**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-Q**
| x                                               | ** ** | **Quarterly report under Section 13 or 15(d)  of the Securities Exchange Act of 1934.** |
|-------------------------------------------------|------------|----------------------------------------------------------------------------------------------|
|                                            |       |                                                                                         |
| **For the  fiscal quarter ended June 30, 2007** |
|                                            |       |                                                                                         |
| **OR**                                          |
|                                            |       |                                                                                         |
| o                                               | ** ** | **Transition report under Section 13 or 15(d)  of the Exchange Act.**                   |

 

**Forthe transition periodfrom               to               .**

 

# **COMMISSIONFILE NUMBER 0001229899**

 

**LITTLESIOUX CORN PROCESSORS, L.L.C.**

(Exact name of registrant as specified in its charter)

| **Iowa**                                                         |   | **42-1510421**                        |
|------------------------------------------------------------------|--------|---------------------------------------|
| (State or other  jurisdiction of  incorporation or organization) |   | (I.R.S. Employer  Identification No.) |

 

**4808F Avenue, Marcus, Iowa 51035**

(Address ofprincipal executive offices)

 

**(712)376-2800**

(Issuer’s telephonenumber)

 

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

 Indicate by check mark whether the registrant isa large accelerated filer, or a non-accelerated filer. See definition of “acceleratedfiler and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Checkone):
| Large  Accelerated Filer o | Accelerated  Filer o | Non-Accelerated  Filer x |
|---------------------------------|---------------------------|-------------------------------|

 

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

Indicatethe number of shares outstanding for each of the issuer’s classes of commonequity as of the latest practicable date:

As ofAugust 14, 2007, there were 164,115 units outstanding.

 

 

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**INDEX**
|            | ** ** | ** **                                                                                  | ** ** | **Page No.** |
|------------|------------|---------------------------------------------------------------------------------------------|------------|--------------|
| PART  I.   |       | FINANCIAL  INFORMATION                                                                      |       | 3            |
|       |       |                                                                                        |       |         |
| ITEM  1.   |       | FINANCIAL  STATEMENTS                                                                       |       | 3            |
| ITEM 2.    |       | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND RESULTS OF OPERATIONS |       | 17           |
| ITEM 3.    |       | QUANTITATIVE  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                 |       | 26           |
| ITEM 4.    |       | CONTROLS AND  PROCEDURES                                                                    |       | 28           |
|       |       |                                                                                        |       |         |
| PART  II.  |       | OTHER INFORMATION                                                                           |       | 28           |
|       |       |                                                                                        |       |         |
| ITEM 1.    |       | LEGAL PROCEEDINGS                                                                           |       | 28           |
| ITEM 1A.   |       | RISK FACTORS                                                                                |       | 28           |
| ITEM 2.    |       | UNREGISTERED  SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                                |       | 29           |
| ITEM 3.    |       | DEFAULTS UPON  SENIOR SECURITIES                                                            |       | 29           |
| ITEM 4.    |       | SUBMISSION OF  MATTERS TO A VOTE OF SECURITY HOLDERS                                        |       | 29           |
| ITEM 5.    |       | OTHER INFORMATION                                                                           |       | 29           |
| ITEM 6.    |       | EXHIBITS AND  REPORTS ON FORM 8-K                                                           |       | 29           |
|       |       |                                                                                        |       |         |
| SIGNATURES |       | 31                                                                                          |

 

2

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**PART I. FINANCIALINFORMATION**

**ITEM 1. FINANCIAL STATEMENTS.**

**LITTLESIOUX CORN PROCESSORS, LLC AND SUBSIDIARY**

Condensed ConsolidatedBalance Sheet
| ** **                                            | ** ** | **June 30** | ** **  | **September 30** | ** ** |
|-------------------------------------------------------|------------|------------------|-------------|-----------------------|------------|
| ** **                                            | ** ** | **2007**         | ** **  | **2006**              | ** ** |
| ** **                                            | ** ** | **(Unaudited)**  | ** **  | **(Audited)**         | ** ** |
| **ASSETS**                                            |       |             |        |                  |       |
| **Current Assets**                                    |       |             |        |                  |       |
| Cash and  equivalents                                 |       | $                | 15,489,330  |                  | $          | 10,133,691 |   |
| Restricted cash                                       |       | 1,848,246        |        | —                |       |
| Short-term  investments                               |       | —           |        | 18,726,834            |       |
| Accounts  receivable                                  |       | 4,844,393        |        | 2,655,454             |       |
| Inventory                                             |       | 6,006,342        |        | 2,200,290             |       |
| Derivative  instruments                               |       | —           |        | 4,356,698             |       |
| Prepaid expenses                                      |       | 2,267,629        |        | 1,301,319             |       |
| Total current  assets                                 |       | 30,455,940       |        | 39,374,286            |       |
|                                                  |       |             |        |                  |       |
| **Property and Equipment**                            |       |             |        |                  |       |
| Land and  improvements                                |       | 2,826,839        |        | 2,826,839             |       |
| Plant buildings  and equipment                        |       | 58,096,868       |        | 57,971,654            |       |
| Office buildings  and equipment                       |       | 348,990          |        | 213,928               |       |
|                                                  |       | 61,272,697       |        | 61,012,421            |       |
| Less accumulated  depreciation                        |       | 17,426,764       |        | 13,649,392            |       |
|                                                  |       | 43,845,933       |        | 47,363,029            |       |
| Construction in  progress                             |       | 46,826,288       |        | 4,384,830             |       |
| Net property and  equipment                           |       | 90,672,221       |        | 51,747,859            |       |
|                                                  |       |             |        |                  |       |
| **Other Assets**                                      |       |             |        |                  |       |
| Long-term  investments                                |       | 150,670          |        | 103,742               |       |
| Land option and  other                                |       | 80,000           |        | 189,616               |       |
| Deferred  offering costs                              |       | 154,909          |        | —                |       |
| Builder  commitment fee                               |       | 500,000          |        | —                |       |
| Deferred loan  costs, net of accumulated amortization |       | 591,460          |        | 141,112               |       |
| Total other assets                                    |       | 1,477,039        |        | 434,470               |       |
|                                                  |       |             |        |                  |       |
| **Total Assets**                                      |       | $                | 122,605,200 |                  | $          | 91,556,615 |   |

 

See Notes to Condensed Consolidated FinancialStatements

 

3

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**LITTLESIOUX CORN PROCESSORS, LLC AND SUBSIDIARY**

Condensed ConsolidatedBalance Sheet
| ** **                                                      | ** ** | **June 30** | ** **  | **September 30** | ** ** |
|-----------------------------------------------------------------|------------|------------------|-------------|-----------------------|------------|
| ** **                                                      | ** ** | **2007**         | ** **  | **2006**              | ** ** |
| ** **                                                      | ** ** | **(Unaudited)**  | ** **  | **(Audited)**         | ** ** |
| **LIABILITIES AND MEMBERS’ EQUITY**                        |       |             |        |                  |       |
| ** **                                                      |       |             |        |                  |       |
| **Current  Liabilities**                                        |       |             |        |                  |       |
| Current maturities of long-term liabilities                     |       | 15,454,424       |        | 3,394,196             |       |
| Accounts payable                                                |       | 7,000,247        |        | 2,053,554             |       |
| Accrued expenses                                                |       | 737,065          |        | 575,646               |       |
| Derivative instruments                                          |       | 820,414          |        | —                |       |
| Total current liabilities                                       |       | 24,012,150       |        | 6,023,396             |       |
|                                                            |       |             |        |                  |       |
| **Long-Term  Liabilities,**net of current maturities            |       | 9,216,906        |        | 13,504,582            |       |
| ** **                                                      |       |             |        |                  |       |
| **Minority  Interest**                                          |       | 35,800,484       |        | 28,864,721            |       |
| ** **                                                      |       |             |        |                  |       |
| **Members’  Equity, 164,115 units issued and outstanding** |       | 53,575,660       |        | 43,163,916            |       |
| ** **                                                      |       |             |        |                  |       |
| **Total  Liabilities and Members’ Equity**                 |       | $                | 122,605,200 |                  | $          | 91,556,615 |   |
|                                                                 |            |                  |             |                       |            |  |  |

 

See Notes to Condensed Consolidated FinancialStatements

 

4

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**LITTLESIOUX CORN PROCESSORS, LLC AND SUBSIDIARY**

Condensed ConsolidatedStatements of Operations
| ** **                                                  | ** ** | **Nine Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|-------------------------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| ** **                                                  | ** ** | **June 30**                | ** ** | **June 30**                | ** ** |
| ** **                                                  | ** ** | **2007**                        | ** ** | **2006**                        | ** ** |
| ** **                                                  | ** ** | **(Unaudited)**                 | ** ** | **(Unaudited)**                 | ** ** |
| ** **                                                  | ** ** | ** **                      | ** ** | ** **                      | ** ** |
| **Revenues**                                                |       | $                               | 99,893,709 |                            | $          | 81,786,517 |   |
| ** **                                                  |       |                            |       |                            |       |
| **Cost of Goods Sold**                                      |       | 65,077,754                      |       | 55,325,395                      |       |
| ** **                                                  |       |                            |       |                            |       |
| **Gross Margin**                                            |       | 34,815,955                      |       | 26,461,122                      |       |
| ** **                                                  |       |                            |       |                            |       |
| **Selling, General, and  Administrative Expenses**          |       | 3,728,931                       |       | 2,006,645                       |       |
| ** **                                                  |       |                            |       |                            |       |
| **Operating Income**                                        |       | 31,087,024                      |       | 24,454,477                      |       |
| ** **                                                  |       |                            |       |                            |       |
| **Other Income (Expense)**                                  |       |                            |       |                            |       |
| Interest income                                             |       | 804,383                         |       | 533,400                         |       |
| Interest expense                                            |       | (317,368                        | )          | (962,648                        | )          |
| Other income                                                |       | 390,886                         |       | 270,047                         |       |
| Total other  income (expense)                               |       | 877,901                         |       | (159,201                        | )          |
|                                                        |       |                            |       |                            |       |
| **Net Income Before Minority  Interest**                    |       | 31,964,925                      |       | 24,295,276                      |       |
| ** **                                                  |       |                            |       |                            |       |
| **Minority Interest in Sudsidiary  Income**                 |       | 12,800,320                      |       | 9,696,572                       |       |
| ** **                                                  |       |                            |       |                            |       |
| **Net Income**                                              |       | $                               | 19,164,605 |                            | $          | 14,598,704 |   |
| ** **                                                  |       |                            |       |                            |       |
| **Net Income Per Unit - Basic and  Diluted**                |       | $                               | 116.78     |                            | $          | 88.95 |   |
| ** **                                                  |       |                            |       |                            |       |
| **Distributions Per Unit - Basic  and Diluted**             |       | $                               | 53.33      |                            | $          | 56.16 |   |
| ** **                                                  |       |                            |       |                            |       |
| **Weighted Average Units Outstanding - Basic and  Diluted** |       | 164,115                         |       | 164,115                         |       |

 

