Amended and Restated Construction Loan Agreement dated May 12, 2011 between Dakota Ethanol, L.L.C. and First National Bank of Omaha.		Filed as Exhibit 10.1 on the registrant's Form 10-Q filed with the Commission on August 11, 2011 and incorporated by reference herein.
10.13	Operating Line of Credit First Amended and Restated Revolving Promissory Note dated May 12, 2011 between Dakota Ethanol, L.L.C. and First National Bank of Omaha.		Filed as Exhibit 10.2 on the registrant's Form 10-Q filed with the Commission on August 11, 2011 and incorporated by reference herein.

54

10.14	Long Term Reducing Revolver First Amended and Restated Promissory Note dated May 12, 2011 between Dakota Ethanol, L.L.C. and First National Bank of Omaha.		Filed as Exhibit 10.3 on the registrant's Form 10-Q filed with the Commission on August 11, 2011 and incorporated by reference herein.
10.15	Third Amendment of First Amended and Restated Construction Loan Agreement between Dakota Ethanol, L.L.C. and First National Bank of Omaha dated May 1, 2012.		Filed as Exhibit 10.1 on the registrant's Form 10-Q filed with the Commission on May 14, 2012 and incorporated by reference herein.
10.16	Second Amended and Restated Revolving Promissory Note (Operating Line of Credit) between Dakota Ethanol, L.L.C. and First National Bank of Omaha dated May 1, 2012.		Filed as Exhibit 10.2 on the registrant's Form 10-Q filed with the Commission on May 14, 2012 and incorporated by reference herein.
10.17	Second Amended and Restated Promissory Note (Long Term Reducing Revolver) between Dakota Ethanol, L.L.C. and First National Bank of Omaha dated May 1, 2012.		Filed as Exhibit 10.3 on the registrant's Form 10-Q filed with the Commission on May 14, 2012 and incorporated by reference herein.
10.18	Member Amended and Restated Marketing Agreement between RPMG, Inc. and Dakota Ethanol, L.L.C. dated August 27, 2012. +		Filed as Exhibit 10.1 on the registrant's Form 10-Q filed with the Commission on November 13, 2012 and incorporated by reference herein.
10.19	Fourth Amendment to First Amended and Restated Construction Loan Agreement between Dakota Ethanol, L.L.C. and First National Bank of Omaha dated May 1, 2013.		Filed as Exhibit 10.1 on the registrant's Form 10-Q filed with the Commission on May 13, 2013 and incorporated by reference herein.
10.20	Third Amended and Restated Revolving Promissory Note between Dakota Ethanol, L.L.C. and First National Bank of Omaha dated May 1, 2013.		Filed as Exhibit 10.2 on the registrant's Form 10-Q filed with the Commission on May 13, 2013 and incorporated by reference herein.
10.21	Credit Agreement between Farm Credit Services of America and Dakota Ethanol, L.L.C. dated May 15, 2013.		Filed as Exhibit 10.1 on the registrant's Form 10-Q filed with the Commission on August 13, 2013 and incorporated by reference herein.
10.22	First Amendment to Credit Agreement between Farm Credit Services of America and Dakota Ethanol, L.L.C. dated November 20, 2013.		Filed as Exhibit 10.22 on the registrant's Form 10-K filed with the Commission on February 27, 2014 and incorporated by reference herein.
10.23	Second Amendment to Credit Agreement between Farm Credit Services of America, PCA and Farm Credit Services of America, FLCA and Dakota Ethanol, L.L.C. dated November 12, 2014		Filed as Exhibit 10.1 on the registrant's Form 10-Q filed with the Commission on November 13, 2014 and incorporated by reference herein.
10.24	2015 Water Purchase Agreement dated December 17, 2014 between Big Sioux Community Water Systems, Inc. and Dakota Ethanol, L.L.C.		Filed as Exhibit 10.24 on the registrant's Form 10-K filed with the Commission on February 26, 2015 and incorporated by reference herein.
10.25	Third Amendment to Credit Agreement dated May 4, 2015 between Farm Credit Services of America, PCA and Farm Credit Services of America, FLCA and Dakota Ethanol, L.L.C.		Filed as Exhibit 10.1 on the registrant's Form 10-Q filed with the Commission on May 14, 2015 and incorporated by reference herein.
10.26	Fourth Amendment to Credit Agreement dated October 28, 2016 between Farm Credit Services of America, PCA and Farm Credit Services of America, FLCA and Dakota Ethanol, L.L.C.		Filed as Exhibit 10.1 on the registrant's Form 10-Q filed with the Commission on November 14, 2016 and incorporated by reference herein.
10.27	Fifth Amendment to Credit Agreement dated August 1, 2017 between Farm Credit Services of America, PCA and Farm Credit Services of America, FLCA and Dakota Ethanol, L.L.C.		Filed as Exhibit 10.1 on the registrant's Form 10-Q filed with the Commission on August 11, 2017 and incorporated by reference herein.
10.28	Master Agreement between Owner and Nelson Engineering, Inc. dated November 30, 2017.	X	Filed herewith
10.28	Amended and Restated Credit Agreement dated February 2, 2018 between Farm Credit Services of America, PCA and Farm Credit Services of America, FLCA and Dakota Ethanol, L.L.C.	X	Filed herewith
31.1	Certificate Pursuant to 17 CFR 240.13a-14(a)	X	Filed herewith
31.2	Certificate Pursuant to 17 CFR 240.13a-14(a)	X	Filed herewith

55

32.1	Certificate Pursuant to 18 U.S.C. Section 1350	X	Filed herewith
32.2	Certificate Pursuant to 18 U.S.C. Section 1350	X	Filed herewith
101	The following financial information from Lake Area Corn Processors, LLC's Annual Report on Form 10-K for the fiscal year ended December 31, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2017 and December 31, 2016, (ii) Consolidated Statements of Income for the fiscal years ended December 31, 2017, 2016 and 2015, (iii) Statement of Changes in Members' Equity, (iv) Consolidated Statements of Cash Flows for the fiscal years ended December 31, 2017, 2016 and 2015, and (v) the Notes to Consolidated Financial Statements.**

+ Confidential Treatment Requested

** Furnished herewith.

ITEM 16. FORM 10-K SUMMARY

None.

SIGNATURES

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

		LAKE AREA CORN PROCESSORS, LLC
Date:	March 2, 2018	/s/ Scott Mundt
		Scott Mundt
		President and Chief Executive Officer (Principal Executive Officer)
Date:	March 2, 2018	/s/ Rob Buchholtz
		Rob Buchholtz
		Chief Financial Officer (Principal Financial and Accounting Officer)

56

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.

Date:	March 2, 2018	/s/ Ronald Alverson
		Ronald Alverson, Manager
Date:	March 2, 2018	/s/ Todd Brown
		Todd Brown, Manager
Date:	March 2, 2018	/s/ Randy Hansen
		Randy Hansen, Manager
Date:	March 2, 2018	/s/ Rick Kasperson
		Rick Kasperson, Manager
Date:	March 2, 2018	/s/ Marty Thompson
		Marty Thompson, Manager
Date:	March 2, 2018	/s/ Wayne Backus
		Wayne Backus, Manager
Date:	March 2, 2018	/s/ Dave Wolles
		Dave Wolles, Manager

57

EX-10.28

MASTER AGREEMENT

BETWEEN OWNER

AND NELSON ENGINEERING, INC.

C17072R1 Expansion to 90 MGY

Dakota Ethanol LLC

November 30, 2017

1

Table of Contents

ARTICLE 1 - DEFINITIONS AND TERMINOLOGY.......................................................................................    3

ARTICLE 2 - WORK...........................................................................................................................................    7

ARTICLE 3 - THE PROJECT..............................................................................................................................    7

ARTICLE 4 - CONTRACT TIMES.....................................................................................................................    7

ARTICLE 5 - CONTRACT PRICE; COST OF THE WORK...........................................................................    10

ARTICLE 6 - PAYMENT PROCEDURES........................................................................................................    12

ARTICLE 7 - NEI REPRESENTATIONS.........................................................................................................    14

ARTICLE 8 - INSURANCE REQUIREMENTS..............................................................................................    14

ARTICLE 9 - CONTRACT DOCUMENTS......................................................................................................    18

ARTICLE 10 - AVAILABILITY OF LANDS; DIFFERING SITE CONDITIONS;

REFERENCE POINTS; HAZARDOUS ENVIRONMENTAL CONDITIONS.............................    20

ARTICLE 11 - DUTIES AND OBLIGATIONS................................................................................................    22

ARTICLE 12 - OWNER'S RESPONSIBILITIES.............................................................................................    26

ARTICLE 13 - CHANGES IN THE WORK; CLAIMS....................................................................................    28

ARTICLE 14 - CHANGE OF CONTRACT PRICE; CHANGE OF CONTRACT TIMES.............................    29

ARTICLE 15 - TESTS AND INSPECTIONS; CORRECTION, REMOVAL OR

ACCEPTANCE OF DEFECTIVE CONSTRUCTION...................................................................    30

ARTICLE 16 - SUSPENSION OF WORK AND TERMINATION..................................................................    31

ARTICLE 17 - GOVERNING LAW AND JURISDICTION............................................................................    32

ARTICLE 18 - MISCELLANEOUS..................................................................................................................    33

EXHIBIT A - SCOPE OF WORK

EXHIBIT B - PRELIMINARY PROGRESS SCHEDULE

EXHIBIT C - NEI INSURANCE COVERAGE

EXHIBIT D - NOTICE TO PROCEED

EXHIBIT E - SCHEDULE OF VALUES

EXHIBIT F - PROCESS AGREEMENT

2

NELSON ENGINEERING

MASTER AGREEMENT

BETWEEN OWNER AND NELSON ENGINEERING, INC.

THIS AGREEMENT is by and between Dakota Ethanol LLC (OWNER) and Nelson Engineering, Inc. (NEI) (collectively, OWNER and NEI may be referred to herein as the “Parties”).

OWNER and NEI hereby agree as follows:

ARTICLE 1 - DEFINITIONS AND TERMINOLOGY

1.01    Defined Terms

A. Wherever used in the Contract Documents and printed with initial capital letters, the following terms have meanings indicated which are applicable to both the singular and plural thereof. In addition to terms specifically defined, terms with initial capital letters in the Contract Documents include references to identified articles and paragraphs, and the titles of other documents or forms.

1. Agreement: This master agreement between OWNER and NEI covering the Work. The Agreement supersedes prior negotiations, representations, or agreements, whether written or oral.

2. Application for Payment: The form which is to be used by NEI in requesting progress or final payments and which is to be accompanied by such supporting documentation as is required by the Contract Documents.

3. Bonds: Performance and payment bonds and other instruments of security.

4. Change Order: A written order which is signed by NEI and OWNER which authorizes an addition, deletion or revision in the Work, or an adjustment in the Contract Price or the Contract Times, issued on or after the Effective Date of the Agreement.

5. Claim: A demand or assertion by OWNER or NEI seeking an adjustment of Contract Price or Contract Times, or both or other relief with respect to the terms of the Contract. A demand for money or services by a third party is not a claim.

6. Conceptual Documents: The drawings and specifications and/or other graphic or written materials, criteria and information concerning OWNER's requirements for the Project, such as design objectives and constraints, space, capacity and performance requirements, flexibility and expandability, including those items enumerated in the Request for Proposals which show or describe the character and

3

scope of, or relate to, the Work to be performed or furnished and which have been prepared by or for OWNER.

7. Construction: The part of the Work that is the result of performing or furnishing of labor, the furnishing and incorporating of materials and equipment into the Work and the furnishing of services (other than Design Professional Services) and documents, all as required by the Contract Documents.

8. Contract Documents: Those items so designated in the Agreement. Only printed or hard copies of the items listed in the Agreement are Contract Documents.

9. Contract Price: The moneys payable by OWNER to NEI for completion of the Work in accordance with the Contract Documents.

10. Contract Times: The numbers of days or the dates stated in the Agreement to (i) achieve Substantial Completion, and (ii) complete the Work so that it is ready for final payment in accordance with Paragraph 6.03.

11.

11. Design Professional Services: That part of the Work comprised of services relating to the preparation of Drawings, Specifications, and other design submittals specified by the Contract Documents and required to be performed by licensed design professionals, as well as other services provided by or for licensed design professionals during Bidding/Negotiating, Construction, or Operational phases.

12. Drawings: Those portions of the Contract Documents prepared by or for NEI and approved by OWNER consisting of drawings, diagrams, illustrations, schedules and other data which show the scope, extent, and character of the Work.

13. Effective Date of the Agreement: The date on which the Agreement is signed and delivered by the last of the two Parties to sign and deliver.

14. Hazardous Environmental Condition: The presence at the Site of asbestos, Hazardous Waste, PCB's, Petroleum Products or Radioactive Materials in such quantities or circumstances that may present a substantial danger to persons or property exposed thereto in connection with the Work.

15. Hazardous Waste: The term Hazardous Waste shall have the meaning provided in Section 1004 of the Solid Waste Disposal Act (42 USC Section 6903) as amended from time to time.

16. Laws or Regulations: Any and all applicable laws, rules, regulations, ordinances, codes, and orders of any and all governmental bodies, agencies, authorities and courts having jurisdiction.

17. Liens: Charges, security interests or encumbrances upon real property or personal property.

4

18. Notice to Proceed: A written notice given by OWNER to NEI fixing the date on which the Contract Times will commence to run and on which NEI shall start to perform the Work.

19. OWNER: The individual or entity with whom NEI has entered into the Agreement and for whom the Work is to be performed.

20. OWNER's Consultant: An individual or entity with whom the OWNER may contract to furnish services to OWNER with respect to the Project and who is identified as such in the Contract Documents.

21. Partial Utilization: Use by OWNER of a substantially completed part of the Work for the purpose for which it is intended (or a related purpose) prior to Substantial Completion of all the Work. The term "partially utilized" as applied to all or part of the Work refer to Partial Utilization thereof.

22. PCBs: Polychlorinated biphenyls.

23. Petroleum: Petroleum, including crude oil or any fraction thereof which is liquid at standard conditions of temperature and pressure (60 degrees Fahrenheit and 14.7 pounds per square inch absolute), such as oil, petroleum, fuel oil, oil sludge, oil refuse, gasoline, kerosene, and oil mixed with other non-Hazardous Wastes and crude oils.

24. Project: The total construction of which the Work to be provided under the Contract Documents may be the whole, or a part as indicated elsewhere in the Contract Documents.

25. Proposal: The documents submitted by NEI in response to the Request for Proposals setting forth the design concepts, proposed prices, and other conditions for the Work to be performed.

26. Punch List: A list of items within a project, prepared by the OWNER and confirmed by NEI which remain to be corrected or completed at the time of Substantial Completion.

27. Radioactive Material: Source, special nuclear, or byproduct material as defined by the Atomic Energy Act of 1954 (42 USC Section 2011 et seq.) as amended from time to time.

28. Request for Proposals: The document prepared by or for OWNER specifying and describing OWNER's objectives and the procedure to be followed in preparing and submitting a Proposal and awarding a contract.

29. Retainage: A portion of the Contract Price or progress payments under an Application for Payment withheld by OWNER until final completion of the Work or a portion thereof. For purposes of this Agreement, Retainage shall equal 5% of the Application for Payment or Contract Price (as applicable).

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30. Schedule of Values: A schedule prepared by NEI and acceptable to OWNER indicating that portion of the Contract Price to be paid for each major component of the Work.

31. Site: Lands or other areas designated in the Contract Documents as being furnished by OWNER upon which Construction is to be performed, including rights-of-way and easements for access thereto, and such other lands furnished by OWNER which are designated for use of NEI.

32. Specifications: The part of the Contract Documents prepared by or for NEI and approved by OWNER consisting of written technical descriptions of materials, equipment, construction systems, standards and workmanship as applied to the Work and certain administrative details applicable thereto.

33. Subcontractor: An individual or entity other than a Supplier having a direct contract with NEI or with any other Subcontractor for the performance of a part of the Work.

34. Transmittal: A written or graphic document prepared by or for NEI which is required by the Contract Documents to be submitted to OWNER by NEI. Transmittals may include Drawings, Specifications, progress schedules, shop drawings, samples, cash flow projections, and Schedules of Values. Transmittals other than Drawings and Specifications are not Contract Documents.

35. Substantial Completion: The time at which the Work (or a specified part) has progressed to the point where it is sufficiently complete, in accordance with the Contract Documents, so that the Work (or a specified part) can be utilized for the purposes for which it is intended. The terms "substantially complete" and "substantially completed" as applied to all or part of the Work refer to Substantial Completion thereof.

36. Supplier: A manufacturer, fabricator, supplier, distributor, material man or vendor having a direct contract with NEI or with any Subcontractor to furnish materials or equipment to be incorporated in the Work by NEI or any Subcontractor.

37. Work: The entire design and construction or the various separately identifiable parts thereof required to be performed or furnished under the Contract Documents. Work includes and is the result of performing or furnishing Design Professional Services and Construction required by the Contract Documents.

1.02 Terminology

A. The words and terms discussed in Paragraph 1.02B are not defined terms but when used in the Contract Documents have the indicated meanings.

B. Intent of Certain Terms or Adjectives:

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1. The word “day” shall constitute a calendar day of 24 hours measured from midnight to the next midnight.

2. The word "defective," when modifying the word "Construction" or “Work” refers to Construction or Work that is faulty, or deficient in that it does not conform to the Contract Documents, or has been damaged prior to OWNER's final payment (unless responsibility for the protection thereof has been assumed by OWNER at Substantial Completion) provided that the defect was not caused by OWNER.

3. The word "furnish," when used in connection with services, materials, or equipment, shall mean to supply and deliver said services, materials or equipment to the Site (or some other specified location) ready for use or installation and in usable or operable condition.

4. The word "install," when used in connection with services, materials, or equipment, shall mean to put into use or place in final position said services, materials or equipment or equipment complete and ready for intended use.

5. The words "perform" or "provide" when used in connection with services, materials, or equipment, shall mean to furnish and install said services, materials, or equipment complete and ready for intended use.

6. When "furnish," "install," "perform," or "provide" is not used in connection with services, materials, or equipment in a context clearly requiring an obligation of NEI, "provide" is implied.

7. Unless stated otherwise in the Contract Documents, words or phrases that have a well‑known technical or construction industry or trade meaning are used in the Contract Documents in accordance with that meaning.

ARTICLE 2 - WORK

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2.01 NEI shall complete all Work as specified or indicated in the Contract Documents.

The Work is detailed in NEI’s Proposal PR17072R3 Expansion to 90 MGY dated November 28, 2017.

ARTICLE 3 - THE PROJECT

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3.01 The Project, of which the Work under the Contract Documents may be the whole or only a part, is generally described as follows:

Expansion of OWNER’s fuel ethanol production facility in Wentworth, SD.

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ARTICLE 4 - CONTRACT TIMES

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4.01 The Contract Times will commence to run on the day indicated in the Notice to Proceed; provided, however, in no event shall the Contract Times commence to run before the satisfaction of all of the following conditions precedent; (i) OWNER has provided to NEI sufficient evidence, in NEI’s sole discretion, that OWNER has obtained adequate financing to pay the Contract Price and complete the Project, (ii) the entire amount of the Down Payment is paid pursuant to the Proposal and/or Paragraph6.01of the Agreement between OWNER and NEI, and (iii) all permits required prior to commencement of Construction have been obtained by OWNER and such permits contain requirements to which NEI has given its written approval. OWNER shall provide the Notice to Proceed, along with supporting documentation sufficient to evidence satisfaction of the conditions precedent, to NEI and, upon NEI’s determination that the conditions precedent have been met, NEI shall commence Work at the Site. To the extent NEI is not satisfied that the conditions precedent have been met, NEI shall notify OWNER of the deficiency in writing, and may withhold commencement of Work until such deficiency is cured. NEI’s commencement of construction activities at the Site shall be deemed an acceptance of the conditions precedent, unless otherwise agreed in writing between the Parties.

All progress payments due and owing under this Agreement shall be payable regardless of whether the OWNER has issued a Notice to Proceed.

4.02 Starting the Work

Except for the Work NEI deems necessary to perform prior to the commencement of the Contract Times, NEI shall start to perform the Work on the date or within a reasonable time after the Contract Times commences to run.

4.03 Preliminary Schedules and Proof of Insurance

A. A Preliminary Progress Schedule is attached as Exhibit B.

B. A Schedule of Values for the Work, which includes prices of items aggregating the Contract Price, is attached hereto as Exhibit E. The Schedule of Values subdivides the Work into component parts to serve as the basis for progress payments during performance of the Work and includes a pro rata amount of overhead and profit applicable to each item of Work.

C. Before any work at the Site is started, NEI and OWNER shall each deliver to the other, with copies to each additional insured, certificates of insurance (and other evidence of insurance which either of them or any additional insured may reasonably request) which NEI and OWNER respectively are required to purchase and maintain in accordance with Article 8 of the Agreement.

4.04 Partial Utilization

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A. Prior to Substantial Completion of all the Work, OWNER may use or occupy any substantially completed part of the Construction which (i) has specifically been identified in the Contract Documents, or (ii) OWNER and NEI agree constitute a separately functioning and usable part of the Construction that can be used by OWNER for its intended purpose without significant interference with NEI’s performance of the remainder of the Construction, subject to the following:

1. OWNER at any time may request NEI in writing to permit OWNER to use or occupy any such part of the Construction which OWNER believes to be ready for its intended use and substantially complete. If NEI agrees that such part of the Work is substantially complete, NEI and OWNER will follow the procedures of Paragraph 4.05 for that part of the Construction.

2. NEI at any time may notify OWNER in writing that NEI considers any such part of the Work ready for its intended use and substantially complete. NEI and OWNER will then follow the procedures of Paragraph 4.05 for that part of the Construction.

3. No use or occupancy of part of the Construction will be accomplished prior to compliance with the requirements of Paragraph 8.06 regarding property insurance.

4.05 Substantial Completion

B. When NEI or OWNER believes the Work, or a portion thereof, is Substantially Complete, OWNER and NEI shall make an inspection of the Work to determine the status of completion. OWNER and NEI shall jointly inspect the Work and identify in writing any and all Punch List Items to be completed or corrected. At the time of preparation of the Punch List Items, the Parties shall also make a written determination as to division of authority and responsibilities between OWNER and NEI with respect to security, safety, maintenance, heat, utilities, insurance, and operating parameters with respect to the Project pending completion of the Punch List Items. Within five days of the inspection, NEI will prepare and deliver to OWNER a Certificate of Substantial Completion which shall fix the date of Substantial Completion. Attached to the certificate shall be a list of items to be completed or corrected before final payment (Punch List Items). If OWNER does not reject the certificate within five days of receipt in writing, giving reasons therefore, the OWNER shall have accepted the date of Substantial Completion.

C. Notwithstanding the foregoing, if OWNER uses any portion of the Work for its intended purpose, OWNER shall have accepted that portion of the Work as Substantially Complete. NEI shall issue the Certificate of Substantial Completion with the date of Substantial Completion fixed as the date which OWNER began use of that portion of the Work.

4.06 Final Inspection

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D. Upon written notice from NEI that the entire Work or an agreed portion thereof is complete (including applicable punch list items and any corrections to defective Work), OWNER will make a final inspection with NEI and will notify NEI in writing of all particulars in which this inspection reveals that the Work is incomplete or defective. NEI shall immediately take such measures as are necessary to complete such Work or remedy such deficiencies.

4.07 NEI shall not be liable, directly or indirectly, for any delay in the Work schedule caused by carriers; damage to equipment while in transit to site; labor difficulties, shortages, strikes, or stoppages of any sort; explosions; fires; floods; storms; accidents or other acts of God or Force Majeure; any statute, regulation, administrative order or decree; order or judgment of a court of law; approval of building or environmental permits; or other causes beyond NEI’s reasonable control. If NEI is delayed in the performance or progress of the Work by fire, flood, epidemic, abnormal weather conditions, acts of God, time constraints or delays caused by OWNER, or other causes not the fault of and beyond control of OWNER and NEI, then NEI shall be entitled to an equitable adjustment in Contract Times.

ARTICLE 5 - CONTRACT PRICE; COST OF THE WORK

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5.01 OWNER shall pay NEI for completion of the Work in accordance with the Contract Documents an amount in current US funds equal to the sum of the amounts determined pursuant to the Contract Price.

A. Contract Price. The Work described in the Scope of Work set forth in Exhibit A and the Proposal shall be performed by NEI on the basis of a fixed price of thirty-two million nine hundred sixty-one thousand five hundred fifty-seven US Dollars ($32,961,557.00 USD) (“Contract Price”). The Contract Price is intended to include design, engineering, construction management, procurement, overhead and profit for the Project. Neither OWNER, its Lender(s) nor any of their agents shall have the right to audit, inspect or otherwise obtain from NEI (or its Subcontractors or Suppliers) any invoice, record, document or information relating to the cost of the equipment, materials, labor or supplies for the Work covered by the Contract Price.

5.02 Cost of the Work

A. Costs Included: The term Cost of the Work means the sum of all costs necessarily incurred and paid by NEI in the proper performance of the Work. When the value of Work covered by a Change Order or when a Claim for an adjustment in Contract Price is determined on the basis of Cost of the Work, the costs to be reimbursed to NEI will be only those additional or incremental costs required because of the change of the Work or because of the event giving rise to the Claim. Except as otherwise may be agreed to in writing by OWNER, such costs shall not include any of the costs itemized in Paragraph 5.02B, and shall be limited to only the following items:

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1. Costs for employees in the direct employ of NEI in the performance of the Work under the Contract Documents agreed upon by OWNER and NEI.

2. Cost of all materials and equipment furnished and incorporated in the Work by NEI, including costs of transportation and storage thereof, and Suppliers' field services required in connection therewith. All cash discounts shall accrue to NEI.

3. Payments made by NEI to Subcontractors for Work performed or furnished by Subcontractors.

4. Payments made by NEI for Design Professional Services.

5. Costs of special consultants (including but not limited to engineers, architects, testing laboratories, surveyors, attorneys, and accountants) employed for services specifically related to the Work.

6. Supplemental costs including the following items:

a. The proportion of necessary transportation, travel and subsistence expenses of NEI's employees incurred in discharge of duties connected with the Work.

b. Cost, including transportation and maintenance, of materials, supplies, equipment, machinery, appliances, office and temporary facilities at the Site and hand tools not owned by the workers, which are consumed in the performance of the Work, and cost, less market value, of such items used but not consumed which remain the property of NEI.

c. Rentals of equipment and machinery and the parts thereof whether rented from NEI or others in accordance with rental agreements approved by OWNER, and the costs of transportation, loading, unloading, installation, dismantling and removal thereof. All such costs shall be in accordance with the terms of said rental agreements. The rental of any such equipment, machinery or parts shall cease when the use thereof is no longer necessary for the Work.

d. Sales, consumer, use, and other similar taxes related to the Work, and for which NEI is liable, imposed by Laws or Regulations.

B. Costs Excluded: The term Cost of the Work shall not include any of the following items, which is not intended to be an exhaustive list:

1. Payroll costs and other compensation of NEI's officers, executives, principals (of partnerships and sole proprietorships), general managers, engineers, architects, estimators, attorneys, auditors, accountants, purchasing and contracting agents, expediters, timekeepers, clerks and other personnel employed by NEI whether at the Site or in NEI's principal or a branch office for general administration of the Work and not specifically included in the agreed

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upon schedule of job classifications referred to in Paragraph 5.02A.1, all of which are to be considered administrative costs covered by NEI's fee.

2. Expenses of NEI's principal and branch offices other than NEI's office at the Site when required.

3. Any part of NEI's capital expenses, including interest on NEI's capital employed for the Work and charges against NEI for delinquent payments.

4. Costs due to the negligence of NEI, any Subcontractor, or anyone directly or indirectly employed by any of them or for whose acts any of them may be liable, including but not limited to the correction of defective Work, disposal of materials or equipment defective in nature or wrongly supplied, and making good any damage to property.

5. Other overhead or general expense costs of any kind and the costs of any item not specifically and expressly included in Paragraph 5.02A.

5.03 The OWNER represents and warrants that the Project is a private construction project and that no public funds, bonds, grants or other non-private funds have been or will be used by OWNER to pay for the entire Project or any portion of the Project when the use of such funds will require compliance with any local, state, federal or international wage payments requirement including, but not limited to, prevailing wage regulations, Davis-Bacon Act, collective bargaining or other similar wage requirements. OWNER acknowledges that the Contract Price for the Project does not include the cost for NEI or any of NEI’s Subcontractors or Suppliers at any level to comply with any special wage requirements and OWNER agrees to indemnify and hold NEI and NEI’s Subcontractors and Suppliers harmless from any claim that Work performed on the Project is subject to prevailing wage, Davis-Bacon Act, collective bargaining or other similar special wage requirements.

In the event OWNER takes any action (including, but not limited to, making applications for public, bond or grant funding or executing a Project Labor Agreement) that potentially creates a special wage requirement for NEI or NEI’s Subcontractors and/or Suppliers on the Project, OWNER will give NEI written notice of such action no later than ten days after taking such action, and provide NEI with all relevant information necessary for NEI to determine the impact to NEI and/or its Subcontractors and/or Suppliers of such action. In the event that NEI or its Subcontractors and/or Suppliers at any level are required to assist in the preparation of any special allocations, schedules, certifications or other documentation to support OWNER in its effort to obtain special funding for the Project, OWNER will promptly execute a Change Order with NEI that fairly compensates NEI and its Subcontractors for such assistance, and for the resulting increased labor cost.

ARTICLE 6 - PAYMENT PROCEDURES

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6.01 Prior to Substantial Completion, NEI shall issue monthly Applications for Payment based upon the progress of the Project, which shall be accompanied by a certification as to the Work completed to date by a representative of NEI carrying a Professional Engineer designation. Each progress payment will be made in an amount as set forth in the applicable Application for Payment. Such amount shall be equal to (a) the total Contract Price (Contract Price as adjusted for any Change Orders), multiplied by (b) the percentage of completion of the Work (based upon the Schedule of Values), less (c) the sum of (i) the applicable Down Payment credit, and (ii) the aggregate of all previous payments made to date (if any), and (iii) the Retainage of the current application amount. OWNER shall pay the amount set forth in the Application for Payment as follows:

A. OWNER will accept the Application if, within fifteen days of receipt of each Application for Payment, OWNER does not return the Application to NEI indicating in writing its reasons for refusing to accept the Application, in which case NEI shall make the necessary corrections and resubmit the Application. Upon OWNER’s acceptance of such Application the amount will become due and when due will be paid by OWNER to NEI.

B. If OWNER refuses to make payment of the full amount requested by NEI, OWNER must give NEI immediate written notice stating the reasons for such action and promptly pay NEI any amount remaining after deduction of the amount withheld. OWNER shall promptly pay NEI the amount withheld or any adjustment thereto agreed to when NEI remedies the reason for such action.

C. Upon a subsequent determination that OWNER’s refusal of payment was not justified, the amount wrongfully withheld shall be treated as an amount due and subject to interest as provided in the Agreement. All monies not paid when due shall bear interest at the rate of eighteen percent (18%) per annum. If it is determined that OWNER incorrectly withheld payment of any disputed payment, then such payment shall bear interest from the date such payment would have otherwise been due until the date actually paid to NEI.

6.02 Upon Substantial Completion, NEI will submit an Application for Payment in an amount sufficient to increase total payments to NEI to equal one hundred percent (100%) of the total contract price (Contract Price as adjusted for any Change Orders), less Retainage. If the Work would be Substantially Complete but for the Work that is outside of the control of NEI, but within the control of the OWNER or OWNER’s subcontractors, the Work will be deemed Substantially Complete for payment purposes.

