**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-QSB**

 
| **ý**                                                                                                                                                                                                                 | **Quarterly  report under Section 13 or 15(d) of the Securities Exchange Act of 1934.** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                       |                                                                                         |
| **For the quarterly period ended March 31, 2004**                                                                                                                                                                     |
|                                                                                                                                                                                                                       |                                                                                         |
| **OR**                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                       |                                                                                         |
| **o**                                                                                                                                                                                                                      | **Transition  report under Section 13 or 15(d) of the Exchange Act.**                   |
|                                                                                                                                                                                                                       |                                                                                         |
| **For the transition period  from               to               .** |
|                                                                                                                                                                                                                       |                                                                                         |
| **COMMISSION FILE NUMBER 0001229899**                                                                                                                                                                                      |

 

**LITTLE SIOUX CORN PROCESSORS, L.L.C.**

(Exact name of small business issuer asspecified in its charter)

 

| **Iowa**                                                        |   | **42-1510421**                       |
|-----------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of  incorporation or organization) |   | (I.R.S. Employer Identification No.) |
|                                                            |   |                                 |
| **4808 F Avenue, Marcus, Iowa 51035**                           |
| (Address of principal executive offices)                        |
|                                                            |   |                                 |
| **(712) 376-2800**                                              |
| (Issuer’s telephone number)                                |
|                                                                 |        |                                      |  |  |

 

Check whether the issuer:  (1) filed all reports required to be filedby Section 13 or 15(d) of the Exchange Act during the past 12 months (orfor 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.
|   | ý   Yes          o  No |
|--------|-----------------------------------------------------------------------------------------|

 

State the number of shares outstanding for each of the issuer’s classesof common equity as of the latest practicable date:  As of May 14, 2004, there were 10,941 units outstanding.

 
| Transitional Small Business Disclosure Format (Check one): | o   Yes          ý  No |
|------------------------------------------------------------|-----------------------------------------------------------------------------------------|

 

 

----

 

**INDEX**

 
| **PART I.   FINANCIAL INFORMATION**                                           |   |
|------------------------------------------------------------------------------------|--------|
| **Item 1.   Financial Statements**                                            |   |
| **Item 2.   Management’s Discussion and Analysis and Plan of Operation** |   |
| **Item 3.   Controls and Procedures**                                         |   |
|                                                                               |   |
| **PART II.  OTHER INFORMATION**                                               |   |
| **Item 1.  Legal Proceedings**                                                |   |
| **Item 2.  Changes in Securities**                                            |   |
| **Item 3.  Defaults Upon Senior  Securities**                                 |   |
| **Item 4.  Submission of Matters  to a Vote of Security Holders**             |   |
| **Item 5.  Other Information**                                                |   |
| **Item 6.  Exhibits and Reports  on Form 8-K**                                |   |
|                                                                               |   |
| **SIGNATURES**                                                                     |   |
|                                                                               |   |
| **CERTIFICATIONS**                                                                 |   |

 

2

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**PART I****.     FINANCIALINFORMATION**

 

**Item 1****.****           FinancialStatements**

 

**LITTLE SIOUX CORN PROCESSORS, LLC AND SUBSIDIARY**

 

Condensed Consolidated Balance Sheet

 
|                                                                        |   | **March 31  2004** |           |
|-----------------------------------------------------------------------------|--------|-------------------------|----------------|
| **ASSETS**                                                                  |   |                    | ** **     |
|                                                                        |   |                    | ** **     |
| **Current Assets**                                                          |   |                    | ** **     |
| Cash                                                                        |   | **$**                   | **1,956,167**  | ** ** |
| Trade accounts receivable, less allowance  for doubtful accounts of $20,000 |   | **1,512,187**           | ** **     |
| Other receivables                                                           |   | **3,590,363**           | ** **     |
| Inventory                                                                   |   | **1,716,321**           | ** **     |
| Derivative instruments                                                      |   | **6,437,478**           | ** **     |
| Prepaid expenses                                                            |   | **731,787**             | ** **     |
| Total current assets                                                        |   | **15,944,303**          | ** **     |
|                                                                        |   |                    | ** **     |
|                                                                        |   |                    | ** **     |
| **Property and  Equipment**                                                 |   |                    | ** **     |
| Land and improvements                                                       |   | **2,381,920**           | ** **     |
| Buildings                                                                   |   | **15,057,828**          | ** **     |
| Processing equipment                                                        |   | **26,513,418**          | ** **     |
| Grain handling equipment                                                    |   | **5,084,720**           | ** **     |
| Rail and other equipment                                                    |   | **1,214,322**           | ** **     |
| Furniture and fixtures                                                      |   | **160,042**             | ** **     |
| Construction in progress                                                    |   | **426,449**             | ** **     |
|                                                                        |   | **50,838,699**          |           |
| Less accumulated depreciation                                               |   | **3,335,310**           | ** **     |
| Net property and equipment                                                  |   | **47,503,389**          | ** **     |
|                                                                        |   |                    | ** **     |
|                                                                        |   |                    | ** **     |
| **Other Assets**                                                            |   |                    | ** **     |
| Deferred loan costs, net                                                    |   | **413,801**             | ** **     |
| Total other assets                                                          |   | **413,801**             | ** **     |
|                                                                        |   |                    | ** **     |
| **Total Assets**                                                            |   | **$**                   | **63,861,493** | ** ** |

 

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

 

3

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**LITTLE SIOUX CORN PROCESSORS, LLC AND SUBSIDIARY**

 

Condensed Consolidated Balance Sheet

 
|                                                                                                                  |   | **March 31  2004** |           |
|-----------------------------------------------------------------------------------------------------------------------|--------|-------------------------|----------------|
| **LIABILITIES AND MEMBERS’ EQUITY**                                                                              |   |                    | ** **     |
|                                                                                                                  |   |                    |           |
| **Current Liabilities**                                                                                               |   |                    | ** **     |
| Revolving promissory note                                                                                             |   | **$**                   | **12,503**     | ** ** |
| Current maturities of long-term debt                                                                                  |   | **3,241,069**           | ** **     |
| Trade accounts payable                                                                                                |   | **1,358,181**           | ** **     |
| Accrued liabilities                                                                                                   |   | **160,060**             | ** **     |
| Total current liabilities                                                                                             |   | **4,771,813**           | ** **     |
|                                                                                                                  |   |                    | ** **     |
| **Long-Term Debt,**  net of current maturities                                                                        |   | **19,690,885**          | ** **     |
|                                                                                                                  |   |                    |           |
| **Commitments and  Contingencies**                                                                                    |   |                    |           |
|                                                                                                                  |   |                    |           |
| **Members’ Equity**                                                                                              |   |                    |           |
| Member contributions, net of costs related  to capital contributions, 10,941 units outstanding at March 31, 2004 |   | **10,842,237**          | ** **     |
| Retained earnings                                                                                                     |   | **12,188,945**          | ** **     |
|                                                                                                                  |   | **23,031,182**          |           |
| Minority interest                                                                                                     |   | **16,367,613**          | ** **     |
| Total members’ equity                                                                                            |   | **39,398,795**          | ** **     |
|                                                                                                                  |   |                    | ** **     |
| **Total Liabilities  and Members’ Equity**                                                                       |   | **$**                   | **63,861,493** | ** ** |