See Notes to Condensed Consolidated FinancialStatements

5

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**LITTLESIOUX CORN PROCESSORS, LLC AND SUBSIDIARY**

Condensed ConsolidatedStatements of Operations
| ** **                                                  | ** ** | **Three Months Ended** | ** ** | **Three Months Ended** | ** ** |
|-------------------------------------------------------------|------------|----------------------------------|------------|----------------------------------|------------|
| ** **                                                  | ** ** | **June 30**                 | ** ** | **June 30**                 | ** ** |
| ** **                                                  | ** ** | **2007**                         | ** ** | **2006**                         | ** ** |
| ** **                                                  | ** ** | **(Unaudited)**                  | ** ** | **(Unaudited)**                  | ** ** |
| ** **                                                  | ** ** | ** **                       | ** ** | ** **                       | ** ** |
| **Revenues**                                                |       | $                                | 33,213,669 |                             | $          | 31,146,507 |   |
| ** **                                                  |       |                             |       |                             |       |
| **Cost of  Goods Sold**                                     |       | 32,341,266                       |       | 19,745,318                       |       |
| ** **                                                  |       |                             |       |                             |       |
| **Gross  Margin**                                           |       | 872,403                          |       | 11,401,189                       |       |
| ** **                                                  |       |                             |       |                             |       |
| **Selling,  General, and Administrative Expenses**          |       | 1,200,206                        |       | 754,797                          |       |
| ** **                                                  |       |                             |       |                             |       |
| **Operating  Income (Loss)**                                |       | (327,803                         | )          | 10,646,392                       |       |
| ** **                                                  |       |                             |       |                             |       |
| **Other  Income (Expense)**                                 |       |                             |       |                             |       |
| Interest income                                             |       | 157,864                          |       | 141,702                          |       |
| Interest expense                                            |       | —                           |       | (332,790                         | )          |
| Other income                                                |       | 517,895                          |       | 191,646                          |       |
| Total other income                                          |       | 675,759                          |       | 558                              |       |
|                                                        |       |                             |       |                             |       |
| **Net  Income Before Minority Interest**                    |       | 347,956                          |       | 10,646,950                       |       |
| ** **                                                  |       |                             |       |                             |       |
| **Minority  Interest in Sudsidiary Income**                 |       | 167,068                          |       | 4,250,481                        |       |
| ** **                                                  |       |                             |       |                             |       |
| **Net  Income**                                             |       | $                                | 180,888    |                             | $          | 6,396,469 |   |
| ** **                                                  |       |                             |       |                             |       |
| **Net  Income Per Unit - Basic and Diluted**                |       | $                                | 1.10       |                             | $          | 38.98 |   |
| ** **                                                  |       |                             |       |                             |       |
| **Distributions  Per Unit - Basic and Diluted**             |       | $                                | —     |                             | $          | — |   |
| ** **                                                  |       |                             |       |                             |       |
| **Weighted Average Units  Outstanding - Basic and Diluted** |       | 164,115                          |       | 164,115                          |       |

 

See Notes to Condensed Consolidated FinancialStatements

 

6

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

CondensedConsolidated Statements of Cash Flows
| ** **                                                                           | ** ** | **Nine Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|--------------------------------------------------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| ** **                                                                           | ** ** | **June 30**                | ** ** | **June 30**                | ** ** |
| ** **                                                                           | ** ** | **2007**                        | ** ** | **2006**                        | ** ** |
| ** **                                                                           | ** ** | **(Unaudited)**                 | ** ** | **(Unaudited)**                 | ** ** |
| **Operating Activities**                                                             |       |                            |       |                            |       |
| Net income                                                                           |       | $                               | 19,164,605 |                            | $          | 14,598,704 |   |
| Adjustments to  reconcile net income to net   cash provided by operating activities: |       | 3,841,189                       |       | 3,641,446                       |       |
| Depreciation and  amortization                                                       |       |                            |       |                            |       |
| Minority  interest in subsidiary’s income                                       |       | 12,800,320                      |       | 9,696,572                       |       |
| Other                                                                                |       | 165,581                         |       | —                          |       |
| Change in operating  assets and liabilities:  Restricted cash                        |       | (1,848,246                      | )          | —                          |       |
| Accounts  recievables                                                                |       | (2,188,939                      | )          | (393,152                        | )          |
| Inventory                                                                            |       | (3,806,052                      | )          | (732,538                        | )          |
| Derivative  instruments                                                              |       | 5,177,112                       |       | (778,631                        | )          |
| Prepaid expenses                                                                     |       | (966,310                        | )          | (949,175                        | )          |
| Accounts payable                                                                     |       | 3,095,494                       |       | 1,751,254                       |       |
| Accrued expenses                                                                     |       | 161,419                         |       | (5,029,747                      | )          |
| Net cash  provided by operating activities                                           |       | 35,596,173                      |       | 21,804,733                      |       |
|                                                                                 |       |                            |       |                            |       |
| **Investing Activities**                                                             |       |                            |       |                            |       |
| Proceeds from  investments                                                           |       | 18,726,834                      |       | 463,001                         |       |
| Payments for  investments                                                            |       | (46,928                         | )          | (52,172                         | )          |
| Capital  expenditures                                                                |       | (40,817,200                     | )          | (3,767,176                      | )          |
| Payments for  land options and other                                                 |       | (55,965                         | )          | (74,616                         | )          |
| Builder  commitment fee                                                              |       | (500,000                        | )          | —                          |       |
| Net cash used in  investing activities                                               |       | (22,693,259                     | )          | (3,430,963                      | )          |
|                                                                                 |       |                            |       |                            |       |
| **Financing Activities**                                                             |       |                            |       |                            |       |
| Payments of  long-term debt                                                          |       | (2,469,594                      | )          | (2,401,290                      | )          |
| Proceeds from  issuance of long-term debt                                            |       | 10,242,146                      |       | —                          |       |
| Payments for  deferrd loan costs                                                     |       | (547,500                        | )          | —                          |       |
| Deferred  offering costs                                                             |       | (154,909                        | )          | —                          |       |
| Distribution to  minority interest                                                   |       | (5,864,557                      | )          | (6,120,759                      | )          |
| Distribution to  members                                                             |       | (8,752,861                      | )          | (9,216,069                      | )          |
| Net cash used in  financing activities                                               |       | (7,547,275                      | )          | (17,738,118                     | )          |
|                                                                                 |       |                            |       |                            |       |
| **Net increase in cash and  equivalents**                                            |       | 5,355,639                       |       | 635,652                         |       |
| ** **                                                                           |       |                            |       |                            |       |
| **Cash  and Equivalents****—**Beginning  of Period                              |       | 10,133,691                      |       | 14,135,954                      |       |
| ** **                                                                           |       |                            |       |                            |       |
| **Cash and Equivalents —**End  of Period                                        |       | $                               | 15,489,330 |                            | $          | 14,771,606 |   |
| ** **                                                                           |       |                            |       |                            |       |
| **Supplemental Cash Flow  Information**                                              |       |                            |       |                            |       |
| Interest expense                                                                     |       | $                               | 405,578    |                            | $          | 898,546 |   |
| Interest  capitalized                                                                |       | $                               | 438,443    |                            | $          | — |   |
| Cash paid for  interest                                                              |       | $                               | 844,021    |                            | $          | 898,546 |   |
| ** **                                                                           |       |                            |       |                            |       |
| **Supplemental Disclosure of  Noncash Investing and Financing Activities**           |       |                            |       |                            |       |
| Capital expenditures in  accounts payable                                            |       | $                               | 1,851,199  |                            | $          | — |   |

 

See Notes to CondensedConsolidated Financial Statements

** **

7

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**LITTLE SIOUX CORN PROCESSORS, LLCAND SUBSIDIARY**

Notes to CondensedConsolidated Financial Statements (Unaudited)

June 30, 2007

**Note 1:  Nature ofOperations**

The Company represents Little Sioux Corn Processors,LLC (LLC) and its subsidiary LSCP, LLLP (LLLP). The Company operates a 52 million gallon ethanol plant, located nearMarcus, Iowa.  The plant commenced operations inApril 2003.   The Company iscurrently in the process of expanding the plant from a 52 million gallons peryear (MMGY) plant to a 92 MMGY plant. The Company sells its production of ethanol, distiller’s grains andsolubles, and modified wet distillers grains with solubles in the ContinentalUnited States.

**Note 2:  Summary of Significant Accounting Policies**

**Basis of Presentation**

These condensed consolidated interim financialstatements and related notes should be read in conjunction with theconsolidated financial statements and notes included in the Company’s auditedconsolidated financial statements for the year ended September 30, 2006,contained in the Company’s annual report of Form 10-K for 2006.

The condensed consolidated interim financialstatements are unaudited.  These statements include all adjustments,  consisting of only normal recurring accruals,that we considered necessary to present a fair statement of the results ofoperations, financial position, and cash flows.  The results reported inthese condensed consolidated financial statements should not be regarded asnecessarily indicative of results that may be expected for the entire year.

**Principles of Consolidation**

The condensed consolidated financial statementsinclude the accounts of the LLC, its 60.15% owned subsidiary, LLLP and itswholly owned subsidiaries Akron Riverview Corn Processors, LLC and Twin RiversManagement Co., LLC.  All significantinter-company transactions and balances have been eliminated in consolidation.

**Use of Estimates**

The preparation of financial statements in conformitywith accounting principles generally accepted in the United States of Americarequires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosure of contingent assets andliabilities at the date of the financial statements and the reported amounts ofrevenues and expenses during the reporting period.  Actual results could differ from thoseestimates.

**Revenue Recognition**

The Companygenerally sells ethanol and related products pursuant to marketingagreements.  Revenues are recognized whenthe marketing company (the “customer”) has taken title and assumed the risksand rewards of ownership, prices are fixed or determinable and collectibilityis reasonably assured.  The marketingagreement with ADM provides that an initial price per gallon of ethanol isestablished upon shipment.  ADM knows the final price of ethanol purchasedby the end of each day, and the Company can obtain directly from ADM, the finalprice on a daily basis.  The Company settles the final price with ADM on amonthly basis, even though the amounts are determinable daily, as this isadministratively easier.  The Company typically receives the relatedpaperwork from ADM within five days of month end.  Therefore, the Companybelieves that all sales of ethanol during a month are recorded at a price that isboth fixed and determinable and that there are no ethanol sales, during anygiven month, that should be considered contingent and recorded as deferredrevenue.  The Company’s products aregenerally shipped FOB shipping point.

In accordance withthe Company’s agreements for the marketing and sale of ethanol and relatedproducts, marketing fees and commissions due to the marketers are deducted fromthe gross sales price at the time payment is remitted to the Company.  However, in accordance with EITF 99-19,because the Company is the primary obligor in the sales 

8

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**LITTLE SIOUX CORN PROCESSORS, LLCAND SUBSIDIARY**

Notes to CondensedConsolidated Financial Statements (Unaudited)

June 30, 2007

arrangement withthe customer, these sales and marketing fees and commissions are recorded inSelling, General and Administrative Expenses in the accompanying statements ofoperations.

**Derivative Instruments**

The Company accounts for derivatives in accordancewith Statement of Financial Accounting Standards (SFAS) No. 133, “Accountingfor Derivative Instruments and Hedging Activities”. SFAS No. 133 requires therecognition of derivatives in the balance sheet and the measurement of theseinstruments at fair value.

In order for a derivative to qualify as a hedge,specific criteria must be met and appropriate documentation maintained. Gainsand losses from derivatives that are do not qualify as hedges, or areundesignated, must be recognized immediately in earnings. If the derivativedoes qualify as a hedge, depending on the nature of the hedge, changes in thefair value of the derivative will be either offset against the change in fairvalue of the hedged assets, liabilities, or firm commitments through earningsor recognized in other comprehensive income until the hedged item is recognizedin earnings.  Changes in the fair valueof undesignated derivatives are recorded in revenue or cost of goods sold basedon the commodity being hedged.

Additionally, SFAS No. 133 requires a company toevaluate its contracts to determine whether the contracts are derivatives.Certain contracts that literally meet the definition of a derivative may beexempted as “normal purchases or normal sales”. Normal purchases and normalsales are contracts that provide for the purchase or sale of something otherthan a financial instrument or derivative instrument that will be delivered inquantities expected to be used or sold over a reasonable period in the normalcourse of business. Contracts that meet the requirements of normal aredocumented as normal and exempted from the accounting and reportingrequirements of SFAS No. 133, and therefore, are not marked to market inour financial statements.

In order to reduce the risk caused by marketfluctuations, we hedge our anticipated corn and natural gas purchases, ethanolsales, and interest rates by entering into options, futures contracts, and swapagreements. These contracts are used with the intention to fix the purchaseprice of our anticipated requirements of corn and natural gas in productionactivities, the sales price of ethanol, and limit exposure to increasedinterest rates.  The fair value of thesecontracts is based on quoted prices in active exchange-traded orover-the-counter markets.  The fair valueof the derivatives is continually subject to change due to changing marketconditions. We do not formally designate these instruments as hedges and,therefore, record in earnings adjustments caused from marking these instrumentsto market on a monthly basis.