6.03 After NEI has completed all Punch List Items, NEI may make application for final payment following the procedure for progress payments. NEI may make application for final payment on any portion of the Work that is partially utilized by the OWNER.

D. The final Application for Payment shall be accompanied (unless previously delivered) by: (i) documentation called for in the Contract Documents, and (ii) NEI’s complete and legally effective release or waiver (satisfactory to OWNER) of all Liens arising out of or filed in connection with the Work.

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E. OWNER shall make payment of the full amount of the final payment requested by NEI, including any Retainage previously withheld, within fifteen (15) days of OWNER’s receipt of the final Application for Payment.

6.04 Final Completion Delayed.

F. If, through no fault of NEI, final completion of the Work is significantly delayed, OWNER shall, upon receipt of NEI's final Application for Payment, and without terminating the Agreement, make payment of the balance due for that portion of the Work fully completed and accepted.

6.05 Waiver of Claims

G. The making of final payment will constitute acceptance of the Work, or that portion of the Work, and a waiver of all Claims by OWNER against NEI, except Claims arising from unsettled Liens, or from NEI's continuing obligations under the Contract Documents.

6.06 Late Payments. In the event that an Application for Payment is not timely paid (fifteen days after OWNER’s receipt of Application for Payment), in addition to any and all remedies available at law or in equity, NEI, at NEI’s sole discretion, (i) may impose, and OWNER shall pay, a late payment charge, after fifteen days from the OWNER’s receipt of Application for Payment, of 0.02% of the total Contract Price (Contract Price as adjusted for any Change Orders) per day of delay, or (ii) cancel the contract, if the overdue amount scheduled for payment is not paid within the next fifteen days. If OWNER is late on payment, after fifteen days from OWNER’s receipt of Application for Payment, each additional day after will result in a two (2) business day extension to the project schedule.

ARTICLE 7 - NEI REPRESENTATIONS

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7.01 NEI represents and warrants to OWNER:

A. NEI is familiar with the Work to be performed by OWNER and others at the Site that relates to the Work as indicated in the Contract Documents.

B. NEI, and each of its workers, agents, and representatives, will perform all Work with care, skill, and diligence, in accordance with applicable professional standards currently recognized by such profession.

C. NEI has correlated the information known to NEI, including reports and drawings identified in the Contract Documents, and all additional examinations, investigations, tests, studies and data necessary with respect to the Contract Documents.

ARTICLE 8 - INSURANCE REQUIREMENTS

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8.01 NEI Insurance Requirements:

A. NEI will maintain the insurance coverages and limits set forth in Exhibit C. NEI shall deliver to OWNER, with copies to each additional insured and loss payee, certificates of insurance (and other evidence of insurance reasonably requested by OWNER or any other additional insured or loss payee) which NEI is required to purchase and maintain.

B. NEI shall be required to furnish a performance, payment or other Bond for the Project in the form and on terms and conditions acceptable to OWNER. The cost of any such Bond is excluded from the Contract Price. Notwithstanding any provision of the Bond Contract or this Agreement to the contrary, the term “labor, materials or equipment” shall not include any and all design, architectural or engineering services and therefore the Bond will cover labor, materials or equipment only. The Bond will not cover Exhibit F Process Agreement.

8.02 OWNER Insurance Requirements:

C. OWNER will deliver to NEI, with copies to each additional insured and loss payee, certificates of insurance (and other evidence of insurance reasonably requested by NEI or any other additional insured) which OWNER is required to purchase and maintain.

1. In addition to the insurance required to be provided by NEI under this Agreement, OWNER at OWNER’s option and expense, may purchase and maintain OWNER’s own liability insurance to protect OWNER against claims which may arise from operations under the Contract Documents.

2. OWNER shall purchase and maintain property insurance upon the Construction at the Site in the amount of the full replacement cost thereof (subject to such deductible amounts as may be required by Laws or Regulations). This insurance will:

a. Include the interests of OWNER, OWNER's Consultant, NEI, Subcontractors, and any other individuals or entities listed as a loss payee, and the officers, directors, members, partners, employees, agents, and other consultants and subcontractors of each and any of them, each of whom is deemed to have an insurable interest;

b. Be written on a Builder's Risk "all-risk" policy form that shall at least include insurance for physical loss and damage to the Construction, temporary buildings, false work, and all materials and equipment in transit, and shall insure against at least the following perils or causes of loss: fire, lightning, extended coverage, theft, vandalism and malicious mischief, earthquake, collapse, debris removal,

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demolition occasioned by enforcement of Laws or Regulations, and water damage (other than that caused by flood), and such other perils or causes of loss;

c. Include expenses incurred in the repair or replacement of any insured property (including but not limited to fees and charges of engineers and architects);

d. Cover materials and equipment stored at the Site or at another location that was agreed to in writing by OWNER prior to being incorporated in the Construction, provided that such materials and equipment have been included in an Application for Payment approved by OWNER;

e. Allow for partial utilization by OWNER of the Work;

f. Include testing and start-up; and

g. Be maintained in effect until final payment is made unless otherwise agreed to in writing by OWNER and NEI with thirty days' written notice to each other loss payee to whom a certificate of insurance has been issued.

3. OWNER shall purchase and maintain such equipment breakdown insurance or additional property insurance on OWNER’s property as may be required by Laws or Regulations which will include the interests of OWNER, OWNER's Consultants, NEI, Subcontractors, Suppliers, and any other individuals or entities listed as a loss payee, each of whom is deemed to have an insurable interest.

4. All the policies of insurance (and the certificates or other evidence thereof) required to be purchased and maintained by OWNER will contain a provision or endorsement that the coverage afforded will not be canceled or materially changed or renewal refused until at least 30 days' prior written notice has been given to NEI and to each other loss payee to whom a certificate of insurance has been issued and will contain the requisite waiver provisions.

5. If NEI requests in writing that other special insurance be included in the property insurance policies, OWNER shall, if possible, include such insurance, and the cost thereof will be charged to NEI by appropriate Change Order. Prior to commencement of the Work at the Site, OWNER shall in writing advise NEI whether or not such other insurance has been procured by OWNER.

6. All duty and responsibility to insure the Project and Site shall become the sole responsibility of OWNER immediately upon Substantial Completion of the Work.

8.03 Waiver of Rights

A. OWNER and NEI intend that all policies purchased in accordance with Paragraph 8.01 will protect OWNER, OWNER's Consultant, NEI, Subcontractors, Suppliers, and all other individuals or entities listed as a loss payee (and the officers, directors, members,

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partners, employees, agents, and other consultants and subcontractors of each and any of them) in such policies and will provide primary coverage for all losses and damages caused by the perils or causes of loss covered thereby. All such policies shall contain provisions to the effect that in the event of payment of any loss or damage the insurers will have no rights of subrogation or recovery against any of the insured’s or loss payees there under. OWNER and NEI waive all subrogation rights against each other and their respective officers, directors, members, partners, employees, agents, and other consultants and subcontractors of each and any of them for all losses and damages caused by, arising out of or resulting from any of the perils or causes of loss covered by such policies and any other property insurance applicable to the Work; and, in addition, waive all such rights against OWNER's Consultant, Subcontractors, Suppliers, and all other individuals or entities identified as insured’s or loss payees under such policies for losses and damages so caused. None of the above waivers shall extend to the rights that any party making such waiver may have to the proceeds of insurance held by OWNER as trustee or otherwise payable under any policy so issued.

B. OWNER waives all rights against NEI, Subcontractors, and Suppliers and the owners, officers, directors, members, employees and agents of any of them for:

1. Loss due to business interruption, loss of use, or other consequential loss extending beyond direct physical loss or damage to OWNER's property caused by, arising out of or resulting from fire or other peril whether or not insured by OWNER; and

2. Loss or damage to the completed Project or any part thereof caused by, arising out of, or resulting from fire or other insured peril or cause or loss covered by any property insurance maintained on the completed Project or part thereof by OWNER.

3. Loss due to business interruption, loss of use, or other consequential loss extending beyond direct physical loss or damage to OWNER’s property caused by, arising out of or resulting from inadequate or incorrect information provided by OWNER.

C. Any insurance policy maintained by OWNER covering any loss, damage or consequential loss referred to in Paragraph 8.01B shall contain provisions to the effect that in the event of payment of any such loss, damage, or consequential loss, the insurers will have no rights of recovery against NEI, Subcontractors, Suppliers, OWNER's Consultant, and the officers, directors, members, partners, employees, agents, and other consultants and subcontractors of each and any of them.

8.04 Receipt and Application of Insurance Proceeds

A. Any insured loss under the policies of insurance will be adjusted with OWNER and made payable to OWNER as fiduciary for the insured’s, as their interests may appear, subject to the requirements of any applicable insurance policy. OWNER shall deposit

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in a separate account any money so received, and shall distribute it in accordance with such agreement as the parties in interest may reach.

B. OWNER as fiduciary shall have power to adjust and settle any loss with the insurers unless one of the parties in interest shall object in writing within 30 days after the occurrence of loss to OWNER's exercise of this power.

1. If no such objection is made by a party in interest within 30 days, all claims against OWNER by the non-objecting party in interest shall be waived.

2. If such objection be made, OWNER as fiduciary shall make settlement with the insurers in accordance with such agreement as the parties in interest may reach.

3. If no such agreement among the parties in interest is reached, OWNER as fiduciary shall adjust and settle the loss with the insurers and, if required in writing by any party in interest, OWNER as fiduciary shall give bond for the proper performance of such duties. The cost of any such bonds shall be charged against proceeds received as fiduciary. Failing an agreement among all parties in interest regarding distribution of proceeds, OWNER shall distribute insurance proceeds in accordance with the directions of the arbitrators selected under Paragraph 17.02.

8.05 Acceptance of Insurance; Option to Replace

D. If either OWNER or NEI has any objection to the coverage afforded by or other provisions of the insurance required to be purchased and maintained by the other party in accordance with this Agreement on the basis of their not complying with the Contract Documents, the objecting party shall so notify the other party in writing within fifteen days after receipt of the certificates (or other evidence requested) required by Paragraph 4.03C. OWNER and NEI shall each provide to the other such additional information in respect of insurance provided as the other may reasonably request. If either party does not purchase or maintain all of the insurance required of such party by the Contract Documents, such party shall notify the other party in writing of such failure to purchase prior to the start of the Work, or of such failure to maintain prior to any change in the required coverage. Without prejudice to any other right or remedy, the other party may elect to obtain equivalent insurance to protect such other party's interests at the expense of the party who was supposed to provide such coverage, and a Change Order shall be issued to adjust the Contract Price accordingly.

8.06 Partial Utilization, Acknowledgment of Property Insurance

E. If OWNER finds it necessary to occupy or use a portion or portions of the Work prior to Substantial Completion of all the Work as provided in Paragraph 4.04, no such use or occupancy shall commence before the insurers providing the property insurance pursuant to Paragraph 4.03 have acknowledged notice thereof and in writing effected any changes in coverage necessitated thereby. The insurers providing the property insurance shall consent by endorsement on the policy or policies, but the property

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insurance shall not be canceled or permitted to lapse on account of any such partial use or occupancy.

ARTICLE 9 - CONTRACT DOCUMENTS

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9.01 The Contract Documents consist of the following:

A. This Master Agreement between OWNER and NEI; and

B. NEI’s Proposal PR17072R3 dated November 28, 2017; and

C. Conceptual Documents referenced in NEI’s Proposal; and

D. The following, which may be delivered, prepared, or issued after the Effective Date of this Agreement and are not attached hereto:

1. Written Notice to Proceed; and

2. All Change Orders amending, modifying or supplementing the Contract Documents pursuant to Paragraph 13.01; and

3. Specifications as defined in Paragraph 1.01A.; and

4. Drawings as defined in Paragraph 1.01A.

9.02 The Contract Documents may only be amended, modified, or supplemented as provided in Paragraph 9.05.

9.03 Intent. The Contract Documents comprise the entire agreement between OWNER and NEI concerning the Work. The Contract Documents are complementary; what is called for by one is as binding as if called for by all. Except as otherwise required by applicable Laws and Regulations, the Contract Documents shall govern the obligations of the Parties regarding the Work and Project.

9.04 Resolving Discrepancies

A. In the event of a discrepancy between the Conceptual Documents on the one hand and the Proposal or Drawings or Specifications on the other hand, the Conceptual Documents will control except when OWNER has approved a Transmittal pursuant to Paragraph 11.09A.

B. Except as otherwise specifically stated in the Contract Documents, the provisions of the Contract Documents shall take precedence in resolving any conflict, error, ambiguity, or discrepancy between the provisions of the Contract Documents and:

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1. The provisions of any such standard, specification, manual, code, or instruction (whether or not specifically incorporated by reference in the Contract Documents); or

2. The provisions of any such Laws or Regulations applicable to the performance of the Work (unless such an interpretation of the provisions of the Contract Documents would result in violation of such Law or Regulation).

9.05 Amending and Supplementing Contract Documents

A. The Contract Documents may only be amended to provide for additions, deletions, and revisions in the Work or to modify the terms and conditions thereof by a signed Change Order.

9.06 Reuse of Documents

A. All documents including Drawings and Specifications prepared or furnished by NEI, or any of its Subcontractors or Suppliers, pursuant to this Agreement are for NEI's own use, and NEI shall retain all ownership rights and property interests therein whether or not the Project is completed. OWNER may make and retain copies for information and reference in connection with the use and occupancy of the Project by OWNER and others. However, such documents are not intended or represented to be suitable for reuse by OWNER or others on extensions of the Project or on any other project. Ownership of all documents prepared or furnished by NEI, or any of its Subcontractors or Suppliers, is considered confidential and proprietary and all such documentation shall be solely owned by NEI. Any reuse or any continued use after any termination without written verification or adaptation by NEI for the specific purpose intended will be at OWNER's sole risk and without liability or legal exposure to NEI, and OWNER shall indemnify and hold harmless NEI and Subcontractors from all claims, damages, losses and expenses including attorneys' fees arising out of or resulting therefrom. Any such verification or adaptation will entitle NEI to further compensation at rates to be agreed upon by OWNER and NEI.

9.07 Electronic Data

A. The data furnished by OWNER to NEI or NEI to OWNER that may be relied upon are limited to the printed copies (also known as hard copies). Files in electronic media format of text, data, graphics, or other types are furnished only for the convenience of the receiving party. Any conclusion or information obtained or derived from such electronic files will be at the user's sole risk. If there is a discrepancy between the electronic files and the hard copies, the hard copies govern.

B. Because data stored in electronic media format can deteriorate or be modified inadvertently or otherwise without authorization of the data's creator, the party receiving electronic files agrees that it will perform acceptance tests or procedures within thirty days, after which the receiving party shall be deemed to have accepted the data thus transferred. Any errors detected within the thirty-day acceptance period will be corrected by the transferring party.

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C. When transferring documents in electronic media format, the transferring party makes no representations as to long term compatibility, usability, or readability of documents resulting from the use of software application packages, operating systems, or computer hardware differing from those used by the data’s creator.

D. All electronic data sent by NEI electronically is assumed received by OWNER once sent.

ARTICLE 10 - AVAILABILITY OF LANDS; DIFFERING SITE CONDITIONS; REFERENCE POINTS; HAZARDOUS ENVIRONMENTAL CONDITIONS

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10.01 Availability of Lands

A. OWNER shall furnish the Site. OWNER shall notify NEI of any encumbrances or restrictions not of general application but specifically related to use of the Site with which NEI will have to comply in performing the Work. Unless otherwise provided in the Contract Documents, OWNER will obtain in a timely manner and pay for easements for permanent structures or permanent changes in existing facilities. If NEI and OWNER are unable to agree on entitlement to or the amount or extent of any adjustments in the Contract Price or the Contract Times as a result of any delay in OWNER's furnishing the Site, NEI may make a Claim therefore as provided inParagraph 13.03.

10.02 Hazardous Environmental Condition at Site

A. NEI will not be responsible for any Hazardous Environmental Condition encountered at the Site which was not identified in the Contract Documents to be within the scope of the Work. NEI shall be responsible for materials creating a Hazardous Environmental Condition brought to the Site by NEI, Subcontractors, Suppliers or anyone else for whom NEI is responsible, and shall indemnify OWNER for the same under Paragraph 11.12.

B. If NEI encounters a Hazardous Environmental Condition, NEI shall immediately: (i) secure or otherwise isolate such condition; (ii) stop all Construction in connection with such condition and in any area affected thereby (except in an emergency as required by Paragraph 11.08); and (iii) notify OWNER (and thereafter confirm such notice in writing). OWNER shall promptly determine the necessity of retaining a qualified expert to evaluate such condition or take corrective action, if any.

C. NEI shall not be required to resume Construction in connection with such Hazardous Environmental Condition or in any such affected area until after OWNER has obtained any required permits related thereto and delivered to NEI written notice (i) specifying that such condition and any affected area is or has been rendered safe for the resumption of Construction, or (ii) specifying any special conditions under which such Construction may be resumed safely. If OWNER and NEI cannot agree as to entitlement to or the amount or extent of an adjustment, if any, in Contract Price or Contract Times as a result

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of such Construction stoppage or such special conditions under which Construction is agreed to be resumed by NEI, either party may make a Claim therefore as provided in Paragraph 13.03.

D. If after receipt of such special written notice NEI does not agree to resume Construction based on a reasonable belief it is unsafe, or does not agree to resume such Construction under such special conditions, then OWNER may order such portion of the Work that is related to such Hazardous Environmental Condition to be deleted from the Work in accordance with Paragraph 13.01B. If OWNER and NEI cannot agree as to entitlement to or the amount or extent of an adjustment, if any, in Contract Price or Contract Times as a result of deleting such portion of the Work, then either party may make a Claim therefore as provided in Paragraph 13.03.

E. To the fullest extent permitted by Laws or Regulations, OWNER shall indemnify and hold harmless NEI, Subcontractors, Suppliers and the officers, directors, partners, employees, agents, other consultants and subcontractors of each and any of them from and against all claims, costs, losses and damages (including but not limited to all fees and charges of engineers, architects, attorneys and other professionals and all court or arbitration or other dispute resolution costs) arising out of or resulting from such Hazardous Environmental Condition, provided that such Hazardous Environmental Condition: (i) was not shown or indicated in the Contract Documents to be included in the scope of the Work, and (ii) was not created by NEI, its officers, directors, partners, employees, agents, and other consultants.

ARTICLE 11 - DUTIES AND OBLIGATIONS

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11.01 Design Professional Services

A. Preliminary Design Phase: After the Contract Times commence to run, NEI shall:

1. Consult with OWNER to understand OWNER's requirements for the Project and review available data;

2. On the basis of the Conceptual Documents and NEI's Proposal, prepare preliminary design documents consisting of final design criteria, preliminary drawings, outline specifications, and written descriptions of the Project, as NEI determines is necessary;

3. Furnish the preliminary design documents to and review them with OWNER. OWNER will have accepted the documents if within ten days OWNER does not provide written notice of rejection of documents, giving reasons therefore.

B. Final Design Phase: After acceptance by OWNER of the preliminary design phase documents NEI shall:

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1. Prepare final Drawings showing the scope, extent, and character of the Construction to be performed and furnished by NEI and Specifications;

2. Provide technical criteria, written descriptions, and design data required for OWNER to obtain approvals of such governmental authorities as have jurisdiction to review or approve the final design of the Project, and assist OWNER in consultations with appropriate authorities;

3. Furnish the above documents, Drawings, and Specifications to and review them with OWNER for approval.

11.02 Services, Materials, and Equipment

A. Unless otherwise specified in the Contract Documents, NEI shall furnish or cause to be furnished and assume full responsibility for all services, materials, equipment, labor, transportation, construction equipment and machinery, tools, appliances, fuel, heat, telephone, sanitary facilities, and all other facilities and incidentals necessary for the completion of the Work, excluding, specifically, power, light, water, temporary facilities and all other items designated as OWNER’s responsibility set forth in the Proposal and Contract Documents.

B. Materials and equipment incorporated into the Work shall be as specified by NEI, or in the Drawings or Specifications, or if not specified shall be of good quality or new, except as otherwise provided in the Contract Documents. All warranties and guarantees specifically called for by the Contract Documents shall expressly run to the benefit of OWNER.

C. Materials and equipment shall be stored, applied, installed, connected, erected, protected, used, and conditioned in accordance with the Contract Documents.

D. Equipment shall be stored outside unless otherwise agreed in the Contract Documents.

E. OWNER shall provide a suitable lay down area for any equipment and materials required to complete the Project.

11.03 Concerning Subcontractors, Suppliers, and Others

A. NEI shall not be required to employ any Subcontractor, Supplier, or other individual or entity to furnish or perform any of the Work against whom NEI has reasonable objection.

B. NEI shall be responsible for scheduling and coordinating Subcontractors, Suppliers, and other individuals and entities performing or furnishing any of the Work under a direct or indirect contract with NEI.

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C. NEI shall require all Subcontractors, Suppliers, and such other individuals and entities performing or furnishing any of the Work to communicate with the OWNER through NEI.

11.04 Permits

A. Unless otherwise provided in the Contract Documents, OWNER shall obtain and pay for all necessary permits, licenses, and approvals of governmental authorities having jurisdiction over the Work. NEI shall assist OWNER, when necessary, in obtaining such permits, licenses and approvals. OWNER shall pay all governmental charges and inspection fees necessary for the performance of the Work, which are applicable on the last day for receipt of Proposals. OWNER shall pay all charges of utility owners for connections for providing permanent service to the Work, and OWNER shall pay all charges of such utility owners for capital costs related thereto.

11.05 Laws or Regulations

A. OWNER shall give all notices required by and comply with all Laws and Regulations applicable to the performance of the Work. Except where otherwise expressly required by applicable Laws and Regulations, NEI shall not be responsible for monitoring OWNER’s compliance with any Laws or Regulations.

B. Changes in Laws or Regulations not known on the Effective Date having an effect on the cost or time of performance are subject to a change in Contract Price or Contract Times.

11.06 Taxes

A. OWNER shall, in addition to payment of the Contract Price, reimburse NEI for all sales, consumer, use, gross receipts, excise, and other similar taxes which are applicable during the performance of the Work and are either paid by NEI or are required to be reimbursed by NEI to its Subcontractors, Suppliers, Engineers, or similar entity. Such requirements shall not apply to taxes payable by NEI on the income of NEI.

11.07 Record Documents

A. During the Contract Times, NEI shall maintain in a safe place one record copy of all Drawings, Specifications and Change Orders, in good order and annotated to show all changes made during performance of the Work. These record documents together with all approved Transmittals will be available to OWNER for reference. Upon completion of the Work, these record documents and Transmittals will be delivered to OWNER.

11.08 Emergencies

In emergencies affecting the safety or protection of persons or the Work or property at the Site or adjacent thereto, NEI is obligated to act to prevent threatened damage, injury

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or loss. NEI shall give OWNER prompt written notice if NEI believes that any significant changes in the Work or variations from the Contract Documents have been caused thereby or are required as a result thereof. If a change in the Contract Price or Contract Times is required because of the action taken by NEI in response to such an emergency, a Change Order will be issued.

11.09 Transmittal

A. OWNER will review Transmittals in accordance with the schedule of required Transmittals accepted by OWNER. OWNER will have accepted the Transmittals if within ten days OWNER does not provide written notice of rejection of Transmittals, giving reasons therefore. OWNER's review and approval will be only to determine if the items covered by the Transmittals will, after installation or incorporation in the construction, conform to the information given in the Contract Documents and be compatible with the design concept of the completed Project as a functioning whole as indicated by the Contract Documents.

11.10 Continuing the Work

A. NEI may continue the Work during all disputes or disagreements with OWNER, except as NEI and OWNER may otherwise agree in writing.

11.11 NEI's General Warranty and Guarantee

A. NEI warrants and guarantees to OWNER that all Construction will be in accordance with the Contract Documents and will not be defective in material and workmanship for one year from the date of Substantial Completion.

B. Should OWNER discover a defect in material or workmanship within one year from Substantial Completion, OWNER shall notify NEI in writing within five days, and thereafter NEI shall commence to repair the defective Work with due diligence.

C. NEI will use all reasonable efforts to obtain for OWNER manufacturers’ guarantees or warranties for materials, components, or equipment included in the Construction. To the extent such warranties are assignable, NEI hereby assigns to OWNER all warranties that are granted to NEI by supplies of materials, components, or equipment obtained in conjunction with this Work.

D. NEI's warranty and guarantee hereunder excludes defects or damage caused by:

1. Abuse, unusual stress, accident, willful acts, negligence, disasters such as fire, flood, wind, and lightning, modification, or improper maintenance or operation or installation by persons other than NEI; or

2. Normal wear and tear under normal usage; or

3. Failure of OWNER to provide required periodic and noticed maintenance; or

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4. Unauthorized or improper installation of attachments, repairs, or modifications; or

5. Use of any material, component, or piece of equipment which NEI did not design, manufacture, supply, or repair.

E. NEI warrants to OWNER that the repairs, parts, and services provided by NEI under warranty will be free from defects in material and workmanship for the period commencing on the date of the repair, installation of part, or the date of completion of the service until the expiration of the original General Warranty and Guarantee.

F. To keep the General Warranty and Guarantee set forth in this Agreement, OWNER has the following responsibilities:

1. OWNER must make all efforts to prove that the Construction has been serviced as recommended by the equipment manufacturer, by properly qualified, certified maintenance staff. Failure to provide proof of service may terminate the warranty; and

2. OWNER must make all reasonable efforts to protect Construction from further damage in the event of mechanical breakdown or failure; and

3. OWNER must notify NEI of any alterations or additions to the Construction and of any proposed departure from ordinary working conditions from which the Construction is designed to operate. NEI must approve the alterations, additions, or changes in operation of the Construction in writing, in order for the General Warranty and Guarantee to remain in effect.

11.12 Indemnification

A. To the fullest extent permitted by Laws or Regulations, NEI shall indemnify and hold harmless OWNER, OWNER's Consultants, and the officers, members, directors, partners, employees, agents, other consultants and subcontractors of each from and against all claims, costs, losses, and damages (including but not limited to all fees and charges of engineers, architects, attorneys and other professionals and all court or arbitration or other dispute resolution costs) arising out of or resulting from the performance of the Work, provided that any such claim, cost, loss, or damage is attributable to bodily injury, sickness, disease, or death, or damage to or destruction of property, but only to the extent caused by any negligent act or omission or willful misconduct of NEI, any Subcontractor, any Supplier, or any individual or entity directly or indirectly employed by any of them to perform or furnish any of the Work. NEI’s duty to indemnify and hold harmless OWNER and the other indemnitees named above shall not arise to the extent any such claim, cost, loss, or damage arises out of the negligent act or omission, or willful misconduct, of OWNER, OWNER’s consultants, and the officers, members, directors, partners, employees, agents, other consultants, and subcontractors of each.

B. The indemnification obligations of NEI under Paragraph 11.12A shall not extend to the liability of OWNER's Consultant, and their officers, directors, members, partners,

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employees, agents, other consultants, and subcontractors arising out of the preparation or approval of maps, drawings, opinions, reports, surveys, designs, business plans, or specifications.

ARTICLE 12 - OWNER'S RESPONSIBILITIES

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12.01 General

A. In addition to specific requirements set forth in other sections of this Agreement, OWNER shall do the following in a timely manner so as not to delay the services of NEI:

1. Provide such legal services as OWNER may require with regard to legal issues pertaining to the Project including any that may be raised by NEI;

2. If requested in writing by NEI, furnish reasonable evidence satisfactory to NEI that sufficient funds are available, free of restriction, and committed for the entire cost of the Project. Unless such reasonable evidence is furnished, NEI is not required to commence or continue any Work, or may, if such evidence is not presented within fifteen days, stop Work upon fifteen days’ notice to the OWNER;

3. Make payments to NEI promptly when they are due;

4. Furnish to NEI, as required for performance of NEI's services, the following, when applicable, all of which NEI may use and rely upon in performing services under this Agreement:

a. Environmental assessment and impact statements;

b. Property, boundary, easement, right-of-way, topographic, and utility surveys;

c. Property descriptions;

d. Zoning, deed, and other land use restrictions;

e. Engineering surveys to establish reference points for design and construction which in OWNER's judgment are necessary to enable NEI to proceed with the Work;

f. Assistance to NEI in filing documents required to obtain necessary permits, licenses, and approvals of governmental authorities having jurisdiction over the Project;

g. Permits, licenses, and approvals of government authorities OWNER is specifically required to obtain by the Contract Documents; and

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h. Identify all reports known to OWNER of explorations and tests of subsurface conditions at or contiguous to the Site, all drawings known to OWNER of physical conditions relating to existing surface or subsurface structures at the Site, and any information or data known to OWNER concerning underground facilities at the Site.

5. Provide information known to OWNER relating to the presence of materials and substances at the Site which could create a Hazardous Environmental Condition;

6. Obtain such additional geotechnical and related information which NEI deems necessary for performance of the Work;

7. Notify NEI as soon as possible of any issues and concerns;

8. Designate the OWNER representative who is capable of making decisions on behalf of the OWNER. The Owner Representative for the purposes of the Contract Documents is the President of the OWNER (currently Scott Mundt) or such other person as OWNER will designate in writing;

9. Provide all subsurface reports consistent with a buildable site that is provided by the OWNER;

10. When the OWNER has a safety program the OWNER will be responsible for safety at the Site.

12.02 Limitations on OWNER's Rights and Responsibilities

A. The OWNER shall not supervise, direct, or have control or authority over, nor be responsible for, NEI's means, methods, techniques, sequences, or procedures of construction or the safety precautions and programs incident thereto, unless called for by the Contract Documents.

B. The OWNER shall not directly engage or contract with any Subcontractors unless and until such Subcontractor has completed all duties and obligations owed to NEI under any Subcontract for the Project.

12.03 OWNER's Consultant

A. OWNER's Consultant, if any, has no duty, responsibility, or authority with respect to NEI. Cost of such consultant is the OWNER’s responsibility.

12.04 Compliance with Safety Program

A. While at the Site, OWNER’s employees, contractors and representatives shall comply with the specific applicable requirements of any safety programs implemented by NEI for the Project.

ARTICLE 13 - CHANGES IN THE WORK; CLAIMS

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13

13.01 Authorized Changes in the Work

A. OWNER may, at any time or from time to time and with lender notification, order additions, deletions, or revisions in the Work within the general scope of the Contract by a Change Order. Upon receipt of any such Change Order, NEI shall review the Change Order for compliance with the Contract Documents, specifically ensuring compatibility with existing specifications, and thereafter promptly proceed with the Work involved which will be performed under the applicable conditions of the Contract Documents (except as otherwise specifically provided).

B. OWNER and NEI shall execute appropriate Change Orders covering:

1. Changes in the Work which are (i) ordered by OWNER pursuant to Article 13, (ii) required because of acceptance of defective Construction under Paragraph 15.04, (iii) required because of Hazardous Environmental Conditions pursuant to Paragraph 10.02D, or (iv) agreed to by the Parties; and

2. Changes in the Contract Price or Contract Times which are agreed to by the Parties, including any undisputed sum or amount of time for Work actually performed in accordance with the Contract Documents or a Change Order.

13.02 Unauthorized Changes in the Work

A. NEI shall not be entitled to an increase in the Contract Price or an extension of the Contract Times with respect to any Work performed that is not required by the Contract Documents as amended, modified and supplemented, except in the case of an emergency as provided in Paragraph 11.08.