 

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

 

4

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**LITTLE SIOUX CORN PROCESSORS, LLC AND SUBSIDIARY**

 

Condensed Consolidated Statements of Operations

 
|                                        |   | **Three  Months Ended  March 31  2004** |       | **Three  Months Ended  March 31  2003** |   |
|---------------------------------------------|--------|----------------------------------------------|------------|----------------------------------------------|--------|
|                                        |   |                                         |       |                                         |   |
| **Revenues**                                |   | $                                            | 20,203,296 |                                         |   |   |
|                                        |   |                                         |       |                                         |   |
| **Cost of Goods Sold**                      |   | 11,311,892                                   |       |                                         |   |
|                                        |   |                                         |       |                                         |   |
| **Gross Profit**                            |   | 8,891,404                                    |       |                                         |   |
|                                        |   |                                         |       |                                         |   |
| **Operating Expenses**                      |   | 1,504,058                                    |       | 361,549                                      |   |
|                                        |   |                                         |       |                                         |   |
| **Operating Income  (Loss)**                |   | 7,387,346                                    |       | (361,549                                     | )      |
|                                        |   |                                         |       |                                         |   |
| **Other  Income/Expense**                   |   |                                         |       |                                         |   |
| Interest income                             |   | 163                                          |       |                                         |   |
| Interest expense                            |   | (415,492                                     | )          |                                         |   |
| CCC Bio-Energy income                       |   | 4,262,613                                    |       |                                         |   |
| Grants and other income                     |   | 60,465                                       |       | 451,751                                      |   |
| Total other income                          |   | 3,907,749                                    |       | 451,751                                      |   |
|                                        |   |                                         |       |                                         |   |
| **Net Income Before  Minority Interest**    |   | 11,295,095                                   |       | 90,202                                       |   |
|                                        |   |                                         |       |                                         |   |
| **Minority Interest  in Sudsidiary Income** |   | 4,715,589                                    |       | 37,393                                       |   |
|                                        |   |                                         |       |                                         |   |
| **Net Income**                              |   | $                                            | 6,579,506  |                                         | $      | 52,809 |   |
|                                        |   |                                         |       |                                         |   |
| **Weighted Average  Units Outstanding**     |   | 10,941                                       |       | 10,941                                       |   |
|                                        |   |                                         |       |                                         |   |
| **Net Income Per Unit**                     |   | $                                            | 601.36     |                                         | $      | 4.83 |   |

 

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

 

5

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|                                        |   | **Six Months  Ended  March 31  2004** |       | **Six Months  Ended  March 31  2003** |   |
|---------------------------------------------|--------|--------------------------------------------|------------|--------------------------------------------|--------|
|                                        |   |                                       |       |                                       |   |
| **Revenues**                                |   | $                                          | 39,470,204 |                                       |   |   |
|                                        |   |                                       |       |                                       |   |
| **Cost of Goods Sold**                      |   | 26,714,380                                 |       |                                       |   |
|                                        |   |                                       |       |                                       |   |
| **Gross Profit**                            |   | 12,755,824                                 |       |                                       |   |
|                                        |   |                                       |       |                                       |   |
| **Operating Expenses**                      |   | 3,072,779                                  |       | 392,577                                    |   |
|                                        |   |                                       |       |                                       |   |
| **Operating Income  (Loss)**                |   | 9,683,045                                  |       | (392,577                                   | )      |
|                                        |   |                                       |       |                                       |   |
| **Other  Income/Expense**                   |   |                                       |       |                                       |   |
| Interest income                             |   | 163                                        |       | 442                                        |   |
| Interest expense                            |   | (818,458                                   | )          |                                       |   |
| CCC Bio-Energy income                       |   | 6,880,239                                  |       |                                       |   |
| Grants and other income                     |   | 79,229                                     |       | 451,751                                    |   |
| Total other income                          |   | 6,141,173                                  |       | 452,193                                    |   |
|                                        |   |                                       |       |                                       |   |
| **Net Income Before  Minority Interest**    |   | 15,824,218                                 |       | 59,616                                     |   |
|                                        |   |                                       |       |                                       |   |
| **Minority Interest  in Sudsidiary Income** |   | 6,596,137                                  |       | 24,699                                     |   |
|                                        |   |                                       |       |                                       |   |
| **Net Income**                              |   | $                                          | 9,228,081  |                                       | $      | 34,917 |   |
|                                        |   |                                       |       |                                       |   |
| **Weighted Average  Units Outstanding**     |   | 10,941                                     |       | 10,941                                     |   |
|                                        |   |                                       |       |                                       |   |
| **Net Income Per Unit**                     |   | $                                          | 843.44     |                                       | $      | 3.19 |   |

 

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

 

6

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**LITTLE SIOUX CORN PROCESSORS, LLC AND SUBSIDIARY**

 

Condensed Consolidated Statements of Cash Flows

 
|                                                              |   | **Six Months  Ended  March 31  2004** |      | **Six Months  Ended  March 31  2003** |   |
|-------------------------------------------------------------------|--------|--------------------------------------------|-----------|--------------------------------------------|--------|
|                                                              |   |                                       |      |                                       |   |
| **Cash Flows from  Operating Activities**                         |   |                                       |      |                                       |   |
| Net income                                                        |   | $                                          | 9,228,081 |                                       | $      | 34,917 |   |
| Adjustments to reconcile net income to net  cash from operations: |   |                                       |      |                                       |   |
| Depreciation and amortization                                     |   | 1,734,352                                  |      | 4,499                                      |   |
| Provision for losses on trade accounts  receivable                |   | 20,000                                     |      |                                       |   |
| Minority interest in subsidiary’s income                     |   | 6,596,137                                  |      | 24,699                                     |   |
| Gain on hedging activity                                          |   | 312,777                                    |      |                                       |   |
| Change in assets and liabilities:                                 |   |                                       |      |                                       |   |
| Receivables                                                       |   | (6,218                                     | )         | (466,115                                   | )      |
| Restricted cash                                                   |   | 12,902                                     |      | (402,768                                   | )      |
| Inventory                                                         |   | (329,750                                   | )         | (887,831                                   | )      |
| Derivative instruments                                            |   | (5,980,865                                 | )         | (17,375                                    | )      |
| Prepaid expenses                                                  |   | (133,685                                   | )         | (8,962                                     | )      |
| Accounts payable                                                  |   | 598,940                                    |      | 505,691                                    |   |
| Accrued liabilities                                               |   | (300,119                                   | )         | 400,907                                    |   |
| Net cash provided by (used in) operating  activities              |   | 11,752,552                                 |      | (812,338                                   | )      |
|                                                              |   |                                       |      |                                       |   |
| **Cash Flows from  Investing Activities**                         |   |                                       |      |                                       |   |
| Capital expenditures                                              |   | (481,010                                   | )         |                                       |   |
| Net cash used in investing activities                             |   | (481,010                                   | )         |                                       |   |
|                                                              |   |                                       |      |                                       |   |
| **Cash Flows from  Financing Activities**                         |   |                                       |      |                                       |   |
| Proceeds (payments) from short-term debt                          |   | (762,662                                   | )         | 12,620                                     |   |
| Proceeds from issuance of long-term debt                          |   |                                       |      | 905,538                                    |   |
| Payments of long-term debt                                        |   | (8,092,756                                 | )         | (13,067                                    | )      |
| Loan costs                                                        |   |                                       |      | (44,848                                    | )      |
| Distribution to minority interest                                 |   | (435,276                                   | )         |                                       |   |
| Distribution to members                                           |   | (561,164                                   | )         |                                       |   |
| Net cash provided by (used in) financing  activities              |   | (9,851,858                                 | )         | 860,243                                    |   |
|                                                              |   |                                       |      |                                       |   |
| **Net increase in  cash**                                         |   | 1,419,684                                  |      | 47,905                                     |   |
|                                                              |   |                                       |      |                                       |   |
| **Cash**–  Beginning of Period                               |   | 536,483                                    |      | 299,951                                    |   |
|                                                              |   |                                       |      |                                       |   |
| **Cash –**  End of Period                                    |   | $                                          | 1,956,167 |                                       | $      | 347,856 |   |