**Recently Issued AccountingPronouncements**

InSeptember 2006, the FASB issued Statement of Financial Accounting StandardsNo. 157 (“SFAS 157”), *Fair ValueMeasurements*.  SFAS 157 defines fair value, establishes aframework for measuring fair value, and expands disclosures about fair valuemeasurements.  The statement is effective for financial statements issuedfor fiscal years beginning after November 15, 2007.  The Company iscurrently evaluating the effect that the adoption of SFAS 157 will have, ifany, on its consolidated results of operations, financial position and relateddisclosures, but does not expect it to have a material impact on the financialstatements.

In February 2007, the FASB issued Statement ofFinancial Accounting Standards No. 159, (“SFAS 159”), *The Fair Value Option for Financial Assets and Financial Liabilities*” whichincluded an amendment of FASB Statement 115. This statement providescompanies with an option to report selected financial assets and liabilities atfair value. This statement is effective for fiscal years beginning after November 15,2007 with early adoption permitted. The Company is in the process of evaluatingthe effect, if any, that the adoption of SFAS No. 159 will have onits consolidated results of operations and financial position.

9

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**LITTLE SIOUX CORN PROCESSORS, LLCAND SUBSIDIARY**

Notes to CondensedConsolidated Financial Statements (Unaudited)

June 30, 2007

**Deferred Offering Costs**

The Company defers thecosts incurred to raise equity financing until that financing occurs.  Atsuch time that the issuance of new equity occurs, these costs will be nettedagainst the proceeds received; or if the financing does not occur, they will beexpensed.  The deferred offering costsrelate to Akron Riverview Corn Processors, LLC, currently a wholly ownedsubsidiary of LLLP, and is currently a development stage company that plans toraise equity for the construction of a 100 MMGY ethanol plant near Akron, Iowaas described in Note 10.

**Reclassifications**

The presentation of certain items in the condensedconsolidated balance sheet as of September 30, 2006 has been changed to conformto the classifications used at June 30, 2007. These reclassifications had no effect on members’ equity, net income, orcash flows previously reported.

**Note 3:  Inventory**

Inventory is comprised of the following at:

|                 | ** ** | **June 30, 2007** | ** ** | **September 30, 2006*** | ** ** |
|-----------------|------------|-----------------------------|------------|-----------------------------------|------------|
| Raw materials   |       | $                           | 3,548,037  |                              | $          | 1,001,783 |   |
| Supplies        |       | 730,164                     |       | 533,895                           |       |
| Work in process |       | 775,817                     |       | 364,036                           |       |
| Finished goods  |       | 952,324                     |       | 300,576                           |       |
| Totals          |       | $                           | 6,006,342  |                              | $          | 2,200,290 |   |

 

*Derived from audited consolidated financial statements.

**Note 4: Derivative Instruments**

At June 30, 2007, the Company had recorded a liabilityfor derivative instruments of approximately $820,000. Derivative instruments relatedto corn, natural gas, and gasoline options and futures positions wereapproximately $1,217,000.  At September30, 2006, the Company had an asset for derivative instruments related to corn,natural gas, and gasoline options and futures positions.  None of the positions open at June 30, 2007or September 30, 2006 were designated as cash flow or fair value hedges. The Company recorded a loss of approximately $4,919,000 in cost of goods soldrelated to its derivative instruments for the three months ended June 30, 2007and a gain of approximately $10,108,000 in cost of goods sold for nine monthsended June 30, 2007.  The Companyrecorded a loss of approximately $688,000 in cost of goods sold related to itsderivative instruments for the three months ended June 30, 2006, and a gain ofapproximately $430,000 in cost of goods sold for nine months ended June 30,2006.  The Company offset revenues withlosses of approximately $830,000 and $2,109,000 related to its derivativeinstruments for the three months and nine months ended June 30, 2007,respectively.  There were nocorresponding gains and losses related to revenue for the three months or ninemonths ended June 30, 2006.

In April 2007, the Company entered into an interestrate swap to limit increased interest expense on a portion of the constructionloans once they convert into term notes. The interest rate swap fixes theinterest rate on $36,500,000 of debt at 7.68% beginning March 1, 2008 untilMarch 1, 2013.  The Company has includedthe value of the interest rate swap of approximately $397,000 with thederivative instruments at June 30, 2007 and recognized approximately $397,000in other income for the nine months ended June 30, 2007.  During fiscal 2006, the Company had aninterest rate cap, which expired on June 1, 2006.  The interest rate cap was not designated as acash flow or fair value hedge.  TheCompany offset interest expense with a loss of approximately $35,000 and$70,000, on the interest rate cap, for the three months and nine months endingJune 30, 2006, respectively.

10

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**LITTLE SIOUX CORN PROCESSORS, LLCAND SUBSIDIARY**

Notes to CondensedConsolidated Financial Statements (Unaudited)

June 30, 2007

**Note 5:  Construction in Progress**

The Company continues tomake payments for the expansion to a 92 million gallon plant.  The Company anticipates the expansion willcost approximately $73,000,000 and has incurred approximately $46,826,000through June 30, 2007.  The Companycapitalized interest of approximately $640,000 in the nine months ended June30, 2007.

**Note 6:  RevolvingPromissory Note**

Under the terms of thefinancing agreement with the lending institution, the Company has a revolvingpromissory note for up to $5,000,000, subject to borrowing base limitationsbased on the amended and restated debt agreement in April 2007. The revolvingpromissory note incurs interest monthly at the one-month LIBOR plus 280 basispoints and is payable in full in March 2008. The Company pays a commitment fee of .125% on the unused portion of therevolving promissory note.  There were nobalances outstanding on the revolving promissory note at June 30, 2007.  The revolving promissory note as well as theterm notes and construction loan described in Note 7 are subject to protectivecovenants under a common financing agreement requiring the Company to maintainvarious financial ratios, including debt service coverage and minimum net worthand working capital requirements and secured by all business assets.

11

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**LITTLE SIOUX CORN PROCESSORS, LLCAND SUBSIDIARY**

Notes to CondensedConsolidated Financial Statements (Unaudited)

June 30, 2007

**Note 7: Long-Term Liabilities**

Long-termdebt consists of the following:
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | ** ** | **June 30,  2007** | ** ** | **September 30,  2006*** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|-------------------------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |       |                    |       |                          |       |
| Term note 2 has fixed principal payments due  quarterly with interest at the three-month LIBOR plus 280 basis points, which  totaled 8.16% at June 30, 2007, payable in full on June 1, 2008.   As part of the financing agreement, the Company accepted a fixed rate option  on term note 2 by entering into an interest rate swap which effectively fixes  the interest rate on this term note at 5.79% until this term note is repaid  on June 1, 2008. The Company did not designate the interest rate swap as  a fair value or cash flow hedge. The value of the interest rate swap related  to this note is not significant. | ** ** | $                       | 10,200,281 |                          | $          | 11,308,363 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |       |                    |       |                          |       |
| Term note 3 bears interest at the three-month LIBOR  plus 280 basis points, which totaled 8.16% at June 30, 2007.  Term note  3 is payable in full on June 1, 2008.  The Company is required to  make quarterly payments of $506,588 applied to accrued interest on term note  3 and then to principal until this note is paid in full or until maturity.                                                                                                                                                                                                                                                                          |       | 3,860,854               |       | 5,090,129                     |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |       |                    |       |                          |       |
| Term note 4 bears interest at the one-month LIBOR  plus 280 basis points.  Term note 4 is payable in full on June 1,  2008. Term note 4 allows subsequent borrowings up to the original $5,000,000  to the extent of principal payments made until maturity and requires a  commitment fee of .25% on any used portion.                                                                                                                                                                                                                                                                                                                 |       | —                  |       | —                        |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |       |                    |       |                          |       |
| Construction loan for up to $73,000,000 for the  partial funding for the 40 MMGY expansion to the Marcus, Iowa ethanol plant.  The construction loan requires interest at the one-month LIBOR plus 310 basis  points during construction, which totaled 8.42% at June 30, 2007.Upon  completion of construction, the construction loan converts into term notes as  described below.                                                                                                                                                                                                                                                              |       | 10,242,146              |       | —                        |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |       |                    |       |                          |       |
| 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |       | 65,972                  |       | 97,222                        |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |       |                    |       |                          |       |
| Note payable to Farmers State 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |       | 75,062                  |       | 108,136                       |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |       |                    |       |                          |       |
| Note payable to Iowa Department of Economic  Development, due in 60 monthly installments beginning August 1, 2004 of  $1,167 without interest, payable in full on July 1, 2009, secured by all  equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                        |       | 168,000                 |       | 178,500                       |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |       |                    |       |                          |       |
| Capital lease obligation, due in monthly installments  initially totaling $6,658 including implicit interest at 3.67% through March  1, 2008, secured by leased equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |       | 59,015                  |       | 116,428                       |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |       |                    |       |                          |       |
| Totals                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | ** ** | $                       | 24,671,330 |                          | $          | 16,898,778 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |       |                    |       |                          |       |
| Less amounts due within one year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |       | 15,454,424              |       | 3,394,196                     |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |       |                    |       |                          |       |
| Totals                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | ** ** | $                       | 9,216,906  |                          | $          | 13,504,582 |   |

 

*Derived from audited consolidated financial statements.

 

12

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**LITTLE SIOUX CORN PROCESSORS, LLCAND SUBSIDIARY**

Notes to CondensedConsolidated Financial Statements (Unaudited)

June 30, 2007

On April 5, 2007, LLLP amended and restated its loanagreement with First National Bank of Omaha, N.A. The agreement provided for aconstruction loan for up to $73,000,000 for the partial funding of the 40 MMGYexpansion to the Marcus, Iowa, ethanol plant. The construction loan requires interest at the one-month LIBOR plus 310basis points.  Upon completion ofconstruction, the construction loan converts into term notes for up to$82,278,227 with interest at the three-month LIBOR plus 260 to 300 basispoints.  These term notes will be payablein full five years from completion of the construction.  The amended and restated loan agreementrequires excess cash flow payments of up to $5,000,000 to be paid at the end ofeach year.  In April 2007, the Companyalso entered into an interest rate swap to limit increases interest expense ona portion of the construction loans once converted into term notes. Theinterest rate swap fixes the interest rate on $36,500,000 of the debt at 7.68%beginning March 1, 2008 until March 1, 2013. As of August 14, 2007, the Company has borrowed approximately$23,198,000 as part of the construction loan.

As part of the financing agreement, the premium abovethe LIBOR on the term notes and revolving promissory note has been reducedbased on a financial ratio from the original 380 basis points.

Theestimated maturities of long-term liabilities at June 30, 2007 are as follows:

| 2008                         |   | $         | 15,454,424 |   |
|------------------------------|--------|-----------|------------|--------|
| 2009                         |   | 2,782,968 |       |
| 2010                         |   | 2,798,023 |       |
| 2011                         |   | 3,030,766 |       |
| 2012                         |   | 608,649   |       |
| Total long-term  liabilities |   | $         | 24,671,330 |   |

**Note 8:  Members’Equity**

On January 16, 2007, theBoard of Directors declared a distribution of $14,718,019 from LLLP to thepartners, which was paid in February 2007. The LLC received approximately $8,854,000 of this distribution.  In February 2007, the LLC paid $53.33 perunit to the LLC unit holders.

In April 2007, theCompany declared a unit distribution of 14 units per unit held by members.  After the unit distribution, there are164,115 units outstanding.  Unit amountsin this statement have been adjusted to reflect this unit split.

On July 17, 2007, theBoard of Directors declared a distribution of $9,380,981 from LLLP to thepartners, which was paid in August 2007. The LLC received approximately $5,643,000 of this distribution.  In August 2007, the LLC paid $33.45 per unitto the LLC unit holders.