13.03 Claims

A. Notice: If OWNER and NEI are unable to agree on entitlement to, or on the amount or extent, if any, of an adjustment in the Contract Price or an adjustment of the Contract Times that should be allowed as a result of any Change Order or other occurrence for which the Contract Documents provide that such adjustment(s) may be made, a Claim may be made therefore. Written notice of intent to make such a Claim shall be submitted to the other party promptly and in no event more than fifteen days after the start of the occurrence or event giving rise to the Claim.

B. Resolution: The parties mutually agree to cooperate with each other to timely resolve any disputes or Claims in a professional manner.

ARTICLE 14 - CHANGE OF CONTRACT PRICE; CHANGE OF CONTRACT TIMES

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14.01 Change of Contract Price

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A. The Contract Price may only be changed by a Change Order. Any Claim for an adjustment in the Contract Price shall be based on written notice delivered by the party making the Claim to the other party promptly in accordance with Paragraph 13.03.

B. NEI's Fee: NEI's fee for overhead and profit on Change Orders is a fixed fee of 18.5%.

14.02 Change of Contract Times

A. The Contract Times may only be changed by a Change Order.

B. Delays Beyond NEI's Control: Where NEI is prevented from completing any part of the Work within the Contract Times due to delay beyond the control of NEI as set forth in Paragraph 4.07, the Contract Times will be extended in an amount equal to the time lost due to such delay if a Claim is made by NEI therefore as provided in Paragraph 13.03.

C. If OWNER or other contractor or utility owners performing other work for OWNER or anyone for whom OWNER is responsible, delays, disrupts, or interferes with the performance or progress of the Work, then NEI shall be entitled to an equitable adjustment in the Contract Price or the Contract Times, or both, as set forth in a Change Order or to the extent NEI makes a Claim under Paragraph 13.03.

ARTICLE 15 - TESTS AND INSPECTIONS; CORRECTION, REMOVAL OR ACCEPTANCE OF DEFECTIVE CONSTRUCTION

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15.01 Notice of Defects

A. OWNER shall give NEI written notice of all defective Construction of which OWNER has knowledge within five days of OWNER’s discovery of said defect. All defective Construction may be rejected, corrected or accepted as provided in this Article 15.

15.02 Correction or Removal of Defective Construction

A. OWNER will have authority to disapprove or reject defective Construction and will have authority to require special inspection or testing of the Construction whether or not the Construction is fabricated, installed or completed. If required by OWNER, NEI shall promptly, as directed, either correct all defective Construction, whether or not fabricated, installed or completed, or, if the Construction has been rejected by OWNER, remove it from the Site and replace it with non-defective Construction. NEI shall bear all direct, indirect, and consequential costs of such correction or removal (including but not limited to fees and charges of engineers, architects, attorneys and other professionals and all court, arbitration, or other dispute resolution costs) arising out of or relating to such correction or removal.

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15.03 Correction Period

A. If within one month after the date of Substantial Completion or such longer period of time as may be prescribed by Laws or Regulations or by the terms of any applicable specific provision or guarantee required by the Contract Documents, any Construction is found to be defective, NEI shall promptly, without cost to OWNER and in accordance with OWNER’s written instructions, (i) correct such defective Construction, or, if it has been rejected by OWNER, remove it from the Site and replace it with Construction that is not defective, and (ii) satisfactorily correct or remove and replace any damage to other Construction or the work of others resulting there from.

15.04 Acceptance of Defective Construction

A. If, instead of requiring correction or removal and replacement of defective Construction, OWNER prefers to accept it, OWNER may do so. If any such acceptance occurs prior to final payment, a Change Order will be issued incorporating the necessary revisions in the Contract Documents with respect to the Construction; and OWNER shall be entitled to an appropriate decrease in the Contract Price, and, if the Parties are unable to agree as to the amount thereof, OWNER may make a Claim therefore. Notwithstanding the foregoing, any defective Construction known by OWNER and not disclosed to NEI at the time of acceptance and final payment shall be deemed to be accepted by OWNER and NEI shall have no obligation to correct, or remove and replace such defect, or make any payment to OWNER with respect thereto. For purposes of this Section, defective Construction shall be known to OWNER only if it is within the actual knowledge of any officer, director, manager, member, designated construction representative, employee or management for OWNER.

ARTICLE 16 - SUSPENSION OF WORK AND TERMINATION

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16.01    OWNER May Suspend Work

A. OWNER may suspend the Work or any portion thereof for a period of not more than 60 days by notice in writing to NEI which will fix the date on which Work will be resumed. NEI shall resume the Work on the date so fixed. NEI shall be allowed an adjustment in the Contract Price or an extension of the Contract Times, or both, directly attributable to any such suspension if NEI makes a Claim therefore as provided in Paragraph 13.03.

16.02 OWNER May Terminate for Cause

A. The occurrence of any one or more of the following events justifies termination for cause:

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1. NEI's persistent failure to perform the Work in accordance with the Contract Documents (including, but not limited to, failure to supply sufficiently skilled workers or suitable materials or equipment or failure to adhere to the progress schedule as may be adjusted from time to time).

2. NEI's disregard of Laws or Regulations of any public body having jurisdiction.

3. NEI's violation in any substantial way of provisions of the Contract Documents.

B. If one or more of the events identified in Paragraph 16.02A occur, OWNER may, after giving NEI thirty days' written notice, terminate the services of NEI, take possession of any completed Drawings and Specifications prepared by or for NEI (subject to the indemnification provisions of Paragraph 11.12), exclude NEI from the Site, and take possession of the Work.

C. Notwithstanding Paragraph 16.02B, NEI’s services will not be terminated if NEI begins, within seven days of receipt of notice of intent to terminate, to correct its failure to perform and proceeds diligently to cure such failure within no more than thirty days of receipt of said notice.

16.03 NEI May Stop Work or Terminate

B. If, through no act or fault of NEI, the Work is suspended for a period of more than sixty days by OWNER or under an order of court or other public authority, or OWNER fails to act on any Application for Payment within thirty days after it is submitted or OWNER fails for thirty days to pay NEI any sum finally determined to be due, then NEI may, upon seven days' written notice to OWNER, and provided OWNER does not remedy such suspension or failure within that time, terminate the Agreement and recover from OWNER payment on the same terms as provided in Articles 5 and 6. In lieu of terminating the Agreement and without prejudice to any other right or remedy, if OWNER has failed for thirty days to pay NEI any sum finally determined to be due, NEI may upon seven days' written notice to OWNER stop the Work until payment is made of all such amounts due NEI, including interest thereon. The provisions of this Paragraph 16.03A are not intended to preclude NEI from making Claim under Paragraph 13.03 for an increase in Contract Price or Contract Times or otherwise for expenses or damage directly attributable to NEI's stopping Work as permitted by this paragraph.

16.04 Payment upon Termination

C. If this Agreement is terminated, NEI shall be paid by OWNER for all services performed in accordance with the Contract Documents through the date of termination, actual expenses and amounts owed by NEI at the time of notice of termination, and cancellation charges for any close-out activities requested by OWNER.

ARTICLE 17 - GOVERNING LAW AND JURISDICTION

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17

17.01 Mediation

A. If a dispute arises out of or relates to this Agreement, or the breach thereof, and if the dispute cannot be settled through negotiation, the Parties may mutually agree to first try in good faith to settle the dispute by mediation under the rules of the American Arbitration Association’s Commercial Mediation Procedures before resorting to arbitration, litigation, or some other dispute resolution procedure. Any controversy or claim arising out of or relating to this Agreement, or the breach thereof which remains unresolved for more than 30 days after commencement of mediation shall be settled in accordance with Paragraph 17.02 below.

17.02 Binding Arbitration

A. This Agreement and all matters arising from or connected with it shall be governed by and construed in accordance with the laws of the State of South Dakota, without regard to the conflict of law provisions thereof.

B. Any dispute, controversy or claim arising from or connected with this Agreement, including, without limitation, one regarding the existence, validity or termination of this Agreement or the consequences of its nullity (a "Dispute") shall be finally resolved by arbitration using the Rules of the American Arbitration Association’s Commercial Arbitration Rules and Arbitration Procedures which are deemed to be incorporated by reference into this section. However, the arbitration shall not be filed with the American Arbitration Association or operate under its auspices. Rather, the Parties shall mutually agree upon a single arbitrator who is licensed to practice law and certified as a neutral (“a Neutral”); if the Parties cannot agree upon a Neutral, then each party shall select a Neutral who has no current or prior attorney-client relationship with either party and the selected Neutrals shall then select a Neutral to serve as the single arbitrator.

C. The seat of the arbitration shall be the City of Sioux Falls, South Dakota, and the language of the arbitration shall be English.

D. The failure or refusal of any party, having been given due notice thereof, to participate at any stage of the arbitration proceedings shall not prevent the proceedings from continuing, nor shall such failure or refusal impair the validity of the award or cause the award to be void or voidable, nor shall it be a basis for challenge of the validity or enforceability of the award or of the arbitration proceedings.

E. The parties waive any right to refer points of law or to appeal to the courts, to the extent that such waiver can validly be made.

F. The parties agree that the arbitrator shall have the power to order on a provisional basis any relief which it would have power to grant in a final award.

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G. Any arbitral award shall be binding from the day it is made and judgment upon the award may be entered in any court of competent jurisdiction.

H. Notwithstanding the foregoing, either party may seek interim measures of protection, including temporary, preliminary and injunctive relief from a court of competent jurisdiction, but only to the extent necessary to obtain, or to challenge the grant or continuation of, that relief. The Parties shall otherwise still be required to act in accordance with this Paragraph 17.02 as if no application for interlocutory relief had been made.

ARTICLE 18 - MISCELLANEOUS

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18.01 No assignment by a party hereto of any rights under or interests in the Contract Documents will be binding on another party hereto without the written consent of the party sought to be bound; and, specifically but without limitation, moneys that may become due and moneys that are due may not be assigned without such consent (except to the extent that the effect of this restriction may be limited by law), and unless specifically stated to the contrary in any written consent to an assignment no assignment will release or discharge the assignor from any duty or responsibility under the Contract Documents.

18.02 Any provision or part of the Contract Documents (not including the Specifications and Drawings) held to be void or unenforceable under any Law or Regulation shall be deemed stricken, and all remaining provisions shall continue to be valid and binding upon OWNER and NEI, who agree that the Contract Documents shall be reformed to replace such stricken provision or part thereof with a valid and enforceable provision that comes as close as possible to expressing the intention of the stricken provision.

18.03 This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which shall constitute one agreement that is binding upon all of the Parties hereto. Facsimile, PDF, or similar reproductions of signatures of the Parties hereto shall be binding.

18.04 The Parties acknowledge that each party and their counsel have had the opportunity to review and negotiate the terms and conditions of this Agreement, and that the normal rule of construction to the effect that any ambiguities are to be construed against the drafting party shall not by employed in the interpretation of this Agreement or any Exhibits or Amendments hereto.

18.05 The OWNER agrees to allow NEI the right to advertise, in any way, the Work being performed by NEI. The OWNER agrees to provide any performance data necessary for NEI to advertise the Work. The OWNER agrees it will assist in the coordination of any tours necessary for NEI to showcase the Work.

34

18.06 The OWNER acknowledges that clerical mistakes such as spelling errors, reference errors, and other errors are possible and hereby give NEI the right to correct any such errors.

18.07 All representations, indemnifications, warranties and guarantees made in, required by or given in accordance with the Contract Documents, as well as all continuing obligations indicated in the Contract Documents, will survive final payment, completion and acceptance of the Work and termination or completion of the Contract.

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IN WITNESS WHEREOF, OWNER and NEI have signed this Agreement in duplicate. One counterpart each has been delivered to OWNER and NEI. All portions of the Contract Documents have been signed, initialed or identified by OWNER and NEI.

OWNER:    Dakota Ethanol LLC                Nelson Engineering, Inc.

By: /s/ Scott Mundt                By: /s/ Jerry Baker        

Date: 11/30/17                 Date: 11/30/17            

Its:     CEO                    Its:     CEO            

Address for giving notices:                Address for giving notices:

Dakota Ethanol LLC            Nelson Engineering, Inc.        

46269 SD Hwy 37            500 W Hanger Street        

Wentworth, SD 57075            Sioux Falls, SD 57104        

Designated Representative:                Designated Representative:

Name: Scott Mundt                    Name: Jerry Baker        

Title: General Manager                     Title: CEO            

Address: 46269 SD Hwy 34             Address: 500 W Hanger Street    

Wentworth, SD 57075     Sioux Falls, SD 57104    

Phone: 605.483.2679                 Phone: 605.275.2025        

Facsimile: 605.483.2681                 Facsimile:      605.385.0007        

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EX-10.29

Form 6281-CP (6-2017)

Page 1 of 34

Amended and Restated CREDIT AGREEMENT

This Amended and Restated Credit Agreement (as amended, modified or restated from time to time, this “Agreement”) dated as of February 2, 2018 by and between Farm Credit Services of America, PCA and Farm Credit Services of America, FLCA (each and collectively “Lender”) and Dakota Ethanol, L.L.C., a South Dakota limited liability company (“Borrower”), in consideration of credit extended by Lender under the terms and conditions set forth below, amends and restates the original Credit Agreement dated May 15, 2013 as amended from time to time; the parties hereto agree as follows:

Article 1 - DEFINITIONS

As used in this Agreement, the following terms shall have the meanings set forth below (and such meaning shall be equally applicable to both the singular and plural form of the terms defined, as the context may require):

‘Advance’ shall mean funds advanced to Borrower under any Loan Facility described in Article 2 herein.

‘Affiliate’ shall mean any Person, (other than a Subsidiary) which directly or indirectly, is in Control of, is controlled by, or is under common Control with, any other Person.

‘Business Day’ shall mean a day, other than a Saturday or Sunday, on which commercial banks are open for business in Omaha, Nebraska.

‘Closing Date’ shall mean that date on which Lender and Borrower have executed all Loan Documents to which they are parties and on which all conditions in Article 3 have been met.

‘Code’ means the Internal Revenue Code of 1986, as amended, and in effect from time to time.

‘Collateral’ shall mean the property described in Article 4, together with any other personal or real property in which Lender may be granted a Lien to secure payment of the Obligations.

‘Collateral Agreements’ shall mean any security agreements, UCC financing statements, lease assignments, mortgages, deeds of trust or any other document granting a Lien to secure the Obligations.

‘Control’ shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies, whether through ownership of voting securities, by contract or otherwise.

‘Debt’ or ‘Indebtedness’ shall mean (i) indebtedness of Borrower for borrowed money, (ii) indebtedness of Borrower for the deferred purchase price of property or services (except trade payables arising in the ordinary course of business), (iii) guarantees, endorsements (other than for collection in the ordinary course of business) and other contingent obligations of Borrower to purchase, to provide funds for payment, to supply funds to invest in any person, corporation or other entity or otherwise to assure a creditor against loss, including contingent obligations under any interest rate swaps agreement or any agreement related to a commodity hedging transaction or foreign currency exchanged, (iv) obligations of Borrower under leases which shall have been or should be in accordance with GAAP, recorded as capital leases, (v) unfunded benefit liabilities of Borrower and (vi) any liability of Borrower that would be classified as indebtedness in accordance with GAAP.

‘Default Rate’ shall mean a rate which is 4 percent per annum higher than the highest rate of interest otherwise then accruing on all or any portion of each Loan, the Obligations or any other Indebtedness owing to Lender.

‘Dollar’and ‘$’ shall mean dollars in lawful currency of the United States of America.

‘Environmental Laws’ shall mean any and all federal, state, and local statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic hazardous substances or wastes into the environment, including, without limitation, ambient air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.

‘ERISA’shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, including any rules and regulations promulgated thereunder.

‘ERISA Affiliate’ shall mean any trade or business which, together with Borrower, is treated as a single employer under Section 414 of the Code.

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‘ERISA Event’ shall mean (i) any reportable event, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a plan; (ii) the existence of an “accumulated funding deficiency”; (iii) the filing of an application for a waiver of the minimum funding standard with respect to any plan; (iv) the incurrence by Borrower or any of its ERISA Affiliates of any liability with respect to the termination of any plan; (v) the receipt by Borrower or the ERISA Affiliate of any notice relating to an intention to terminate any plan or to appoint a trustee to administer any plan; (vi) the incurrence by Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any plan; or (vii) the receipt by Borrower or any ERISA Affiliate of any notice concerning the imposition of withdrawal liability.

‘Event of Default’ shall have the meaning set forth in Article 8.

‘GAAP’ shall mean those generally accepted accounting principles set forth in Statements of the Financial Accounting Standards Board and in Opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants or which have other substantial authoritative support in the United States of America and are applicable in the circumstances, as applied on a consistent basis.

‘Governmental Authority’ means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

‘Lien’shall mean any mortgage, deed of trust, pledge, charge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever, including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing and the filing of any financing statement under the UCC (other than any such financing statement filed for informational purposes only) or comparable law or any jurisdiction to evidence any of the foregoing.

‘Loan’ shall mean the aggregate amount of outstanding Advances under each Loan Facility; and ‘Loans’ shall mean the aggregate amount of outstanding Advances under all of the Loan Facilities.

‘Loan Documents’ shall mean this Agreement, the Collateral Agreements, and any other document or instrument executed in connection with or evidencing any Loan (including any amendment, restatement or modification thereto).

‘Material Adverse Effect’ shall mean any event, occurrence or circumstance that has a material negative effect on (i) the business, operations, property, liabilities, condition (financial or otherwise) or prospects of Borrower, taken as a whole, or (ii) the validity or enforcement of any of the Loan Documents or the rights or remedies of Lender hereunder, or (iii) the ability of Borrower, taken as a whole, to perform their obligations under any of the Loan Documents.

'Material Contracts' means all agreements and contracts in effect presently and entered into from time to time hereafter which are material to the sale or disposal of products and by-products produced by Borrower, as such agreements and contracts are amended, restated, supplemented or otherwise modified from time to time.

‘Obligations’ shall mean any Advances and other amounts due to Lender under the Loan Documents, including without limitation, principal, interest, fees, costs, and expenses, together with all renewals, extensions, or refinancing of same and any future and additional loans or advances made to or on behalf of Borrower by Lender or under any other Loan Document for any purpose, including advances for the protection of Collateral, all attorney fees, costs and expenses incurred by Lender in the collection of any Loan or in the enforcement or preservation of the rights of Lender in and to the Collateral.

‘Permitted Indebtedness’ shall mean (i) Indebtedness of Borrower arising under this Agreement; (ii) Indebtedness listed in the Schedule of Permitted Indebtedness attached hereto as Schedule 7.8; (iii) unsecured Subordinated Debt; (iv) trade payables of Borrower incurred in the ordinary course of business.

‘Permitted Liens’ shall mean (i) Liens securing the Obligations; (ii) Liens for taxes, assessments or similar charges not yet due; (iii) Liens of materialmen, mechanics, warehousemen, or carriers or other like liens arising in the ordinary course of business and securing obligations which are not yet delinquent; (iv) purchase money Liens or purchase money security interests upon or in any property acquired or held by Borrower in the ordinary course of business to secure Permitted Indebtedness; (v) Liens and security interests existing on the date hereof which were granted to secure Permitted Indebtedness; and (vi) those Liens and security interests which in the aggregate constitute an immaterial and insignificant monetary amount with respect to the net value of Borrower’s assets.

‘Person’ shall mean any individual, corporation, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated organization or government.

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‘Plan’ shall mean any employee benefit or other plan established or maintained, or to which contributions have been made, by Borrower or any ERISA Affiliate and which is covered by Title IV of ERISA, other than a Multi-employer Plan.

‘Potential Default’ shall mean any event or condition, which, with the lapse of time, or giving of notice, or both, would constitute an Event of Default.

‘Regulatory Change’shall mean, with respect to Lender, any change after the date of this Agreement in United States federal, state, municipal or foreign laws or regulations (including, without limitation, Regulation D of the Board of Governors of the Federal Reserve System) or the adoption or making after such date of any interpretations, directives or requests applying to a class of banks, including such Lender of or under any United States, federal, state, municipal or foreign laws or regulations (whether or not having the force of law) by any court or governmental or monetary authority charged with the interpretation or administration thereof. Notwithstanding anything herein to the contrary, (a) the Dodd Frank Wall Street Reform and Consumer Protection Act, and all requests, rules, guidelines and directives promulgated thereunder shall be deemed to be ‘Regulatory Change’, regardless of the date enacted or adopted, and (b) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a ‘Regulatory Change’, regardless of the date enacted, adopted or issued.

‘Reportable Event’ shall mean, any of the events set forth in Section 4043 of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the Pension Benefit Guaranty Corporation.

‘Request’ shall mean acommunication (by email, telephone, letter, fax or otherwise) from a person reasonably believed by Lender to be Borrower or an authorized officer or manager of Borrower making the Request upon which Lender shall be entitled to rely.

‘Subordinated Debt’ shall mean Indebtedness of Borrower which has been subordinated to the Obligations pursuant to a debt subordination agreement in form and substance acceptable to Lender.

‘Subsidiary’ shall mean any Person with respect to which Borrower has voting power to elect a board of directors (or other similar governing body), or has the power under ordinary circumstances to directly or indirectly control the management thereof.

‘Unfunded Benefit Liabilities’ shall mean, with respect to any Plan, the amount (if any) by which the present value of all benefit liabilities (within the meaning of Section 4001(a)(16) of ERISA) under the Plan exceeds the fair market value of all Plan assets allocable to such benefit liabilities, as determined on the most recent valuation date of the Plan and in accordance with the provisions of ERISA for calculating the potential liability of any Borrower or any ERISA Affiliate under Title IV of ERISA.

‘Working Capital’ shall mean current assets minus current liabilities (including all Advances under Loan Facility A as a current liability). For purposes of determining the current assets, any amount available under Loan Facility B (less the amount that would be considered a current liability under GAAP if fully advanced) hereto may be included as a current asset up to a maximum amount of $15,000,000.00.

ARTICLE 2 - LOAN FACILITIES

Subject to the terms and conditions set forth in this Agreement, Lender agrees to make Advances to Borrower on any Business Day from the date hereof to, but excluding the Final Advancement Date identified for said Advances, so long as no Event of Default or Potential Default has occurred.

Section 2.1 Loan Facilities.

Section 2.1.1 Loan Facility A Operating (304761-069993-214088).

Lender agrees to advance sums to Borrower up to the aggregate amount of $10,000,000.00 (Maximum Principal Balance) until November 1, 2019 (Final Advancement Date). Each Advance made will reduce the funds available for future advances by the amount of the Advance. Repayments of principal will be available for subsequent Advances. The commitment under said Loan will be used by Borrower for financing the operating needs of the companyand Borrower agrees not to request or use such proceeds for any other purpose.

a) Interest.

Borrower hereby promises to pay interest on the principal indebtedness outstanding from time to time on each Advance from and including the date of such Advance and otherwise in accordance with statements issued by Lender.  In the event an Index or reference rate is used to calculate the applicable interest rate, then, in no

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event shall the Index or reference rate used to determine the applicable interest rate be less than zero percent (0.00%), regardless of the actual published Index or reference rate. Interest shall be payable on the following dates, provided that interest accruing at the Default Rate, if applicable, shall be payable on demand.

Said interest shall be payable on the 1st day of each month continuing on March 1, 2018 at the following rate.

Interest shall accrue from the date of each Advance at a variable rate per annum equivalent to the One Month LIBOR Rate, plus 3.00%. The interest rate will continue to adjust higher or lower on February 15th, 2018, and on the 15th of every month thereafter to reflect any change in the One Month LIBOR Rate and this higher or lower rate will thereafter apply to the outstanding principal indebtedness and remain in effect until a different rate of interest is established. The amount of any subsequent payments will be increased or decreased accordingly to reflect the different rate of interest without in any manner changing the due date of the payments. There is no limitation on the amount of the change in the interest rate.

The One Month LIBOR Rate is the London InterBank Offered Rate based on the LIBOR rate published on the last Business Day of the month in the 'Money Rates' column of the Wall Street Journal, rounded to the nearest 0.05%, defined therein as 'the Intercontinental Exchange Benchmark Administration Ltd. (or any successor administrator) average of interbank offered rates for dollar deposits in the London market.' If this index is no longer available, the Lender will select a new index, which is based upon comparable information

b) Principal

Principal Due at Maturity.

Borrower hereby promises to pay principal, plus all accrued interest and any unpaid fees, costs or expenses in full on November 1, 2019 (‘Maturity Date’).

c) Facility Fee.

Non-Use Fee.

In connection with Loan Facility A (304761-069993-214088). Borrower agrees to pay Lender an additional fee when the outstanding principal balance is less than the Maximum Principal Balance. This fee will be equal to 0.25% per annum, based upon a 360-day year, calculated on the difference between the Maximum Principal Balance and the daily outstanding principal balance. The fee shall be calculated, due and payable quarterly in arrears, continuing through the maturity date.

Section 2.1.2 Loan Facility B (304761-073489-225482)(formally known as Facility D).

Lender agrees to advance sums to Borrower up to the aggregate amount of $40,000,000.00 (subject to the Restricted Commitment and Reducing Commitment terms set forth in 2.1.2 (a) and 2.1.2 (b)) (“Maximum Principal Balance”) until January 1, 2026 (Final Advancement Date). Repayments of principal will be available for subsequent Advances. The commitment under said Loan will be used by Borrower to finance capital expenditures related to plant expansion of the "as will be built" 90-million gallon per year ethanol plant located near Wentworth, SD to fund investments and to provide working capital. Borrower agrees not to request or use such proceeds for any other purpose.

a) Restricted Commitment.

To the extent any requested Advance would cause the outstanding principal balance to exceed $30,000,000.00, such Advance shall be restricted until such time Borrower is able to demonstrate at least two consecutive months of ethanol production in excess of 5,416,666 gallons per month (65,000 gallons of annualized production). During any such restriction period, restricted Advances will be subject to Lender approval and may only be used to finance capital expenditures related to the plant expansion and technology upgrades, and Borrower shall be required to submit draw requests acceptable to Lender prior to each restricted Advance.

b) Reducing Commitment.

Commencing on January 1, 2020, the Maximum Principal Balance shall be reduced by $1,750,000.00 on the 1st day of each January and July through and including July 1, 2023, at which time the balance available for subsequent advances shall be $26,000,000.00. The obligation to advance funds may be terminated in Agent’s sole discretion prior to the Final Advancement Date if intervening liens have been filed on any Collateral since the Closing Date. If the outstanding principal balance is at or below the Maximum Principal Balance (taking into consideration any reductions in commitment)(“Applicable Maximum Balance”) up to and including the Final Advancement Date, Borrower will be billed interest only; if the outstanding principal balance exceeds

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the Applicable Maximum Principal Balance, Borrower will make principal payments in such amount as necessary to reduce principal to the Applicable Maximum Principal Balance available at that time

c) Interest.

Borrower hereby promises to pay interest on the principal indebtedness outstanding from time to time on each Advance from and including the date of such Advance and otherwise in accordance with statements issued by Lender. Interest shall be payable on the following dates, provided that interest accruing at the Default Rate, if applicable, shall be payable on demand. In the event an Index or reference rate is used to calculate the applicable interest rate, then, in no event shall the Index or reference rate used to determine the applicable interest rate be less than zero percent (0.00%), regardless of the actual published Index or reference rate.

Interest shall be payable on the 1st day of each quarter commencing on April 1, 2018 at the following rate per annum.

LIBOR Rate Repricing to 30-Day Discount Note.

Interest shall accrue from the date of each Advance at a variable rate per annum equivalent to the One Month LIBOR Rate, plus 3.25% until February 1, 2023 when interest shall accrue at a variable rate per annum equivalent to the 30-Day Discount Note Rate plus 3.50%. The One Month LIBOR Rate shall be adjusted higher or lower on February 15, 2018, and on the 15th day of every month thereafter to reflect any change in the One Month LIBOR Rate and the 30-Day Discount Note Rate shall be adjusted higher or lower on the 15th day of every month with any change in this rate. Any higher or lower rate will thereafter apply to the outstanding principal indebtedness and remain in effect until the different rate of interest becomes effective. The amount of any subsequent payments will be increased or decreased accordingly to reflect the different rate of interest without in any manner changing the due date of the payments. There is no limitation on the amount of the change in the interest rate.

The One Month LIBOR Rate is the London InterBank Offered Rate based on the LIBOR Rate published on the last Business Day of the month in the ‘Money Rates’ column of the Wall Street Journal, rounded to the nearest 0.05%, defined therein as ‘the Intercontinental Exchange Benchmark Administration Ltd. (or any successor administrator) average of interbank offered rates for dollar deposits in the London market.’ If this index is no longer available, the Lender will select a new index which is based upon comparable information.

The 30-Day Discount Note Rate is equal to the monthly average of bond-equivalent Federal Farm Credit Banks Funding Corporation 30-day discount note costs (for market days only) published on the Federal Farm Credit Banks Funding Corporation’s web site found in the farm credit system, funding cost index, archive section at www.farmcreditfunding.com/ffcb_live/fundingCostIndex.html. The index changes monthly on the first Business Day of the month, using the previous month’s average index. Existing loans tied to the 30-Day Discount Note index reprice on the 15th day of the month, using the previous month’s average index.

d)Principal

Principal Due at Maturity

Borrower hereby promises to pay principal, plus all accrued interest and any unpaid fees, costs or expenses in full on January 1, 2026 (maturity date).

e) Minimum Balance.

If, at any time, the outstanding balance on Loan Facility B is less than $1,000,00 all commitments by Lender

to make any additional Advances under all loan facilities in this Agreement shall be terminated without

further notice and any Advances thereafter shall only be made at Lender’s sole discretion and subject to such conditions as Lender may require.

f) Facility Fees.

Non-Use Fee.

In connection with Loan Facility B (304761-073489-225482), Borrower agrees to pay Lender an additional fee when the outstanding principal balance is less than the Maximum Principal Balance available. This fee will be equal to 0.50 % per annum, based upon a 360 day year, calculated on the difference between

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the Maximum Principal Balance and the daily outstanding principal balance. The fee shall be calculated, due and payable quarterly in arrears, continuing through the maturity date.

Origination Fee.

Borrower agrees to pay Lender an origination fee in the amount of $60,000.00 (which $10,000.00 has been received) in connection with Loan Facility B (304761-073489-225482), which shall be due and payable upon the closing date of this Agreement.

Appraisal Fee.

Borrower agrees to pay Lender an appraisal fee in the amount of $15,000.00 in connection with Loan FacilityB (304761-073489-225482), which shall be due and payable upon the closing date of this Agreement.

Administrative Fee.

Borrower agrees to pay Lender an annual, non-refundable, non-prorated administrative fee in the amount of $2.500.00 in connection with Loan Facility B (304761-073489-225482) due February 1, 2018 and each year thereafter.

Section 2.1.3 Loan Facility C (304761-075422-2706447)(previously known as Facility E).

Lender previously advanced funds to the Borrower in the amount of $8,000,000.00 (Maximum Principal Balance) which as of the date of the Agreement has an unpaid principal balance of $8,000,000.00. Repayments of principal will not be available for subsequent Advances.

d) Interest.

Borrower hereby promises to pay interest on the principal indebtedness outstanding from time to time on each Advance from and including the date of such Advance and otherwise in accordance with statements issued by Lender.  Interest shall be payable on the following dates, provided that interest accruing at the Default Rate, if applicable, shall be payable on demand: In the event an Index or reference rate is used to calculate the applicable interest rate, then, in no event shall the Index or reference rate used to determine the applicable interest rate be less than zero percent (0.00%), regardless of the actual published Index or reference rate.

Interest shall be payable on the 1st day of each month continuing on March 1, 2018 at the following rate per annum.