 

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

 

7

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|                                                                        |   | **Six Months  Ended  March 31  2004** |    | **Six Months  Ended  March 31  2003** |       |
|-----------------------------------------------------------------------------|--------|--------------------------------------------|---------|--------------------------------------------|------------|
|                                                                        |   |                                       |    |                                       |       |
| **Supplemental Cash  Flow Information**                                     |   |                                       |    |                                       |       |
| Cash paid during the year for:                                              |   |                                       |    |                                       |       |
| Interest                                                                    |   | $                                          | 898,085 |                                       | $          | 221,446 |   |
|                                                                        |   |                                       |    |                                       |       |
| **Supplemental  Disclosure of Noncash Investing and Financing Activities**  |   |                                       |    |                                       |       |
| Reduction in property and equipment due to  debt forgiveness                |   | $                                          | 90,000  |                                       |       |   |
| Property and equipment financed with note  payable and construction payable |   |                                       |    | $                                          | 14,697,204 |   |

 

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

 

8

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**LITTLE SIOUX CORN PROCESSORS, LLC AND SUBSIDIARY**

 

Notes to Condensed Consolidated FinancialStatements (Unaudited)

 

March 31, 2004

 

**1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

 

Theaccompanying condensed quarterly consolidated financial statements representLittle Sioux Corn Processors, LLC and Subsidiary.  See Note 1 to theconsolidated financial statements included in the Form 10-KSB for the ninemonth fiscal year ended September 30, 2003.  That note discusses theconsolidation.  As used in this report in Form 10-QSB, the “Company”represents Little Sioux Corn Processors, LLC (LLC) and its subsidiary LSCP,LLLP (LSCP).

 

Thecondensed consolidated quarterly financial statements are unaudited. These statements include all adjustments (consisting of normal recurringaccruals) that we considered necessary to present a fair statement of theresults of operations, financial position, and cash flows.  The resultsreported in these condensed, consolidated financial statements should not beregarded as necessarily indicative of results that may be expected for theentire year.

 

*Nature of Business*

 

TheCompany operates a 40 million gallon ethanol plant, located near Marcus,Iowa.  The plant commenced operations in April 2003.  TheCompany sells its production of ethanol and distillers grains and solubles inthe continental United States.

 

*Commodity Credit Corporation Bioenergy Program*

 

During2003, the Company enrolled in the Commodity Credit Corporation BioenergyProgram (CCC), a department of the United States Department ofAgriculture.  This program enables the Company to receive payments basedon increases in production of ethanol over the previous year of up to$7,500,000 per year.  New production is eligible and is consideredincreased production.  Payments under the program are subject to pro ratareduction if aggregate payments to all producers in any fiscal year exceed themaximum annual funding of the program.  The Company recorded $4,262,613 and$6,880,239 as other income from the CCC for the three months and six monthsended March 31, 2004 respectively. At March 31, 2004, $3,479,619 remained in other receivables.

 

*Derivative Instruments*

 

AtMarch 31, 2004, the Company had recorded an asset for derivativeinstruments related to corn and natural gas options and futures positions witha fair value of $6,437,478 for forecasted purchases during fiscal 2004 and2005.  None of the positions open at March 31, 2004 are designated ascash flow hedges.  The Company has recorded a gain of $5,128,799 in costof goods sold related to its derivative instruments for the three months endedMarch 31, 2004.  The Company hasrecorded a gain of $4,811,670 in cost of goods sold related to its derivativeinstruments for the six months ended March 31, 2004, which includes thereclassification of $371,440 from accumulated other comprehensive loss.

 

AtMarch 31, 2004, the Company had an interest rate cap as described in Note4 with a fair value of $31,503 recorded as an asset with derivativeinstruments.  The interest rate cap was not designated as a cash flowhedge.  The Company charged interest expense with the loss on the interestrate cap of $54,073 and $49,721 for the three months and six months ending March 31,2004 respectively.

 

*Recent Accounting Pronouncement*

 

InDecember 2003, the Financial Accounting Standards Board (FASB) issued FASBInterpretation No. 46 (R), *Consolidation ofVariable Interest Entities*.  The Company has reviewed itsconsolidation policy under this interpretation.  It was determined thatcontinued consolidation under previously issued accounting standards is stillapplicable.

 

9

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**2.  INVENTORY**

 

Inventoriesconsist of the following at March 31, 2004:

 

 
| Raw materials   |   | $       | 1,130,070 |   |
|-----------------|--------|---------|-----------|--------|
| Work in process |   | 186,159 |      |
| Finished goods  |   | 400,092 |      |
|            |   |    |      |
| Totals          |   | $       | 1,716,321 |   |

 

**3.  REVOLVING PROMISSORY NOTE**

 

Underthe terms of the financing agreement with a lending institution, the Companyhas a revolving promissory note of up to $3,500,000, subject to borrowing baselimitations, maturing in July 2004.  The revolving promissory noteaccrues interest monthly at the one month LIBOR plus 280 basis points whichtotaled 3.89% at March 31, 2004.  The Company pays a commitment feeof .125% on the unused portion of the revolving promissory note.  Theoutstanding balance at March 31, 2004 was $12,503.  The revolvingpromissory note, as well as the term notes described in Note 4, are subject toprotective covenants under a common financing agreement requiring the Companyto maintain various financial ratios, including debt service coverage, minimumnet worth and working capital requirements, and restrictions ondistributions.  The revolving promissorynote and term notes are secured by all business assets.  Additionally, the term notes described inNote 4 require additional loan payments based on excess cash flow.