13

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**LITTLE SIOUX CORN PROCESSORS, LLCAND SUBSIDIARY**

Notes to CondensedConsolidated Financial Statements (Unaudited)

June 30, 2007

**Note 9:  Related Party Transactions**

The Company has balances and transactions in thenormal course of business with various related parties.  Significant related party transactionsaffecting the condensed consolidated financial statements as of and for theperiods ended are as follows:
|                              | ** ** | **June 30,  2007**               | ** ** | **September 30,  2006***        | ** ** |
|------------------------------|------------|---------------------------------------|------------|--------------------------------------|------------|
| **Balance Sheet**            | ** ** | ** **                            | ** ** | ** **                           | ** ** |
| Accounts receivable          |       | $                                     | 4,074,000  |                                 | $          | 2,236,000 |   |
| Accounts payable             |       | 2,082,000                             |       | 137,000                              |       |
|                         |       |                                  |       |                                 |       |
|                         | ** ** | **Three Months Ended  June 30, 2007** | ** ** | **Nine Months Ended  June 30, 2007** | ** ** |
| **Statements of Operations** | ** ** | ** **                            | ** ** | ** **                           | ** ** |
| Revenues                     |       | $                                     | 30,481,000 |                                 | $          | 90,602,000 |   |
| Expenses                     |       | 6,183,000                             |       | 13,654,000                           |       |
|                         |       |                                  |       |                                 |       |
|                         | ** ** | **Three Months Ended  June 30, 2006** | ** ** | **Nine Months Ended  June 30, 2006** | ** ** |
| **Statements of Operations** | ** ** | ** **                            | ** ** | ** **                           | ** ** |
| Revenues                     |       | $                                     | 27,807,000 |                                 | $          | 72,164,000 |   |
| Expenses                     |       | 3,318,000                             |       | 9,921,000                            |       |
|                         |       |                                  |       |                                 |       |

*Derived from audited consolidated financialstatements

The Company incurred approximately $34,991,000including retainage of approximately $1,748,000 in accounts payable related toconstruction in progress performed by a related party during the nine monthsended June 30, 2007.  The Companyincurred approximately $256,000 and $576,000 in marketing fees paid to ADMincluded with expenses above during the three months and nine months ended June30, 2007, respectively. The Company incurred approximately $136,000 and$397,000 in marketing fees paid to ADM included with expenses above during thethree months and nine months ended June 30, 2006, respectively.

**Note 10: Akron Riverview CornProcessors, LLC**

**Project Information**

Akron Riverview Corn Processors, LLC (ARCP) was formedas an Iowa Limited Liability Company, November 27, 2006, for the purpose ofdeveloping a project to build a 100 million gallon dry mill corn-processingethanol plant expected to be located in Plymouth County, Iowa near Akron.  ARCP is a development stage company with noprior operating history.  ARCP does notexpect to generate any revenue until the plant operations begin.

**Project Funding**

On February 27, 2007, ARCP entered into a subscriptionagreement with LLLP, in which ARCP accepted a subscription agreement for$19,999,900 in exchange for 15,000 Class A units at $666.66 per unit and 12,500Class A units at $800 per unit, totaling 27,500 Class A units.   ARCPhas two classes of membership units, Class A and B, with each unit representinga pro rata ownership interest in ARCP’s capital, profits and losses, anddistributions.  Class B unit holders will not be able to elect boardmembers of ARCP unless the Class B unit holder holds at least 15,000units.  ARCP’s Board is currentlyidentical to the Board of Little Sioux Corn Processors, LLC, which is also thegeneral manager of LSCP, LLLP.

ARCP is in the process of filing a Form SB-2Registration Statement with the Securities and Exchange Commission (SEC). The offering will be for a minimum of 70,000 Class B units and up to100,000 Class B units for sale at $1,000 per unit.  Offering proceeds willbe held in escrow until the earliest of the receipt of $70,000,000 or more incash proceeds, one year from the effective date of the registration statement,or termination of the offering.  ARCP anticipates funding the developmentof the ethanol plant by raising total equity of at least approximately 

14

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**LITTLE SIOUX CORN PROCESSORS, LLCAND SUBSIDIARY**

Notes to CondensedConsolidated Financial Statements (Unaudited)

June 30, 2007

$90,000,000 and securing financing for up toapproximately $112,500,000, less any grants received.  The amount of debtfinancing needed depends on the amount of equity raised in the offering.

**Letter of Intent**

The total cost of the project, including theconstruction of the ethanol plant and start-up expenses, is expected toapproximate $202,500,000.  ARCP signed a letter of intent in March 2007with a general contractor, a related party, to design and build the ethanolplant at a total contract price of approximately $129,505,000.  Thecontract price is subject to changes based on corresponding changes to the ConstructionCost Index (CCI), published by Engineering News-Record magazine, from January2007 (7879.58).  The estimated contract price has increased byapproximately $2,102,000 based on increases in the CCI in August 2007 to8,007.48.  ARCP budgeted a reserve for potential increases in the CCI ofapproximately $7,800,000.  The contract price is also subject to a 0.50%surcharge for each calendar month that has passed between January 2007 and themonth in which a valid Notice to Proceed is given.  The total increase dueto changes caused by the CCI and the 0.50% surcharge is limited to 6%. The letter of intent terminates on November 5, 2007, unless a valid Notice toProceed has been accepted by the Design-Builder.  The termination date maybe extended upon mutual written agreement.  A non-refundable commitmentfee of $500,000 has been paid with the signing of the letter of intent whichwill be credited towards the contract price should the Company choose toexecute the design build agreement.  The general contractor is an investorin LSCP, LLLP.

ARCP entered into a Phase I and Phase II engineeringservices agreement with an affiliate of the general contractor.  Inexchange for the performance of certain engineering and design services, ARCPhas agreed to pay $185,000, which will be credited against the totaldesign-build cost.  ARCP will also be required to pay certain reimbursableexpenses per the agreement.

**Land Options**

LSCP obtained two land options on the intended site ofthe ethanol plant in Plymouth County, Iowa to purchase approximately 300 acresof land.  The land options were contributed to ARCP as part of thesubscription agreement and valued at the cost of the options fees paid, whichwas $50,000.  The land options give the Company the right to purchase theland for approximately $4,500,000 until June 19, 2007 with the option feesbeing applied to the final purchase price.  In addition, ARCP paid rentfor the two sites for the 2007 crop year of approximately $56,000, which wasexpensed.  The land options wereexercised on June 15, 2007 and ARCPcompleted the purchase of the land in August 2007.  The total cost of the land was approximately$4,647,000, less previous amounts paid.

**Marketing Agreement**

In March 2007, ARCP entered into a marketing agreementwith an unrelated party to purchase all of the distillers dried grains withsolubles (DDGS) ARCP expects to ship by railcar.  The buyer agrees to payARCP a percentage of the selling price, subject to a minimum and maximum amountper ton.  The agreement commences when ARCP begins producing DDGS andcontinues for one year initially and is terminable thereafter by either partywith four months notice.

**Management Agreement**

In May 2007, ARCP entered into a management agreementwith LLLP to operate and manage the plant.  The agreement requires anannual management fee of $420,000 and an annual incentive bonus of 3% of theARCP’s net income up to $1,500,000.  The management fee is negotiable sixmonths after operations commence and yearly thereafter.  The agreement beginswhen ARCP hires a plant manager which cannot be earlier than 180 days prior tocommencement of operations and continues for five years with an automaticrenewal for an additional five year term unless terminated by either party.

**Note 11:**  **Commitments,and Contingencies**

15

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**LITTLE SIOUX CORN PROCESSORS, LLCAND SUBSIDIARY**

Notes to CondensedConsolidated Financial Statements (Unaudited)

June 30, 2007

**Contractual Obligations**

The following table provides information regarding theconsolidated contractual obligations of the Company as of June 30, 2007:

|                                | ** ** | **Total**  | ** ** | **Less than  One Year** | ** ** | **One to  Three Years** | ** ** | **Three to  Five Years** | ** ** |
|--------------------------------|------------|------------|------------|-----------------------------------|------------|-----------------------------------|------------|------------------------------------|------------|
| Long-Term Debt  Obligations(1) |       | $          | 27,963,187 |                              | $          | 17,083,549                        |       | $                                  | 10,219,742 |   | $ | 659,896 |   |
|                           |       |       |       |                              |       |                              |       |                               |       |
| Operating Lease Obligations    |       | 214,897    |       | 187,371                           |       | 27,526                            |       | —                             |       |
|                           |       |       |       |                              |       |                              |       |                               |       |
| Purchase Obligations(2)        |       | 54,160,810 |       | 52,941,301                        |       | 1,219,509                         |       | —                             |       |
|                           |       |       |       |                              |       |                              |       |                               |       |
| Total  Contractual Obligations |       | $          | 82,338,894 |                              | $          | 70,212,221                        |       | $                                  | 11,466,777 |   | $ | 659,896 |   |

----

(1)                          Long-TermDebt Obligations include estimated interest. 

(2)                          Purchaseobligations include forward contracts for corn and natural gas as well asremaining amounts for construction in progress.

 

16

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**ITEM2.  MANAGEMENT’S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.**

We prepared the followingdiscussion and analysis to help you better understand our financial condition,changes in our financial condition, and results of operations for the three andnine-month periods ended June 30, 2007, compared to the same period ofthe prior fiscal year.  This discussionshould be read in conjunction with the consolidated financial statements andnotes and the Management’s Discussion and Analysis section for the fiscal yearended September 30, 2006, included in the Company’s Annual Report on Form 10-K.

**Disclosure RegardingForward-Looking Statements**

Thisreport contains historical information, as well as forward-lookingstatements.  These forward-lookingstatements include any statements that involve known and unknown risks andrelate to future events and our expectations regarding future performance orconditions.  Words such as “may,” “will,”“should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “future,” “intend,”“could,” “hope,” “predict,” “target,” “potential,” or “continue” or thenegative of these terms or other similar expressions are intended to identifyforward-looking statements, but are not the exclusive means of identifying suchstatements.  These forward-lookingstatements, and others we make from time to time, are subject to a number ofrisks and uncertainties. Many factors could cause actual results to differmaterially from those projected in forward-looking statements. While it isimpossible to identify all such factors, factors that could cause actualresults to differ materially from those estimated by us include, but are notlimited to:

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

·                  Projected growth, overcapacity orincreased competition in the ethanol market in which we operate;

·                  Fluctuations in the price and marketfor ethanol and distillers grains;

·                  Changes in plant production capacity,variations in actual ethanol and distillers grains production from expectationsor technical difficulties in operating the plant;

·                  Changes in our development plans forexpanding, maintaining or contracting our presence in the market in which weoperate;

·                  Costs of construction and equipment;

·                  Changes in interest rates and theavailability of credit to support capital improvements, development, expansionand operations;

·                  Changes in or elimination ofgovernmental laws, tariffs, trade or other controls or enforcement practices;

·                  Fluctuations in US oil consumptionand petroleum prices;

·                  Anticipated trends in our financialcondition and results of operations;

·                  The availability and adequacy of ourcash flow to meet our requirements; and

·                  Competition from alternative fuelsand alternative fuel additives.

The cautionary statements referred to in this sectionalso should be considered in connection with any subsequent written or oralforward-looking statements that may be issued by us or persons acting on ourbehalf.  We do not undertake any duty toupdate forward-looking statements after the date they are made or to conformthem to actual results or to changes in circumstances or expectations.Furthermore, we cannot guarantee future results, events, levels of activity,performance, or achievements.  We cautionyou not to put undue reliance on any forward-looking statements, which speakonly 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 ourforward-looking statements by these cautionary statements.