LIBOR Rate Repricing to 30-Day Discount Note.

Interest shall accrue from the date of each Advance at a variable rate per annum equivalent to the One Month LIBOR Rate, plus 3.25% until July 28, 2022 when interest shall accrue at a variable rate per annum equivalent to the 30-Day Discount Note Rate plus 3.50%. The One Month LIBOR Rate shall be adjusted higher or lower on February 15, 2018, and on the 15th day of every month thereafter to reflect any change in One Month LIBOR Rate and the 30-Day Discount Note Rate shall be adjusted higher or lower on the 15th day of every month with any change in this rate. Any higher or lower rate will thereafter apply to the outstanding principal indebtedness and remain in effect until the different rate of interest becomes effective. The amount of any subsequent payments will be increased or decreased accordingly to reflect the different rate of interest without in any manner changing the due date of the payments. There is no limitation on the amount of the change in the interest rate.

The One Month LIBOR Rate is the London InterBank Offered Rate based on the LIBOR Rate published on the last Business Day of the month in the ‘Money Rates’ column of the Wall Street Journal, rounded to the nearest 0.05%, defined therein as ‘the Intercontinental Exchange Benchmark Administration Ltd. (or any successor administrator) average of interbank offered rates for dollar deposits in the London market.’ If this index is no longer available, the Lender will select a new index which is based upon comparable information.

The 30-Day Discount Note Rate is equal to the monthly average of bond-equivalent Federal Farm Credit Banks Funding Corporation 30-day discount note costs (for market days only) published on the Federal Farm Credit Banks Funding Corporation’s web site found in the farm credit system, funding cost index, archive section at www.farmcreditfunding.com/ffcb_live/fundingCostIndex.html. The index changes monthly on the first Business Day of the month, using the previous month’s average index. Existing loans tied to the 30-Day Discount Note index reprice on the 15th day of the month, using the previous month’s average index

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e) Principal.

Equal Principal Payments (Plus Interest).

Borrower hereby promises to pay installment(s) of equal principal payments of $1,000,000.00 plus accrued interest commencing August 1, 2018 and continuing annually thereafter on the 1^st day of August, up to and including August 1, 2025, when the entire unpaid principal, plus all accrued interest and any unpaid fees, costs or expense shall be due and payable in full.

Section 2.2 Computation.

Interest shall be computed on the basis of a 360 day year, but charged on the actual number of days elapsed. If interest is not paid as and when it is due, it may be added to the principal, become and be treated as a part thereof, and shall thereafter bear like interest.

Section 2.3 Fees and Late Charges.

Borrower agrees to pay Lender the following fees and late charges, in addition to those fees, costs and expenses referenced in Section 2.1 and Section 9.5 of this Agreement and in any Fee Letter.

Section 2.3.1 Late Charges.

Borrower agrees to pay late charges when any amount of a scheduled payment is past due. Late charges are 0.50 percent of the amount past due and may be assessed by Lender after the payment due date and every 15 days thereafter up to 60 days past the due date. Late charges may be added to unpaid principal and interest of the Loan may be charged thereon.

Section 2.3.1 Overdraft Fees.

Borrower agrees to pay a fee for any Advance made by draft to Borrower’s Loan, which would cause the outstanding principal balance on said Loan to exceed the Maximum Principal Balance, whether or not Lender honors the draft. The amount of said fee shall be determined by Lender, from time to time, as the fee it will charge its borrowers for overdrafting a line of credit.

Section 2.3.1 Wire Fee.

Borrower agrees to pay Lender a fee for each outgoing wire transaction. The amount of said fee shall be determined by Lender, from time to time, as the fee it will charge its borrowers for wire transactions. The cut off time is 1:30 CST for non-recurring wires and 2:00 CST for recurring wires.

Section 2.4 Repayment.

In accordance with this Agreement and the following provisions, Borrower agrees to pay Lender, at the location identified by Lender, the entire unpaid principal balance, plus interest, fees and other Lender’s costs and reasonable expenses in U.S. dollars. If any payment of principal or interest falls due on a day that is not a Business Day, then such due date shall be extended to the next following Business Day. All payments received on the Loan (unless the payment is designated by Borrower as an interest payment) shall first be applied to protective advances and fees, then to reduce principal and finally to accrued interest. Upon the occurrence and continuance of an Event of Default, payments on the Loan shall first be applied to default interest thereon, then to protective advances and fees, then to accrued interest thereon, and finally to principal.

Funds received by Lender will be applied to reduce principal the day received, if before 5:00 p.m., Central Standard Time, unless received on a day that is not a Business Day, in which case said funds will be credited the next Business Day. Wire transfers will be given credit the day received only if received before 3:00 p.m., Central Standard Time.

Funds received by Lender on a revolving Loan Facility shall be immediately available for re-advance under the provisions of this Agreement if made by wire transfer, cash or other method of ensuring funds immediately available to Lender. Payment made in funds not immediately available to Lender, shall not be available to Borrower for re-advance for two Business Days thereafter or until Lender has confirmed the availability of funds.

In the event that Lender shall, for any reason, require a promissory note to evidence Borrower’s repayment obligation, upon receipt of notice from Lender, Borrower agrees to execute and deliver to Lender a promissory note or notes in form prescribed by Lender consistent with the terms of this Agreement.

Section 2.5 Prepayment.

This provision applies to all prepayments of principal, whether mandatory or voluntary, which prepay any Loan in full or in part or which exceed any scheduled principal payments thereon.

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Section 2.5.1 Voluntary Prepayments.

Subject to the payment of any applicable prepayment fees or funding losses as provided herein, Borrower may prepay any Loan in full or in part before its maturity on any Business Day, specifying the Loan upon which any prepayment is made. Such additional principal payment shall not, however, defer, postpone or alter the amount or due date of any scheduled payments required under this Agreement.

Section 2.5.2 Mandatory Prepayments.

If, at any time, the outstanding unpaid principal amount on any Loan shall exceed the Maximum Principal Balance on said Loan or the Minimum Borrowing Base Margin (as that term may be defined in this Agreement) is not maintained, Borrower shall immediately repay Advances in an amount sufficient to reduce the outstanding unpaid principal to the Maximum Principal Balance or an amount sufficient to restore the Minimum Borrowing Base Margin (if this Agreement provides for a Borrowing Base Report with respect to said Loan).

Section 2.6 Maximum Lawful Rate of Interest.

With the intent to comply with all applicable usury laws, it is agreed that, any provisions in this Agreement or any of the other Loan Documents to the contrary notwithstanding, in no event shall this Agreement or any other Loan Document require the payment or permit the collection of interest or any amount in the nature of interest or fees in excess of the maximum amount permitted by applicable law. If any such excess interest is contracted for, charged or received pursuant to this Agreement or any other Loan Document, so that the amount of such interest contracted for, charged or received shall exceed the maximum amount of interest permitted by applicable law, then in such event any such excess which may have been collected shall, at Lender’s option, either be credited to the principal balance of the Loan as a prepayment of principal, without any prepayment fee, or refunded to Borrowers, and the effective rate of interest shall automatically be reduced to the maximum lawful rate allowed under applicable law. Without limiting the foregoing, all calculations of the rate of interest contracted for, charged or received with respect to the Loan or under this Agreement or any other Loan Document which are made for the purpose of determining whether such rate exceeds the maximum lawful contract rate, shall be made, to the fullest extent permitted by applicable law, by amortizing, prorating, allocating and spreading in equal parts during the period of the full stated term of the indebtedness, all interest at any time contracted for, charged to or received from Borrowers in connection with such indebtedness; provided, however, that if any applicable state law is amended or the law of the United States of America preempts any applicable state law, so that it becomes lawful for Lender to receive a greater interest rate per annum than is presently allowed, Borrowers agree that, on the effective date of such amendment or preemption, as the case may be, the lawful maximum rate hereunder shall be increased to the lesser of (a) the maximum interest rate per annum allowed by the amended state law or the law of the United States of America and (b) the then current interest rate.

Section 2.7 Joint and Several Obligations.

The obligations of each Borrower hereunder (if more than one Borrower) are joint and several. Each reference to the term ‘‘Borrower’’ in this Agreement shall be deemed to refer to each Borrower; each representation and warranty made by a Borrower shall be deemed to have been made by each Borrower; each covenant and undertaking on the part of a Borrower shall be deemed individually applicable with respect to each Borrower; and each event constituting an Event of Default under this Agreement shall be determined with respect to each Borrower. A separate action or actions may be brought and prosecuted against any Borrower whether an action is brought against the other Borrower or whether the other Borrower is joined in any such action or actions. Each Borrower waives any right to require Lender to: (a) proceed against the other Borrower; (b) proceed against or exhaust any security held from the other Borrower; or (c) pursue any other remedy in Lenders’ power whatsoever. Notices under this Agreement required to be provided to Borrowers shall be effective if provided to any Borrower. Any consent on the part of Borrowers under this Agreement shall be effective when provided by any Borrower, and Lender shall be entitled to rely upon any notice or consent given by any Borrower as being notice or consent given by all Borrowers hereunder.

In the event any obligation of Borrowers under this Agreement is deemed to be an agreement by any individual Borrower to answer for the debt or default of another Borrower or as a hypothecation of property as security therefor, each Borrower represents and warrants that: (a) no representation has been made to it as to the creditworthiness of any other Borrower and (b) it has established adequate means of obtaining from any other Borrower on a continuing basis, financial or other information pertaining to such other Borrower’s financial condition. Each Borrower expressly waives diligence, demand, presentment, protest and notice of every kind and nature whatsoever, consents to the alteration or release by Lender in any manner of any security now or hereafter held in connection with any obligations now or hereafter under or secured by this Agreement, and consents that Lender and any Borrower may deal with each other in connection with said obligations or otherwise, or alter any contracts now or hereafter existing between them, in any manner whatsoever, including, without limitation, the renewal, extension, acceleration, changes in time for payment, and increases or decreases in any payment, rate of interest or other amounts owing, all without in any way altering

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the liability of any Borrower or affecting any security for such obligations. Should any default be made in the payment of any such obligations or in the terms or conditions of any security held, Lender is hereby expressly given the right, at its option, to proceed in the enforcement of this Agreement independently of any other remedy or security it may at any time hold in connection with such obligations secured and it shall not be necessary for Lender to proceed upon or against or exhaust any other security or remedy before proceeding to enforce proceed upon or against or exhaust any other security or remedy before proceeding to enforce its rights against any Borrower. Each Borrower further waives any right of subrogation, reimbursement, exoneration, contribution, indemnification, setoff or other recourse in respect of sums paid to Lender by any Borrower until such time as all Obligations are paid in full.

ARTICLE 3 - CONDITIONS PRECEDENT

Section 3.1 Lender Stock.

Each Borrower agrees to own or purchase if necessary, stock in Farm Credit Services of America ACA, as required by Lender’s policies and bylaws. Borrower purchasing such stock shall do so by executing the Farm Credit Services of America ACA Stock Purchase Agreement.

Section 3.2 Conditions Precedent to Initial Advance.

The obligations of Lender to make its initial Advance shall be subject to the conditions precedent that Lender shall have received on or before this initial Advance all of the following in form and substance satisfactory to Lender:

Section 3.2.1 Organizational Documents.

Copies of the organizational documents of Borrower and any Subsidiary, including certificates of good standing in their State of organization, and copies of all resolutions, incumbency certificates or other authorizations of Borrower and any Subsidiary, certified by the appropriate officers of such entity as being in full force and effect authorizing, as applicable, the Loans as herein provided, and for the execution, delivery and performance of this Agreement and the other Loan Documents or any instruments or agreements required hereunder to which such entity is a party.

Section 3.2.2 Evidence of Insurance.

Insurance certificates and such other evidence, in form or substance satisfactory to Lender, of all insurance required to be maintained under this Agreement and the Loan Documents.

Section 3.2.3 Loan Documents.

All duly executed originals of the Loan Documents.

Section 3.2.4 Payment of Fees and Expenses.

Evidence that Borrower has paid all fees and expenses then due and payable under this Agreement.

Section 3.2.5 Consents, Licenses and Approvals.

Evidence satisfactory to Lender that all consents, licenses and approvals of Governmental Authorities and third parties have been obtained which are necessary for, or required as a condition of, the validity and enforceability of the Loan Documents.

Section 3.2.6 Title and Lien Verification.

In connection with all real property included in the Collateral, Lender shall have received either a preliminary title opinion from an attorney acceptable to Lender or a title insurance commitment in an amount and from a title insurance company in form, scope and substance satisfactory to Lender to assure Lender of its lien priority as required by this Agreement and with no exceptions contained therein except as are approved in writing by attorneys for Lender. Further, that evidence satisfactory to Lender and the title company be obtained by Borrower establishing that all labor and material bills have been paid and that there is no possibility of a Lien for such items which might be prior to Lender’s lien on the Collateral. In connection with all personal property included in the Collateral, Lender shall have received searches of appropriate filing offices showing no Liens filed against the Collateral, except those to be released prior to disbursement or otherwise acceptable to Lender to assure Lender of its lien priority as required by this Agreement.

Section 3.2.7 No Material Change.

No change shall have occurred in the condition, financial or otherwise, or operation of Borrower since the Loan was approved based on information known to Lender at time of Loan approval, which could reasonably be expected to result in a Material Adverse Effect.

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Section 3.2.8 Further Assurances.

Borrower shall have provided and/or executed and delivered to Lender such further assignments, documents or financing statements, in form and substance satisfactory to Lender, that Borrower is to execute and/or deliver pursuant to the terms of the Loan Documents, this Agreement, or as Lender may otherwise reasonably require.

Section 3.2.9 Opinion of Counsel.

Borrower shall have requested its counsel to prepare a written opinion, addressed to Lender and dated the Closing Date, covering the matters set forth in Exhibit ‘A’ hereto, and such opinion shall have been delivered to Lender.

Section 3.2.10 Appraisal.

Lender shall have received appraisals satisfactory to Lender in both form and substance for any portion of the Collateral constituting real property and such appraisals shall be prepared in conformance with prevailing standards of appraisal practice, and signed by an appraiser acceptable to Lender.

Section 3.3 Conditions Precedent to All Advances.

The obligations of Lender to fund each Advance after the initial Advance is subject to Lender’s satisfaction of each of the following as well as those in Section 3.2 and each request by Borrower for an Advance shall constitute a representation by Borrower that all conditions precedent in this Article have been satisfied and the amount of the Advance does not exceed the limits set forth in Article 2 hereof, violate or exceed any other provision of this Agreement.

Section 3.3.1 No Default or Potential Default.

As of the Advance date, no Event of Default or Potential Default shall have occurred and be continuing and disbursing the amount of the Advance requested shall not result in an Event of Default or Potential Default.

Section 3.3.2 Representations and Warranties.

The following statements shall be true and the giving of a Request for an Advance by any Borrower shall be deemed to be a representation and warranty by Borrower that the representations and warranties contained in Article 5 hereof and in the other documents to be delivered hereunder are true and complete on both the date of such Request and the date of such Advance as though made on and as of such date.

Section 3.3.3 No Intervening Liens.

There are no intervening or conflicting liens (including lis pendens) on or claims to Collateral, except for Permitted Liens.

Section 3.3.4 No Notice.

No notice has been received from Borrower or any Guarantor requesting Advances under the Loan be restricted.

Section 3.3.5 All Other Requirements Met.

All other requirements precedent to disbursal of Advances as required by this Agreement have been met.

Section 3.3.6 Further Assurances.

Lender shall have received such other approvals, opinions, financial statements, documents or information as Lender may reasonably request from any Borrower or Guarantor.

ARTICLE 4 - SECURITY

Section 4.1.1 Collateral

As security for the payment and performance of all Obligations, Borrower hereby grants to Lender a security interest in certain personal property and a lien on certain real estate, including the following described property whether now owned or hereafter acquired wherever located in which Borrower has or claims an interest, and in all increases, additions, accessions and substitutions (“Collateral”):

Section 4.1.2 Goods and Equipment. 

All goods, equipment, titled and nontitled vehicles, rolling stock, machinery, inventory, parts, tools, furniture and fixtures (including any accessions, additions, improvements, attachments and accessories thereto, and all operating manuals, service records, maintenance logs and warranties applicable thereto).

Section 4.1.3 Farm Products. 

All farm products including, but not limited to, all poultry and livestock, together with all issue, products, replacements, and produce thereof; all feed, hay, grain, medicines, and supplies used or produced in connection therewith; and all contracts, leases, licenses, permits and privileges for water, pasture, or grazing purposes, all crops now growing or hereafter planted or grown, whether harvested, unharvested or stored; all products of crops and all seed, fertilizer, chemicals and supplies used or produced in connection with any crop, and all other supplies used or produced in Borrower’s operations or sold as inventory, and the rights to payments associated with all or

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any of the foregoing including without limitation crop insurance or other insurance policies and proceeds related to any of the foregoing.

Section 4.1.4 Inventory and Goods. 

All inventory, work in process and other goods owned by Borrower, and any inventory consigned to or by any Borrower, with any third party of any nature.

Section 4.1.5 Accounts, General Intangibles, and Other Rights to Payment. 

All accounts, receivables, promissory notes, deposit accounts, margin accounts, commodity accounts, hedging accounts, contract rights, general intangibles (including, without limitation, patents, trademarks, copyrights and other intellectual property), payment intangibles, letters of credit, letter of credit rights and supporting obligations, chattel paper, investment property, documents, instruments, insurance proceeds, money, all government subsidies, tax refunds and other government payments or rights thereto and all other rights to payment now existing and hereafter acquired, from any and all sources.

Section 4.1.6 Books and Records. 

All books, records, ledger sheets or cards, reports, invoices, purchase orders, customer lists, mailing lists, files, correspondence, computer programs, tapes, disks, digital files, any media storage devices and other documents or data processing software that at any time relates to any of the foregoing or are otherwise necessary or helpful in realizing on or collecting on any Collateral (the ‘Books and Records’).

Section 4.1.7 Investment Property/Hedging Accounts. 

All investment property, securities, commodity contracts, securities accounts, hedging accounts, commodity accounts, all commodity and securities entitlements and other rights contained in any such account.

Section 4.1.8 Fixtures/Irrigation Equipment/Construction Materials.

All construction materials, fixtures and irrigation equipment including, without limitation, all silos, bins, removable structures, tanks, wells, pumps, motors, sprinkler systems and sprinkler heads, gear heads, pipe, and generators located on the real estate described below in the mortgage(s) or deed(s) of trust pledged by mortgagor(s) or trustor(s), as therein defined, and as recorded in Lake County in the state of South Dakota.

Section 4.1.9 Real Estate.

That real estate described in the mortgage(s) of Deed(s) of Trust pledged by mortgagor(s) or Grantor(s) as therein defined recorded in the official records of[Lake County, South Dakota.

Collateral for the Loan includes any security interest or other lien on property granted to Lender under the terms of any Collateral Agreements executed by Borrower. Said security interest or other lien is continuing and shall include the proceeds and products of the Collateral, including, but not limited to, the proceeds of any insurance thereon.

Borrower agrees that if any livestock that may be described herein is placed by Borrower in the care of a third party for feeding, Borrower shall have the right under their agreement with said third party to file an advisory/informational financing statement showing Borrower as the owner of said livestock and Lender is authorized to file said financing statement as Borrower’s agent and attorney-in-fact.

Borrower further agrees that if Collateral includes titled vehicles, Borrower grants Lender a power of attorney (which is coupled with an interest) to execute and file applications for certificates of title or similar documents, as Borrower’s agent and attorney-in-fact, all in such form and substance as Lender may determine.

Borrower further agrees to execute and deliver security agreements and assignments of accounts / control agreements in form and substance satisfactory to Lender to grant Lender a first priority perfected security interest therein, with respect to any accounts that constitute Collateral. Lender agrees that it will not exert control over Borrowers’ commodity accounts, as permitted by the terms of any security agreements and assignments of accounts / control agreements, unless an Event of Default exists or except to the extent Lender reasonably deems it necessary to take action to protect the Collateral.

Section 4.2 Collateral Matters.

Until all Obligations have been fully satisfied and indefeasibly paid in full, Lender’s security interest in the Collateral, and all proceeds and products thereof, shall continue in full force and effect. During the term of this Agreement, Borrower shall not permit any Lien, (other than Permitted Liens) to remain against any of the Collateral and Borrower shall perform any and all steps requested by Lender to perfect, maintain and protect Lender’s security interest in the Collateral in which a security interest is granted to Lender under this Agreement, any Collateral Agreement or any other agreement, including, without limitation, executing and filing financing and continuation statements in form and substance satisfactory to Lender. Lender may file one or more financing statements disclosing Lender’s security under this Agreement and Borrower shall pay any costs of, or incidental to, any recording or filing of any financing statements

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concerning the Collateral. Borrower hereby expressly agrees that (a) a carbon, photographic, photostatic or other reproduction of a financing statement is sufficient as a financing statement, and (b) wherever and whenever available and allowed by law Lender is authorized to file electronically all documents allowed or required by the UCC, the Federal Food Security Act, or other applicable law, including but not limited to financing statements, effective financing statements, and continuations, amendments, assignments, or terminations thereof, WITHOUT the physical signature of Borrower. Such authorization shall be deemed a digital signature and constitutes, a limited power of attorney, coupled with an interest, appointing Lender as Borrower’s agent and attorney-in-fact for the express purpose of signing and executing the aforesaid documents on Borrower’s behalf. Borrower shall pay or cause to be paid, unless contested in good faith, all taxes, assessments and governmental charges levied, assessed or imposed upon or with respect to the Loan, the Collateral, any part thereof, or Lender by virtue of the Loan transaction. Unless contested in good faith, if Borrower fails to pay such taxes, assessments and governmental charges, Lender may (but shall not be required to) pay the same and charge the cost to Borrower payable on demand and secured by the Collateral.

Section 4.3 Sale of Collateral.

Without Lender’s prior written consent, or except as otherwise provided in this Agreement, Borrower will not sell, transfer, or dispose of the Collateral without applying all proceeds of such transaction to payment of the Loan secured hereby within 10 days after the transaction. Borrower will not take or attempt to take the Collateral from the state where kept without the prior written consent of Lender, except in the normal course of its business. Upon request, Borrower will provide Lender with a current list of all Collateral and its location.

ARTICLE 5 - REPRESENTATIONS AND WARRANTIES

Each Borrower warrants and represents that on the Closing Date and on and after each Advance occurring hereunder:

Section 5.1 Organization and Qualification.

Borrower is duly incorporated or organized and is validly existing as a corporation or other legal entity in good standing in the jurisdiction of its incorporation or organization; has the power and authority to own or lease its properties and to conduct the business in which it is now engaged or proposed to be conducted; is duly qualified to do business and is in good standing in each jurisdiction in which the transaction of its business makes such qualification necessary.

Section 5.2 Authorization and Consent.

The execution, delivery and performance by Borrower of the Loan Documents to which it is or is to be a party have been duly authorized by all required actions of Borrower and do not and will not (i) require any consent or approval of the stockholders, partners or members of Borrower, (ii) violate any provisions of any federal, state or local law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to Borrower or of the charter, articles of incorporation or organization, operating agreement, partnership agreement or bylaws of Borrower, (iii) result in a breach of or constitute a default under any indenture or loan or credit agreement, or any other agreement, lease or instrument to which Borrower is a party or by which it or its properties may be bound or affected or (iv) result in, or require, the creation or imposition of any Lien (other than Permitted Liens), upon or with respect to any of the properties now owned or hereafter acquired by Borrower, and Borrower is not in default under any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, agreement, lease or instrument.

Section 5.3 Binding Agreement.

Each of the Loan Documents to which Borrower is a party is a legal, valid and binding obligation of Borrower, enforceable in accordance with its terms, subject only to limitations on enforceability imposed by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity.

Section 5.4 Compliance With Laws.

Borrower is in compliance with all federal, state and local laws, rules, regulations, ordinances, codes and orders, including, without limitation, ERISA, all Environmental Laws, all licensing laws and has filed all federal, state and local tax returns and has paid all federal, state and local taxes, assessments and governmental charges imposed upon it or upon its property, except to the extent the same are contested in good faith and by appropriate proceedings and for which adequate reserves have been established, and Borrower has no knowledge of any deficiency or additional assessment in connection therewith.

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Section 5.5 Litigation.

There is no pending or threatened legal or governmental actions, proceedings or investigations to which Borrower is a party or to which any property of Borrower is subject, where an adverse outcome could reasonably be expected to result in a Material Adverse Effect, except as previously disclosed to Lender in writing.

Section 5.6 Financial Statements.

All financial statements, information and other data which may have been or which may hereafter be submitted by Borrower to Lender are true, accurate and correct and have been or will be prepared in accordance with GAAP consistently applied or by other method acceptable to Lender and accurately represent the financial condition or, as applicable, the other information disclosed therein. Since the most recent submission of such financial information or data to Lender, Borrower represents and warrants that no Material Adverse Effect has occurred.

Section 5.7 Assets.

Borrower has good and marketable title to and is the record and beneficial owner of all the Collateral covered by the Collateral Agreements to which Borrower is or is to be a party, free and clear of all Liens, except Permitted Liens, and all such Collateral is in all material respects in good order and repair (ordinary wear and tear excepted) and covered by the insurance required under Section 6.5.

Section 5.8 ERISA.

If the Borrower has a pension, profit sharing or retirement plan subject to ERISA, such plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law. Each plan which is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS and to the best knowledge of Borrower, nothing has occurred which would cause the loss of such qualification. The Borrower and each ERISA Affiliate (as defined in the Code) has made all required contributions to any plan subject to the Code, and no application for a funding waiver or an extension of any amortization period pursuant to the Code has been made with respect to any plan.

There are no pending or threatened claims, actions or lawsuits, or action by any Governmental Authority with respect to any plan, which has resulted or could reasonably be expected to result in a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any plan, which has resulted or could reasonably be expected to result in a Material Adverse Effect.

In addition, (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no pension plan has any material unfunded pension liability; (iii) neither Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any material liability under Title IV of ERISA with respect to any pension plan (other than premiums due and not delinquent under Section 4007 of ERISA) and (iv) neither Borrower nor any ERISA Affiliate has engaged in a transaction that would be subject to Section 4069 or 4212(c) of ERISA.

Section 5.9 Environmental Compliance.

All known sources of existing or potential environmental contamination on or near any property owned or operated by Borrower has been fully disclosed to Lender; the operations of Borrower comply, and during the term of this Agreement will at all times comply in all respects, with all Environmental Laws; Borrower has obtained all licenses, permits, authorizations and registrations required under any Environmental Law and necessary for its ordinary course operations, all such environmental permits are in good standing, and Borrower is in compliance with all terms and conditions of such environmental permits; neither Borrower nor any of its present property or operations is subject to any outstanding written order from or agreement with any Governmental Authority or subject to any judicial or docketed administrative proceeding, respecting any Environmental Law, environmental claim or hazardous material; there are no hazardous materials or other conditions or circumstances existing, or arising from operations prior to the date of this Agreement, with respect to any property of Borrower that would reasonably be expected to give rise to environmental claims. In addition, Borrower shall hold Lender harmless from any liability for environmental waste or contamination on any property owned or operated by Borrower or liability imposed as a consequence by reason of Borrower’s activities and will indemnify Lender against all claims, losses, liabilities, and expenses incurred by Lender as a result thereof. This covenant will survive cancellation or termination of this Agreement.

Section 5.10 No Default.

No Potential Default or Event of Default has occurred and is continuing hereunder. Borrower is not in default in the payment of any Indebtedness nor is Borrower in default, or aware of any third party default, in respect to the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement to which Borrower is a party.

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Section 5.11 Receipt and Verification.

Borrower has received a copy of the “Customer Information and Disclosure Handbook” and that all the information provided by Borrower to Lender is true and correct.

Section 5.12 Margin Stock.

Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System), and no proceeds of any Advance will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock.

Section 5.13 Security Interest.

The security interest created herein and in any Collateral Agreement constitutes a valid and perfected first priority security interest and Lien (except for any prior Permitted Lien), in and to the Collateral purported to be covered by each thereof, except as otherwise provided therein, enforceable against all third parties in all jurisdictions securing the payment of all obligations purported to be secured thereby (except for Permitted Liens), and all action required to perfect fully such security interests and liens so constituted have been taken and completed.

Section 5.14 Contractual Restrictions.

Borrower is not a party to any indenture, loan or credit agreement or any lease or other agreement or instrument or subject to any charter or corporate restriction, which reasonably could be expected to result in a Material Adverse Effect.

Section 5.15 Approvals and Licenses.

Borrower possesses all the franchises, permits and licenses necessary or required in the conduct of its business, and the same are valid, binding and enforceable and all authorizations, consents, approvals or licenses of, or filings or registrations with, any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, or any specifically granted exemptions from any of the foregoing, necessary to the valid execution, delivery or performance by Borrower of this Agreement and the Loan Documents to which it is or is to be a party have been obtained and are in full force and effect.

Section 5.16 No Untrue Statements.

Noinformation, exhibit, schedule or report furnished by Borrower to Lender contained or contains any untrue statement of material fact or omits any material fact that make such statements or facts contained therein misleading.

Section 5.17 Solvency.

Borrower is and, after consummation of the transactions contemplated by this Agreement and the other Loan Documents, shall be, solvent. For the purposes of this paragraph, “solvent” means (i) the fair value of the property of Borrower is greater than the total amount of liabilities, including contingent liabilities of Borrower, (ii) the amount that will be required to pay the probable liabilities of Borrower on its debts as they become absolute and matured shall not be greater than the fair value of the assets of Borrower at such time, (iii) Borrower is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (iv) Borrower does not intend to, and does not believe it shall, incur debts or liabilities beyond its ability to pay as such debts and liabilities mature and (v) Borrower is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which Borrower’s property would constitute unreasonably small capital after giving due consideration to prevailing practices in the industry in which Borrower is engaged. In computing the amount of any contingent liability at any time, it is intended that such liability shall be computed at the amount that, in light of all the facts and circumstances existing at such time, represents the amount that might reasonably be expected to become an actual or matured liability.

Section 5.18 Subsidiaries.

Borrower has no Subsidiary that has not been fully disclosed to Lender in writing.

Section 5.19 Advances.

The following statements shall be true and the giving of a Request for an Advance by any Borrower shall be deemed to be a representation and warranty by Borrower that the following statements are true both on the date of such Request and on the date of such Advance: (i) the representations and warranties contained in Article 5 hereof and in the other documents to be delivered hereunder are true and complete on and as of the date of such Advance as though made on and as of such date; (ii) no event has occurred and is continuing, or would result from such Advance, which constitutes an Event of Default or Potential Default; (iii) no Material Adverse Effect has occurred and is continuing; (iv) the total Advances do not exceed the Maximum Principal Balance or any Borrowing Base in effect as of the date of each Advance; and (v) no order, judgment or decree of any court, arbitrator or Governmental Authority that does, or seeks to, enjoin or restrain Lender from making any Advance is pending or threatened.

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ARTICLE 6 - AFFIRMATIVE COVENANTS

The Borrower covenants and agrees that during the term of this Agreement and so long as any obligation remains unpaid or any amounts drawn hereunder remain unreimbursed, each Borrower shall comply with the following requirements:

Section 6.1 Preservation of Existence.

Borrower shall maintain and preserve its existence and good standing in the jurisdiction in which such qualification and good standing are necessary in order for Borrower to lawfully conduct its business and own its property in said jurisdiction.

Section 6.2 Compliance with Laws.