 

**4.  LONG–TERM DEBT**

 

Long-termdebt consists of the following at March 31, 2004:

 

 
| Note payable to Iowa Corn Promotion Board,  principal and interest are due and payable on June 30, 2004, no interest  rate is charged as long as the note is repaid by June 30, 2004.  Thereafter, interest will retroactively  accrue at the prime rate, secured by a general security agreement covering  substantially all assets, subordinate to term notes |   | $          | 50,000     |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                           |   |       |       |
| Term note #2 payable to lending  institution, see terms below                                                                                                                                                                                                                                                                                                                  |   | 14,759,132 |       |
|                                                                                                                                                                                                                                                                                                                                                                           |   |       |       |
| Term note #3 payable to lending  institution, see terms below                                                                                                                                                                                                                                                                                                                  |   | 7,071,469  |       |
|                                                                                                                                                                                                                                                                                                                                                                           |   |       |       |
| Term note #4 payable to lending  institution, see terms below                                                                                                                                                                                                                                                                                                                  |   | 130,267    |       |
|                                                                                                                                                                                                                                                                                                                                                                           |   |       |       |
| Note payable to Iowa Energy Center, due in  monthly payments of $3,472 without interest, maturing on January 29,  2009, secured by real estate, subordinated to term notes                                                                                                                                                                                                |   | 208,248    |       |
|                                                                                                                                                                                                                                                                                                                                                                           |   |       |       |
| Note payable to bank due in monthly  payments of $5,921 including interest at 6%, maturing on January 29,  2009, secured by real estate, subordinated to term notes                                                                                                                                                                                                       |   | 201,389    |       |
|                                                                                                                                                                                                                                                                                                                                                                           |   |       |       |
| Note payable to Iowa Department of Economic  Development, due in sixty monthly installments beginning August 1, 2004  of $1,167 without interest, payable in full on July 1, 2009, secured by  all equipment                                                                                                                                                         |   | 210,000    |       |
|                                                                                                                                                                                                                                                                                                                                                                           |   |       |       |
| Capital lease obligations, due in monthly  installments initially totaling $6,768 including implicit interest between  7.4% and 17.4% through March 1, 2008, secured by leased equipment                                                                                                                                                                                  |   | 301,449    |       |
| Totals                                                                                                                                                                                                                                                                                                                                                                         |   | 22,931,954 |       |
| Less amounts due within one year                                                                                                                                                                                                                                                                                                                                               |   | 3,241,069  |       |
|                                                                                                                                                                                                                                                                                                                                                                           |   |       |       |
| Totals                                                                                                                                                                                                                                                                                                                                                                         |   | $          | 19,690,885 |   |

 

10

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TheCompany obtained debt financing from a lending institution in the form of arevolving promissory note and term notes, referred to by the lendinginstitution as term notes #2, #3, and #4.  Term note #2 has fixedprincipal payments due quarterly with interest at the three month LIBOR plus280 basis points, which totaled 3.91% at March 31, 2004, payable in fullon June 1, 2008.  As part of the financing agreement, the Companyaccepted a fixed rate option on term note #2 by entering into an interest rateswap which effectively fixes the interest rate on this term note at 5.79% untilthis term note is repaid on June 1, 2008.

 

Termnote #3 bears interest at the three month LIBOR plus 330 basis points whichtotaled 4.41% at March 31, 2004.  Term note #4 bears interest at theone month LIBOR plus 280 basis points which totaled 3.89% at March 31,2004.  Term notes #3 and #4 are payable in full on June 1,2008.  The Company is required to make quarterly payments of $506,588applied first to accrued interest on term note #4.  The remaining amountis applied to accrued interest on the term note #3 and then to principal untilthis note is repaid in full or until maturity.  After term note #3 isrepaid, payments are applied first to accrued interest and then to principal onthe term note #4 until paid in full or until maturity.  Term note #4allows subsequent borrowings up to the original $5,000,000 to the extent ofprincipal payments made until maturity and requires a commitment fee of 0.375%on any used portion.

 

Aspart of the financing agreement, the premium above the LIBOR on term notes #3and #4 and the revolving promissory note has been reduced based on a financialratio from the original 380 basis points.  The financing agreementrequires an annual servicing fee of $50,000 for five years.  As describedin Note 1, the Company entered into an interest rate cap agreement to reducethe risk of increases in interest rates.  The interest rate cap agreementis based on a notional amount of $10,000,000 and caps increases in interestrates at 6.8% on this amount until June 1, 2006.

 

Theoriginal notes payable to the Iowa Department of Economic Development totaled$300,000 and included a $90,000 note subject to forgiveness if the Company metcertain qualifications.  InMarch 2004, these qualifications were met, and the $90,000 loan wasforgiven on March 9, 2004.  TheCompany recorded the debt forgiveness as a grant and reduced the cost ofproperty and equipment.

 

AtSeptember 30, 2003, LSCP was in violation of the net worth covenant. The lender has waived compliance with this violation at September 30, 2003and for the following year as it relates to this violation atSeptember 30, 2003.

 

Inaddition to the terms notes, the subordinated notes payable to the bank requireadditional cash flow anticipated to be received from the CCC to be split prorata between the subordinated debtors as additional payments on the notes.

 

11

----

 

Theestimated maturities of long-term debt at March 31, 2004 are as follows:

 
| 2005                 |   | $         | 3,241,069  |   |
|----------------------|--------|-----------|------------|--------|
| 2006                 |   | 3,340,648 |       |
| 2007                 |   | 3,492,969 |       |
| 2008                 |   | 3,434,349 |       |
| 2009                 |   | 9,278,251 |       |
| After 2009           |   | 144,668   |       |
|                 |   |      |       |
| Total long-term debt |   | $         | 22,931,954 |   |

 

**5.  RELATED PARTY TRANSACTIONS**

 

Inaddition to the related party transactions described previously, the Companyalso had the following related party transactions:

 

AtMarch 31, 2004, amounts due from Archer Daniels Midland Company (ADM)approximated 72% of trade accounts receivable.  For the three months andsix months ended March 31, 2004, the Company incurred marketing expensesof approximately $120,000 and $243,000 respectively to ADM.  InJanuary 2004, the Company repaid the $1,250,000 note payable owed toFagen, Inc. (Fagen).  During the threemonths and six months ended March 31, 2004, the Company paid interest toFagen approximating $14,000 and $98,000 respectively.  During the threemonths ended March 31, 2004, the Company paid construction costs to Fagenof $250,000.

 

Inthe three months and six months ended March 31, 2004, LSCP purchasedapproximately $1,216,000 and $1,769,000, respectively, in corn from members ofthe LLC.