**Overview**

Little Sioux Corn Processors, L.L.C. (the “Company”)is an Iowa limited liability company that owns the sole general partnershipinterest of LSCP, LLLP, (the “Partnership”) an Iowa limited liability limitedpartnership.  As general partner, we manage the business and day-to-dayoperations of the Partnership’s 52 million gallon per year (MMGY) ethanol plantlocated near Marcus, Iowa in northwest Iowa.  We currently own a 60.15%ownership interest in the Partnership. The Partnership has two wholly owned subsidiaries, Akron Riverview CornProcessors, 

17

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LLC (“Akron”) and Twin Rivers Management Co., LLC (“TwinRivers”).  Akron is an Iowa limitedliability company that is developing a 100 million gallons per year ethanolplant in Plymouth County, near Akron, Iowa. Twin Rivers is an Iowa limited liability company that anticipatesmanaging Akron’s ethanol plant.  The Company, its subsidiary, itsPartnership, and the Partnership’s subsidiaries are collectively referred to inthis report as “LSCP,” “we,” or “us.”

Our revenues are derived from the sale and distributionof our ethanol, distillers grains and corn oil throughout the continentalUnited States.  Corn is supplied to us primarily from local agriculturalproducers and from purchases of corn on the open market. After processing thecorn, ethanol is sold to Archer Daniels Midland Co. (“ADM”), which subsequentlymarkets and sells the ethanol to gasoline blenders and refineries locatedthroughout the continental United States.  On March 29, 2007 we enteredinto an Amended and Restated Ethanol Marketing Agreement with ADM for aninitial term of four years, and unless the contract is terminated it will renewautomatically for successive additional terms of one year each.  The revenue we receive from the sale ofethanol to ADM is based upon the price that ADM receives from the sale to itscustomers, minus a marketing fee and commission.  Some of our distillersgrains are sold directly to local farmers, and the remainder is sold throughCommodity Specialist Company (“CSC”), which markets and sells the product tolivestock feeders.  On August 7, 2007, CSC and CHS Inc., a Minnesota cooperativecorporation (“CHS”), entered into an agreement, under which CSC assigned to CHSall of its right, title and interest in our distillers marketing agreement withCSC, subject to receiving consent from us. We have not yet agreed to thisassignment, but anticipate we will do so in the future. For our distillersgrains, we receive a percentage of the selling price actually received by CSCin marketing the distillers grains to its customers.  We market and sellour corn oil to regional wholesalers.  Presently, the end use of our cornoil is in the livestock industry.  In the long term, our corn oil could bemarketed for human consumption, however, the feasibility of market penetrationas human food is unknown at this time as corn oil extraction in dry milling isrelatively new and suitability for human consumption has not yet beendetermined.

We are subject to industry-wide factors that affectour operating income and cost of production.  Our operating results arelargely driven by the prices at which we sell ethanol, distillers grain andcorn oil and the costs related to their production.  Historically, theprice of ethanol tends to fluctuate in the same direction as the price ofunleaded gasoline and other petroleum products.  Surplus ethanol suppliesalso tend to put downward price pressure on ethanol.  In addition, theprice of ethanol is generally influenced by factors such as general economicconditions, the weather, and government policies and programs.  The priceof distillers grains is generally influenced by supply and demand, the price ofsubstitute livestock feed, such as corn and soybean meal, and other animal feedproteins.  Surplus grain supplies also tend to put downward price pressureon distillers grains.  In addition, our revenues are also impacted by suchfactors as our dependence on one or a few major customers who market anddistribute our products; the intensely competitive nature of our industry;possible legislation at the federal, state, and/or local level; and changes infederal ethanol tax incentives.

Our two largest costs of production are corn andnatural gas.  The cost of corn is affected primarily by supply and demandfactors such as crop production, carryout, exports, government policies andprograms, risk management and weather, over much of which we have nocontrol.  Natural gas prices fluctuate with the energy complex ingeneral.  Over the last few years, natural gas prices have trended higherthan average and it appears prices will continue to trend higher due to thehigh price of alternative fuels such as fuel oil.  Our costs of productionare affected by the cost of complying with the extensive environmental lawsthat regulate our industry.

**Results of Operations for the Three Months Ended June 30,2007 and 2006**

Thefollowing table shows the results of our operations and the percentage ofrevenues, cost of goods sold, operating expenses and other items to totalrevenues in our consolidated statements of operations for the three monthsended June 30, 2007 and 2006:
| ** **                          | ** ** | **June 30, 2007** | ** ** | **June 30, 2006** | ** ** |
|-------------------------------------|------------|-----------------------------|------------|-----------------------------|------------|
| **Income Statement Data** | ** ** | **Amount**                  | ** ** | **%**                       | ** ** | **Amount** | ** ** | **%** | ** ** |
| Revenues                            |       | $                           | 33,213,669 |                        | 100.0      |   | $ | 31,146,507 |   | 100.0 |   |
|                                |       |                        |       |                        |       |   |   |   |   |
| Cost of Goods  Sold                 |       | 32,341,266                  |       | 97.4                        |       | 19,745,318 |   | 63.4 |   |
|                                     |            |                             |            |                             |            |  |  |  |  |  |  |

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|                                    |   |      |    |   |   |       |   |      |   |
|-----------------------------------------|--------|-----------|---------|--------|--------|------------|--------|-----------|--------|
| Gross Profit                            |   | 872,403   |    | 2.6    |   | 11,401,189 |   | 36.6      |   |
|                                    |   |      |    |   |   |       |   |      |   |
| Operating  Expenses                     |   | 1,200,206 |    | 3.6    |   | 754,797    |   | 2.4       |   |
|                                    |   |      |    |   |   |       |   |      |   |
| Operating Income  (Loss)                |   | (327,803  | )       | (1.0   | )      | 10,646,392 |   | 34.2      |   |
|                                    |   |      |    |   |   |       |   |      |   |
| Other Income                            |   | 675,759   |    | 2.0    |   | 558        |   | 0.0       |   |
|                                    |   |      |    |   |   |       |   |      |   |
| Net Income  Before Minority Interest    |   | 347,956   |    | 1.0    |   | 10,646,950 |   | 34.2      |   |
|                                    |   |      |    |   |   |       |   |      |   |
| Minority Interest  in Subsidiary Income |   | 167,068   |    | .5     |   | 4,250,481  |   | 13.6      |   |
|                                    |   |      |    |   |   |       |   |      |   |
| Net Income                              |   | $         | 180,888 |   | .5     |       | $      | 6,396,469 |   | 20.6 |   |
|                                         |        |           |         |        |        |            |        |           |        |  |  |

* *

*Revenues.*The increase in revenuesfrom the three months ended June 30, 2007 compared to the three months endedJune 30, 2006 is due primarily to an increase in the price per gallon wereceived for the ethanol sold. The price per gallon we received for the threemonths ended June 30, 2007 was approximately 17% higher than the price pergallon received for the three months ended June 30, 2006 due to the strongethanol market.  Revenue from sales of our co-products increased byapproximately 7% in the three months ended June 30, 2007 compared to the threemonths ended June 30, 2006 due to higher prices and volumes of corn oil sales.

Dueto a number of factors, including the higher price of petroleum gasoline andseasonal demand, ethanol prices remained high during the period covered by thisreport. We believe the favorable prices are primarily due to high demand forethanol, created by a number of factors, including the declining use of MTBE asan oxygenate, the high price of gasoline, which encourages voluntary blending,and the growing recognition of ethanol as an alternative energy source. Ethanolprices tend to track with the price of petroleum gasoline, therefore, webelieve this trend will continue so long as petroleum gasoline prices remainhigh, a factor over which we have no control. Ethanol prices are still higherthan the 10-year average. However, we cannot guarantee that the price ofethanol will not significantly decrease due to factors beyond our control.

Agreater supply of ethanol on the market from additional plants and plantexpansions could reduce the price we are able to charge for our ethanol,especially if supply outpaces demand. As of August 1, 2007, the Renewable FuelsAssociation reports that there were 124 ethanol plants in operation nationwidewith the capacity to produce 6.5 billion gallons annually, with approximately76 ethanol plants under construction and 7 planned expansions, expanding totalethanol production capacity by an additional 6.4 billion gallons. Accordingly,the price of ethanol may trend downward if supply exceeds demand, which wouldnegatively impact our earnings.

Withrespect to distillers grains, we believe that unless demand increases, theprice of distillers grains may be subject to future downward pressure as thesupply of distillers grains increases because of increased ethanol production.

*Cost of Goods Sold.*Our cost of goodssold as a percentage of revenues were 97.4% and 63.4% for the three monthsended June 30, 2007 and 2006, respectively. The 63.8% increase in our cost ofgoods sold from period to period is primarily due to the increased cost of cornpurchased, and the decreased values of our corn derivatives which are used tooffset corn costs.  The per bushel costof corn purchased increased approximately 117% in the third quarter ended June30, 2007 as compared to the third quarter ended June 30, 2006.  In addition, the cost increase resulting fromthe change in fair value of our corn derivatives was approximately seven timesgreater for the three months ended June 30, 2007, than the cost reductionsrecorded for the three months ended June 30, 2006. These derivative costincreases were a result of lower corn prices on June 30, 2007 than the cornprices at the end of the prior quarter on March 31, 2007.  This change decreased the values of ourderivatives, increasing our cost of goods sold. As corn and natural gas pricesfluctuate, the value of our underlying corn derivative instruments areimpacted, which affects our financial performance. We anticipate continuedvolatility in our cost of goods sold due 

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to the timing ofthe changes in value of the derivative instruments relative to the cost and useof the commodity being hedged.

Corncosts significantly impact our cost of goods sold. The United States Departmentof Agriculture’s Economic Research Service reported on July 16, 2007 that the2007 corn plantings were at 92.9 million acres, up from 78.3 million acres in2006. The July USDA Feed Outlook report, projects the 2007-2008 price of cornto be at $2.80-$3.40 per bushel, and reported the average price received byfarmers for 2006-2007 was estimated to be $3.05 per bushel.  Overall, the USDA expects prices for corn tobe stronger in 2007-2008 than in 2006-2007. We expect corn prices to remain athistorically high price levels well into 2007, which could significantly impactour cost of goods sold. For the three months ended June 30, 2006, we paid anaverage of $2.03 per bushel of corn.  For the three months ended June 30,2007, we paid an average of $3.80 per bushel of corn.

Ournatural gas costs, excluding hedging, decreased by approximately 11% for thethree months ended June 30, 2007 compared to the same period in 2006.  This resulted from an approximate 15%reduction in the price per MMBTU that we paid for natural gas for the threemonths ended June 30, 2007 compared to the same period in 2006.  This was partially offset by an increase inthe number of MMBTUs we consumed.  Forthe three months ended June 30, 2007, the number of MMBTUs we consumed wasapproximately 4% higher than the MMBTUs we consumed in the same period in 2006.More significantly, the cost of our natural gas hedging activities rosedramatically this quarter, and offset the savings we had from a reduction inthe per MMBTU purchase price of natural gas.

*Operating Expenses.*Our operatingexpenses as a percentage of revenues were 3.6% and 2.4% for the three monthsended June 30, 2007 and 2006, respectively.  This increase resulted froman increase in professional, consulting and legal fees associated withcompliance with Sarbanes-Oxley, and organizational costs for possible newventures.

*Operating Income/(Loss).*Our loss fromoperations for the three months ended June 30, 2007 totaled approximately$328,000 compared to an operating income of approximately $10,646,000 for thethree months ended June 30, 2006. This was a result of the substantialreduction in gross profit for the three months ended June 30, 2007, and thehigher operating expenses for the same period.

*Other Income (Expense*).  We hadother income of approximately $676,000 for the three months ended June 30, 2007compared to other income of approximately $600 for the three months ended June30, 2006.  The increase is primarily dueto the increase in value of the interest rate swap obtained as part of theconstruction loan for the expansion of the plant.