Borrower shall comply with all laws, rules, regulations and orders of any Government Authority applicable to it or its property, such compliance to include, without limitation, ERISA and Environmental Laws and paying before the same become delinquent all taxes, assessments and governmental charges imposed upon it or upon its property, unless contested in good faith by appropriate proceedings and adequate reserves have been set aside in Borrower’s books in accordance with GAAP.

Section 6.3 Books and Records.

Borrower shall at all times keep proper books of record and account in which correct and complete entries shall be made of all its dealings, in accordance with GAAP or other method acceptable to the Majority Lenders.

Section 6.4 Inspection of Properties and Books.

Borrower shall, upon reasonable notice and at any reasonable time and from time to time, permit Lender, upon request, to visit and inspect any of the Collateral or properties of Borrower and to examine the books, accounts and other records of Borrower and to copy or take abstracts therefrom and to discuss the affairs, finances, loans and accounts of Borrower with Borrower’s representatives. If Borrower shall maintain any records in the possession of a third party, Borrower authorizes such third party to provide Lender with copies of any records which it may request.

Section 6.5 Maintenance of Property; Insurance.

Borrower shall maintain all of its properties necessary or useful in its business in good condition, repair and working order, normal wear and tear excepted, and shall maintain insurance with financially sound and reputable insurance companies. Borrower shall maintain, or cause its’ approved producers to maintain, insurance on the Collateral in an amount at least equal to the lesser of the loan balance(s), the actual cash value of the Collateral, or the replacement cost of the Collateral and shall name Lender as loss payee on all casualty insurance and shall provide Lender with evidence of such insurance upon request. All proceeds of any insurance will be held by Lender as additional Collateral and at the option of Lender may be used to pay for reconstruction, repair, or replacement of the Collateral, or applied to payment of the Loan. In addition, to the extent that any real property interests which constitute a part of the Collateral lie within a designated flood plain, Borrower must maintain flood insurance with respect to such real property interest. If additional insurance is required as provided herein, insurance will be obtained from companies reasonably satisfactory to Lender and said policies shall name Lender as loss payee. The policies shall provide that there be no cancellation or modification without 30 days advance notification to Lender.

Section 6.6 Notice of Material Events.

Borrower agrees to give Lender prompt written notice of any and all (i) Events of Default or Potential Default; (ii) litigation, arbitration or administrative proceedings to which Borrower is a party and, if adversely determined, could reasonably be expected to result in a Material Adverse Effect; (iii) default under any note, indenture, loan agreement, mortgage, lease, contract, deed or other similar agreement to which Borrower is a party or by which Borrower is bound, which relates to borrowed money, or of any other default under any other note, indenture, loan agreement, mortgage, lease, contract, deed or other similar agreement to which any Borrower is a party or by which Borrower is bound if such other default may result in a Material Adverse Effect; and (iv) any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect. Any violation of Environmental Laws or permits shall be reported to Lender within 10 days of Borrower’s knowledge of such occurrence.

Each notice delivered under this Section shall be accompanied by a statement of an officer of Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

Section 6.7 Reports.

Borrower shall provide to Lender the following financial reports and such other reports with respect to the financial condition and operations of Borrower as Lender may from time to time reasonably request:

Section 6.7.1 Annual Consolidated Finanacial Statements and Projections.

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As soon as available, but in no event later than 120 days after the end of the fiscal year of Borrower, a consolidated and consolidating audit report in accordance with GAAP and prepared by an accountant acceptable to Lender for such year and accompanying financial statements (including all footnotes thereto) including a consolidated and consolidating balance sheet and the related consolidated statement of income and retained earnings for such fiscal year in form and content acceptable to Lender.

As soon as available but in no event later than 30 days prior to each fiscal year end, Borrower shall provide to Lender, a projected consolidated and consolidating financial statement for the subsequent fiscal year including proposed capital projects

Section 6.7.2 Monthly Financial Statements.

As soon as available, but in no event later than 30 days after the end of each month, a consolidated and consolidating balance sheet and income statement for that month and for year-to-date since the last fiscal year end, such report certified complete and correct from a source acceptable to Lender.

Section 6.7.3 Monthly Production Reports.

As soon as available, but in no event later than 30 days after the end of each month, a report of Borrower’s ethanol, distillers, grains and corn oil production which shall include plant production, yield and input costs, such reports certified complete and correct by a source acceptable to Lender

Section 6.7.4 Monthly Position Reports.

As soon as available, but in no event later than 30 days after the end of each month, a report of all commodity positions including corn, natural gas, ethanol, distillers, grains and corn oil, such reports certified complete and correct by a source acceptable to Lender.

Section 6.7.5 Additional Information.

Such other information respecting the condition or operations, financial or otherwise of Borrower or such other information relating to Borrower as any Lender may from time to time reasonably request.

Section 6.8 Account Authorization.

Borrower will require the financial or other institutions with which it maintains or has maintained depository and operating accounts to promptly provide such information concerning Borrower, its financial condition and any transactions as Lender may from time to time request. Borrower hereby authorizes such institutions to directly provide to Lender such information as Lender may request.

Section 6.9 Collateral Audits.

Borrowers will keep accurate books of record and account for themselves pertaining to the Collateral and, upon request of Lender, will permit any officer, employee, attorney, accountant or agent for Lender to examine and copy any or all of its records and to examine, audit and inspect the business operations of Borrower (including the effectiveness of their internal reporting systems and controls) and Collateral at any time during Borrower’s business hours upon at least two Business Days’ advance written notice. Upon completion of any such examination, audit or inspection, Borrower shall pay Lender’s costs and expenses incurred in connection therewith.

Section 6.10 Execution of Supplemental Instruments.

Borrower will execute and deliver to Lender from time to time, upon demand, such supplemental agreements, statements, transfers, assignments, authorizations to release information, or documents relating to the Collateral, and such other instruments or documents as Lender may request, in order that the full intent of this Agreement may be carried into effect.

Section 6.11 Hedging.

Borrower hereby agrees not to engage in speculative commodity trading transactions. Use of futures markets not consistent with acceptable hedging practices shall be considered a material breach of this Agreement and shall constitute an Event of Default.

Borrower agrees to notify Lender of any new hedging account promptly upon creating the same. Borrower agrees to assign Lender all hedging accounts and take such other actions as Lender requests to perfect Lender’s security interest in Borrower’s right to the accounts. Borrower agrees to provide Lender with all notices and statements in respect to said accounts upon receipt or delivery.

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Section 6.1 Financial Covenants.

Borrower agrees to maintain sufficient capital resources, as determined by Lender’s valuation of Borrower’s assets in accordance with GAAP and full disclosure of Borrower’s liabilities such as to maintain the following covenants at all times.

Section 6.12.1 Working Capital.

Borrower agrees to maintain minimum Working Capital of less than $13,500,000.00, measured monthly.

Section 6.12.2 Debt Service Coverage Ratio.

Borrower agrees to maintain a Debt Service Coverage Ratio of 1.25:1.00, measured at fiscal year-end. “Debt Service Coverage Ratio” defined as [net profit plus depreciation and amortization, minus gain (loss) on sale of fixed assets] divided by $4,500,000.00.

General Financial

Section 6.12.3 Local Net Worth.

Borrower agrees to maintain minimum Local Net Worth of not less than $28,000,000.00. “Local Net Worth” is defined as total assets minus total liabilities minus Investments.

Section 6.14 Compliance Certificate.

Borrower agrees to provide Lender with a Compliance Certificate showing or certifying compliance with the aforesaid reporting requirements as of date and as of the last day of each month (Reporting Period) thereafter, in accordance with the Certificate attached herein as Exhibit ‘B’. Such Certificate shall be provided to Lender within 30 days following the end of each Reporting Period.

Section 6.15Borrowing Base.

Borrower agrees to maintain a minimum Borrowing Base Margin in an amount equal to or greater than $0 ('Minimum Borrowing Base Margin'). Borrowing Base Margin shall mean the difference yielded after deducting the Borrowing Base Liabilities from the Borrowing Value of certain secured assets identified as Borrowing Base Assets included in and computed according to a Borrowing Base Report acceptable to Lender, an example of which is attached hereto as Exhibit ‘C’ (Borrowing Base Report).

Borrower agrees to provide Lender with such Borrowing Base Report monthly (Reporting Period), or more often at the discretion of Lender, during the term of the Loan(s), commencing January 31, 2018. Notwithstanding the foregoing, Borrower will not be required to provide Lender a Borrowing Base Report for any December Reporting Period if there is no outstanding balance on Loan Facility A on the Report Date of that December Reporting Period. Said Borrowing Base Report shall be dated the last day of the Reporting Period (Report Date) and reflect true and accurate inventory and calculation of: Borrowing Base Assets; Borrowing Value; Borrowing Base Liabilities; and Borrowing Base Margin current through the end of the Reporting Period. Said Borrowing Base Report shall be completed by Borrower and provided to Lender no later than the 30th day following the Report Date, by ordinary mail or electronic transmission. No item shall be included in the Borrowing Base Report if such item is subject to any Lien, claim or security interest (other than that granted to Lender). Lender shall have the right, in its sole discretion, to adjust any values set forth in the Borrowing Base Report and such adjusted values will be the values for the determination of the Borrowing Base Margin.

Borrowing Base Assets shall mean those secured assets meeting the criteria to be listed as Borrowing Base Assets in the Borrowing Base Report.

Borrowing Value shall mean the total lending value based upon the designated advance rates of those assets listed as Borrowing Base Assets in the Borrowing Base Report.

Borrowing Base Liabilities shall mean the total of those liabilities listed as Borrowing Base Liabilities in the Borrowing Base Report.

If the Borrowing Base Margin is less than the Minimum Borrowing Base Margin for any Reporting Period, Borrower agrees to restore compliance with the Borrowing Base Margin within 30 days from the Report Date and that during said restoration period Lender may advance credit to Borrower as Lender may deem reasonable to protect its collateral. It is agreed that if Borrower cannot, or will not, reduce the total Borrowing Base Liabilities to an amount sufficient to restore compliance with the Minimum Borrowing Base Margin within said restoration period, Lender may deem said failure to be a material breach of this Agreement and an Event of Default.

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Section 6.16 Assignment of Hedging and Investments Accounts.

Borrower agrees to notify Lender of any new hedging account or Investment Account promptly upon creating the same. Borrower agrees to assign Lender all hedging accounts and Investment Accounts and take such other actions as Lender requests to perfect Lender's security interest in Borrower's right to the accounts.

Section 6.17 Assignment of Deposit Accounts.

Borrower shall notify Lender of any new Deposit Accounts promptly upon creating the same. Borrower shall assign to Lender all Deposit Accounts and take such other actions as Lender requests to perfect Lender's security interest in Borrower's right to the accounts.

ARTICLE 7 - NEGATIVE COVENANTS

Borrower covenants and agrees that as long as the Loans remains unpaid, they will comply with the following requirements, unless Lender shall otherwise consent in writing.

Section 7.1 No Material Change.

Borrower will not adopt any material change in accounting method or principles; will not adopt, permit or consent to any change in its fiscal year; or will not enter into any contract, agreement or transaction affecting the Collateral or the Loan which could reasonably be expected to have a Material Adverse Effect.

Section 7.2 No Other Business.

Borrower will not engage in any material respects in any business activity or operations materially different from that presently engaged in by Borrower and will not purchase, lease or otherwise acquire assets not related to or used in its business.

Section 7.3 Transactions with Subsidiaries.

Borrower will not have a Subsidiary and will not purchase, acquire, provide, or sell any equipment, other personal property, real property or services from or to any Subsidiary, except in the ordinary course and pursuant to the reasonable requirements of Borrower’s business.

Section 7.4 Transactions with Affiliates.

Borrower will not enter into any transaction, including without limitation, the purchase, sale, lease or exchange of any property, or the rendering of any service, with any Affiliate of Borrower, except in the ordinary course of and pursuant to the reasonable requirements of Borrower’s business and upon fair and reasonable terms no less favorable to Borrower than would be obtained in a comparable arms-length transaction with a person not an Affiliate of Borrower.

Section 7.5 Consolidation and Merger.

Borrower will not, and will not permit any Subsidiary to, consolidate with or merge with any entity, or acquire all or substantially all of the assets of any Person, nor shall Borrower change its business form, provided that Borrower may acquire the assets of any Person if there has been no Event of Default or Potential Default and shall not be after giving effect to said acquisition, and that said acquisition shall not result in a Material Adverse Effect.

Section 7.6 Transfer of Assets.

Borrower will not sell, assign (by operation of law or otherwise) transfer, exchange, lease or otherwise dispose of any of the Collateral, nor will Borrower deliver actual or constructive possession of the Collateral to any other Person; provided however, any Collateral may be sold if (a) it is in the ordinary course of business as presently conducted by Borrower and at fair market value or (b) such Collateral is either being replaced or is no longer necessary or useful for the business conducted by Borrower.

Section 7.7 Liens; Negative Pledge.

Borrower will not create, incur, assume or permit to exist, any Lien on its property or assets, whether real or personal, tangible or intangible, including the Collateral, except Permitted Liens.

Section 7.8 Indebtedness.

Borrower will not create, incur, assume, guaranty, permit or suffer to exist any Indebtedness or otherwise become liable with respect to the obligations or liabilities of any person or entity, except Permitted Indebtedness.

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Section 7.9 Loans, Advances, Guarantees and Investments.

Borrower will not make or permit to exist any loans or advances to, guarantees of, or otherwise become liable with respect to (other than guarantees by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business), or investments in, any Person, except: (a) loans, advances, guarantees, or investments existing as of the date of this Agreement and listed on Schedule 7.9 hereto; and (b) trade credit extended in the ordinary course of business.

Section 7.10 Subordinated Debt.

Borrower will not make payments on account of any existing Subordinated Debt and shall not incur any additional Subordinated Debt except to the extent permissible under the agreement by which such Subordinated Debt is subordinated to the Loan. Borrower shall not amend, supplement, or otherwise modify any provisions of any agreement(s) covering Subordinated Debt, and shall not refinance any portion of the Subordinated Debt, except on terms no less favorable to Borrower and Lender.

Section 7.11 Use of Proceeds.

Borrower will not use any of the proceeds of any Advance, directly or indirectly, to purchase or carry margin securities within the meaning of Regulation U of the Board of Governors of the Federal Reserve System or engage as its principal business in the extension of credit for purchasing or carrying such securities.

Section 7.12 ERISA.

Borrower shall not, and shall not permit any of its ERISA Affiliates to: (i) engage in a prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan which has resulted or could reasonably be expected to result in liability of the Borrower; or (ii) engage in a transaction that could be subject to Section 4069 or 4212(c) of ERISA.

Section 7.13 Distribution and Withdrawls.

Borrower will not distribute any profits, make any loans, declare or pay any dividends, distribute earnings, allow any draws, or make other distributions to its shareholders or equity holders of Borrower or apply any assets to the redemption, retirement, purchase or other acquisition of any such equity interests. However, if no Event of Default exists or Potential Default shall arise from such payments and distributions, Borrower may pay dividends and distributions so long as the Working Capital remains above $15,000,000.00 on a post-distribution basis, increasing to $18,000,000 on a post distribution basis effective January 31, 2019 and thereafter.

Section 7.14 No Change in Management or Control.

Borrower will not make any change in present management or Control of its business or of the Collateral.

Section 7.15 Material Contracts.

Borrower will not enter into or make any material changes to any Material Contracts, without Lender’s prior written consent.

ARTICLE 8 - EVENTS OF DEFAULT

Section 8.1 Events of Default.

The occurrence of any of the following events shall constitute an event of default (“Event of Default”) hereunder:

Section 8.1.1 Failure to Make Payments.

Borrower shall fail to pay, in accordance with the terms of this Agreement any principal of or interest on any Loan or any fee or other cost owing to Lender under the Agreement, any other Loan Document or any fee letter.

Section 8.1.2 Breach of Warranty or Representation.

Any representation or warranty made by Borrower under or in connection with this Agreement or any other Loan Document or any financial statement given by Borrower, which shall prove to have been incorrect in any material respect on or as of the date made or given.

Section 8.1.3 Insolvency.

Borrower or any guarantor shall: (i) become insolvent or be unable to pay its debts as they mature; (ii) make an assignment for the benefit of creditors or to an agent authorized to liquidate any substantial amount of its properties and assets; (iii) file a voluntary petition in bankruptcy or seeking reorganization or to effect a plan or other arrangement with creditors; (iv) file an answer admitting the material allegations of an involuntary petition relating to bankruptcy or reorganization or join in any such petition; (v) become or be adjudicated a bankrupt; or (vi) apply for or consent to the appointment of, or consent that an order be made, appointing any receiver, custodian or trustee, for itself or any of its properties, assets or businesses, or (vii) have an involuntary bankruptcy petition filed against Borrower, and such petition remains undismissed for more than 30 days.

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Section 8.1.4 Execution.

Any writ of execution or attachment or any judgment lien shall be issued against any property of Borrower and shall not be discharged or bonded against or released within 30 days after the issuance or attachment of such writ or lien.

Section 8.1.5 Suspension.

Borrower voluntarily suspends, without just cause, the transaction of business or allows to be suspended, terminated, revoked or expired any permit, license or approval of any governmental body necessary to conduct Borrower’s business resulting in a Material Adverse Effect.

Section 8.1.6 Impairment of Guaranty.

There shall occur any event that would impair any guaranty given in connection with the Loan or cause the guaranty to become unenforceable by Lender.

Section 8.1.7 Due on Sale.

Except as otherwise permitted under the terms of this Agreement, there shall occur, without Lender’s prior written consent, the sale, transfer or further encumbrance of any item of Collateral.

Section 8.1.8 Material Adverse Change.

If there occurs a Material Adverse Effect in Borrower’s business or financial condition, or if there is a material impairment of the prospect of repayment of any portion of the Loan or there is a material impairment of the value or priority of Lender’s security interest in the Collateral.

Section 8.1.9 Change in Control.

There shall occur a change in Control without prior written consent of Lender.

Section 8.1.10 Impairment of Collateral.

Lender shall be unable to obtain a final title opinion or title insurance policy that assures Lender of its lien priority on the Collateral; or if either of the following results in a Material Adverse Effect (i) any injury or damage to all or any part of the Collateral, or (ii) all or any part of the Collateral is lost, stolen or destroyed.

Section 8.1.11 Death or Dissolution.

If Borrower or any Guarantor shall die (if a natural person) or if Borrower or any Guarantor shall dissolve or terminate operations (if Borrower or any Guarantor is a corporation, partnership, limited liability company or other legal entity).

Section 8.1.12 Performance Under This Agreement.

Borrower or any guarantor shall fail in any material respect to perform or observe any other term, covenant or agreement contained in this Agreement or in any of the Loan Documents or any other document or agreement executed by Borrower with or in favor of Lender, not specifically mentioned above.

Section 8.1.13 Compliance With Other Loan Covenants.

Borrower or any Affiliate or Subsidiary shall (i) fail to pay any Debt in an aggregate principal amount in excess of $100,000.00 (excluding Debt evidenced by the Loans) of such Borrower, or any interest or premium thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument evidencing such Debt; (ii) fail to perform, observe or perform any term, covenant or condition on its part to be performed or observed under any agreement or instrument relating to any such Debt, when required to be performed or observed and shall continue after the applicable grace period, if any, specified in such agreement or instrument if the effect of such failure to perform or observe is to accelerate, or to permit the acceleration of, the maturity of such Debt; or (iii) such Debt be declared due and payable, or required to be prepaid (other than a regularly scheduled required prepayment), prior to the stated maturity thereof.

Section 8.1.14 Non-Binding Agreements.

Any provision of any of the Loan Documents shall for any reason cease to be legal, valid and binding on any Borrower or guarantor party thereto, or any Borrower or guarantor shall so state in writing.

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Section 8.1.15 No Lien or Security Interest.

Any of the Collateral Agreements shall for any reason, except to the extent permitted by the terms hereof or thereof, cease to create a valid and perfected first priority security interest in any of the Collateral purported to be covered thereby or Borrower shall so state in writing.

Section 8.1.16 ERISA Matters.

Any event or condition shall occur or exist with respect to any Plan concerning which any Borrower is under an obligation to furnish a report to Lender in accordance with Article 6 hereof and as a result of such event or condition, together with all other such events or conditions, Borrower or any ERISA Affiliate has incurred or, in the opinion of the Lender, is reasonably likely to incur a liability to a Plan, the PBGC or a Section 4042 Trustee (or any combination of the foregoing) which is material in relation to the financial position of Borrower, on a consolidated basis.

Section 8.1.17 Unfunded Benefits.

The Unfunded Benefit Liabilities of one or more Plans have increased after the date of this Agreement in an amount which is material.

Section 8.1.18 Indictment.

The indictment of Borrower or any guarantor under any criminal statute or commencement of criminal proceedings against Borrower or any guarantor, which could reasonably be expected to result in a Material Adverse Effect.

Section 8.2 Cross Default.

Declaration of default under any Loan described herein or any other contract obligation Borrower may have with Lender or Lender’s Affiliate may, at Lender’s option, cause all Loans and such other contract obligations to be declared in default, charged interest at the default rate and become immediately due and payable.

Section 8.3 Remedies on Default.

Upon the occurrence of any Event of Default Lender may, at its sole discretion, do any of the following:

Section 8.3.1 Acceleration.

Declare any or all of Borrower’s Loans immediately due and payable, whether or not otherwise due and payable.

Section 8.3.2 Default Interest.

If any principal or interest on the Loan is past due, regardless of the length of time, or if there is any failure to comply with any covenant, condition, or agreement contained in this Agreement, or in any Collateral Agreement, or other document, given to secure payment of the Loan, then, at the election of Lender, all principal, all accrued interest thereon and all advances will become immediately due and payable without demand and the whole will bear interest at the Default Rate from and including the date of election to but excluding the date paid. Any reasonable attorney fees (to the extent allowed by law), costs, or expenses incurred and advanced by Lender to enforce collection of the Loan will be added to the principal of the Loan and bear interest at the Default Rate from the date of advance to but excluding the date paid. At Lender’s option, any Event of Default may allow Lender to charge interest on all principal of the Loan and all accrued interest thereon at the Default Rate without declaring the Loan immediately due and payable.

Section 8.3.3 Cease Extending Credit.

Cease making Advances or otherwise extending additional credit to or for the account of Borrower under this Agreement or under any other agreement now existing or hereafter entered into between Borrower and Lender.

Section 8.3.4 Termination.

Terminate this Agreement as to any future obligation of Lender without affecting Borrower’s Obligations to Lender or Lender’s rights and remedies under this Agreement or under any other document, instrument or agreement.

Section 8.3.5 Protection of Security Interest.

Make additional or protective advances and do such acts as Lender, in its sole judgment, considers necessary and reasonable to protect its Lien in the Collateral. Such additional or protective advances may be made to protect the Collateral, including but not limited to, payment of insurance premiums and taxes, as well as payments to protect the Collateral from claims of other creditors, diminution in value, waste, destruction or abandonment. Such advances may be added to the Loan and will, at Lender’s option, be immediately due and payable and bear interest at the Default Rate from the date advanced to but excluding the date paid. Borrower hereby irrevocably authorizes Lender to pay, purchase, contest or compromise any encumbrance, lien or claim which Lender, in its sole judgment, deems to be prior or superior to its security interest. Further, Borrower hereby agrees to pay to Lender, upon demand, all expenses (including reasonable attorney’s fees) incurred in connection with the foregoing.

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Section 8.3.6 Foreclosure.

Enforce any security interest or lien given or provided for under this Agreement or under any Collateral Agreement or other document, in such manner and such order, as to all or any part of the properties subject to such security interest or lien, as Lender, in its sole judgment, deems to be necessary or appropriate and Borrower hereby waives any and all rights, obligations or defenses now or hereafter established by law relating to the foregoing. In the enforcement of its security interest or lien, Lender is authorized to enter upon the premises where any Collateral is located and take possession of the Collateral or any part thereof, together with Borrower’s records pertaining thereto, or Lender may require the records be made available to Lender at a place designated by Lender. If any part of the Collateral is accounts receivable, Lender may notify at any time the account debtor to make payment thereon directly to Lender and may take control of the cash and noncash proceeds of any such accounts. Lender may sell the Collateral or any portions thereof, together with all additions, accessions and accessories thereto, giving only such notices and following only such procedures as are required by law, at either a public or private sale, or both, with or without having the Collateral present at the time of the sale, which sale shall be on such terms and conditions and conducted in such manner as Lender determines in its sole judgment to be commercially reasonable. Any deficiency that exists after the disposition or liquidation of the Collateral shall be a continuing liability of Borrower to Lender and shall be immediately paid by Borrower to Lender.

Section 8.3.7 Non-Exclusivity of Remedies.

Exercise one or more of Lender’s rights set forth herein or exercise any and all rights or remedies granted to it under any Loan Document, by applicable law, or otherwise, including the right to accelerate the maturity of the Loan and to proceed against all or any portion of the Collateral, in any order. In addition, Lender may hold and set off and apply against the Loan any and all accounts or other property in the possession of or under the control of Lender. All rights and remedies granted to Lender under the Loan Documents or this Agreement or available under applicable law shall be deemed concurrent and cumulative and not alternative remedies, and Lender may proceed with any number of such remedies at the same time until obligations of Borrower to Lender are paid and satisfied in full. The exercise of any one right or remedy shall not be deemed a waiver or release of any other right or remedy, and Lender, upon the occurrence of any Event of Default, may proceed against Borrower at any time, with any available remedy and in any order.

Section 8.3.8 Application of Proceeds.

All amounts received by Lender as proceeds from the disposition or liquidation of the Collateral shall be applied to the Loan as follows: first, to the costs and expenses of collection, enforcement, protection and preservation of Lender’s lien in the Collateral, including court costs and reasonable attorney’s fees, whether or not suit is commenced by Lender; next, to those costs and expense incurred by Lender in protecting, preserving, enforcing, collecting, liquidating, selling or disposing of the Collateral; next, to the payment of accrued and unpaid interest on all of the Loans; next, to the payment of the outstanding principal balance of the Loan; and last, to the payment of any other indebtedness owed by Borrower to Lender

ARTICLE 9 - MISCELLANEOUS

Section 9.1 Entire Agreement and Amendments.

This Agreement and all of the Loan Documents constitute the entire and complete understanding of the parties hereto and supersede all prior agreements and understandings relative to the subject matter hereof. This Agreement may not be effectively amended, changed, altered or modified, except in writing executed by all parties. To the extent the provisions contained in this Agreement are inconsistent with those contained in any other Loan Documents, the terms and provisions contained herein shall control. Otherwise, such provisions shall be considered cumulative.

Section 9.2 Survival.

All representations, warranties, covenants and agreements herein contained on the part of Borrower shall survive the termination of this Agreement and shall be effective until the Loan is repaid and performed in full.

Section 9.3 Severability.

Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of any such provision.

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Section 9.4 No Waiver; Cumulative Remedies.

If Lender shall waive any power, right or remedy arising hereunder or under any applicable law, such waiver shall not be deemed to be a waiver upon the later occurrence or recurrence of any of said events. No failure or delay on the part of Lender in exercising any right, power or remedy under the Loan Documents, or in extending time for payment, accepting partial payment or release of any Collateral or proceeds of any Collateral, or failure to enforce strict compliance with any covenant or condition contained herein, shall operate as a waiver; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy under the Loan Documents. The remedies provided in the Loan Documents are cumulative and not exclusive of any remedies provided by law

Section 9.5 Costs and Expenses.

Borrower shall pay Lender’s out-of-pocket costs and expense incurred in connection with the making or disbursement of the Loan or in the exercise of any of its rights or remedies under this Agreement, including, but not limited to, title insurance, legal fees, appraisal fees, architect or consultant’s fees, Lender inspection fees and any other reasonable fees and costs for services that are not customarily performed by Lender’s salaried employees and are not specifically covered by any commitment fee for the Loan. All such costs and expenses constitute obligations secured by the Collateral. The provisions of this Section shall survive the termination of this Agreement and the repayment of the Loan.

Section 9.6 Notices.

All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by facsimile transmission) and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or three days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when received, or, in the case of delivery by a nationally recognized overnight courier, when received, addressed to one or more of the individuals executing this Agreement on behalf of such party at the address appearing below the signature of such party, or to such other address as such party may designate for itself by like notice.

Section 9.7 Assignments and Participations.

The terms of this Agreement shall bind and benefit the heirs, legal representatives, successors, and assigns of the parties; provided, however, that Borrower may not assign this Agreement, or any Advances made hereunder, or assign or delegate any of its rights or obligations, without the prior written consent of Lender. Lender shall have the right to sell participations in the Loan to any other entities without the consent of, or notice to, Borrower, provided that no such action by Lender shall relieve Lender of its obligations to make advances under the Loan when required by this Agreement. Lender may disclose to any participants or prospective participants any information or other data or material in Lender’s possession relating to Borrower, any guaranty and matters pertinent to the Loan, without the consent of, or notice to, Borrower or any guarantor.

Section 9.8 Advice From Independent Counsel.

The parties hereto understand that this Agreement is a legally binding agreement that may affect such party’s rights. Each party hereto represents to the other that it has received legal advice from counsel of its choice regarding the meaning or legal significance of this Agreement and that it is satisfied with its legal counsel and the advice received.

Section 9.9 Governing Law; Jurisdiction; Waiver of Jury Trial, Etc.

Section 9.9.1 Governing Law.

The Loan Documents shall be governed by, and construed in accordance with, the laws of the State of Nebraska, except to the extent that the law of any other jurisdiction applies as to the perfection or enforcement of Lender’s Lien on any Collateral and except to the extent expressly provided to the contrary in any Loan Document.

Section 9.9.2 Jurisdiction.

Each Lender and Borrower hereby irrevocably submits to the jurisdiction of any state or federal court sitting in the State of Nebraska, in any action or proceeding arising out of or relating to this Agreement or any of the other Loan Documents, and agrees that all claims in respect of such action or proceeding may be heard and determined in such state or federal court. Borrower hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. Borrower irrevocably consents to the service of copies of the summons and complaint and any other process which may be served in any such action or proceeding by the mailing of copies of such process to Borrower at its address specified herein. Borrower agrees that a final judgment in any such action or proceeding may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Section shall affect the right of Lender to service legal process in any other manner permitted by law or affect the right of Lender to bring any action or proceeding against Borrower or their property in the courts of other jurisdictions.

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Section 9.9.3 WAIVER OF JURY TRIAL.

BORROWER AND LENDER HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY

Section 9.10 Headings.

The headings herein are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Agreement.

Section 9.11 Counterparts.

This Agreement may be executed in any number of counterparts and by either party on separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The parties agree that the delivery of an executed copy of this Agreement by facsimile, electronic image or other means shall be legal and binding and shall have the same full force and effect as if an original executed copy of this Agreement had been delivered. The parties shall provide to each other an executed counterpart original of this Agreement as soon as practicable after delivery of the facsimile or electronic image thereof.

Section 9.12 Non-Business Day.

If any payment of principal or interest on the Loan shall fall due on a day which is not a Business Day, interest at the rate such Loan bears for the period prior to maturity shall continue to accrue on such principal from the stated due date thereof to and including the next succeeding Business Day on which the same is payable.

Section 9.13 No Third Party Beneficiaries.

This Agreement, the Loan Documents and the advances and disbursements hereunder and thereunder are for the sole benefit of Lender and Borrower, and no third parties shall have any rights or benefits hereunder or thereunder, whether pursuant to any theory of third party beneficiary or otherwise

Section 9.14 Waiver and Set Off.

Any funds of Borrower held by Lender in any account are subject to applicable policies and procedures as may be adopted by Lender from time to time. Borrower grants Lender a security interest in all of said funds and may exercise the right to apply these funds against any Loan upon the occurrence of an Event of Default

Section 9.15 Disbursement Authorization.