 

**6.  COMMITMENTS ANDCONTINGENCIES**

 

*Natural Gas and Corn Contracts*

 

AtMarch 31, 2004, the Company has forward contracts to purchaseapproximately 836,000 million British thermal units (MMBTU) of natural gasduring the April 2004 through October 2004 time period at an averageprice of $5.18 per MMBTU.  The Companyhas forward contracts to purchase approximately 200,000 MMBTU of natural gasduring the November 2004 through March 2005 time period at $6.28 perMMBTU.  The Company has forwardcontracts to purchase approximately 630,000 MMBTU of natural gas during theApril 2005 through October 2005 time period at $5.03 per MMBTU.  These contracts total approximately $8,752,000less a deposit of $184,000.

 

AtMarch 31, 2004, the Company has forward contracts to purchaseapproximately 2,560,000 bushels of corn at prices ranging from $2.08 to $3.09per bushel through October 2005.

 

*Construction in Progress*

 

TheCompany estimates its costs to complete the construction of assets not yetplaced in service to be approximately $1,079,000 of March 31, 2004.

 

12

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**Item 2****.****           Management’sDiscussion and Analysis and Plan of Operations**

 

This report contains forward-looking statements that involve futureevents, our future performance and our expected future operations andactions.  In some cases you can identifyforward-looking statements by the use of words such as “may,” “will,” “should,”“anticipate,” “believe,” “expect,” “plan,” “future,” “intend,” “could,”“estimate,” “predict,” “hope,” “potential,” “continue,” or the negative ofthese terms or other similar expressions. These forward-looking statements are only our predictions and involvenumerous assumptions, risks and uncertainties. Our actual results or actions may differ materially from theseforward-looking statements for many reasons, including the reasons described inthis report.  We are not under any dutyto update the forward-looking statements contained in this report.  We cannot guarantee future results, levelsof activity, performance or achievements. We caution you not to put undue reliance on any forward-lookingstatements, which speak only as of the date of this report.  You should read this report and thedocuments that we reference in this report and have filed as exhibits,completely and with the understanding that our actual future results may bematerially different from what we currently expect.  We qualify all of our forward-looking statements by thesecautionary statements.

 

**Overview**

 

As general partner of LSCP, LLLP, an Iowa limited liability limitedpartnership (the “Partnership”), we manage the business and day-to-dayoperations of the Partnership’s 40 million gallon per year ethanol plant innorthwest Iowa.  We currently own a58.5% ownership interest in LSCP, LLLP. Little Sioux Corn Processors, L.L.C. (the “LLC”) and its subsidiary,LSCP, LLLP, are collectively referred to in this report as the “Company,” “we,”or “us.”

 

Beginning inApril 2003, we have been engaged in the production of ethanol anddistillers grains at our ethanol plant near Marcus, Iowa.  Since commencement of plant operations, theplant’s production capacity has consistently exceeded the 40 million gallon peryear production guarantee provided by the general contractor as measured on apro rata basis.  Our revenues arederived from the sale and distribution of our ethanol and distillers grainsthroughout the continental United States.

 

We are subject to industry-wide factors that affect the Company’srevenues and profits.  These factorsinclude, but are not limited to, the available supply and cost of corn fromwhich our ethanol and distillers grains are made; the cost of natural gas,which we use in the production of ethanol and distillers grains; dependence onone or a few major customers who market and distribute our products; theintensely competitive nature of our industry; possible legislation at thefederal, state, and/or local level; changes in federal ethanol tax incentives;and the cost of complying with the extensive environmental laws that regulateour industry.

 

In the future, there may be an opportunity for us to expand the plantto allow us to increase our production of ethanol and distillers grains.  Our Board of Directors has formed acommittee to research the feasibility of expanding the plant.  We are in the beginning stages ofconsidering whether to expand.  Anexpansion of any size would present additional challenges and risks.

 

**Plan of Operations**

 

*Financial Summary and Analysis of OperatingResults*

 

Netincome before minority interest, which is the Partnership’s income, totaled$11,295,095 in the second quarter of fiscal 2004, up from $4,529,123 reportedin the first quarter of fiscal 2004. This increase primarily resulted from: (1) an increase in revenuesattributable to higher ethanol prices; (2) our recognition of the currentBioenergy Program payments of $4,262,613; and (3) a significant decrease in ourcost of goods sold relating to the gains of $5,128,799, which we realized onour derivative instruments as corn prices continued to rise, increasing thevalue of our derivative instruments.

 

Revenuesfrom operations for the second quarter of fiscal 2004 totaled $20,203,296, upfrom $19,266,908 in the first quarter of fiscal 2004.  Net gallons of denatured ethanol sold totaled 11,998,316 in thesecond quarter of fiscal 2004 compared to 12,194,292 gallons in the firstquarter of fiscal 2004.  Increasedrevenues in the second

 

13

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quarter of fiscal 2004 resulted from higher ethanol prices.  While we anticipate continued strong demandfor ethanol, we are uncertain as to the sustainability of current ethanolprices given the increasing ethanol supply as new plants begin production andcurrent plants continue to expand.

 

Otherincome net of other expenses totaled $3,907,749 in the second quarter of fiscal2004, up from $2,233,424 reported in the first quarter of fiscal 2004.  The majority of this increase is due toincome under the USDA’s Commodity Credit Corporation Bioenergy Program.  We expect to receive the maximum of$7,500,000 under the Program and will only be eligible for additional paymentsif we expand our production.  Therefore,our current cash flow statement, which recognizes these payments, may not beindicative of future financial performance.

 

Ourcost of goods sold for the second quarter of fiscal 2004 totaled $11,311,892,down from $15,402,488 in the first quarter of fiscal 2004.  This decrease is primarily the result of ourability to offset the costs of corn supply against the increased value of ourderivative instruments as corn prices continued to rise.  Rising corn prices effectively increased thevalue of our derivative instruments and we recognize in income the gains orlosses that result from the changes in the value of our derivative instrumentsas the changes occur.  Accordingly, thegains we experienced this fiscal quarter may not be indicative of futurefinancial performance.  As corn pricesfluctuate, the value of our derivative instruments may be impacted which willaffect our future financial performance.

 

Operatingexpenses for the second quarter of fiscal 2004 totaled $1,504,058, similar to$1,568,721 reported in the first quarter of 2004.

 

*Plan of Operations for the Next 12 Months*

 

We expect to spend the next 12 months continuing to operate the ethanolplant.  We have also discussed expandingthe plant, and the Board of Directors has formed a committee to research thefeasibility of a plant expansion, including an evaluation of the financingalternatives available to fund any expansion. We are currently considering a plant expansion of 15, 40, or 60 milliongallons of annual increased production. An expansion of any size would present additional challenges and risks.

 

If we do not expand, we expect to have sufficient cash from cash flowfrom continuing operations, lines of credit through our revolving promissorynote and cash reserves to cover our costs over the next 12 months, includingcosts for corn and natural gas supplies, staffing, office, audit, legal,compliance, and working capital costs. Moreover, if we do not expand, we do not anticipate a need to raise additionalfunds within the next 12 months based upon our expected sources of funds.  In the event we determine an expansion to befeasible and in the best interests of the Company, we may need to raiseadditional equity, incur debt financing, or a combination of both in order tofund an expansion.