**Results of Operations for the Nine Months Ended June 30, 2007and 2006**

Thefollowing table shows the results of our operations and the percentage ofrevenues, cost of goods sold, operating expenses and other items to totalrevenues in our consolidated statements of operations for the nine months endedJune 30, 2007 and 2006:
| ** **                          | ** ** | **June 30, 2007** | ** ** | **June 30, 2006** | ** ** |
|-------------------------------------|------------|-------------------|------------|-------------------|------------|
| **Income Statement Data** | ** ** | **Amount**        | ** ** | **%**             | ** ** | **Amount** | ** ** | **%** | ** ** |
| Revenues                            |       | $99,893,709       |       | 100.0             |       | $81,786,517 |   | 100.0 |   |
|                                |       |              |       |              |       |   |   |   |   |
| Cost of Goods Sold                  |       | 65,077,754        |       | 65.2              |       | 55,325,395 |   | 67.6 |   |
|                                |       |              |       |              |       |   |   |   |   |
| Gross Profit                        |       | 34,815,955        |       | 34.8              |       | 26,461,122 |   | 32.4 |   |
|                                |       |              |       |              |       |   |   |   |   |
| Operating Expenses                  |       | 3,728,931         |       | 3.7               |       | 2,006,645 |   | 2.5 |   |
|                                |       |              |       |              |       |   |   |   |   |
| Operating Income                    |       | 31,087,024        |       | 31.1              |       | 24,454,477 |   | 29.9 |   |

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|                                   |   |        |   |   |   |        |   |   |   |
|----------------------------------------|--------|-------------|--------|--------|--------|-------------|--------|--------|--------|
| Other Income (Expense)                 |   | 877,901     |   | 0.9    |   | (159,201    | )      | (0.2   | )      |
|                                   |   |        |   |   |   |        |   |   |   |
| Net Income Before Minority Interest    |   | 31,964,925  |   | 32.0   |   | 24,295,276  |   | 29.7   |   |
|                                   |   |        |   |   |   |        |   |   |   |
| Minority Interest in Subsidiary Income |   | 12,800,320  |   | 12.8   |   | 9,696,572   |   | 11.9   |   |
|                                   |   |        |   |   |   |        |   |   |   |
| Net Income                             |   | $19,164,605 |   | 19.2   |   | $14,598,704 |   | 17.8   |   |

 

*Revenues.*  The increase inrevenues from the nine months ended June 30, 2007 compared to the nine monthsended June 30, 2006 was primarily due to a 22% increase in price per gallon wereceived for the ethanol sold.

*Cost of Goods Sold*.  The increasein our cost of goods for the nine months ended June 30, 2007 compared to the ninemonths ended June 30, 2006 was primarily due to the higher prices we paid forcorn, despite higher gains from derivatives.

*Operating Expenses. *Ouroperating expenses as a percentage of revenues increased to 3.7% for the ninemonths ended June 30, 2007 compared to 2.5% for the nine months ended June 30,2006.  This increase was a result ofhigher wages, increased marketing fees and increased professional fees.

*Operating Income. *Our incomefrom operations as a percentage of revenues increased to 31.1% for the ninemonths ended June 30, 2007 compared to 29.9% for the nine months ended June 30,2006.

*Other Income (Expense). *Ourother income (expense) as a percentage of revenues was 0.9% and (0.2%) for thenine months ended June 30, 2007 and 2006, respectively.  This increase inother income was due primarily to the increase in interest income we receivedduring the period and the capitalization of interest during the constructionperiod.

**Changesin Financial Condition for the Nine Months Ended June 30, 2007**

Consolidatedassets totaled $122,605,200 at June 30, 2007 compared to $91,556,615 atSeptember 30, 2006. Current assets totaled $30,455,940 at June 30, 2007 downfrom $39,374,286 at September 30, 2006. The change resulted from a decrease inshort-term investments which had no balance at June 30, 2007 compared to$18,726,834 at September 30, 2006 resulting from payments made for constructioncosts; offset by (i) an increase in the value of accounts receivable whichtotaled $4,844,393 at June 30, 2007 compared to $2,655,454 at September 30,2006 and; (ii) an increase in the value of inventories which totaled $6,006,342at June 30, 2007 compared to $2,200,290 at September 30, 2006.

Consolidatedcurrent liabilities totaled $24,012,150 at June 30, 2007 compared to the$6,023,396 at September 30, 2006.  Thisincrease resulted from construction loan withdrawals made during theperiod.  Long-term debt, net of current maturities, totaled $9,216,906 at June30, 2007 down from $13,504,582 at September 30, 2006. This reduction occurredas a result of our regularly scheduled loan payments.

**Strategies: Expansion**

***Marcus Plant Expansion***

During fiscal year 2006, we commenced a plantexpansion which when completed, will increase the ethanol production capacityof our plant by 40 million gallons to 92 million gallons annually. We expectthe expansion to be substantially complete early in the 2008 calendar year andthat the total cost of the expansion project will be approximately $73,000,000.The completion date and cost of the expansion project is a preliminary estimateand we expect it will change as we continue to gather information relating tothe expansion.  The expansion project, asof the date of this report, was approximately 75% complete.

 

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We expect to finance the 40 million per year expansionusing both a portion of our cash and additional debt to finance the requiredcapital expenditures.  We do not expectto seek additional equity from our members to fund this expansion.  On April 5, 2007, we entered into an Amendedand Restated Construction Loan Agreement (the “Amended Agreement”) with FirstNational Bank of Omaha, N.A. (“FNBO”).  Under the Amended Agreement, FNBOhas agreed to loan us up to $73,000,000 (the “Construction Loan”) for the purposeof partially funding the construction of the 40 million gallon per yearexpansion of our facility and the subsequent replacement of the ConstructionLoan with an amount of up to $82,278,227 (the “Term Loan”), together with a$5,000,000 operating line of credit and letter of credit facility (the “OperatingLoan”) and swap contracts.  Foradditional information regarding our expansion debt financing commitment, see “**Item 2 — Management’s Discussion and Analysis of Financial Conditionand Results of Operations — Indebtedness, *Expansion Debt Financing***.”

Management anticipates that the Plant will continue tooperate at or above name-plate capacity of 52 million gallons per year untilthe expansion is completed, at which time the name-plate capacity will increaseto 92 million gallons per year.  Weestimate that the Plant will start operating at 92 million gallons per year inSeptember 2007, although tangential work on the expansion project, such as railsiding, road work and landscaping, will continue until the project is fullycomplete early in the 2008 calendar year.  This current expansion will becompleted while the current facility remains in production.  However, the Plant may be shut down from timeto time to incorporate expansion improvements.

We expect to have sufficient cash from cash flowgenerated by continuing operations, additional debt financing secured to fundplant expansion, current lines of credit through our revolving promissory note,and cash reserves to cover the costs of expansion as well as our usualoperating costs over the next 12 months, which consist primarily of cornsupply, natural gas supply, staffing, office, audit, legal, compliance, workingcapital costs and debt service obligations.

After completion of this expansion, our totaloperating costs are expected to increase because of the increase in ourproduction capacity.  We expect to offset the increase in operating costsby increased ethanol revenues, however, a variety of market factors can affectboth operating costs and revenues.  These factors include:

·                  Changesin the availability and price of corn;

·                  Changesin the environmental regulations that apply to our plant operations;

·                  Increasedcompetition in the ethanol and oil industries;

·                  Changesin interest rates or the availability of credit;

·                  Changesin our business strategy, capital improvements or development plans;

·                  Changesin plant production capacity or technical difficulties in operating the plant;

·                  Changesin general economic conditions or the occurrence of certain events causing aneconomic impact in the agriculture, oil or automobile industries;

·                  Changesin the availability and price of natural gas and the market for distillersgrains; and

·                  Changesin federal and/or state laws (including the elimination of any federal and/orstate ethanol tax incentives).

***Development of Akron Ethanol Plant***

In addition to expansion of the Plant, we executed asubscription agreement to purchase 27,500 Class A units in Akron, our whollyowned subsidiary.  Akron is an Iowalimited liability company organized for the purpose of developing andconstructing a 100 million gallon per year ethanol plant in Plymouth Countynear Akron, Iowa.  We have initiallycapitalized Akron by committing to contribute $9,999,900 in exchange for 15,000Class A units at the price of $666.66 per unit and $10,000,000 in exchange for12,500 Class A units at a price of $800 per unit.  In connection with our subscription, we havepaid on Akron’s behalf approximately $695,000 in services, $80,000 in landoptions and costs which we assigned to Akron, and $500,000 paid to Fagen, Inc.by us on behalf of Akron for Akron’s letter of intent payment, plus apromissory note for approximately $18,725,000. We will pay Akron the entire amount due under the promissory note withintwenty days of receiving notice from Akron that it is due.  On March 20, 2007, we assigned two realestate options to Akron for the site of its proposed plant and on June 15,2007, Akron exercised the two real estate options.  On August 10, 2007 Akron closed on thepurchase of the two real estate parcels. In addition, on May 30, 2007, Akron entered into a management andoperational services agreement 

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with Twin Rivers. Akron and Twin Rivers are our wholly owned subsidiaries. There is noassurance that our involvement with the Akron plant, or the project, will besuccessful.

***Distribution***

Subsequent to the end ofthe period covered by this report, our board of directors approved a cashdistribution of $9,380,981 to LSCP, LLLP partners of record as of July 17,2007.  As a holder of 60.15% of the units of LSCP, LLLP, Little Sioux CornProcessors, L.L.C. will receive a cash distribution of $5,643,026.  OnJuly 17, 2007, our board of directors approved a cash distribution of $33.45per membership unit or a total of $5,490,536 to its unit holders of record asof July 17, 2007.

**Liquidityand Capital Resources**

Thefollowing table shows cash flows for the nine months ended June 30, 2007 and2006:

|                                           | ** ** | **2007** | ** **    | **2006**   | ** ** |
|-------------------------------------------|------------|----------|---------------|------------|------------|
| Net cash from  operating activities       |       | $        | 35,596,173    |       | $          | 21,804,733 |   |
| Net cash used  for investing activities   |       | $        | (22,693,259   | )          | $          | (3,430,963 | ) |
| Net cash used  for financing activities   |       | $        | (7,547,275    | )          | $          | (17,738,118 | ) |
| **Net increase in cash and  equivalents** | ** ** | **$**    | **5,355,639** | ** ** | **$**      | **635,652** | ** ** |

 

*Cash Flow From Operations.*Cashprovided by operating activities was $35,596,173 for the first nine months offiscal 2007, which was up from $21,804,733 for the first nine months of fiscal2006. This increase resulted from the increase in net income in fiscal2007.  Our capital needs are beingadequately met through cash from our operating activities and our currentcredit facilities.

*Cash Flow From Investing Activities.*Cashused in investing activities was $22,693,259 for the first nine months offiscal 2007, compared to $3,430,963 for the first nine months of fiscal 2006.This increase in cash used resulted from an increase in funds needed to beexpended for our current expansion construction, less proceeds from the sale ofshort-term investments.

*Cash Flow From Financing Activities*.Cash was increased by $10,242,146 from a draw against the construction note inthe first nine months of fiscal 2007.  Weused cash to pay down our debt by $2,469,594 in the first nine months of fiscal2007 compared to $2,401,290 in the first nine months of fiscal 2006.Additionally, the total amount of cash we distributed to partners and memberstotaled $14,617,418 in the first nine months of fiscal 2007 compared to$15,336,828 in the first nine months of fiscal 2006.

**Indebtedness**

### *Short-Term Debt Sources***.**We maintain aline of credit with First National Bank of Omaha through March 2008 to financeshort-term working capital requirements. Under the line of credit, we mayborrow up to $5,000,000 under a revolving promissory note. The interest payableon the revolving promissory note is due monthly at the one-month LIBOR plus2.80%. We pay a commitment fee of 0.125% on the unused portion of the line.There was no outstanding balance as of June 30, 2007. The maximum availablecredit under this note is based on receivable and inventory balances. Ourcurrent receivable and inventory balances are not sufficient to allow us to usethe maximum amount of the operating line of credit. The operating line ofcredit is subject to protective covenants requiring us to maintain variousfinancial ratios and is secured by all of our business assets.