Any person executing this Agreement on behalf of Borrower is authorized to request, accept, receive, and receipt for all or any portion of the proceeds of the Loans or of any refinance, conversion, extension, additional loan, re-amortization or revision of the same and to execute and approve all agreements required by Lender in the disbursement of Loan proceeds. Such person, and/or authorized personnel as disclosed on Schedule 9.15 may initiate/request either by phone, in person or in writing disbursements in the form of check, internal transfer, wire or electronic transfer to the account specified by requestor, including any other loan account Borrower may have with Lender. Lender is authorized to disburse or retain any amounts required to: purchase stock in Lender; pay any fees or charges required to be paid to Lender: pay other services provided by or through Lender; obtain any evidence of title to Collateral; satisfy any title requirements required to clear title or obtain Lender’s required lien position on Collateral; pay any letters of credit issued for or on behalf of Borrower; and pay any premiums for hazard insurance, flood insurance, mortgage insurance, or any other insurance required by Lender under this Agreement or Collateral Agreements, or any sums payable by Borrower to Lender in lieu of the payment of such premiums

Upon any verbal or written request of Borrower, or their authorized representative, for a wire transfer (“Payment Order”) Lender shall wire transfer funds through AgriBank, FCB or other commercial bank chosen by Lender and qualified to execute the transfer, to an account identified in the verbal or written instructions. Wire instructions are to be sufficiently complete to allow Lender to execute the Payment Order and will include, at a minimum, the name and number of beneficiary financial institution, any intermediary financial institutions as applicable, and a beneficiary name and account number. Every receiving or beneficiary financial institution may rely on the identifying number to make payment even if it identifies a financial institution, person, or account other than the one named. Lender will accept the wiring instructions as provided to it and is under no obligation to verify the authenticity or accuracy of the instructions.

Borrower is liable for all losses relating to unauthorized transactions which do not result solely from the gross negligence or intentional misconduct by Lender.

All wire transfers will be made in U.S. Dollars unless otherwise specified in the wiring instructions. For wire transfers requested by Borrower in a foreign currency, Borrower agrees to accept and bear the foreign exchange risk for converted currency. Borrower acknowledges delays in beneficiary’s receipt of wire transfers to foreign banks and agrees Lender shall be held harmless for any such delays.

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Borrower agrees to repay all Payment Orders made by wire transfer in accordance with the terms and conditions of this Credit Agreement and other Loan Documents. Lender will have no obligation to execute wire transfer payment order at the request of Borrower or an authorized representative of Borrower if such Advance would result in any indebtedness of Borrower being in excess of Maximum Principal Balance.

Section 9.16 Confidentiality; Sharing Information.

Lender shall hold all non-public information obtained by Lender pursuant to the requirements of this Agreement in accordance with Lender’s customary procedures for handling confidential information of this nature; provided, however, Lender may disclose such confidential information (i) to its examiners, affiliates, outside auditors, counsel and other professional advisors, (ii) to any prospective purchasers under Section 9.7 herein, (iii) as required under the Regulations of the Farm Credit Administration, (iv) to any guarantors of the Loan or third parties pledging collateral as security for the Loan, and (v) to any persons executing this Agreement on behalf of any Borrower or other persons authorized by Borrower to receive confidential information as set out in the Schedule of Authorized Persons attached to this Agreement as Schedule 9.16 or as otherwise authorized in writing by Borrower on a form approved by Lender. Such authorization shall survive the repayment of the Loan(s) and the termination of this Agreement and can only be revoked by written notice to Lender.

Section 9.17 Anti-Terrorism Laws.

To the best of its knowledge, neither Borrower nor any of its Affiliates is in violation of (i) any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto, (ii) Executive Order No. 13,224, 66 Fed Reg 49,079 (2001), issued by the President of the United States (Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism) (the "Executive Order") or (iii) the anti-money laundering provisions of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, Public Law 107-56 (October 26, 2001) amending the Bank Secrecy Act, 31 U.S.C. Section 5311 et seq (collectively, "Anti-Terrorism Laws").

Section 9.18 GAAP.

Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Agreement shall be made, in accordance with GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and any Borrower or Lender shall so request, Lender and Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP; provided that, until so amended: (a) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein; and (b) Borrower shall provide to Lender financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the Borrower shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 on financial liability shall be disregarded.

Section 9.19 Principal Headquarters.

Borrower’s principal headquarters and the place where the records required by Section 6.3 are kept is located at 46269 SD Highway 34PO Box 100, Wentworth, SD, 57075-6934.

Section 9.20 Drafts.

Lender may make credit line drafts (‘Drafts’) available to Borrower as one means of making Advances under Facility AOperating (304761-069993-214088). Borrower agrees that Borrower will only write Drafts prior to the Maturity Date and within the Maximum Principal Balance of the Loan for an approved Loan purpose and so long as there is no Event of Default under the Loan Documents or that there is no event that Borrower knows of that will ripen into an Event of Default. Borrower understands and agrees that any Draft written prior to the Maturity Date will be considered to be an Advance under the Loan and will be fully due and payable under the terms and conditions of the Loan and Loan Documents. Lender will honor Drafts presented to Lender for payment under the terms and conditions described herein unless Lender is notified otherwise by Borrower. Lender may refuse payment on all Drafts that do not meet the terms and conditions concerning Drafts contained herein or the Loan Documents. Provided, however, notwithstanding anything to the contrary herein or in the Loan Documents, in the event of any Event of Default or in the event of any Material Adverse Effect, as Lender may determine, Lender may upon prior notice to Borrower, terminate any right of Borrower to use Drafts on this Loan and refuse payment of all Drafts. Lender also retains the right to make changes to the procedures governing the use of Drafts at any time.

Lender is not obligated to inquire whether Borrower(s) have issued specific directions for any particular Draft or to determine whether Borrower(s) have received the benefit of the proceeds of any particular Draft before honoring such

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a Draft. Lender reserves the right to revoke all future Draft privileges without notice to Borrower(s) in the event of an overdraft and the right to reject Drafts that are not written for purposes specified in the loan documents or pursuant to these terms and conditions. Borrower(s) are responsible for all advances obtained via Drafts signed by any person Borrower(s) allow to use such Drafts, even if such Drafts are for more than Borrower(s) intended. Borrower(s) agree to immediately notify Lender in the event one or more Drafts are lost, stolen, destroyed or otherwise misused and to indemnify Lender and hold Lender harmless from any loss or claim if any Draft is lost, stolen, forged, altered or otherwise misused if Lender did not have notice of the same at least one Business Day prior to honoring such Draft.

Section 9.21 Payer of Record.

Dakota Ethanol, L.L.C., a South Dakota limited liability company is identified as the primary borrower/payer of record on behalf of all Borrowers under this Agreement to accept and receive tax notices and any dividend, patronage, or other distributions declared by Lender.

Section 9.22 IRS Declaration.

The Internal Revenue Service does not require Borrower’s consent to any provision of this document other than the following certification required to avoid backup withholding. Under penalties of perjury, I/we certify that the Taxpayer Identification Number shown below is correct and that I/we am/are not subject to backup withholding either because I/we are exempt, have not been notified that I/we are subject to backup withholding due to failure of reporting interest or dividends, or the Internal Revenue Service has notified Borrower that I/we am/are no longer subject to backup withholding. I/we am/are a U.S. person (including U.S. resident alien):

Dakota Ethanol, L.L.C. 46-0453735

Section 9.23 Credit Agreement in Writing.

A CREDIT AGREEMENT MUST BE IN WRITING TO BE ENFORCEABLE UNDER NEBRASKA LAW. TO PROTECT YOU AND US FROM ANY MISUNDERSTANDINGS OR DISAPPOINTMENTS, ANY CONTRACT, PROMISE, UNDERTAKING OR OFFER TO FOREBEAR REPAYMENT OF MONEY OR TO MAKE ANY OTHER FINANCIAL ACCOMMODATION IN CONNECTION WITH THIS LOAN OF MONEY OR GRANT OR EXTENSION OF CREDIT, OR ANY AMENDMENT OF, CANCELLATION OF, WAIVER OF, OR SUBSTITUTON FOR ANY OR ALL OF THE TERMS OR PROVISIONS OF ANY INSTRUMENT OR DOCUMENT EXECUTED IN CONNECTION WITH THIS LOAN OF MONEY OR GRANT OR EXTENSION OF CREDIT, MUST BE IN WRITING TO BE EFFECTIVE.

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

BORROWER:

Dakota Ethanol, L.L.C.,

a South Dakota limited liability company

By:   _______________________________________                

         Scott Mundt, Chief Executive Officer     

Address for Notice: P.O. Box 100, Wentworth, South Dakota 57075

LENDER:

Farm Credit Services of America, PCA and Farm Credit Services of America, FLCA

By:    __________________________

Name:    __________________________

Title:    __________________________

Address for Notice: 5015 S 118th Street, PO Box 2409, Omaha, NE 68103-2409 United States

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Exhibit ‘A’

Matters to be Covered by Opinion of Counsel to Borrower

The opinion of counsel to Borrower which is called for by Section 3.2.9 of the Credit Agreement (the “Credit Agreement”) shall be addressed to Lenders and dated the Closing Date. It shall be satisfactory in form and substance to Lender and shall cover the matters set forth below, subject to such assumptions, exceptions and qualifications as may be acceptable to Lenders and counsel to Lenders. Capitalized terms used herein have the respective meanings given such terms in the Credit Agreement.

1. (Borrower) is validly existing and in good standing under the laws of the State of Province and has all requisite power and authority to carry on its business as now conducted, to enter into the Loan Documents and to perform all of its obligations under each and all of the foregoing. Borrower is duly qualified and in good standing as in all of the jurisdictions in which the character of the properties owned or leased by it or the business conducted by it makes such qualification necessary and the failure to so qualify would permanently preclude said Borrower from enforcing its rights with respect to any material asset or expose said Borrower to any material liability.

2. The execution, delivery and performance of the Loan Documents by [__________] as authorized representative of Borrower has been duly authorized by all necessary action by Borrower.

3. The Loan Documents constitute the legal, valid and binding obligations of Borrower, enforceable against said Borrower in accordance with their respective terms and are entitled to the benefit and security of the Collateral Agreements securing the Indebtedness described in the Credit Agreement.

4. The [mortgage/Deed of Trust] when executed by Borrower is sufficient in form to create in favor of Lender a valid and enforceable lien in the mortgaged property defined in the [mortgage/Deed of Trust].

5. The execution, delivery and performance under the Loan Documents by the said [___________] will not (i) violate any provision of any law, statute, rule or regulation or, to the best knowledge of such counsel, any order, writ, judgment, injunction, decree, determination or award of any court, governmental agency or arbitrator presently in effect having applicability to Borrower, (ii) violate or contravene any provision of the [ORGANIZATIONAL DOCUMENT], or (iii) result in a breach of or constitute a default under any indenture, loan or credit agreement, or any other agreement, lease or instrument known to such counsel to which Borrower is a party or by which it or any of its properties may be bound or result in the creation of any lien thereunder.

6. To the best knowledge of such counsel, no order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by, any governmental or public body or authority is required on the part of Borrower to authorize, or is required in connection with the execution, delivery and performance of, or the legality, validity, binding effect or enforceability of, the Loan Documents, except for any necessary filing or recordation of or with respect to any of the Security Documents.

7. To the best knowledge of such counsel, there are no actions, suits or proceedings pending or threatened against or affecting Borrower or any of its properties before any court or arbitrator, or any governmental department, board, agency or other instrumentality which (i) challenge the legality, validity or enforceability of the Loan Documents, or (ii) if determined adversely to Borrower, would have a material adverse effect on the business, operations, property or condition (financial or otherwise) of Borrower or on the ability of Borrower to perform its obligations under the Loan Documents.

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Exhibit “B’

Compliance Certificate

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Exhibit ‘C’

Borrowing Base Report

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Schedule 7.8

Permitted Indebtedness

1. Term debt to creditors not to exceed $1,000,000.00 in the aggregate that is either secured by a lien subordinated to Lender or a lien position acceptable to Lender.

2. Operating and capital leases with annual payments not to exceed $500,000.00 in the aggregate with additional allowance for rail car lease commitments.

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Schedule 7.9

Loans, Advances, Guarantees and Investments

1. Investments not to exceed an aggregate amount of $2,000,000.00 in each fiscal year

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Schedule 9.15

Borrower Disbursement Authorization for Non-Signers on Agreement

Borrower Name: Dakota Ethanol, L.L.C., a South Dakota limited liability company

CTL3: 268    CIF: 304761    Facility(ies): All    Loan(s): All

Borrower hereby authorizesFarm Credit Services of America, PCA and Farm Credit Services of America, FLCAin its individual capacity. Farm Credit Services of America, PCA and Farm Credit Services of America, FLCA (“Lender”) to execute request(s) to advance funds from above stated loan(s) by wire transfer and/or check, based on instructions provided by phone, in person, or in writing by a party authorized by Borrower as stated below in this agreement.

Name of Authorized Individual(s)

Rob Buchholtz

Scott Mundt

Borrower agrees that Borrower’s access to wire transfer and check disbursement services pursuant to this agreement are also subject to all of the terms and conditions contained in the Credit Agreement and related documents evidencing Borrower’s borrowing relationship with Lender.

Borrower further understands that any disbursement request is subject to approval by Lender and that Lender may refuse to execute and complete a request if such request causes the loan to exceed the available commitment.

Authorization granted by (at least one primary obligor):

Date:        

Dakota Ethanol, L.L.C.,

a South Dakota limited liability company

By: _______________________________________

Scott Mundt, Chief Executive Officer

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Schedule 9.16

Schedule of Authorized Persons

Pursuant to Section 9.16 Confidentiality; Sharing Information of the Credit Agreement betweenDakota Ethanol, L.L.C., a South Dakota limited liability company, and Farm Credit Services of America, PCA and Farm Credit Services of America, FLCAdatedFebruary 2, 2018, Lender may disclose such confidential information (i) to its examiners, affiliates, outside auditors, counsel and other professional advisors, (ii) to any prospective purchasers under Section 9.7 herein, (iii) as required under the Regulations of the Farm Credit Administration, (iv) to any guarantors of the Loan or third parties pledging collateral as security for the Loan, and (v) to any officers, managers, members, partners, personal representatives, employees, agents or other persons authorized by Borrower to receive confidential information as set out in the Schedule of Authorized Persons

I/We hereby release and agree to hold Lender, its directors, officers, employees, and agents harmless from any liability whatsoever which might arise at any time by reason of any release, disclosure, or publication of said information to the person(s) identified herein.

PERSON(S) AUTHORIZED TO RECEIVE INFORMATION:

(If none, please write “none”

Rob Buchholtz

Scott Mundt

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EX-31.1

CERTIFICATION

I, Scott Mundt, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date:	March 2, 2018	/s/ Scott Mundt
		Scott Mundt, Chief Executive Officer

EX-31.2

CERTIFICATION

I, Robbi Buchholtz, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date:	March 2, 2018	/s/ Robbi Buchholtz
		Robbi Buchholtz, Chief Financial Officer

EX-32.1

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

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

In connection with this annual report on Form 10-K of Lake Area Corn Processors, LLC (the “Company”) for the fiscal year ended December 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott Mundt, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Dated:	March 2, 2018	/s/ Scott Mundt
		Scott Mundt,
		Chief Executive Officer

EX-32.2

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

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

In connection with this annual report on Form 10-K of Lake Area Corn Processors, LLC (the “Company”) for the fiscal year ended December 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robbi Buchholtz, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Dated:	March 2, 2018	/s/ Robbi Buchholtz
		Robbi Buchholtz,
		Chief Financial Officer

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2017	Mar. 02, 2018	Jun. 30, 2017
Document Information [Line Items]
Entity Registrant Name	LAKE AREA CORN PROCESSORS LLC
Entity Central Index Key	0001156174
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-K
Document Period End Date	Dec. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Common Stock, Shares Outstanding		29,620,000
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 0

XML

Consolidated Balance Sheets - USD ($)	Dec. 31, 2017	Dec. 31, 2016
CURRENT ASSETS
Cash and cash equivalents	$ 5,102,959	$ 9,993,335
Accounts receivable	3,186,530	4,054,667
Other receivables	38,704	25,216
Inventory	5,526,094	6,212,619
Derivative financial instruments	862,840	1,057,465
Prepaid expenses	219,741	237,823
Total current assets	14,936,868	21,581,125
PROPERTY AND EQUIPMENT
Land	874,473	874,473
Land improvements	8,558,720	9,449,920
Buildings	8,955,206	8,955,206
Equipment	53,060,482	52,614,358
Construction in progress	8,475,840	0
Gross Property and Equipment	79,924,721	71,893,957
Less accumulated depreciation	(39,955,791)	(37,069,755)
Net property and equipment	39,968,930	34,824,202
OTHER ASSETS
Goodwill	10,395,766	10,395,766
Investments	18,739,259	11,192,032
Other	31,417	122,964
Total other assets	29,166,442	21,710,762
TOTAL ASSETS	84,072,240	78,116,089
CURRENT LIABILITIES
Outstanding checks in excess of bank balance	674,936	1,035,671
Accounts payable	6,123,995	7,670,550
Accrued liabilities	582,487	592,749
Derivative financial instruments	410,785	827,786
Current portion of notes payable	1,000,000	0
Other	13,556	141,323
Total current liabilities	8,805,759	10,268,079
LONG-TERM LIABILITIES
Notes payable	6,971,944	1,000
Other	12,000	25,556
Total long-term liabilities	6,983,944	26,556
COMMITMENTS AND CONTINGENCIES
MEMBERS' EQUITY (29,620,000 units issued and outstanding)	68,282,537	67,821,454
TOTAL LIABILITIES AND MEMBERS' EQUITY	$ 84,072,240	$ 78,116,089

XML

Consolidated Balance Sheets Parenthetical - shares	Dec. 31, 2017	Dec. 31, 2016
MEMBERS' EQUITY, units issued and outstanding	29,620,000	29,620,000

XML

Consolidated Statements of Operations - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
REVENUES	$ 84,821,788	$ 88,812,550	$ 88,997,947
COSTS OF REVENUES	76,253,945	76,097,861	81,445,770
GROSS PROFIT	8,567,843	12,714,689	7,552,177
OPERATING EXPENSES	3,717,291	3,642,087	1,827,789
INCOME FROM OPERATIONS	4,850,552	9,072,602	5,724,388
OTHER INCOME (EXPENSE)
Interest and other income	77,033	40,367	117,471
Business interruption claims recovery	0	0	617,771
Equity in net income of investments	1,459,806	2,293,928	2,195,535
Interest expense	(2,308)	(1,689)	(1,635)
Total other income (expense)	1,534,531	2,332,606	2,929,142
NET INCOME	$ 6,385,083	$ 11,405,208	$ 8,653,530
BASIC AND DILUTED EARNINGS PER UNIT	$ 0.22	$ 0.39	$ 0.29
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING FOR THE CALCULATION OF BASIC & DILUTED EARNINGS PER UNIT	29,620,000	29,620,000	29,620,000

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Consolidated Statement of Changes in Members' Equity	USD ($)
Stockholders' Equity Attributable to Parent at Dec. 31, 2014	$ 68,600,228
Net Income	8,653,530
Distributions to members	(8,989,512)
Stockholders' Equity Attributable to Parent at Dec. 31, 2015	68,264,246
Net Income	11,405,208
Distributions to members	(11,848,000)
Stockholders' Equity Attributable to Parent at Dec. 31, 2016	67,821,454
Net Income	6,385,083
Distributions to members	(5,924,000)
Stockholders' Equity Attributable to Parent at Dec. 31, 2017	$ 68,282,537

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Consolidated Statement of Changes in Members' Equity Parenthetical - $ / shares	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Distribution Made to Limited Partner, Distributions Paid, Per Unit	$ 0.20	$ 0.40	$ 0.30

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Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
OPERATING ACTIVITIES
Net Income	$ 6,385,083	$ 11,405,208	$ 8,653,530
Adjustments to reconcile net income to cash provided by operating activities
Depreciation and amortization	2,977,582	3,375,012	3,373,935
Distributions in excess of earnings from investments	2,598,644	4,032,960	8,004,464
(Gain) on insurance proceeds for damage to equipment	0	0	(2,818,955)
(Gain) loss on disposal of property and equipment	0	0	849,734
(Increase) decrease in
Receivables	816,730	(2,432,676)	759,945
Inventory	686,526	1,352,871	(1,458,844)
Prepaid expenses	18,080	43,732	24,796
Derivative financial instruments	(222,375)	(160,259)	(59,474)
Accounts payable	(1,550,377)	(2,017,964)	2,211,376
Accrued and other liabilities	(142,029)	80,872	(64,878)
NET CASH PROVIDED BY OPERATING ACTIVITIES	11,567,864	15,679,756	19,475,629
INVESTING ACTIVITIES
Insurance proceeds received for damage to equipment	0	1,318,955	1,500,000
Purchase of property and equipment	(7,989,022)	(3,999,128)	(9,894,309)
Purchase of investments	(10,145,871)	0	(15,000)
NET CASH (USED IN) INVESTING ACTIVITIES	(18,134,893)	(2,680,173)	(8,409,309)
FINANCING ACTIVITIES
Increase (decrease) in outstanding checks in excess of bank balance	(360,736)	558,505	230,319
Proceeds from issuance of notes payable	8,000,000	0	0
Payments for long-term debt	(38,611)	(45,919)	(82,344)
Distributions to members	(5,924,000)	(11,848,000)	(8,989,512)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	1,676,653	(11,335,414)	(8,841,537)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(4,890,376)	1,664,169	2,224,783
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	9,993,335	8,329,166	6,104,383
CASH AND CASH EQUIVALENTS AT END OF PERIOD	5,102,959	9,993,335	8,329,166
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for interest, net of capitalized interest of $116,650, $2,940, and $6,715 in 2017, 2016 and 2015, respectively	2,317	1,687	1,689
Capital expenditures in accounts payable	$ 111,390	$ 69,647	$ 52,989

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Consolidated Statements of Cash Flows Parenthetical - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Supplemental Cash Flow Elements [Abstract]
Interest Paid, Capitalized	$ 116,650.00	$ 2,940.00	$ 6,175.00

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Nature of Operations

12 Months Ended

Dec. 31, 2017

Nature of Operations [Abstract]

Nature of Operations

NATURE OF OPERATIONS

Principal Business Activity

Lake Area Corn Processors, LLC and subsidiary (the Company) is a South Dakota limited liability company.

The Company owns and manages Dakota Ethanol, LLC (Dakota Ethanol), a 40 million-gallon (annual nameplate capacity) ethanol plant located near Wentworth, South Dakota. Dakota Ethanol sells ethanol and related products to customers located primarily in North America.

In addition, the Company has investment interests in six companies in related industries. See note 4 for further details.

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2017

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements of the Company include the accounts of its wholly owned subsidiary, Dakota Ethanol. All significant inter-company transactions and balances have been eliminated in consolidation.

Revenue Recognition

Revenue from the production of ethanol and related products is recorded when title transfers to customers. Generally, ethanol and related products are shipped FOB shipping point, based on written contract terms between Dakota Ethanol and its customers. Collectability of revenue is reasonably assured based on historical evidence of collectability between Dakota Ethanol and its customers. Interest income is recognized as earned.

Shipping costs incurred by the Company in the sale of ethanol, dried distillers grains and corn oil are not specifically identifiable and as a result, revenue from the sale of those products is recorded based on the net selling price reported to the Company from the marketer.

Cost of Revenues

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

Shipping costs on modified and wet distillers grains are included in cost of revenues.

Inventory Valuation

Inventories are generally valued using methods which approximate the lower of cost (first-in, first-out) or net realizable value. In the valuation of inventories and purchase commitments, net realizable value is based on estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation.

Cash and Cash Equivalents

Cash and cash equivalents consist of demand accounts and other accounts with original maturities of three months or less that provide withdrawal privileges.

Receivables and Credit Policies

Accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within fifteen days from the invoice date. Unpaid accounts receivable with invoice dates over thirty days old bear interest at 1.5% per month. Accounts receivable are stated at the amount billed to the customer. Payments of accounts receivable are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the earliest unpaid invoices.

The carrying amount of trade receivables is reduced by a valuation allowance that reflects management’s best estimate of the amounts that will not be collected. Management regularly reviews trade receivable balances and based on an assessment of current creditworthiness, estimates the portion, if any, of the balance that will not be collected. The valuation allowance was $2,131 and $51,791 as of December 31, 2017 and 2016 respectively.

Investment in commodities contracts, derivative instruments and hedging activities

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

The Company is subject to market risk with respect to the price and availability of corn, the principal raw material the Company uses to produce ethanol and ethanol by-products.  In general, rising corn prices result in lower profit margins and, therefore, represent unfavorable market conditions.  This is especially true when market conditions do not allow us to pass along increased corn costs to our customers.  The availability and price of corn is subject to wide fluctuations due to unpredictable factors such as weather conditions, farmer planting decisions, governmental policies with respect to agriculture and international trade and global demand and supply.

Certain contracts that literally meet the definition of a derivative may be exempted from derivative accounting as normal purchases or normal sales.  Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business.  Contracts that meet the requirements of normal purchases or sales are documented as normal and exempted from the accounting and reporting requirements of derivative accounting.

The Company does not apply the normal purchase and sales exemption for forward corn purchase contracts. As of December 31, 2017, the Company is committed to purchasing approximately 2.5 million bushels of corn on a forward contract basis with an average price of $3.30 per bushel. The total corn purchase contracts represent 14% of the projected annual plant corn usage.

The Company enters into firm-price purchase commitments with natural gas suppliers under which the Company agrees to buy natural gas at a price set in advance of the actual delivery.  Under these arrangements, the Company assumes the risk of a price decrease in the market price of natural gas between the time the price is fixed and the time the natural gas is delivered.  At December 31, 2017, the Company is committed to purchasing approximately 40,000 MMBtus of natural gas with an average price of $3.10 per MMBtu. The Company accounts for these transactions as normal purchases, and accordingly, does not mark these transactions to market. The natural gas purchases represent approximately 3% of the projected annual plant requirements.

The Company enters into firm-price sales commitments with distillers grains customers under which the Company agrees to sell distillers grains at a price set in advance of the actual delivery.  Under these arrangements, the Company assumes the risk of a price increase in the market price of distillers grain between the time the price is fixed and the time the distillers grains are delivered.  At December 31, 2017, the Company is committed to selling approximately 38,000 dry equivalent tons of distillers grains with an average price of $101 per ton.  The Company accounts for these transactions as normal sales, and accordingly, does not mark these transactions to market. The distillers grains sales represent approximately 26% of the projected annual plant production.

The Company enters into firm-price sales commitments with distillers corn oil customers under which the Company agrees to sell distillers corn oil at a price set in advance of the actual delivery.  Under these arrangements, the Company assumes the risk of a price increase in the market price of distillers corn oil between the time the price is fixed and the time the distillers corn oil is delivered.  At December 31, 2017, the Company is committed to selling approximately 770,000 pounds of distillers corn oil with an average price of $0.24 per pound.  The Company accounts for these transactions as normal sales, and accordingly, does not mark these transactions to market. The distillers corn oil sales represent approximately 7% of the projected annual plant production.

The Company does not have any firm-priced sales commitments for ethanol as of December 31, 2017.

The Company enters into short-term forward, option and futures contracts for ethanol, corn and natural gas as a means of managing exposure to changes in commodity and energy prices. All of the Company's derivatives are designated as non-hedge derivatives, and accordingly are recorded at fair value with changes in fair value recognized in net income. Although the contracts are considered economic hedges of specified risks, they are not designated as and accounted for as hedging instruments.

As part of our trading activity, The Company uses futures and option contracts offered through regulated commodity exchanges to reduce risk of loss in the market value of inventories and purchase commitments. To reduce that risk, the Company generally takes positions using forward and futures contracts and options.

Derivatives not designated as hedging instruments at December 31, 2017 and December 31, 2016 were as follows:

	Balance Sheet Classification	December 31, 2017			December 31, 2016
Forward contracts in gain position		$	3,856		$	6,491
Futures contracts in gain position		119,825			246,900
Futures contracts in loss position		(1,363		)	(12,575		)
Total forward and futures contracts		122,318			240,816
Cash held by broker		740,522			816,649
	Current Assets	$	862,840		$	1,057,465
Forward contracts in loss position	(Current Liabilities)	$	(410,785	)	$	(827,786	)

Futures contracts and cash held by broker are all with one party and the right of offset exists. Therefore, on the balance sheet, these items are netted in one balance regardless of position.

Forward contracts are with multiple parties and the right of offset does not exist. Therefore, these contracts are reported at the gross amounts on the balance sheet.

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

	Statement of Operations	Years Ended December 31,
	Classification	2017			2016			2015
Net realized and unrealized gains (losses) related to purchase contracts:
Futures contracts	Cost of Revenues	$	608,250		$	1,874,523		$	1,325,265
Forward contracts	Cost of Revenues	(1,423,330		)	(1,707,414		)	(994,242		)

Investments

The Company has investment interests in six companies in related industries. All of these interests are at ownership shares less than 20%. These investments are flow-through entities. Per ASC 323-30-S99-1, they are being accounted for by the equity method of accounting under which the Company’s share of net income is recognized as income in the Company’s statements of operations and added to the investment account.  Distributions or dividends received from the investments are treated as a reduction of the investment account. The Company consistently follows the practice of recognizing the net income based on the most recent reliable data. 

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the fair value of derivative financial instruments, lower of cost or net realizable value accounting for inventory and forward purchase contracts and goodwill impairment evaluation.

Concentrations of Credit Risk

The Company’s cash balances are maintained in bank depositories and regularly exceed federally insured limits. The Company has not experienced any losses in connection with these balances.

Property and Equipment

Property and equipment is stated at cost. Significant additions and betterments are capitalized, while expenditures for maintenance, repairs and minor renewals are charged to operations when incurred. Depreciation on assets placed in service is computed using the straight-line method over estimated useful lives as follows:

	Minimum	Maximum
Land improvements	20 years	40 years
Equipment	5 years	20 years
Buildings	15 years	40 years

Equipment relates to two general categories: mechanical equipment and administrative and maintenance equipment. Mechanical equipment generally relates to equipment for handling inventories and the production of ethanol and related products, with useful lives of 15 to 20 years, including boilers, cooling towers, grain bins, centrifuges, conveyors, fermentation tanks, pumps and drying equipment. Administrative and maintenance equipment is equipment with useful lives of 5 to 15 years, including vehicles, computer systems, security equipment, testing devices and shop equipment.

The Company reviews its property and equipment for impairment whenever events indicate that the carrying amount of an asset group may not be recoverable. An impairment loss is recorded when the sum of the undiscounted future cash flows is less than the carrying amount of the asset group. An impairment loss is measured as the amount by which the carrying amount of the asset group exceeds its fair value. No indicators of impairment were identified at December 31, 2017 and 2016.

Goodwill

Annually, as well as when an event triggering impairment may have occurred, the Company performs an impairment test on goodwill. The Company performs a quantitative analysis that tests for impairment. The second step, if necessary, measures the impairment. The Company performs the annual analysis on December 31 of each fiscal year. The Company determined that there was no impairment of goodwill at December 31, 2017 and 2016.

Earnings Per Unit

For purposes of calculating basic earnings per unit, units issued are considered outstanding on the effective date of issuance. Diluted earnings per unit are calculated by including dilutive potential equity units in the denominator. There were no dilutive equity units for the years ending December 31, 2017, 2016, and 2015.