 

The following is our estimate of our costs and expenditures for thenext 12 months for the plant as it currently operates:

 
| Corn Costs                       |   | $      | 43,900,000 |   |
|----------------------------------|--------|--------|------------|--------|
| General and Administrative Costs |   | $      | 4,100,000  |   |
| Natural Gas Costs                |   | $      | 7,200,000  |   |
| Chemical Costs                   |   | $      | 4,500,000  |   |
| Other Production Costs           |   | $      | 4,200,000  |   |
|                             |   |   |       |
| Total Operating Costs:           |   | $      | 63,900,000 |   |

 

An expansion of any size would increase our costs in all categoriesabove.  An expansion would also requiresignificant expenditures for the expansion project itself.  At this point, we have not yet determinedthe cost or sources of financing of any such expansion.

 

The estimates in the table set forth above are based on our limitedoperational experience and that of our design contractor with other ethanolplants similar to ours.  These are onlyestimates and our actual expenses and costs could be much higher due to avariety of factors outside our control, such as:

 

14

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•                  Changes in theavailability and price of corn;

•                  Changes in theenvironmental regulations that apply to our plant operations;

•                  Increasedcompetition in the ethanol and oil industries;

•                  Changes ininterest rates or the availability of credit;

•                  Changes in ourbusiness strategy, capital improvements or development plans;

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

•                  Changes ingeneral economic conditions or the occurrence of certain events causing aneconomic impact in the agriculture, oil or automobile industries; and

•                  Changes in theavailability and price of natural gas and the market for wet and modified wetdistillers grains.

•                  Changes infederal and/or state laws (including the elimination of any federal and/orstate ethanol tax incentives).

 

*Corn and Natural Gas Supplies*

 

Iowa’s 2003 corn for grain production was estimated at 1.88 billionbushels.  This is 1 percent belowNovember 2003 estimates and 4 percent below 2002 levels, but is the secondhighest yield on record in Iowa. National 2003 corn for grain production was estimated at 10.1 billionbushels, which is an increase of 12 percent over 2002 amounts.  Further, both national production and yieldestimates are the largest on record. Although the crop was estimated at record levels, demand for bothforeign and domestic corn reduced the projected 2004 corn supply stocks.  These estimates of reduced supply caused themarket price of corn to increase in the fourth quarter of 2003 and the firstquarter of 2004.  The final 2003 cropreport published by the USDA in January 2004 reduced the U.S. Cornproduction by approximately 150 million bushels from previous estimates, whilesimultaneously increasing feed, seed, residual use and export demand.  As a result, the Company’s cost of rawmaterials has increased since the January crop report and all indicationspoint to increased corn costs over the next year.

 

The Company has taken steps to defray the impact of possible futureprice increases by entering into derivative instruments, which include forward contractsand over-the-counter and Chicago Board of Trade futures and optioncontracts.  All of these measures areintended to reduce the variability of cash flows relating to our cornpurchases.  We periodically adjust ourhedging positions as the market price for corn rises and declines.  Althoughwe believe our hedge positions accomplish an economic hedge against our futurepurchases, they do not qualify for hedge accounting, which would match the gainor loss on our hedge position to the specific commodity purchase beinghedged.  We are using fair valueaccounting for our hedge positions, which means as the current market price ofour hedge positions changes, the gains and losses are immediately recognized inour cost of goods sold.  The immediaterecognition of hedging gains and losses under fair value accounting can causenet income to be volatile from quarter to quarter due to the timing of thechange in value of the derivative instruments relative to the cost and use ofthe commodity being hedged.  Theincrease in value of the hedged positions was $5,128,799 in the quarter endingMarch 31, 2004.  As ofMarch 31, 2004, we have futures and option contract price protection inplace for a portion of our expected corn usage through December 2005 andwe have forward contracts for corn supply through October 2005.  As we move forward, additional protectionmay be necessary.

 

Natural gas is an important input to our manufacturing process.  We use natural gas to dry our distillersgrains products to moisture contents at which they can be stored for longperiods and transported greater distances, so that we can market them tobroader livestock markets, including poultry and swine markets in thecontinental United States.  Natural gashas recently been available only at prices exceeding historical averages.  These prices are increasing our costs ofproduction.  We expect natural gasprices to remain high or increase at least through the 2004 calendar year.  We entered into derivative instrumentsincluding forward contracts and over-the-counter and New York MercantileExchange Option contracts on a portion of expected natural gas usage to defraythe impact of possible future prices increases.

 

We have contracted for nearly all of our natural gas requirements forthe April 2004 through October 2004 time period.  At the time of the purchase, natural gas wasexperiencing a great deal of price uncertainty.  Due to this uncertainty, we purchased amounts for most of theplant’s needs and implemented derivative instruments to allow us to benefit inthe event natural gas prices declined. We estimate that we have forward contracts in place for approximately30% of our natural gas needs for November 2004 through March 2005.  The contracts provide for

 

15

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approximately 10% higher gas prices for the 2004-2005 winter monthsthan we spent for the 2003-2004 winter months. This is due to the price increases of crude oil and fuel components,which raises the costs of natural gas. In the next few months, we may contract for our remaining natural gasneeds for winter 2004-2005.  The timingof the contracts is contingent upon market volatility and the ability of theCompany to purchase natural gas to protect processing margins.

 

In addition to procuring natural gas requirements for winter 2004-2005,we have purchased approximately seventy-five percent (75%) of our summer 2005natural gas requirements.  We may alsopurchase natural gas requirements for the 2006 and 2007 calendar years as we attemptto further reduce our susceptibility to price increases.  In the future, we may not be able to securenatural gas for prices less than current market price and we may not recoverhigh costs of production resulting from high natural gas prices, which mayraise our costs of production.

 

*Expected Purchases of Equipment,Environmental Testing Results and Other Operational Issues*

 

We expect to install a regenerative thermal oxidizer, an additionalcentrifuge, centrifuge components, an additional air compressor, watertreatment equipment, a corn screener, and an additional heat exchanger withinthe next 12 months.  We believe thatinstalling this equipment will allow the plant to continue producing in excessof 40 million gallons of ethanol per year while continuing to satisfy certainemission standards and maintain efficiencies. We expect that it will cost approximately $1,600,000 to purchase andinstall all of the above-listed pieces of equipment.  We expect to use available cash flow to purchase the equipmentwithout financing.  We may alsoimplement certain design improvements as they are developed.  The plant may be shut down from time to timeover the next 12 months to incorporate these design improvements.  The Company is also researching the feasibilityof laying hard surface on the roads on the plant property in order to reducedust emissions from our total air emissions, and allow us to run the plant at ahigher capacity.  If we decide to put inhard surface, completion of this project may be delayed until final expansionplans, if any, are completed.