We have short-term debt financing consisting of aconstruction note for up to $73,000,000 for the partial funding of the 40 MMGYexpansion to the Marcus facility.  Theprincipal balance on this note was $10,242,146 as of June 30, 2007 and willconvert into term notes at the completion of the construction.  Interest on the construction note is at theone-month LIBOR plus 3.10%, which totaled 8.42% as of June 30, 2007.

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*Long-Term Debt Sources*.We have long-term debt financing consisting of three term notes held by FirstNational Bank of Omaha and referred to as Term Notes 2, 3, and 4. At June 30,2007, the principal balance on Term Note 2 was $10,200,281. Term Note 2 ispayable in quarterly installments. Interest on Term Note 2 is at thethree-month LIBOR plus 2.80%, which totaled 8.16% as of June 30, 2007. TermNote 2 is payable in full on June 1, 2008. In order to achieve a fixed interestrate on Term Note 2, we entered into an interest rate swap which helps protectour exposure to increases in interest rates and the swap effectively fixes theinterest rate on Term Note 2 at 5.79% until June 1, 2008.

AtJune 30, 2007, the principal balance on Term Note 3 was $3,860,854. Term Note 3is payable in quarterly installments. Interest on Term Note 3 is at thethree-month LIBOR plus 2.80%, which totaled 8.16% as of June 30, 2007. TermNote 3 is payable in full on June 1, 2008. As part of the financing agreement,we have agreed to pay an annual servicing fee of $50,000.

AtJune 30, 2007, there was no principal balance on Term Note 4.  Interest on Term Note 4 is at the one-monthLIBOR plus 2.80%. Term Note 4 is payable in full on June 1, 2008. Term Note 4allows borrowings up to the original principal of $5,000,000 to the extent ofprincipal payments made until maturity.

Wehave a capital lease obligation in the amount of $59,015 on which we paymonthly installments totaling $6,658, with an implicit interest rate of 3.67%.This obligation is secured by the leased equipment and runs through March 1,2008.

Wehave a note in the amount of $65,972 payable to the Iowa Energy Center on whichwe pay monthly installments of $3,472 without interest. This note is secured byreal estate, but is subordinated to the term notes. It matures on January 29,2009.

Wehave a note with Farmers State Bank of Marcus, Iowa in the amount of $75,062 onwhich we pay monthly installments of $5,921, including interest at 6%. Thisnote is secured by real estate, but is subordinated to the term notes. Itmatures on January 29, 2009.

Wehave a note totaling $168,000 payable to the Iowa Department of EconomicDevelopment on which we pay monthly installments of $1,167 without interest.This note is secured by all equipment and matures on July 1, 2009.

*Expansion Debt Financing.*On April 5,2007, we entered into an Amended and Restated Construction Loan Agreement (the “AmendedAgreement”) with First National Bank of Omaha, N.A. (“FNBO”).  Under theAmended Agreement, FNBO has agreed to loan us up to $73,000,000 (the “ConstructionLoan”) for the purpose of partially funding the construction of the 40 milliongallon per year expansion of our facility and the subsequent replacement of theConstruction Loan with an amount of up to $82,278,227 (the “Term Loan”),together with a $5,000,000 operating line of credit and letter of creditfacility (the “Operating Loan”) and swap contracts.  The principal balance on this note was$10,242,146 as of June 30, 2007.  Inorder to achieve a fixed interest rate on portions of our expansion debt, weentered into an interest rate swap which helps protect our exposure toincreases in interest rates. The swap fixes the interest rate on $36,500,000 ofdebt related to the expansion financing at 7.68% for the period ofMarch 1, 2008 to March 1, 2013. The note will convert into term notesat the completion of construction. Interest on the construction notes is at the one-month LIBOR plus 3.10%,which totaled 8.42% as of June 30, 2007.

Underthe Amended Agreement, the existing swap note and a business credit card loanare subject to the same terms and conditions, including interest rate, interestperiod, repayment terms, as our previous credit facility with FNBO.  Inaddition, through the Construction Loan termination date, the existing variablerate note and the existing long term revolving note will continue to be subjectto the same terms and conditions, including interest rate, interest period,repayment terms, as our existing credit facility; provided, however, interestshall accrue on the existing variable rate note and the existing long termrevolving note at a variable rate equal to the applicable LIBOR Rate set forthin such notes, plus (a) 280 basis points prior to acceleration or maturity, and(b) an additional 600 basis points after maturity, whether by acceleration orotherwise.  On the construction loan termination date, the existingvariable rate note and the existing long term revolving note will be convertedwith the construction loan into the term loan described below.

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TheAmended Agreement also provides for refinancing of our existing operatingnote.  Under the refinanced operating loan (the “Operating Loan”) FNBOwill loan us an amount up to $5,000,000, which shall provide both operatingline of credit financing and FNBO will issue letters of credit at ourrequest.  The aggregate amount of any letter of credit at the time ofissuance shall not exceed $1,000,000 and unless otherwise agreed to by FNBO, noletter of credit shall have an expiration date more than one (1) year from thedate of issuance. We may borrow, repay and re-borrow under the Operating Loan,without penalty or premium, either the full amount of the Long Term RevolvingLoan or any lesser sum.

Duringthe construction period interest on the Construction Loan will be payable on aquarterly basis on the outstanding principal amount at a variable rate equal tothe one-month LIBOR Rate, in effect from time to time, plus (a) 310 basispoints prior to acceleration or maturity, and (b) an additional 600 basispoints after maturity, whether by acceleration or otherwise.  On theConstruction Loan termination date, the Construction Loan will be convertedinto the Term Loan and replaced by the following term notes:

(a)           The Swap Note. A loan in themaximum amount of $36,500,000.  Interest on the Swap Note shall accrue ata variable rate equal to the three-month LIBOR Rate, in effect from time totime, plus (a) 260 basis points prior to acceleration or maturity, and (b) anadditional 600 basis points after maturity, whether by acceleration orotherwise.  The Swap Note will mature and terminate on the fifthanniversary of the Construction Loan termination date.

(b)           The Variable Rate Note. A loan in the maximum amount of $35,778,227 representing the principal balanceof the Construction Note plus the entire principal amount and all accrued andunpaid interest under the existing variable rate note, if any, less the SwapNote and less $5,000,000 of the Long Term Revolving Loan.  Interest on theVariable Rate Note shall accrue at a variable rate equal to the three-monthLIBOR Rate, in effect from time to time, plus (a) 300 basis points prior toacceleration or maturity, and (b) an additional 600 basis points aftermaturity, whether by acceleration or otherwise. The Variable Rate Note willmature and terminate on the fifth anniversary of the Construction Loan terminationdate.

(c)           The Long Term Revolving Note. A loan in the maximum amount of $10,000,000 representing the entire principalamount and all accrued and unpaid interest under the existing long term revolvingnote, if any, and $5,000,000 converted from the Construction Loan on theConstruction Loan termination date.  Interest on the Long Term RevolvingNote shall accrue at a variable rate equal to the three-month LIBOR Rate, ineffect from time to time, plus (a) 300 basis points prior to acceleration ormaturity, and (b) an additional 600 basis points after maturity, whether byacceleration or otherwise.  We may borrow, repay and re-borrow under theLong Term Revolving Loan, without penalty or premium, either the full amount ofthe Long Term Revolving Loan or any lesser sum until termination of the LongTerm Revolving Note. The Long Term Revolving Note will mature and terminate onthe fifth anniversary of the Construction Loan termination date.

Weare obligated to repay the Term Loan as follows:

(a)                                  Wewill make quarterly principal payments on the Swap Note ranging fromapproximately $612,000 to $859,000 plus accrued interest commencing on thefirst day of the first quarter immediately following the Construction Loan terminationdate. A final balloon payment of approximately $23,000,000 will be due on thetermination date of the Swap Note.

(b)                                 Wewill make quarterly payments of $1,362,429 beginning the first day of the firstquarter immediately following the Construction Loan termination date whichshall be allocated as follows:  (i) first to accrued and unpaid intereston the Long Term Revolving Note, (ii) next to accrued and unpaid interest onthe Variable Rate Note, and (iii) next to principal on the Variable Rate Note.

(c)                                  Afterthe Variable Rate Note has been fully paid, such quarterly payments shall beallocated first to accrued and unpaid interest on the Long Term Revolving Note,and then to principal on the Long Term Revolving Note, with reductions in theavailability thereof .

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(d)                                 Atthe end of each fiscal year, we must apply an amount equal to 25% of our excesscash flow but not to exceed $5,000,000 to the term notes.  Excess cashflow is determined as EBITDA less capital expenditures, taxes and allowabledistributions, required payments to FNBO and subordinated debt.

(e)                                  Notwithstandingthe foregoing, all unpaid principal and accrued and unpaid interest for allTerm Notes shall be due and payable on their respective termination dates, ifnot sooner paid.

Inconnection with the Amended Agreement, we executed a mortgage in favor of FNBOcreating a first lien on our real estate and plant and a security interest inall personal property located on our property.  In addition, we assigned,in favor of FNBO, all rents and leases to our property, the design/buildcontract, our marketing contracts, risk management services contract and leaseagreement.

As acondition to FNBO making loans under the Amended Agreement, we were required tocollaterally assign to FNBO all of our right, title and interest in and to anyand all membership or other equity interest in Akron in exchange for itsconsent to our making an equity contribution in the aggregate amount ofapproximately $20,000,000 to Akron.  In addition, we will also be subjectto certain financial loan covenants consisting of minimum working capital,minimum debt coverage, and minimum tangible net worth.  After theconstruction phase, we will only be allowed to make annual capital expendituresup to $1,000,000 annually without prior approval.  We will also beprohibited from making distributions to our members of greater than 40% of thenet income for such fiscal year if our leverage ratio (combined totalliabilities to net worth) is greater than or equal to 1.0:1.0.  If ourleverage ratio is less than 1.0:1.0, we may make distributions up to 65% of ournet income.  We must be in compliance with all financial ratiorequirements and loan covenants before and after any distributions to ourmembers.  Our failure to comply with the protective loan covenants ormaintain the required financial ratios may cause acceleration of theoutstanding principal balances on the revolving promissory note and terms notesand/or the imposition of fees, charges or penalties.  Any acceleration ofthe debt financing or imposition of significant fees, charges or penalties mayrestrict or limit our access to the capital resources necessary to continueplant operations.

Uponan occurrence of an event of default or an event which will lead to ourdefault, FNBO may upon notice terminate its commitment to loan funds anddeclare the entire unpaid principal balance of the loans, plus accruedinterest, immediately due and payable.   An event of defaultincludes, but is not limited to, our failure to make payments when due,insolvency, any material adverse change in our financial condition or ourbreach of any of the covenants, representations or warranties we have given inconnection with the transaction.

*ContractualObligations and Commercial Commitments*. Except asdisclosed in this report, there were no material changes in our contractualobligations and commercial commitments during the period ended June 30, 2007.

**CriticalAccounting Estimates**

Therewere no material changes in our accounting estimates during the period endedJune 30, 2007.

**Off-Balance Sheet Arrangements.**

We currently have no off-balance sheet arrangements.

**ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.**

We are exposed to the impact of market fluctuationsassociated with interest rates and commodity prices as discussed below. We haveno exposure to foreign currency risk as all of our business is conducted inU.S. Dollars. We use derivative financial instruments as part of an overallstrategy to manage market risk. We use cash, futures and option contracts tohedge changes to the commodity prices of corn and natural gas. We do not enterinto these derivative financial instruments for trading or speculativepurposes, nor do we designate these contracts as hedges for accounting purposespursuant to the requirements of SFAS 133, *Accountingfor Derivative Instruments and Hedging Activities*.

 

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**InterestRate Risk**

Weare exposed to market risk from changes in interest rates. Exposure to interestrate risk results primarily from holding a revolving promissory note, aconstruction note and three term notes which bear variable interest rates.  Specifically, we have $24,303,281 outstandingin variable rate debt as of June 30, 2007. The specifics of each note arediscussed in greater detail in “**Item 2 —Management’s Discussion and Analysis of Financial Condition and Results ofOperations — Indebtedness**.”