Income Taxes

The Company is taxed as a limited liability company under the Internal Revenue Code. The income of the Company flows through to the members to be taxed at the member level rather than the corporate level. Accordingly, the Company has no tax liability.

Management has evaluated the Company’s tax positions under the Financial Accounting Standards Board issued guidance on accounting for uncertainty in income taxes and concluded that the Company had taken no uncertain tax positions that require adjustment to the financial statements to comply with the provisions of this guidance. Generally, the Company is no longer subject to income tax examinations by the U.S. federal, state or local authorities for the years before 2014.

Environmental Liabilities

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

Operating Segment

The Company uses the “management approach” for reporting information about segments in annual and interim financial statements. The management approach is based on the way the chief operating decision-maker organizes segments within a company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure and any other manner in which management disaggregates a company. Based on the “management approach” model, the Company has determined that its business is comprised of a single operating segment.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, "Revenue from Contracts with Customers (Topic 606)" (ASU 2014-09). ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. Generally Accepted Accounting Principles (GAAP) when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. The updated standard becomes effective for the Company in the first quarter of fiscal year 2018. The Company has completed a comparison of the current revenue recognition policies to the ASU 2014-09 requirements for each of the Company’s major revenue categories. Results indicate that the guidance will not materially change the amount or timing of revenues recognized by the Company. The Company will adopt ASU 2014-09 using the retrospective with cumulative effect transition method. The Company expects to have enhanced disclosures but does not expect this standard to have a material impact on the Company's consolidated financial statements.

In February 2016, FASB issued ASU No. 2016-02, "Leases (Topic 842)” (ASU 2016-02). ASU 2016-02 requires the recognition of lease assets and lease liabilities by lessees for all leases greater than one year in duration and classified as operating leases under previous GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and for interim periods within that fiscal year. The Company does not expect this standard to have a material impact on the Company's consolidated financial statements.

In January 2017, FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350)” (ASU 2017-04). ASU 2107-04 simplifies the test for goodwill impairment. It eliminates the two-step process of assessing goodwill impairment and replaces it with one step which compares the fair value of the reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying value exceeds the fair value up to the amount of the goodwill attributed to the reporting unit. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, and for interim periods within that fiscal year. The Company does not expect this standard to have a material impact on the Company's consolidated financial statements.

Risks and Uncertainties

The Company has certain risks and uncertainties that it will experience during volatile market conditions, which can have a severe impact on operations. The Company's revenues are derived from the sale and distribution of ethanol and distiller grains to customers primarily located in the United States. Corn for the production process is supplied to the plant primarily from local agricultural producers and from purchases on the open market. For the twelve months ended December 31, 2017, ethanol sales averaged approximately 79% of total revenues, while approximately 17% of revenues were generated from the sale of distiller grains and 4% of revenues were generated from the sale of corn oil. For the twelve months ended December 31, 2017, corn costs averaged approximately 71% of cost of goods sold.

The Company's operating and financial performance is largely driven by the prices at which it sells ethanol and the net expense of corn. The price of ethanol is influenced by factors such as supply and demand, weather, government policies and programs, and unleaded gasoline and the petroleum markets. Excess ethanol supply in the market, in particular, puts downward pressure on the price of ethanol. The Company's largest cost of production is corn. The cost of corn is generally impacted by factors such as supply and demand, weather, and government policies and programs. The Company's risk management program is used to protect against the price volatility of these commodities.

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Inventory

12 Months Ended

Dec. 31, 2017

Inventory [Abstract]

Inventory

INVENTORY

Inventory consisted of the following as of December 31, 2017 and 2016:

	December 31, 2017		December 31, 2016
Raw materials	$	2,466,493	$	3,217,822
Finished goods	1,193,552		1,124,660
Work in process	516,362		593,197
Parts inventory	1,349,687		1,276,940
	$	5,526,094	$	6,212,619

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Investments

12 Months Ended

Dec. 31, 2017

Investments [Abstract]

Investments

INVESTMENTS

Dakota Ethanol has a 7% investment interest in the Company’s ethanol marketer, Renewable Products Marketing Group, LLC (RPMG).  The net income which is reported in the Company’s income statement for RPMG is based on RPMG’s September 30, 2017, 2016 and 2015 audited results. The carrying amount of the Company’s investment was approximately $1,206,000 and $1,283,000 as of December 31, 2017 and 2016, respectively.

Dakota Ethanol has a 6% investment interest in Prairie Gold Venture Partnership, LLC (PGVP), a venture capital fund investing in cellulosic ethanol production.  The net income which is reported in the Company’s income statement for PGVP is based on PGVP’s June 30, 2017, 2016 and 2015 unaudited interim results. The carrying amount of the Company’s investment was approximately $0 and $308,000 as of December 31, 2017 and 2016, respectively. During 2017, Dakota Ethanol determined an other than temporary decline in value had occurred and wrote off the remaining $308,000 balance of the investment as it was considered impaired and worthless. This charge in included in the equity in net income of investments on the consolidated statements of operations for the year ended December 31, 2017.

Dakota Ethanol has a 10% investment interest in Lawrenceville Tanks, LLC (LT), a partnership to construct and operate an ethanol storage terminal in Georgia.  The net income which is reported in the Company’s income statement for LT is based on LT’s December 31, 2017, 2016 and 2015 unaudited results. The carrying amount of the Company’s investment was approximately $327,000 and $460,000 as of December 31, 2017 and 2016 respectively.

Lake Area Corn Processors has a 10% investment interest in Guardian Hankinson, LLC (GH), a partnership to operate an ethanol plant in North Dakota.  The net income which is reported in the Company’s income statement for GH is based on GH’s December 31, 2017, 2016 and 2015 audited results. The carrying amount of the Company’s investment was approximately $7,151,000 and $9,108,000 as of December 31, 2017 and 2016 respectively.

Lake Area Corn Processors has a 17% investment interest in Guardian Energy Management, LLC (GEM), a partnership to provide management services to ethanol plants.  The net income which is reported in the Company’s income statement for GEM is based on GEM’s December 31, 2017, 2016 and 2015 unaudited interim results. The carrying amount of the Company’s investment was approximately $33,000 and $33,000 as of December 31, 2017 and 2016.

Lake Area Corn Processors has an 11% investment interest in Ring-neck Energy & Feed, LLC (REF), a partnership to operate an ethanol plant in South Dakota.  The net income which is reported in the Company’s income statement for REF is based on REF’s December 31, 2017 unaudited interim results. The carrying amount of the Company’s investment was approximately $10,023,000 as of December 31, 2017. 2017 is the initial year for the investment in REF and the ethanol plant is currently under construction. The carrying amount of the investment exceeds the underlying equity in net assets by approximately $619,000. The excess will be amortized over 10 years when the plant becomes operational. The amortization will be recorded in equity in net income of investments.

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

Balance Sheet	12/31/2017		12/31/2016		12/31/2015
Current assets	$	212,154,680	$	178,539,108	$	157,550,341
Other assets	164,254,183		151,378,628		163,122,840
Current liabilities	131,152,747		140,898,148		115,222,336
Long-term liabilities	54,754,437		49,924,355		37,502,031
Member's equity	190,501,679		139,095,233		167,948,814
Revenue	255,154,945		255,245,069		259,096,005
Gross Profit	33,033,635		42,635,837		35,135,377
Net Income	19,482,340		29,555,855		25,650,869

The following table shows the condensed financial information of Guardian Hankinson; the earnings in which represents greater than 10% of the Company's net income for the year ended December 31, 2017.

Balance Sheet	12/31/2017		12/31/2016		12/31/2015
Current assets	$	22,771,808	$	31,337,860	$	30,957,066
Other assets	117,344,930		133,415,881		144,336,737
Current liabilities	17,619,748		23,822,812		21,819,143
Long-term liabilities	51,352,566		49,856,355		37,502,031
Members' equity	71,144,424		91,074,574		115,972,629
Revenue	239,421,949		237,885,377		240,928,085
Gross Profit	22,456,677		30,731,135		21,352,587
Net Income	17,422,533		25,601,946		19,838,398

The following table shows the condensed financial information of Ring-neck Energy & Feed; the investment in which represents greater than 10% of the Company's assets as of December 31, 2017.

Balance Sheet	12/31/2017
Current assets	$	50,000,088
Other assets	42,640,650
Current liabilities	4,716,781
Long-term liabilities	3,230,871
Members' equity	84,693,086
Revenue	—
Gross Profit	—
Net Income	(253,522		)

The Company recorded equity in net income of approximately $1,742,000, $2,561,000 and $1,984,000 from GH for the years ended December 31, 2017, 2016 and 2015 respectively. The Company recorded equity in net (loss) of approximately ($123,000) from REF for the year ended December 31, 2017. The Company recorded equity in net income (loss) of approximately $(160,000), $267,000 and $212,000 from our other investments for the years ended December 31, 2017, 2016 and 2015 respectively. The Company has undistributed net earnings in investees of approximately $627,000 and $680,000 as of December 31, 2017 and 2016, respectively.

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Revolving Operating Note

12 Months Ended

Dec. 31, 2017

Short Term Note Payable [Abstract]

Short Term Note Payable

REVOLVING OPERATING NOTE

On November 1, 2016, Dakota Ethanol executed a revolving promissory note with Farm Credit Services of America (FCSA) in the amount up to $10,000,000 or the amount available in accordance with the borrowing base calculation. Interest on the outstanding principal balances will accrue at 300 basis points above the 1 month LIBOR rate and is not subject to a floor. The rate was 4.35% at December 31, 2017. There is a non-use fee of 0.25% on the unused portion of the $10,000,000 availability. The note is collateralized by substantially all assets of the Company. The note expires on November 1, 2019. On December 31, 2017, Dakota Ethanol had $0 outstanding and approximately $2,047,000 available to be drawn on the revolving promissory note under the borrowing base.

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Long Term Notes Payable

12 Months Ended

Dec. 31, 2017

Long Term Note Payable [Abstract]

Long Term Notes Payable

LONG-TERM NOTES PAYABLE

On November 11, 2014, Dakota Ethanol executed a reducing revolving promissory note from FCSA in the amount of $15,000,000. The amount Dakota Ethanol can borrow on the note decreases by $750,000 semi-annually starting on April 1, 2015 until the maximum balance reaches $7.5 million on October 1, 2019. The note matures on October 1, 2024. Interest on the outstanding principal balance will accrue at 325 basis points above the 1 month LIBOR rate and is not subject to a floor. The rate was 4.60% at December 31, 2017. The note contains a non-use fee of 0.50% on the unused portion of the note. On December 31, 2017, Dakota Ethanol had $1,000 outstanding and $10,499,000 available to be drawn on the note.

On August 1, 2017, Dakota Ethanol executed a term note from FCSA in the amount of $8,000,000. Dakota Ethanol agreed to make monthly interest payments starting September 1, 2017 and annual principal payments of $1,000,000 starting on August 1, 2018. The notes matures on August 1, 2025. Interest on the outstanding principal balance will accrue at 325 basis points above the 1 month LIBOR rate and is not subject to a floor. The rate was 4.60% at December 31, 2017. On December 31, 2017, Dakota Ethanol had $8,000,000 outstanding on the note.

As part of the note payable agreement, Dakota Ethanol is subject to certain restrictive covenants establishing financial reporting requirements, distribution and capital expenditure limits, minimum debt service coverage ratios, net worth and working capital requirements. The note is collateralized by substantially all assets of the Company.

The balances of the notes payable are as follows:

	December 31, 2017			December 31, 2016*
Note Payable - FCSA	$	8,001,000		$	1,000
Less unamortized debt issuance costs	(29,056		)	—
	7,971,944			1,000
Less current portion	(1,000,000		)	—
	$	6,971,944		$	1,000
*Derived from audited financial statements

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

Years Ending December 31,	Principal
2018	$	1,000,000
2019	1,000,000
2020	1,000,000
2021	1,000,000
2022	1,000,000
thereafter	3,001,000

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Employee Benefit Plans

12 Months Ended

Dec. 31, 2017

Employee Benefit Plans [Abstract]

Employee Benefit Plans

EMPLOYEE BENEFIT PLANS

Dakota Ethanol maintains a 401(k) plan for the employees who meet the eligibility requirements set forth in the plan documents. Dakota Ethanol matches a percentage of the employees' contributed earnings. Employer contributions to the plan totaled approximately $104,000, $103,000 and $103,000 for the years ended December 31, 2017, 2016 and 2015, respectively.

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Fair Value Measurements

12 Months Ended

Dec. 31, 2017

Fair Value Measurements [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

The Company complies with the fair value measurements and disclosures standard which defines fair value, establishes a framework for measuring fair value, and expands disclosure for those assets and liabilities carried on the balance sheet on a fair value basis.

The Company’s balance sheet contains derivative financial instruments that are recorded at fair value on a recurring basis. Fair value measurements and disclosures require that assets and liabilities carried at fair value be classified and disclosed according to the process for determining fair value. There are three levels of determining fair value.

Level 1 uses quoted market prices in active markets for identical assets or liabilities.

Level 2 uses observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3 uses unobservable inputs that are not corroborated by market data.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

Derivative financial instruments. Commodity futures and options contracts are reported at fair value utilizing Level 1 inputs. For these contracts, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes and live trading levels from the CBOT and NYMEX markets. Over-the-counter commodity options contracts are reported at fair value utilizing Level 2 inputs. For these contracts, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes and live trading levels from the over-the-counter markets. Forward purchase contracts are reported at fair value utilizing Level 2 inputs. For these contracts, the Company obtains fair value measurements from local grain terminal bid values. The fair value measurements consider observable data that may include live trading bids from local elevators and processing plants which are based off the CBOT markets.

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of December 31, 2017 and 2016, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	Total			Level 1			Level 2			Level 3
December 31, 2017
Assets:
Derivative financial instruments, futures contracts	$	119,825		$	119,825		$	—		$	—
forward contracts	3,856			—			3,856			—
Liabilities:
Derivative financial instruments, futures contracts	$	(1,363	)	$	(1,363	)	$	—		$	—
forward contracts	(410,785		)	—			(410,785		)	—
December 31, 2016
Assets:
Derivative financial instruments, futures contracts	$	246,900		$	246,900		$	—		$	—
forward contracts	6,491			—			6,491			—
Liabilities:
Derivative financial instruments, futures contracts	$	(12,575	)	$	(12,575	)	$	—		$	—
forward contracts	(827,786		)	—			(827,786		)	—

During the years ended December 31, 2017 and 2016, the Company did not make any changes between Level 1 and Level 2 assets and liabilities. As of December 31, 2017 and 2016, the Company did not have any Level 3 assets or liabilities.

Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). Financial assets and financial liabilities measured at fair value on a non-recurring basis were not significant at December 31, 2017 and 2016.

Disclosure requirements for fair value of financial instruments require disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or nonrecurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or non recurring basis are discussed above. The methodologies for other financial assets and financial liabilities are discussed below.

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

The carrying amount of long-term obligations (level 3) at December 31, 2017 of $8,001,000 had an estimated fair value of approximately $8,001,000 based on estimated interest rates for comparable debt. The carrying amount of long-term obligations at December 31, 2016 of $1,000 had an estimated fair value of approximately $1,000 based on estimated interest rates for comparable debt.

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Commitments, Contingencies and Agreements

12 Months Ended

Dec. 31, 2017

Commitments, Contingencies and Agreements [Abstract]

Commitments, Contingencies and Agreements

COMMITMENTS, CONTINGENCIES AND AGREEMENTS

Dakota Ethanol has entered into contracts and agreements regarding the operation of the ethanol plant as follows:

Natural Gas - The agreement provides Dakota Ethanol with a fixed transportation rate for natural gas for a ten-year term through August 2021, and is renewable annually thereafter. The agreement does not require minimum purchases of natural gas during their initial term.

Electricity - The agreement provides Dakota Ethanol with electric service for a term of one year. The contract automatically renews unless prior notice of cancellation is given. The agreement sets rates for energy usage based on market rates and requires a minimum purchase of electricity each month during the term of the agreement.

Expenses related to the agreement for the purchase of electricity and natural gas were approximately $7,259,000, $6,510,000, and $7,013,000, for the years ended December 31, 2017, 2016 and 2015, respectively.

Minimum annual payments during the term of the electricity agreement are as follows:

Years Ending December 31,	Amount
2018	$584,280

Ethanol Fuel Marketing Agreement - Dakota Ethanol has an agreement with RPMG (a related party, see note 10), a joint venture of ethanol producers, for the sale, marketing, billing and receipt of payment and other administrative services for all ethanol produced by the plant. The agreement continues indefinitely unless terminated under terms set forth in the agreement.

Distillers Grain Marketing Agreement - Dakota Ethanol has an agreement with RPMG (a related party, see note 10), for the marketing of all distillers dried grains produced by the plant. The agreement expires on July 15, 2018 and is automatically renewed for successive one year terms unless terminated 180 days prior to expiration.

Corn Oil Marketing Agreement - Dakota Ethanol has an agreement with RPMG (a related party, see note 10), for the marketing of all corn oil produced by the plant. The agreement expires on August 11, 2018 and is automatically renewed for successive one year terms unless terminated 180 days prior to expiration.

During the years ended December 31, 2016 and 2015, Dakota Ethanol received an incentive payment from the State of South Dakota to produce ethanol. In accordance with the terms of this arrangement, revenue is recorded based on gallons of ethanol sold. Incentive revenue of $0, $378,307 and $416,667, was recorded for the years ended December 31, 2017, 2016 and 2015, respectively. Dakota Ethanol reached the lifetime maximum under the program during 2016 and will no longer receive funds under the program.

From time to time in the normal course of business, the Company can be subject to litigation based on its operations. There is no current litigation nor any litigation that is considered probable at this time.

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Related Party Transactions

12 Months Ended

Dec. 31, 2017

Related Party Transactions [Abstract]

Related Party Transactions

RELATED PARTY TRANSACTIONS

Dakota Ethanol has a 7% interest in RPMG, and Dakota Ethanol has entered into marketing agreements for the exclusive rights to market, sell and distribute the entire ethanol, dried distillers grains, and corn oil inventories produced by Dakota Ethanol.  The marketing fees are included in net revenues.

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

	Years Ended December 31,
	2017		2016		2015
Revenues ethanol	$	67,186,350	$	69,398,350	$	67,581,517
Revenues distillers grains	4,225,707		5,254,492		6,205,391
Revenues corn oil	3,088,510		2,860,912		2,979,581
Marketing fees ethanol	249,645		187,431		168,796
Marketing fees distillers grains	31,993		32,979		35,289
Marketing fees corn oil	19,481		18,239		29,724
Accounts receivable balance at period end	2,749,502		3,695,561		939,705

The Company purchased corn and services from members of its Board of Directors that farm and operate local businesses. The Company also purchased ingredients from RPMG. Purchases from these related parties during the fiscal years ended December 31, 2017, 2016 and 2015 totaled approximately $1,099,000, $1,890,000 and $1,694,000, respectively. As of December 31, 2017 and 2016, the amount we owed to related parties was approximately $45,000 and $40,000, respectively.

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TIF Bond Guarantee

12 Months Ended

Dec. 31, 2017

TIF Bond Guarantee [Abstract]

TIF Bond Guarantee

TIF BOND GUARANTEE

During December 2003, Dakota Ethanol entered into an agreement to guarantee a bond issued by Lake County, South Dakota. The bond issue was in conjunction with the refunding of the tax increment financing (TIF) bond issued by Lake County in 2001, of which Dakota Ethanol was the recipient of the proceeds. During 2003, Lake County became aware that the taxes collected based on the incremental tax would not be sufficient to cover the debt service of the 2001 bond issue. Based on the aforementioned deficiency and changes in interest rate during December of 2003, Lake County refunded the 2001 bond issue replacing it with two separate bonds. A tax-exempt bond in the amount of $824,599 and a taxable bond in the amount of $1,323,024 were issued. As a part of the refunding, Dakota Ethanol entered into the agreement to guarantee the taxable bond issue. The taxes levied on Dakota Ethanol's property will first go towards the semiannual debt service of the tax-exempt bonds and any remaining taxes will be used for the debt service of the taxable bonds. Dakota Ethanol guarantees any shortfall in debt service for the taxable bonds. The guarantee expires in December 2018.

The maximum amount of estimated future payments on the taxable bond debt service is $152,217 as of December 31, 2017. The carrying amount of the guarantee liability on Dakota Ethanol's balance sheet at December 31, 2017 is $9,555, which represents the estimated shortfall between the taxable bond amount and the amount of taxes estimated to be collected on Dakota Ethanol's property.

Estimated maturities of the guarantee are as follows:

Years Ending December 31,	Amount
2018	$	9,555

Dakota Ethanol has no recourse to third parties or collateral held by third parties related to the guarantee.

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Captive Insurance

12 Months Ended

Dec. 31, 2017

Captive Insurance [Abstract]

Captive Insurance

CAPTIVE INSURANCE

The Company participates, along with other plants in the industry, in a group captive insurance company (Captive). The Captive insures losses related to workman's compensation, commercial property and general liability. The Captive reinsures catastrophic losses for all participants, including the Company, in excess of predetermined amounts. The Company's premiums are accrued by a charge to income for the period to which the premium relates and is remitted by the Company's insurer to the captive reinsurer. These premiums are structured such that the Company has made a prepaid collateral deposit estimated for losses related to the above coverage. The Captive insurer has estimated and collected an amount in excess of the estimated losses but less than the catastrophic loss limit insured by the Captive. The Company cannot be assessed over the amount in the collateral fund.

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Insurance Claims (Notes)

12 Months Ended

Dec. 31, 2017

Unusual or Infrequent Items, or Both [Abstract]

Business Insurance Recoveries [Text Block]

INSURANCE CLAIMS

Dakota Ethanol experienced property damage to grain handling equipment in June 2014. The damages were covered by property and business interruption insurance policies. The Company continued to use the equipment through May 2015, at which time the equipment was disposed of resulting in a loss of approximately $674,000. Insurance proceeds of $3,436,727, consisting of $2,818,955 from the property insurance claim and $617,771 from the business interruption claim were paid. The loss on disposal of damaged assets and property insurance proceeds are both recorded in operating expenses in the statements of operations.

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Property Plant and Equipment Commitments (Notes)

12 Months Ended

Dec. 31, 2017

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

COMMITMENTS

Dakota Ethanol has committed to a contract for the design and construction of a new regenerative thermal oxidizer (RTO) to replace its existing RTO. The value of the contract is approximately $4.6 million. There is approximately $1.7 million remaining as of December 31, 2017. The project is expected to be completed in the second quarter of 2018. The Company will pay for the project with cash flows from operations and the long-term revolving debt currently in place.

Dakota Ethanol entered into a design-build agreement with Nelson Engineering Co. for the design and construction of the plant expansion to increase its production capacity to approximately 90 million gallons of ethanol per year. The cost of the expansion is expected to be approximately $33 million. The Company has commenced engineering work with the contractor and has secured financing with its lender for the expansion project. The Company anticipates that the expansion will be complete during the Company's second quarter of 2019. The Company will pay for the project with cash flows from operations and the long-term revolving debt as amended on February 6, 2018.

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Quarterly Financial Reporting

12 Months Ended

Dec. 31, 2017

Quarterly Financial Data [Abstract]

Quarterly Financial Reporting

QUARTERLY FINANCIAL REPORTING (UNAUDITED)

Summary quarterly results are as follows:

	First Quarter			Second Quarter		Third Quarter		Fourth Quarter
Year ended December 31, 2017
Total revenues	$	22,713,628		$	21,612,598	$	19,479,798	$	21,015,764
Gross profit	2,220,455			2,015,355		1,968,680		2,363,353
Income from operations	1,213,883			1,151,750		1,134,221		1,350,698
Net income	1,610,424			1,314,299		1,815,347		1,645,013
Basic and diluted earnings per unit	0.05			0.04		0.06		0.07
Year ended December 31, 2016
Total revenues	$	21,623,796		$	21,944,230	$	20,983,806	$	24,260,718
Gross profit	1,254,612			2,839,644		2,806,148		5,814,285
Income from operations	319,378			1,979,265		1,927,830		4,846,129
Net income	659,621			2,529,919		2,610,395		5,605,273
Basic and diluted earnings per unit	0.02			0.09		0.09		0.19
Year ended December 31, 2015
Total revenues	$	20,715,145		$	23,680,338	$	22,038,423	$	22,564,041
Gross profit	709,131			2,860,830		2,221,102		1,761,114
Income (loss) from operations	(367,802		)	2,816,205		1,448,138		1,827,847
Net income	238,949			4,572,389		1,850,884		1,991,308
Basic and diluted earnings per unit	0.01			0.15		0.06		0.07

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Subsequent Event Subsequent Event (Notes)

12 Months Ended

Dec. 31, 2017

Subsequent Events [Abstract]

Subsequent Events [Text Block]

SUBSEQUENT EVENTS

On February 6, 2018, Dakota Ethanol executed an Amended and Restated Credit Agreement (the "Credit Agreement") with FCSA. Pursuant to the Credit Agreement, Dakota Ethanol increased the total credit availability to $40 million. Further, the maturity date of this increased credit availability under the Credit Agreement was extended to January 1, 2026. Until February 1, 2023, interest will accrue pursuant to the Credit Agreement on the increased credit availability at the one month London Interbank Offered Rate ("LIBOR") plus 3.25% per year. The note contains a non-use fee of 0.50% on the unused portion of the note.

During February 2018, the Company declared a distribution to its members of $2,962,000, or $0.10 per capital unit, to unit holders of record as of January 1, 2018.

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Accounting Policies

12 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements of the Company include the accounts of its wholly owned subsidiary, Dakota Ethanol. All significant inter-company transactions and balances have been eliminated in consolidation.

Revenue Recognition

Revenue Recognition

Revenue from the production of ethanol and related products is recorded when title transfers to customers. Generally, ethanol and related products are shipped FOB shipping point, based on written contract terms between Dakota Ethanol and its customers. Collectability of revenue is reasonably assured based on historical evidence of collectability between Dakota Ethanol and its customers. Interest income is recognized as earned.

Shipping costs incurred by the Company in the sale of ethanol, dried distillers grains and corn oil are not specifically identifiable and as a result, revenue from the sale of those products is recorded based on the net selling price reported to the Company from the marketer.

Cost of Revenues

Cost of Revenues

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

Shipping costs on modified and wet distillers grains are included in cost of revenues.

Inventory Valuation

Inventory Valuation

Inventories are generally valued using methods which approximate the lower of cost (first-in, first-out) or net realizable value. In the valuation of inventories and purchase commitments, net realizable value is based on estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents consist of demand accounts and other accounts with original maturities of three months or less that provide withdrawal privileges.

Receivables and Credit Policies

Receivables and Credit Policies

Accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within fifteen days from the invoice date. Unpaid accounts receivable with invoice dates over thirty days old bear interest at 1.5% per month. Accounts receivable are stated at the amount billed to the customer. Payments of accounts receivable are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the earliest unpaid invoices.

The carrying amount of trade receivables is reduced by a valuation allowance that reflects management’s best estimate of the amounts that will not be collected. Management regularly reviews trade receivable balances and based on an assessment of current creditworthiness, estimates the portion, if any, of the balance that will not be collected. The valuation allowance was $2,131 and $51,791 as of December 31, 2017 and 2016 respectively.

Investment in commodities contracts, derivative instruments and hedging activities

Investment in commodities contracts, derivative instruments and hedging activities

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

The Company is subject to market risk with respect to the price and availability of corn, the principal raw material the Company uses to produce ethanol and ethanol by-products.  In general, rising corn prices result in lower profit margins and, therefore, represent unfavorable market conditions.  This is especially true when market conditions do not allow us to pass along increased corn costs to our customers.  The availability and price of corn is subject to wide fluctuations due to unpredictable factors such as weather conditions, farmer planting decisions, governmental policies with respect to agriculture and international trade and global demand and supply.

Certain contracts that literally meet the definition of a derivative may be exempted from derivative accounting as normal purchases or normal sales.  Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business.  Contracts that meet the requirements of normal purchases or sales are documented as normal and exempted from the accounting and reporting requirements of derivative accounting.

The Company does not apply the normal purchase and sales exemption for forward corn purchase contracts. As of December 31, 2017, the Company is committed to purchasing approximately 2.5 million bushels of corn on a forward contract basis with an average price of $3.30 per bushel. The total corn purchase contracts represent 14% of the projected annual plant corn usage.

The Company enters into firm-price purchase commitments with natural gas suppliers under which the Company agrees to buy natural gas at a price set in advance of the actual delivery.  Under these arrangements, the Company assumes the risk of a price decrease in the market price of natural gas between the time the price is fixed and the time the natural gas is delivered.  At December 31, 2017, the Company is committed to purchasing approximately 40,000 MMBtus of natural gas with an average price of $3.10 per MMBtu. The Company accounts for these transactions as normal purchases, and accordingly, does not mark these transactions to market. The natural gas purchases represent approximately 3% of the projected annual plant requirements.

The Company enters into firm-price sales commitments with distillers grains customers under which the Company agrees to sell distillers grains at a price set in advance of the actual delivery.  Under these arrangements, the Company assumes the risk of a price increase in the market price of distillers grain between the time the price is fixed and the time the distillers grains are delivered.  At December 31, 2017, the Company is committed to selling approximately 38,000 dry equivalent tons of distillers grains with an average price of $101 per ton.  The Company accounts for these transactions as normal sales, and accordingly, does not mark these transactions to market. The distillers grains sales represent approximately 26% of the projected annual plant production.

The Company enters into firm-price sales commitments with distillers corn oil customers under which the Company agrees to sell distillers corn oil at a price set in advance of the actual delivery.  Under these arrangements, the Company assumes the risk of a price increase in the market price of distillers corn oil between the time the price is fixed and the time the distillers corn oil is delivered.  At December 31, 2017, the Company is committed to selling approximately 770,000 pounds of distillers corn oil with an average price of $0.24 per pound.  The Company accounts for these transactions as normal sales, and accordingly, does not mark these transactions to market. The distillers corn oil sales represent approximately 7% of the projected annual plant production.

The Company does not have any firm-priced sales commitments for ethanol as of December 31, 2017.

The Company enters into short-term forward, option and futures contracts for ethanol, corn and natural gas as a means of managing exposure to changes in commodity and energy prices. All of the Company's derivatives are designated as non-hedge derivatives, and accordingly are recorded at fair value with changes in fair value recognized in net income. Although the contracts are considered economic hedges of specified risks, they are not designated as and accounted for as hedging instruments.

As part of our trading activity, The Company uses futures and option contracts offered through regulated commodity exchanges to reduce risk of loss in the market value of inventories and purchase commitments. To reduce that risk, the Company generally takes positions using forward and futures contracts and options.

Derivatives not designated as hedging instruments at December 31, 2017 and December 31, 2016 were as follows:

	Balance Sheet Classification	December 31, 2017			December 31, 2016
Forward contracts in gain position		$	3,856		$	6,491
Futures contracts in gain position		119,825			246,900
Futures contracts in loss position		(1,363		)	(12,575		)
Total forward and futures contracts		122,318			240,816
Cash held by broker		740,522			816,649
	Current Assets	$	862,840		$	1,057,465
Forward contracts in loss position	(Current Liabilities)	$	(410,785	)	$	(827,786	)

Futures contracts and cash held by broker are all with one party and the right of offset exists. Therefore, on the balance sheet, these items are netted in one balance regardless of position.

Forward contracts are with multiple parties and the right of offset does not exist. Therefore, these contracts are reported at the gross amounts on the balance sheet.