 

We are subject to ongoing environmental regulations.  The plant passed emissions testing inDecember 2003, and we expect to be re-tested within the next six months incompliance with standard environmental regulations.  The data from the emissions testing that was conducted inDecember 2003 was submitted to the Iowa Department of Natural Resources inFebruary 2004, and we received operating permits in April 2004.  The operating permits allow us to operate inexcess of 40 million gallons per year. After our regenerative thermal oxidizer is installed, we plan to retestcritical emissions points to further enhance our ability to operate at peakefficiencies.  We are required byfederal regulations to conduct a Relative Accuracy Test Audit (RATA) once per12-month period.  We passed the RATAtesting in February 2004.

 

We now employ 32 full-time employees to operate the ethanol facility,of which 6 are in general management and administration.  We do not expect to hire a significantnumber of additional employees during the next 12 months.

 

We benefit from federal ethanol tax incentives.  Changes to these incentives could negativelyimpact demand for our ethanol.

 

**Liquidity and Capital Resources**

 

As of March 31, 2004, we had thefollowing consolidated assets: cash of $1,956,167, current assets of$15,944,303 and total assets of $63,861,493. As of March 31, 2004, we had consolidated current liabilities of$4,771,813.

 

The members’ contributions, net of costs relatedto capital contributions for the LLC, was $10,842,237.  Earnings were distributed to the LLC’smembers in the amount of $561,164.  Theequity of the LLC members’ was $23,031,182 including retained earnings of$12,188,945.  The consolidated total members’equity of the Partnership was $39,398,795, which includes equity held by thelimited partners of $16,367,613.

 

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For the six-months ending March 31, 2004, cash provided byoperating activities was $11,752,552. Cash provided by operating activities was used for $481,010 of capitalexpenditures, $561,164 distributed to LLC members, $435,276 distributed tolimited partners, and a net $8,855,418 pay down of our debt.

 

### **Short-TermDebt Sources**

 

We have a revolving promissory note of up to $3,500,000 with FirstNational Bank of Omaha renewable annually through July 2004.  The interest payable on the revolvingpromissory note is due monthly at the one month LIBOR plus 2.8%, which totaled3.89% at March 31, 2004.  Therevolving promissory note is our operating line of credit.  We pay a commitment fee of 0.125% on theunused portion of the line.  Theoutstanding balance as of March 31, 2004, was $12,503.  The maximum available amount of this note isbased on receivable and inventory balances. Our current receivable and inventory balances are in excess of theminimum required under the terms of the revolving promissory note, which allowsus to use the maximum available line of credit under the note.  As the balances in these accounts fluctuate,the amount of available credit on this note may be reduced. The operating lineof credit is subject to protective covenants requiring us to maintain variousfinancial ratios.  The operating line ofcredit is secured by all business assets.

 

#### **Long-Term Debt Sources**

#### ** **

We have long-term debt financing consisting of three term notes held byFirst National Bank of Omaha and referred to as Term Notes #2, #3 and #4.  At March 31, 2004, the principalbalance on Term Note #2 is $14,759,132. Term Note #2 is payable in quarterly installments, which began onSeptember 1, 2003.  Interest onTerm Note #2 is at the three month LIBOR plus 2.8%, which totaled 3.91% as ofMarch 31, 2004.  Term Note #2 ispayable in full on June 1, 2008. In order to achieve a fixed interest rate on Term Note #2, we enteredinto an interest rate swap which helps protect our exposure to increases ininterest rates.  Our interest rate swapeffectively fixes the interest rate on Term Note #2 at 5.79% until June 1,2008.

 

At March 31, 2004, the principal balance on Term Note #3 is$7,071,469.  Term Note #3 is payable inquarterly installments which began on September 1, 2003.  Interest on Term Note #3 is at the threemonth LIBOR plus 3.3%, which totaled 4.41% as of March 31, 2004.  Term Note #3 is payable in full onJune 1, 2008.  In order to protectour interest rate exposure on Term Note #3, we entered into an interest ratecap agreement based on a principal amount of $10,000,000.  Our interest rate is capped at 6.8% for TermNote #3 until June 1, 2006.

 

At March 31, 2004, the principal balance on Term Note #4 is$130,267.  Term Note #4 is payable inquarterly installments which began on September 1, 2003.  Interest on Term Note #4 is at the one monthLIBOR plus 2.8%, which totaled 3.89% as of March 31, 2004.  Term Note #4 is payable in full onJune 1, 2008.  Term Note #4 allowsborrowings up to the original principal of $5,000,000 to the extent ofprincipal payments made until maturity and requires a commitment fee of 0.375%on any unused portion.  AtMarch 31, 2004, the aggregate indebtedness represented by Term Notes #2,#3 and #4 was $21,960,868.

 

We expect our interest rate swap and cap agreement to adequatelyprotect us in the event of changes in interest rates.  However, we may not be fully protected in the event of largemovements in interest rates.

 

We have a note payable to the Iowa Corn Promotion Board in the amountof $50,000, with principal and interest due and payable on June 30,2004.  No interest is charged as long asthe note is repaid by June 30, 2004 after which interest willretroactively accrue at the prime rate. We expect that we will pay off the note in full by June 30, 2004.

 

We have capital lease obligations in the amount of $301,449, due inmonthly installments initially totaling $6,768, and including implicit interestbetween 7.4% and 17.4% through March 1, 2008.  The capital lease obligations are secured by leased equipment.

 

We have a note in the amount of $208,248 payable to the Iowa Energy Centerdue in monthly installments of $3,472 without interest, maturing onJanuary 29, 2009.  The note issecured by real estate and subordinated to the Term Notes.  We have a note with Farmers State Bank ofMarcus, Iowa, in the amount of $201,389 payable in monthly payments of $5,921,including interest at 6%, maturing on January 29, 2009.  The note is secured by real

 

17

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estate and subordinated to the Term Notes.  We have a note totaling $210,000 payable to the Iowa Departmentof Economic Development due in 60 monthly installments beginning August 1,2004 in the amount of $1,667 without interest. The note matures on July 1, 2009. The original notes payable to the Iowa Department of EconomicDevelopment totaled $300,000, which included a $90,000 note subject toforgiveness for meeting certain requirements. In March 2004, we met the requirements and the $90,000 loan wasforgiven on March 9, 2004.  Theremaining note is secured by all equipment.

 

The notes payable to First National Bank at Omaha, require additionalloan payments based on excess cash flow generated by payments received from theUSDA’s Commodity Credit Corporation, as discussed below.

 

**Bioenergy Program Payments**

 

We are continuing to receive payments under the USDA’s Commodity CreditCorporation Bioenergy Program.  If we increase our production capacity atsome point in the future and during the life of the grant program, we maybecome eligible to receive more than $7.5 million in total payments, or we maybecome eligible more than once for this award.

 

As of March 31, 2004, we have received 100% of the eligiblepayments for first quarter of fiscal year 2004.  During the fiscal quarter ended March 31, 2004, the Companyrecorded $4,262,613 as other income from the Commodity Credit Corporation.  For year to date fiscal year 2004, werecorded $6,880,239 as other income from Commodity Credit Corporation.  This is 100% of eligible payments under theprogram for the first quarter of fiscal 2004, and approximately 85% of theeligible payments for the second quarter of fiscal 2004.  Although we have recorded the second quarter2004 payments, we have not yet received them.