Inorder to achieve a fixed interest rate on portions of our debt, we entered intointerest rate swaps which help protect our exposure to increases in interestrates and the swaps fix the interest rate on Term Note 2 at 5.79% until June 1,2008, and fixes the interest rate on $36,500,000 of debt, related to theexpansion financing, at 7.68% for the period of March 1, 2008 to March 1,2013.  When the three-month LIBOR plus2.80% exceeds the fixed rate of 5.79% or 7.68%, we receive payments for thedifference between the market rate and the swap rate.  Conversely, when the three-month LIBOR plus2.80% is below 5.79% or 7.68%, we make payments for the difference between the marketrate and the swap rate.  While ourexposure is now greatly reduced, there can be no assurance that the interestrate swap agreement will provide us with protection in all scenarios.  For example, if interest rates were to fallbelow 5.79% or 7.68%, as applicable, we would still be obligated pay interestat the fixed rate.

**Commodity Price Risk**

We are also exposed to market risk from changes incommodity prices. Exposure to commodity price risk results from our dependenceon corn and natural gas in the ethanol production process. We seek to minimizethe risks from fluctuations in the prices of corn and natural gas through theuse of derivative instruments. In practice, as markets move, we actively manageour risk and adjust hedging strategies as appropriate. Although we believe ourhedge positions accomplish an economic hedge against our future purchases, theyare not designated as such for hedge accounting purposes, which would match thegain or loss on our hedge positions to the specific commodity purchase beinghedged. We are marking to market our hedge positions, which means as thecurrent market price of our hedge positions changes, the gains and losses areimmediately recognized in our cost of goods sold.

The immediate recognition of hedging gains and lossescan cause net income to be volatile from quarter to quarter due to the timingof the change in value of the derivative instruments relative to the cost anduse of the commodity being hedged. At June 30, 2007 and September 30, 2006, thefair value of our derivative instruments for corn, natural gas, and gasoline isa liability in the amount of approximately $1,217,000 and an asset in theamount of approximately $4,357,000, respectively. There are several variablesthat could affect the extent to which our derivative instruments are impactedby price fluctuations in the cost of corn or natural gas. However, it is likelythat commodity cash prices will have the greatest impact on the derivativesinstruments with delivery dates nearest the current cash price.

To manage our corn price risk, our hedging strategy isdesigned to establish a price ceiling and floor for our corn purchases. We havetaken a net long position on our exchange traded futures and options contracts,which allows us to offset increases or decreases in the market price of corn.The upper limit of loss on our futures contracts is the difference between thecontract price and the cash market price of corn at the time of the executionof the contract. The upper limit of loss on our exchange traded andover-the-counter option contracts is limited to the amount of the premium wepaid for the option.

We estimate that our expected corn usage isapproximately 19 million bushels per year for the production of 52 milliongallons of ethanol. We have price protection in place for a portion of ourexpected corn usage for fiscal year 2007 and fiscal year 2008 using forwardcontracts, CBOT futures and options and Over-the-Counter option contracts. Ascorn prices move in reaction to market trends and information, our incomestatement will be affected, depending on the impact such market movements haveon the value of our derivative instruments. As we move forward, additionalprice protection may be required to solidify our margins in the current andfuture fiscal years. Depending on market movements, crop prospects and weather,these price protection positions may cause immediate adverse effects, but areexpected to produce long-term positive growth for us.

To manage our natural gas price risk, we entered intoa natural gas purchase agreement with our supplier to supply us with naturalgas. This purchase agreement fixes the price at which we purchase natural gas.We have 

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purchased a portion of our fiscal year 2007 and fiscalyear 2008 natural gas requirements utilizing both cash, futures and optionscontracts. We may also purchase additional natural gas requirements for the2007 and 2008 calendar years as we attempt to further reduce our susceptibilityto price increases. We recently entered into gasoline derivative instruments tohedge the variability of ethanol prices. While not perfectly correlated, wehave found that ethanol and gasoline prices tend to move in tandem. Therefore,the gasoline contracts we have entered into are intended to offset cashdecreases in the price of ethanol we receive.

A sensitivity analysis has been prepared to estimateour exposure to corn, gasoline and natural gas price risk. The table presentsthe net fair value of our derivative instruments as of June 30, 2007 andSeptember 30, 2006 and the potential loss in fair value resulting from ahypothetical 10% adverse change in such prices. The fair value of the positionsis a summation of the fair values calculated by valuing each net position atquoted market prices as of the applicable date. The results of this analysis,which may differ from actual results, are as follows:

|                    | ** ** | **Fair Value** | ** ** | **Effect of Hypothetical  Adverse Change —  Market Risk** | ** ** |
|--------------------|------------|---------------------|------------|-----------------------------------------------------------------------------------------|------------|
| June 30, 2007      |       | $                   | (1,217,000 | )                                                                                       | $          | (122,000 | ) |
| September 30, 2006 |       | $                   | 4,357,000  |                                                                                    | $          | 436,000 |   |

 

**ITEM4.  CONTROLS AND PROCEDURES.**

Our management, includingour President and Chief Executive Officer (the principal executive officer),Stephen Roe, along with our Chief Financial Officer (the principal financialofficer), Gary Grotjohn, have reviewed and evaluated the effectiveness of ourdisclosure controls and procedures (as defined inRule 13a-15(e) under the Securities Exchange Act of 1934, as amended)as of June 30, 2007.  Based upon this review and evaluation, theseofficers have concluded that our disclosure controls and procedures areeffective to ensure that information required to be disclosed in the reportsthat we file or submit under the Exchange Act is recorded, processed,summarized and reported within the time periods required by the forms andrules of the Securities and Exchange Commission; and to ensure that theinformation required to be disclosed by an issuer in the reports that it filesor submits under the Exchange Act is accumulated and communicated to ourmanagement including our principal executive and principal financial officers,or persons performing similar functions, as appropriate to allow timelydecisions regarding required disclosure.

Our management, including our principal executiveofficer and principal financial officer, have reviewed and evaluated anychanges in our internal control over financial reporting that occurred as ofJune 30, 2007 and there has been no change that has materially affected or isreasonably likely to materially affect our internal control over financialreporting.

**PARTII.     OTHER INFORMATION**

**ITEM1.  LEGAL PROCEEDINGS.**

None.

**ITEM 1A.RISK FACTORS**

***Increases in the price of cornwould reduce our profitability.**** *Our results of operations and financial condition are significantlyaffected by the cost and supply of corn. Changes in the price and supply ofcorn are subject to and determined by market forces over which we have nocontrol.  The price at which we purchase cornhas risen substantially in the last year and we expect the price to continue toincrease.  In 2006, despite the thirdlargest corn yield on record of approximately 10.74 billion bushels, the pricewe paid per bushel of corn during our third quarter of fiscal year 2007increased approximately 117% from the price we paid per bushel for the samequarter in fiscal year 2006.

Increases in demand for corn from both the worldfoodstuff markets and from increased production of ethanol have pushed withprice of corn.  We expect demand for cornfrom the ethanol industry to continue to 

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expand.  The Renewable FuelsAssociation estimates as of August 1, 2007, there were 124 ethanolplants in operation nationwide with the capacity to produce nearly 6.5 billiongallons of ethanol annually.  Anadditional 76 new plants and seven expansions are currently under construction,which will add an additional estimated 6.4 billion gallons of annual productioncapacity.  Approximately 90% of theethanol produced in the United States uses corn as its feedstock.  This increased supply of ethanol willcontinue to increase demand for corn. In the July USDA Feed Outlook Report, itwas predicted corn prices to be higher in 2007-2008 than they were in2006-2007.

Ifthe demand for corn continues to increase so will the price we pay forcorn.  Since our revenues depend on thespread between the selling price of our ethanol and the price we pay for corn,increases in corn prices affect our ability to generate a profit.  This could negatively affect our futureprofitability.

***New plants under construction ordecreases in the demand for ethanol may result in excess production capacity inour industry.*** The supply of domestically produced ethanol is at an all-time high.  As of August 1, 2007, there were 124ethanol plants in operation nationwide with the capacity to produce nearly 6.5billion gallons of ethanol annually.  Anadditional 76 new plants and seven expansions are currently under construction,which will add an additional estimated 6.4 billion gallons of annual productioncapacity.   Iowa alone is estimated to have produced approximately 1.5 billiongallons of ethanol in 2006.  Excess capacity in the ethanol industry wouldhave an adverse impact on our results of operations, cash flows and generalfinancial condition.  If the demand for ethanol does not grow at the samepace as increases in supply, we would expect the selling price of ethanol todecline.  If excess capacity in the ethanol industry occurs, the marketprice of ethanol may decline to a level that is inadequate to generatesufficient cash flow to cover our costs.

***Carbon dioxide may be regulated in the future by the EPA as an airpollutant requiring us to obtain additional permits and install additionalenvironmental mitigation equipment, which could adversely affect our financialperformance*. **TheSupreme Court recently decided a case in which it ruled that carbon dioxide isan air pollutant under the Clean Air Act for the purposes of motor vehicleemissions.  The lawsuit sought to requirethe EPA to regulate carbon dioxide in vehicle emissions.  Similar lawsuits have been filed seeking torequire the EPA to regulate carbon dioxide emissions from stationary sourcessuch as our ethanol plant under the Clean Air Act. Our plant produces asignificant amount of carbon dioxide that we currently vent into theatmosphere.  While there are currently noregulations applicable to us concerning carbon dioxide, if the EPA or the Stateof Iowa regulate carbon dioxide emissions by plants such as ours, we may haveto apply for additional permits or we may be required to install carbon dioxidemitigation equipment or take other as yet unknown steps to comply with thesepotential regulations.  Compliance withany future regulation of carbon dioxide, if it occurs, could be costly and mayprevent us from operating the ethanol plant profitably which could decrease oreliminate the value of our units.

**ITEM2.  UNREGISTERED SALES OF EQUITYSECURITIES AND USE OF PROCEEDS**

None.

**ITEM3.  DEFAULTS UPON SENIOR SECURITIES.**

None.

**ITEM4.  SUBMISSION OF MATTERS TO A VOTE OFSECURITY HOLDERS.**

None.

**ITEM 5.**  **OTHERINFORMATION.**

None.

**ITEM6.  EXHIBITS AND REPORTS ON FORM 8-K**

The following exhibits are filed as part of thisreport.

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| Exhibit No. | ** ** | **Description**                                                                                                                                | ** ** | **Method of Filing** |
|-------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------|
| 10.1        |       | Management and Operational Services Agreement dated  May 30, 2007 between Akron Riverview Corn Processors, LLC and Twin Rivers  Management Co. |       | (1)                  |
| 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.                                                                                                 |       | *                    |

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(*)           Filed herewith.

(1)                                    Incorporatedby reference to Exhibit 10.12 on Akron Riverview Corn Processors, LLC’sPre-Effective Amendment No. 1 to  RegistrationStatement on Form SB-2, No. 333-141528, originally filed on June 4, 2007.

 

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**SIGNATURES**

In accordance with the requirements of the ExchangeAct, the registrant caused this report to be signed on its behalf by theundersigned, thereunto duly authorized.

 
|   |   |            | LITTLE SIOUX CORN PROCESSORS, L.L.C. |
|--------|--------|-----------------|--------------------------------------|
|   |   |            |                                 |   |
|   |   |            |                                 |   |
|   |   |            |                                 |   |
| Date:  |   | August 14, 2007 |                                 | /s/ Stephen Roe |
|   |   |            |                                 | Stephen Roe   President and Chief Executive Officer |
|   |   |            |                                 |   |
|   |   |            |                                 |   |
| Date:  |   | August 14, 2007 |                                 | /s/ Gary Grotjohn |
|   |   |            |                                 | Gary Grotjohn   Chief Financial Officer |

 

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