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

	Statement of Operations	Years Ended December 31,
	Classification	2017			2016			2015
Net realized and unrealized gains (losses) related to purchase contracts:
Futures contracts	Cost of Revenues	$	608,250		$	1,874,523		$	1,325,265
Forward contracts	Cost of Revenues	(1,423,330		)	(1,707,414		)	(994,242		)

Investments

Investments

The Company has investment interests in six companies in related industries. All of these interests are at ownership shares less than 20%. These investments are flow-through entities. Per ASC 323-30-S99-1, they are being accounted for by the equity method of accounting under which the Company’s share of net income is recognized as income in the Company’s statements of operations and added to the investment account.  Distributions or dividends received from the investments are treated as a reduction of the investment account. The Company consistently follows the practice of recognizing the net income based on the most recent reliable data. 

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the fair value of derivative financial instruments, lower of cost or net realizable value accounting for inventory and forward purchase contracts and goodwill impairment evaluation.

Concentrations of Credit Risk

Concentrations of Credit Risk

The Company’s cash balances are maintained in bank depositories and regularly exceed federally insured limits. The Company has not experienced any losses in connection with these balances.

Property and Equipment

Property and Equipment

Property and equipment is stated at cost. Significant additions and betterments are capitalized, while expenditures for maintenance, repairs and minor renewals are charged to operations when incurred. Depreciation on assets placed in service is computed using the straight-line method over estimated useful lives as follows:

	Minimum	Maximum
Land improvements	20 years	40 years
Equipment	5 years	20 years
Buildings	15 years	40 years

Equipment relates to two general categories: mechanical equipment and administrative and maintenance equipment. Mechanical equipment generally relates to equipment for handling inventories and the production of ethanol and related products, with useful lives of 15 to 20 years, including boilers, cooling towers, grain bins, centrifuges, conveyors, fermentation tanks, pumps and drying equipment. Administrative and maintenance equipment is equipment with useful lives of 5 to 15 years, including vehicles, computer systems, security equipment, testing devices and shop equipment.

The Company reviews its property and equipment for impairment whenever events indicate that the carrying amount of an asset group may not be recoverable. An impairment loss is recorded when the sum of the undiscounted future cash flows is less than the carrying amount of the asset group. An impairment loss is measured as the amount by which the carrying amount of the asset group exceeds its fair value. No indicators of impairment were identified at December 31, 2017 and 2016.

Goodwill

Goodwill

Annually, as well as when an event triggering impairment may have occurred, the Company performs an impairment test on goodwill. The Company performs a quantitative analysis that tests for impairment. The second step, if necessary, measures the impairment. The Company performs the annual analysis on December 31 of each fiscal year. The Company determined that there was no impairment of goodwill at December 31, 2017 and 2016.

Earnings Per Unit

Earnings Per Unit

For purposes of calculating basic earnings per unit, units issued are considered outstanding on the effective date of issuance. Diluted earnings per unit are calculated by including dilutive potential equity units in the denominator. There were no dilutive equity units for the years ending December 31, 2017, 2016, and 2015.

Income Taxes

Income Taxes

The Company is taxed as a limited liability company under the Internal Revenue Code. The income of the Company flows through to the members to be taxed at the member level rather than the corporate level. Accordingly, the Company has no tax liability.

Management has evaluated the Company’s tax positions under the Financial Accounting Standards Board issued guidance on accounting for uncertainty in income taxes and concluded that the Company had taken no uncertain tax positions that require adjustment to the financial statements to comply with the provisions of this guidance. Generally, the Company is no longer subject to income tax examinations by the U.S. federal, state or local authorities for the years before 2014.

Environmental Liabilities

Environmental Liabilities

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

Operating Segment

Operating Segment

The Company uses the “management approach” for reporting information about segments in annual and interim financial statements. The management approach is based on the way the chief operating decision-maker organizes segments within a company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure and any other manner in which management disaggregates a company. Based on the “management approach” model, the Company has determined that its business is comprised of a single operating segment.

New Accounting Pronouncements, Policy

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, "Revenue from Contracts with Customers (Topic 606)" (ASU 2014-09). ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. Generally Accepted Accounting Principles (GAAP) when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. The updated standard becomes effective for the Company in the first quarter of fiscal year 2018. The Company has completed a comparison of the current revenue recognition policies to the ASU 2014-09 requirements for each of the Company’s major revenue categories. Results indicate that the guidance will not materially change the amount or timing of revenues recognized by the Company. The Company will adopt ASU 2014-09 using the retrospective with cumulative effect transition method. The Company expects to have enhanced disclosures but does not expect this standard to have a material impact on the Company's consolidated financial statements.

In February 2016, FASB issued ASU No. 2016-02, "Leases (Topic 842)” (ASU 2016-02). ASU 2016-02 requires the recognition of lease assets and lease liabilities by lessees for all leases greater than one year in duration and classified as operating leases under previous GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and for interim periods within that fiscal year. The Company does not expect this standard to have a material impact on the Company's consolidated financial statements.

In January 2017, FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350)” (ASU 2017-04). ASU 2107-04 simplifies the test for goodwill impairment. It eliminates the two-step process of assessing goodwill impairment and replaces it with one step which compares the fair value of the reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying value exceeds the fair value up to the amount of the goodwill attributed to the reporting unit. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, and for interim periods within that fiscal year. The Company does not expect this standard to have a material impact on the Company's consolidated financial statements.

Derivatives, Reporting of Derivative Activity

Risks and Uncertainties

The Company has certain risks and uncertainties that it will experience during volatile market conditions, which can have a severe impact on operations. The Company's revenues are derived from the sale and distribution of ethanol and distiller grains to customers primarily located in the United States. Corn for the production process is supplied to the plant primarily from local agricultural producers and from purchases on the open market. For the twelve months ended December 31, 2017, ethanol sales averaged approximately 79% of total revenues, while approximately 17% of revenues were generated from the sale of distiller grains and 4% of revenues were generated from the sale of corn oil. For the twelve months ended December 31, 2017, corn costs averaged approximately 71% of cost of goods sold.

The Company's operating and financial performance is largely driven by the prices at which it sells ethanol and the net expense of corn. The price of ethanol is influenced by factors such as supply and demand, weather, government policies and programs, and unleaded gasoline and the petroleum markets. Excess ethanol supply in the market, in particular, puts downward pressure on the price of ethanol. The Company's largest cost of production is corn. The cost of corn is generally impacted by factors such as supply and demand, weather, and government policies and programs. The Company's risk management program is used to protect against the price volatility of these commodities.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Significant Accounting Policies [Abstract]

Derivatives Not Designated as Hedging Instruments

	Balance Sheet Classification	December 31, 2017			December 31, 2016
Forward contracts in gain position		$	3,856		$	6,491
Futures contracts in gain position		119,825			246,900
Futures contracts in loss position		(1,363		)	(12,575		)
Total forward and futures contracts		122,318			240,816
Cash held by broker		740,522			816,649
	Current Assets	$	862,840		$	1,057,465
Forward contracts in loss position	(Current Liabilities)	$	(410,785	)	$	(827,786	)

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

	Statement of Operations	Years Ended December 31,
	Classification	2017			2016			2015
Net realized and unrealized gains (losses) related to purchase contracts:
Futures contracts	Cost of Revenues	$	608,250		$	1,874,523		$	1,325,265
Forward contracts	Cost of Revenues	(1,423,330		)	(1,707,414		)	(994,242		)

Property, Plant and Equipment

	Minimum	Maximum
Land improvements	20 years	40 years
Equipment	5 years	20 years
Buildings	15 years	40 years

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Inventory (Tables)

12 Months Ended

Dec. 31, 2017

Inventory [Abstract]

Schedule of Inventory

Inventory consisted of the following as of December 31, 2017 and 2016:

	December 31, 2017		December 31, 2016
Raw materials	$	2,466,493	$	3,217,822
Finished goods	1,193,552		1,124,660
Work in process	516,362		593,197
Parts inventory	1,349,687		1,276,940
	$	5,526,094	$	6,212,619

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Investments (Tables)

12 Months Ended

Dec. 31, 2017

Investments [Abstract]

Schedule of Equity Method Investments

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

Balance Sheet	12/31/2017		12/31/2016		12/31/2015
Current assets	$	212,154,680	$	178,539,108	$	157,550,341
Other assets	164,254,183		151,378,628		163,122,840
Current liabilities	131,152,747		140,898,148		115,222,336
Long-term liabilities	54,754,437		49,924,355		37,502,031
Member's equity	190,501,679		139,095,233		167,948,814
Revenue	255,154,945		255,245,069		259,096,005
Gross Profit	33,033,635		42,635,837		35,135,377
Net Income	19,482,340		29,555,855		25,650,869

The following table shows the condensed financial information of Guardian Hankinson; the earnings in which represents greater than 10% of the Company's net income for the year ended December 31, 2017.

Balance Sheet	12/31/2017		12/31/2016		12/31/2015
Current assets	$	22,771,808	$	31,337,860	$	30,957,066
Other assets	117,344,930		133,415,881		144,336,737
Current liabilities	17,619,748		23,822,812		21,819,143
Long-term liabilities	51,352,566		49,856,355		37,502,031
Members' equity	71,144,424		91,074,574		115,972,629
Revenue	239,421,949		237,885,377		240,928,085
Gross Profit	22,456,677		30,731,135		21,352,587
Net Income	17,422,533		25,601,946		19,838,398

The following table shows the condensed financial information of Ring-neck Energy & Feed; the investment in which represents greater than 10% of the Company's assets as of December 31, 2017.

Balance Sheet	12/31/2017
Current assets	$	50,000,088
Other assets	42,640,650
Current liabilities	4,716,781
Long-term liabilities	3,230,871
Members' equity	84,693,086
Revenue	—
Gross Profit	—
Net Income	(253,522		)

The Company recorded equity in net income of approximately $1,742,000, $2,561,000 and $1,984,000 from GH for the years ended December 31, 2017, 2016 and 2015 respectively. The Company recorded equity in net (loss) of approximately ($123,000) from REF for the year ended December 31, 2017. The Company recorded equity in net income (loss) of approximately $(160,000), $267,000 and $212,000 from our other investments for the years ended December 31, 2017, 2016 and 2015 respectively. The Company has undistributed net earnings in investees of approximately $627,000 and $680,000 as of December 31, 2017 and 2016, respectively.

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Long Term Notes Payable (Tables)

12 Months Ended

Dec. 31, 2017

Long Term Note Payable [Abstract]

Schedule of Long-term Debt

The balances of the notes payable are as follows:

	December 31, 2017			December 31, 2016*
Note Payable - FCSA	$	8,001,000		$	1,000
Less unamortized debt issuance costs	(29,056		)	—
	7,971,944			1,000
Less current portion	(1,000,000		)	—
	$	6,971,944		$	1,000
*Derived from audited financial statements

Schedule of Maturities of Long-term Debt

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

Years Ending December 31,	Principal
2018	$	1,000,000
2019	1,000,000
2020	1,000,000
2021	1,000,000
2022	1,000,000
thereafter	3,001,000

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2017

Fair Value Measurements [Abstract]

Fair Value, by Balance Sheet Grouping

	Total			Level 1			Level 2			Level 3
December 31, 2017
Assets:
Derivative financial instruments, futures contracts	$	119,825		$	119,825		$	—		$	—
forward contracts	3,856			—			3,856			—
Liabilities:
Derivative financial instruments, futures contracts	$	(1,363	)	$	(1,363	)	$	—		$	—
forward contracts	(410,785		)	—			(410,785		)	—
December 31, 2016
Assets:
Derivative financial instruments, futures contracts	$	246,900		$	246,900		$	—		$	—
forward contracts	6,491			—			6,491			—
Liabilities:
Derivative financial instruments, futures contracts	$	(12,575	)	$	(12,575	)	$	—		$	—
forward contracts	(827,786		)	—			(827,786		)	—

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Commitments, Contingencies and Agreements (Tables)

12 Months Ended

Dec. 31, 2017

Commitments, Contingencies and Agreements [Abstract]

Contractual Obligation, Fiscal Year Maturity Schedule

Years Ending December 31,	Amount
2018	$584,280

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Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2017

Related Party Transactions [Abstract]

Schedule of Related Party Transactions

	Years Ended December 31,
	2017		2016		2015
Revenues ethanol	$	67,186,350	$	69,398,350	$	67,581,517
Revenues distillers grains	4,225,707		5,254,492		6,205,391
Revenues corn oil	3,088,510		2,860,912		2,979,581
Marketing fees ethanol	249,645		187,431		168,796
Marketing fees distillers grains	31,993		32,979		35,289
Marketing fees corn oil	19,481		18,239		29,724
Accounts receivable balance at period end	2,749,502		3,695,561		939,705

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TIF Bond Guarantee (Tables)

12 Months Ended

Dec. 31, 2017

TIF Bond Guarantee [Abstract]

Schedule of Maturities of Guarantee

Years Ending December 31,	Amount
2018	$	9,555

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Quarterly Financial Reporting (Tables)

12 Months Ended

Dec. 31, 2017

Quarterly Financial Data [Abstract]

Schedule of Quarterly Financial Information

	First Quarter			Second Quarter		Third Quarter		Fourth Quarter
Year ended December 31, 2017
Total revenues	$	22,713,628		$	21,612,598	$	19,479,798	$	21,015,764
Gross profit	2,220,455			2,015,355		1,968,680		2,363,353
Income from operations	1,213,883			1,151,750		1,134,221		1,350,698
Net income	1,610,424			1,314,299		1,815,347		1,645,013
Basic and diluted earnings per unit	0.05			0.04		0.06		0.07
Year ended December 31, 2016
Total revenues	$	21,623,796		$	21,944,230	$	20,983,806	$	24,260,718
Gross profit	1,254,612			2,839,644		2,806,148		5,814,285
Income from operations	319,378			1,979,265		1,927,830		4,846,129
Net income	659,621			2,529,919		2,610,395		5,605,273
Basic and diluted earnings per unit	0.02			0.09		0.09		0.19
Year ended December 31, 2015
Total revenues	$	20,715,145		$	23,680,338	$	22,038,423	$	22,564,041
Gross profit	709,131			2,860,830		2,221,102		1,761,114
Income (loss) from operations	(367,802		)	2,816,205		1,448,138		1,827,847
Net income	238,949			4,572,389		1,850,884		1,991,308
Basic and diluted earnings per unit	0.01			0.15		0.06		0.07

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Nature of Operations Nature of Operations (Details) gal in Millions	12 Months Ended
	Dec. 31, 2017 gal
Product Information [Line Items]
Equity Method Investments, Number of Entities	6
Ethanol [Member] | Product [Member]
Product Information [Line Items]
Annual production capacity	40

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Summary of Significant Accounting Policies Receivables (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Summary of Significant Accounting Policies [Abstract]
Trade Receivable, Unpaid Balance, Interest Rate	1.50%
Allowance for Doubtful Accounts Receivable	$ 2,131	$ 51,791

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Derivative Instruments - Balance Sheet (Details)	Dec. 31, 2017 USD ($) bu MMBTU T $ / MMBTU $ / usd_per_lb $ / bu $ / T	Dec. 31, 2016 USD ($)
Derivatives, Fair Value [Line Items]
Other Receivables from Broker-Dealers and Clearing Organizations	$ 740,522	$ 816,649
Derivative financial instruments	$ 862,840	1,057,465
Corn [Member]
Derivatives, Fair Value [Line Items]
Derivative, Number of Instruments Held | bu	2,500,000
Derivative, Average Price Per Unit | $ / bu	3.30
Product usage, percentage	14.00%
Natural Gas [Member]
Derivatives, Fair Value [Line Items]
Derivative, Number of Instruments Held | MMBTU	40,000
Derivative, Average Price Per Unit | $ / MMBTU	3.10
Product usage, percentage	3.00%
Distillers Grain [Domain]
Derivatives, Fair Value [Line Items]
Derivative, Number of Instruments Held | T	38,000
Derivative, Average Price Per Unit | $ / T	101
Product usage, percentage	26.00%
Distillers Corn Oil [Domain]
Derivatives, Fair Value [Line Items]
Derivative, Number of Instruments Held | bu	770,000
Derivative, Average Price Per Unit | $ / usd_per_lb	0.24
Product usage, percentage	7.00%
Current Assets [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative Assets, Current	$ 122,318	240,816
Derivative financial instruments	862,840	1,057,465
Current Assets [Member] | Forward Contracts [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative Assets, Current	3,856	6,491
Current Assets [Member] | Future [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative Assets, Current	119,825	246,900
Derivative Liabilities, Current	1,363	(12,575)
Current Liabilities [Member] | Forward Contracts [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative Liabilities, Current	$ (410,785)	$ (827,786)

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Derivative Instruments - Income Statement (Details) - Not Designated as Hedging Instrument [Member] - Cost of Sales [Member] - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Future [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments, Gain (Loss) Recognized in Income	$ 608,250	$ 1,874,523	$ 1,325,265
Forward Contracts [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments, Gain (Loss) Recognized in Income	$ (1,423,330)	$ (1,707,414)	$ (994,242)

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Summary Investments (Details)	Dec. 31, 2017
Summary of Significant Accounting Policies [Abstract]
Equity Method Investments, Number of Entities	6

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Property and Equipment (Details)	12 Months Ended
	Dec. 31, 2017
Land Improvements [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	20 years
Land Improvements [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	40 years
Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	5 years
Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	20 years
Building [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	15 years
Building [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	40 years
Machinery and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	15
Machinery and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	20
Other Machinery and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	5
Other Machinery and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	15

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Summary of Significant Accounting Policies Risks and Uncertainties (Details)	12 Months Ended
	Dec. 31, 2017
Sales Revenue, Segment [Member] | Ethanol [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	79.00%
Sales Revenue, Segment [Member] | Distillers Grain [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	17.00%
Sales Revenue, Segment [Member] | Corn Oil [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	4.00%
Cost of Goods, Segment [Member] | Corn [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	71.00%

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Inventory (Details) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Inventory [Abstract]
Raw Materials	$ 2,466,493	$ 3,217,822
Finished Goods	1,193,552	1,124,660
Work in Process	516,362	593,197
Parts Inventory	1,349,687	1,276,940
Inventory	$ 5,526,094	$ 6,212,619

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Investments (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Schedule of Equity Method Investments [Line Items]
Investments	$ 18,739,259	$ 11,192,032
Equity Method Investment, Summarized Financial Information, Current Assets	212,154,680	178,539,108	$ 157,550,341
Equity Method Investment, Summarized Financial Information, Other Assets	164,254,183	151,378,628	163,122,840
Equity Method Investment, Summarized Financial Information, Current Liabilities	131,152,747	140,898,148	115,222,336
Equity Method Investment, Summarized Financial Information, Long-term Liabilities	54,754,437	49,924,355	37,502,031
Equity Method Investment Summarized Financial Information, Equity	190,501,679	139,095,233	167,948,814
Equity Method Investment, Summarized Financial Information, Revenue	255,154,945	255,245,069	259,096,005
Equity Method Investment, Summarized Financial Information, Gross Profit (Loss)	33,033,635	42,635,837	35,135,377
Equity Method Investment, Summarized Financial Information, Net Income (Loss)	19,482,340	29,555,855	25,650,869
Income (Loss) from Equity Method Investments	$ 1,459,806	2,293,928	2,195,535
Renewable Products Marketing Group, LLC (RPMG) [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investment, Ownership Percentage	7.00%
Investments	$ 1,206,000	1,283,000
Prairie Gold Venture Partnership, LLC (PGVP) [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investment, Ownership Percentage	6.00%
Investments	$ 0	308,000
Equity Method Investment, Other than Temporary Impairment	$ 308,000
Lawrenceville Tanks, LLC [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investment, Ownership Percentage	10.00%
Investments	$ 327,000	460,000
Guardian Hankinson, LLC [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investment, Ownership Percentage	10.00%
Investments	$ 7,151,000	9,108,000
Equity Method Investment, Summarized Financial Information, Current Assets	22,771,808	31,337,860	30,957,066
Equity Method Investment, Summarized Financial Information, Other Assets	117,344,930	133,415,881	144,336,737
Equity Method Investment, Summarized Financial Information, Current Liabilities	17,619,748	23,822,812	21,819,143
Equity Method Investment, Summarized Financial Information, Long-term Liabilities	51,352,566	49,856,355	37,502,031
Equity Method Investment Summarized Financial Information, Equity	71,144,424	91,074,574	115,972,629
Equity Method Investment, Summarized Financial Information, Revenue	239,421,949	237,885,377	240,928,085
Equity Method Investment, Summarized Financial Information, Gross Profit (Loss)	22,456,677	30,731,135	21,352,587
Equity Method Investment, Summarized Financial Information, Net Income (Loss)	17,422,533	25,601,946	19,838,398
Income (Loss) from Equity Method Investments	1,742,000	2,561,000	1,984,000
Retained Earnings, Undistributed Earnings from Equity Method Investees	627,000	680,000
Other Investments Combined [Member]
Schedule of Equity Method Investments [Line Items]
Income (Loss) from Equity Method Investments	$ (160,000)	267,000	$ 212,000
Guardian Energy Management [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investment, Ownership Percentage	17.00%
Investments	$ 33,000	$ 33,000
Ring-neck Energy and Feeds [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investment, Ownership Percentage	11.00%
Investments	$ 10,023,000
Equity Method Investment, Summarized Financial Information, Current Assets	50,000,088
Equity Method Investment, Summarized Financial Information, Other Assets	42,640,650
Equity Method Investment, Summarized Financial Information, Current Liabilities	4,716,781
Equity Method Investment, Summarized Financial Information, Long-term Liabilities	3,230,871
Equity Method Investment Summarized Financial Information, Equity	84,693,086
Equity Method Investment, Summarized Financial Information, Revenue	0
Equity Method Investment, Summarized Financial Information, Gross Profit (Loss)	0
Equity Method Investment, Summarized Financial Information, Net Income (Loss)	(253,522)
Income (Loss) from Equity Method Investments	(123,000)
Amortization of Acquisition Costs	$ 619,000
Amortization period for amortization of investment premium	10 years

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Revolving Operating Note (Details) - Line of Credit [Member]	12 Months Ended
	Dec. 31, 2017 USD ($)
Farm Credit Services of America [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 10,000,000
Line of Credit Facility, Interest Rate at Period End	4.35%
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.25%
Line of Credit Facility, Amount Outstanding	$ 0
Line of Credit Facility, Remaining Borrowing Capacity	$ 2,047,000
First National Bank of Omaha [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate	3.00%

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Long Term Note Payable (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Aug. 01, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Long-term Debt, Gross	$ 8,001,000		$ 1,000
Debt Issuance Costs, Noncurrent, Net	(29,056)		0
Long-term Debt	7,971,944		1,000
Long-term Debt, Current Maturities	(1,000,000)		0
Notes payable, net of current maturities	6,971,944		$ 1,000
Debt Instrument, Face Amount		$ 8,000,000
Debt Instrument, Annual Principal Payment	$ 1,000,000
Debt Instrument, Interest Rate, Stated Percentage	4.60%
Farm Credit Services of America [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Current Borrowing Capacity	$ 15,000,000
Periodic decrease in line of credit availability	750,000
Line of Credit Facility, Maximum Borrowing Capacity	$ 7,500,000
Line of Credit Facility, Interest Rate at Period End	4.60%
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.50%
Line of Credit Facility, Amount Outstanding	$ 1,000
Line of Credit Facility, Remaining Borrowing Capacity	$ 10,499,000
Debt Instrument, Basis Spread on Variable Rate	3.25%
Farm Credit Services of America [Member] | Term Note [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate	3.25%

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Long Term Notes Payable Schedule of Maturities of Long-term debt (Details)	Dec. 31, 2017 USD ($)
Debt Instrument [Line Items]
Long-term Debt, Maturities, Repayments of Principal in Next Twelve Months	$ 1,000,000
Long-term Debt, Maturities, Repayments of Principal in Year Two	1,000,000
Long-term Debt, Maturities, Repayments of Principal in Year Three	1,000,000
Long-term Debt, Maturities, Repayments of Principal in Year Four	1,000,000
Long-term Debt, Maturities, Repayments of Principal in Year Five	1,000,000
Long-term Debt, Maturities, Repayments of Principal after Year Five	$ 3,001,000

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Employee Benefit Plans (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Employee Benefit Plans [Abstract]
Defined Benefit Plan, Plan Assets, Contributions by Employer	$ 104,000	$ 103,000	$ 103,000

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Fair Value Measurements (Details) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Obligations, Fair Value Disclosure	$ 8,001,000	$ 1,000
Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Obligations, Fair Value Disclosure	8,001,000	1,000
Future [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Asset	119,825	246,900
Derivative Financial Instruments, Liabilities, Fair Value Disclosure	(1,363)	(12,575)
Future [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Asset	119,825	246,900
Derivative Financial Instruments, Liabilities, Fair Value Disclosure	(1,363)	(12,575)
Future [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Asset	0	0
Derivative Financial Instruments, Liabilities, Fair Value Disclosure	0	0
Future [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Asset	0	0
Derivative Financial Instruments, Liabilities, Fair Value Disclosure	0	0
Forward Contracts [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Asset	3,856	6,491
Derivative Financial Instruments, Liabilities, Fair Value Disclosure	(410,785)	(827,786)
Forward Contracts [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Asset	0	0
Derivative Financial Instruments, Liabilities, Fair Value Disclosure	0	0
Forward Contracts [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Asset	3,856	6,491
Derivative Financial Instruments, Liabilities, Fair Value Disclosure	(410,785)	(827,786)
Forward Contracts [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Asset	0	0
Derivative Financial Instruments, Liabilities, Fair Value Disclosure	$ 0	$ 0

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Commitments, Contingencies and Agreements (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Long-term Purchase Commitment [Line Items]
Long-term Contract for Purchase of Electric Power, Annual Minimum Debt Service Payment Required	$ 584,280
Revenue from Grants	0	$ 378,307	$ 416,667
Cost of Sales [Member]
Long-term Purchase Commitment [Line Items]
Utilities Operating Expense, Purchased Power under Long-term Contracts	$ 7,259,000	$ 6,510,000	$ 7,013,000
Natural Gas [Member]
Long-term Purchase Commitment [Line Items]
Long-term Purchase Commitment, Period	10 years
Long-term Contract for Purchase of Electric Power [Domain]
Long-term Purchase Commitment [Line Items]
Long-term Purchase Commitment, Period	1 year
Distillers Grain [Member]
Long-term Purchase Commitment [Line Items]
Marketing Agreement Termination Notice Required	180 days
Marketing Agreement term	1 year
Corn Oil [Member]
Long-term Purchase Commitment [Line Items]
Marketing Agreement Termination Notice Required	180 days
Marketing Agreement term	1 year

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Related Party Transactions (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Related Party Transaction [Line Items]
Due from Related Parties, Current	$ 2,749,502	$ 3,695,561	$ 939,705
Renewable Products Marketing Group, LLC (RPMG) [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Purchases from Related Party	$ 1,099,000	1,890,000	1,694,000
Equity Method Investment, Ownership Percentage	7.00%
Due to Related Parties	$ 45,000	40,000
Ethanol [Member] | Renewable Products Marketing Group, LLC (RPMG) [Member]
Related Party Transaction [Line Items]
Revenue from Related Parties	67,186,350	69,398,350	67,581,517
Marketing Expenses from Transactions with Related Party	249,645	187,431	168,796
Distillers Grain [Member] | Renewable Products Marketing Group, LLC (RPMG) [Member]
Related Party Transaction [Line Items]
Revenue from Related Parties	4,225,707	5,254,492	6,205,391
Marketing Expenses from Transactions with Related Party	31,993	32,979	35,289
Corn Oil [Member] | Renewable Products Marketing Group, LLC (RPMG) [Member]
Related Party Transaction [Line Items]
Revenue from Related Parties	3,088,510	2,860,912	2,979,581
Marketing Expenses from Transactions with Related Party	$ 19,481	$ 18,239	$ 29,724

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TIF Bond Guarantee (Details) - USD ($)	Dec. 31, 2017	Aug. 01, 2017
Guarantor Obligations [Line Items]
Debt Instrument, Face Amount		$ 8,000,000
Payment Guarantee [Member]
Guarantor Obligations [Line Items]
Maturities of Guarantee in 2018	$ 9,555
Tax-Exempt Bond [Member]
Guarantor Obligations [Line Items]
Debt Instrument, Face Amount	824,599
Estimated Payments, Total	152,217
Taxable Bond [Member]
Guarantor Obligations [Line Items]
Debt Instrument, Face Amount	1,323,024
Guarantee Liability [Member]
Guarantor Obligations [Line Items]
Debt, Carrying Amount	$ 9,555

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Insurance Claims (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Unusual or Infrequent Items, or Both [Abstract]
Property, Plant and Equipment, Disposals		$ 674,000
Unusual or Infrequent Item, Gain, Gross		3,436,727
Unusual or Infrequent Item, Insurance Proceeds		2,818,955
Business interruption claims recovery	$ 0	$ 0	$ 617,771

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Property Plant and Equipment Commitments (Details) gal in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2017 USD ($) gal	Sep. 30, 2017 USD ($)
Capital Addition Purchase Commitments [Member]
Property, Plant and Equipment [Line Items]
Other Commitment		$ 4.6
Purchase Commitment, Remaining Minimum Amount Committed		$ 1.7
Ethanol [Member] | Product [Member]
Property, Plant and Equipment [Line Items]
Annual production capacity after expansion | gal	90
Estimated Expansion Costs	$ 33.0

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Quarterly Financial Reporting (Details) - USD ($)	3 Months Ended												12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Quarterly Financial Data [Abstract]
Revenue, Net	$ 21,015,764	$ 19,479,798	$ 21,612,598	$ 22,713,628	$ 24,260,718	$ 20,983,806	$ 21,944,230	$ 21,623,796	$ 22,564,041	$ 22,038,423	$ 23,680,338	$ 20,715,145
Gross Profit	2,363,353	1,968,680	2,015,355	2,220,455	5,814,285	2,806,148	2,839,644	1,254,612	1,761,114	2,221,102	2,860,830	709,131	$ 8,567,843	$ 12,714,689	$ 7,552,177
Operating Income (Loss)	1,350,698	1,134,221	1,151,750	1,213,883	4,846,129	1,927,830	1,979,265	319,378	1,827,847	1,448,138	2,816,205	(367,802)	4,850,552	9,072,602	5,724,388
Net Income (Loss)	$ 1,645,013	$ 1,815,347	$ 1,314,299	$ 1,610,424	$ 5,605,273	$ 2,610,395	$ 2,529,919	$ 659,621	$ 1,991,308	$ 1,850,884	$ 4,572,389	$ 238,949	$ 6,385,083	$ 11,405,208	$ 8,653,530
Earnings Per Share, Basic and Diluted	$ 0.07	$ 0.06	$ 0.04	$ 0.05	$ 0.19	$ 0.09	$ 0.09	$ 0.02	$ 0.07	$ 0.06	$ 0.15	$ 0.01	$ 0.22	$ 0.39	$ 0.29

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Subsequent Event (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Subsequent Event [Member]
Subsequent Event [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 40,000,000
Distribution Made to Limited Liability Company (LLC) Member, Cash Distributions Declared	$ 2,962,000
Distribution Made to Limited Liability Company (LLC) Member, Distributions Declared, Per Unit	$ 0.10
Farm Credit Services of America [Member] | Revolving Credit Facility [Member]
Subsequent Event [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity		$ 7,500,000
Debt Instrument, Basis Spread on Variable Rate		3.25%
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage		0.50%
Farm Credit Services of America [Member] | Revolving Credit Facility [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Debt Instrument, Basis Spread on Variable Rate	3.25%
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.50%