 

The 2003-2004 payments that we have received have significantlyimpacted our cash flow figures. Accordingly, our current cash flow statement is not indicative of futureperformance.  We do not anticipatereceiving unpaid amounts for past pro rata reductions. 

 

**Distribution to Unit Holders**

 

On January 20, 2004, our Board of Directors, acting on behalf ofthe Company, as general partner of LSCP, LLLP, approved a distribution of$1,050,000 from LSCP, LLLP to the partners. The distribution took place in February 2004.  Because we own a 58.5% ownership interest ofLSCP, LLLP, our Company received a distribution of $614,724.  Of the $614,724 we distributed approximately$561,000 to our unit holders and used the remaining amount to reduce accountspayable.

 

**Covenants**

 

The revolving promissory note and Term Notes #2, #3 and #4 are subjectto numerous protective covenants requiring us to maintain various financialratios.  Our failure to comply with theprotective loan covenants or maintain the required financial ratios may causeacceleration of the outstanding principal balances on the revolving promissorynote and terms notes and/or the imposition of fees, charges or penalties.  As of September 30, 2003, we were notin compliance with the net worth covenant. First National Bank of Omaha has waived this violation for one year andis in the process of rewriting this covenant. Due to the waiver, we do not expect the violation of the net worthcovenant to result in any fees, charges, penalties, acceleration of principal,or increase in interest rate for the described violation.  Any acceleration of the debt financing orimposition of significant fees, charges or penalties may restrict or limit ouraccess to the capital resources necessary to continue plant operations.  For each of the term notes, the premium abovethe LIBOR may be reduced based upon our achievement and maintenance of certainfinancial ratios.  The premium aboveLIBOR was reduced for the revolving promissory note and term notes #3 and #4during the three months ended March 31, 2004.

 

**Off-Balance Sheet Arrangements.**

 

We do not have any off-balance sheet arrangements.

 

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**Item 3**.  **Controlsand Procedures.**

 

Our management, including our President (the principal executiveofficer), Daryl Haack, and our Treasurer (the principal financial officer),Doug Lansink, have reviewed and evaluated the effectiveness of our disclosurecontrols and procedures as of the end of the period covered by thisreport.  Based upon this review andevaluation, these officers believe that our disclosure controls and proceduresare effective in ensuring that material information related to us is recorded,processed, summarized and reported within the time periods required by theforms and rules of the Securities and Exchange Commission.

 

Our management, including our principal executive officer and principalfinancial officer, have reviewed and evaluated any changes in our internalcontrol over financial reporting that occurred as of the end of the periodcovered by this report and there has been no change that has materiallyaffected or is reasonably likely to materially affect our internal control overfinancial reporting.

 

# **Part II**– OTHER INFORMATION

# ** **

**Item 1. Legal Proceedings.**

 

None.

 

**Item 2. Changes in Securities.**

 

None.

 

**Item 3. Defaults Upon Senior Securities.**

 

None.

 

**Item 4. Submission of Matters to a Vote ofSecurity Holders.**

 

The Company held its annual members’ meeting on March, 25, 2004 for thepurpose of electing nine (9) Class A Directors to serve in staggered termsuntil the 2005, 2006, and 2007 annual meetings of members and until theirsuccessors are elected.  Votes weresolicited in person and by proxy.  Allnine (9) nominees were directors serving on our Board of Directors at the timeof the meeting, and all nine (9) were re-elected for the following terms:

 
|             |   | **Term  Length** |   | **Term Ends** |   | **Votes For** |   | **Votes  Against** |   | **Abstentions** |   |
|------------------|--------|------------------|--------|---------------|--------|---------------|--------|--------------------|--------|-----------------|--------|
| Daryl Haack      |   | 1 year           |   | 2005          |   | 5,632         |   | 80                 |   | 193             |   |
|             |   |             |   |          |   |          |   |               |   |            |   |
| Roland Schmidt   |   | 1 year           |   | 2005          |   | 5,642         |   | 70                 |   | 193             |   |
|             |   |             |   |          |   |          |   |               |   |            |   |
| Ronald Wetherell |   | 1 year           |   | 2005          |   | 5,642         |   | 70                 |   | 193             |   |
|             |   |             |   |          |   |          |   |               |   |            |   |
| Vincent Davis    |   | 2 years          |   | 2006          |   | 5,642         |   | 70                 |   | 193             |   |
|             |   |             |   |          |   |          |   |               |   |            |   |
| Darrell Downs    |   | 2 years          |   | 2006          |   | 5,592         |   | 120                |   | 193             |   |
|             |   |             |   |          |   |          |   |               |   |            |   |
| Douglas Lansink  |   | 2 years          |   | 2006          |   | 5,642         |   | 70                 |   | 193             |   |
|             |   |             |   |          |   |          |   |               |   |            |   |
| Verdell Johnson  |   | 3 years          |   | 2007          |   | 5,672         |   | 40                 |   | 193             |   |
|             |   |             |   |          |   |          |   |               |   |            |   |
| Timothy Ohlson   |   | 3 years          |   | 2007          |   | 5,682         |   | 30                 |   | 193             |   |
|             |   |             |   |          |   |          |   |               |   |            |   |
| Myron Pingel     |   | 3 years          |   | 2007          |   | 5,682         |   | 30                 |   | 193             |   |

 

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**Item 5. Other Information.**

 

None.

 

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

 

(a)                                  Thefollowing exhibits are included herein.

 
| 31.1   |   | Certificate pursuant to 17 CFR 240.13a-14(a)       |
|--------|--------|----------------------------------------------------|
|   |   |                                               |
| 31.2   |   | Certificate pursuant to 17 CFR 240.13a-14(a)       |
|   |   |                                               |
| 32.1   |   | Certificate pursuant to 18 U.S.C. § 1350 |
|   |   |                                               |
| 32.2   |   | Certificate pursuant to 18 U.S.C. § 1350 |

 

(b)                                 Reportson Form 8-K.

 

None.

 

 

**SIGNATURES**

 

In accordance with the requirements of the Exchange Act, the registrantcaused this report to be signed on its behalf by the undersigned, thereuntoduly authorized.

 

 
|   |         | LITTLE SIOUX CORN PROCESSORS, L.L.C.                    |
|--------|--------------|---------------------------------------------------------|
|   |         |                                                    |
|   |         |                                                    |
| Date:  | May 17, 2004 |                                                    | /s/ Daryl Haack |
|   |         | Daryl Haack                                             |
|   |         | President  (Principal Executive Officer)                |
|   |         |                                                    |
|   |         |                                                    |
| Date:  | May 17, 2004 |                                                    | /s/ Doug Lansink |
|   |         | Doug Lansink                                            |
|   |         | Treasurer  (Principal Financial and Accounting Officer) |

 

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