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UNITED STATESSECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549


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FORM 10-Q


|            |                                                                                          
|----------- | -----------------------------------------------------------------------------------------
|(Mark
 One)
|            |                                                                                          
|x           | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES EXCHANGE ACT OF 1934 
|            |                                                                                          
|            | For
 the quarterly period ended October 31, 2010                                         
|            |                                                                                          
|OR         
|            |                                                                                          
|o           | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES EXCHANGE ACT OF 1934
|            |                                                                                          
|            | For
 the transition period from _________ to _________                                   

Commission File Number 001-09097


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REX
AMERICAN RESOURCES CORPORATION  (Exact name of registrant as specified
in its charter)


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|                                |                       
|------------------------------- | ----------------------
|Delaware                        | 31-1095548            
|(State or other jurisdiction of | (I.R.S. Employer      
|incorporation or organization)  | Identification Number)

|                                          |           
|----------------------------------------- | ----------
|2875 Needmore Road, Dayton, Ohio          | 45414     
|(Address of principal executive
 offices) | (Zip Code)

(937) 276-3931(Registrants telephone number,
including area code)

---

Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days.

Yes x No o

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

Yes o No o

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


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

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

At the close of business
on December 8, 2010 the registrant had 9,489,944 shares of Common Stock, par
value $.01 per share, outstanding.

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REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES

INDEX

|          |                                                                                        |  |      | 
|--------- | -------------------------------------------------------------------------------------- |  | ---- | 
|          |                                                                                        |  | Page
|PART
 I.  | FINANCIAL
 INFORMATION                                                                 |  |      | 
|          |                                                                                        |  |      | 
|Item
 1.  | Financial
 Statements                                                                  |  |      | 
|          |                                                                                        |  |      | 
|          | Consolidated
 Condensed Balance Sheets                                                 |  | 3    | 
|          | Consolidated
 Condensed Statements of Operations                                       |  | 4    | 
|          | Consolidated
 Condensed Statements of Equity                                           |  | 5    | 
|          | Consolidated
 Condensed Statements of Cash Flows                                       |  | 6    | 
|          | Notes
 to Consolidated Condensed Financial Statements                                  |  | 7    | 
|          |                                                                                        |  |      | 
|Item
 2.  | Managements
 Discussion and Analysis of Financial Condition and Results of Operations |  | 29   | 
|          |                                                                                        |  |      | 
|Item
 3.  | Quantitative
 and Qualitative Disclosures About Market Risk                            |  | 44   | 
|          |                                                                                        |  |      | 
|Item 4.   | Controls
 and Procedures                                                               |  | 45   | 
|          |                                                                                        |  |      | 
|PART
 II. | OTHER
 INFORMATION                                                                     |  |      | 
|          |                                                                                        |  |      | 
|Item
 1A. | Risk
 Factors                                                                          |  | 46   | 
|          |                                                                                        |  |      | 
|Item
 2.  | Unregistered
 Sales of Equity Securities and Use of Proceeds                           |  | 47   | 
|          |                                                                                        |  |      | 
|Item
 6.  | Exhibits                                                                               |  | 47   | 

2

---



PART I.
FINANCIAL INFORMATION

Item 1. Financial Statements

REX
AMERICAN RESOURCES CORPORATION AND SUBSIDIARIESConsolidated Condensed
Balance Sheets
Unaudited

|                                                                                     |  |                   |          |                   |   |          |  
|------------------------------------------------------------------------------------ |  | ----------------- | -------- | ----------------- | - | -------- | -
|                                                                                     |  | October 31,
 2010 |          | January 31,
 2010 |  
|                                                                                     |  |                   |          |                   |  
|                                                                                     |  | (In Thousands)    |         
|Assets                                                                               |  |                   |         
|Current assets:                                                                      |  |                   |          |                   |   |          |  
|Cash and cash
 equivalents                                                           |  | $                 | 87,563   |                   | $ | 100,398  |  
|Accounts
 receivable, net                                                            |  |                   | 12,242   |                   |   | 9,123    |  
|Inventory, net                                                                       |  |                   | 10,546   |                   |   | 8,698    |  
|Refundable
 income taxes                                                             |  |                   | 7,442    |                   |   | 12,813   |  
|Prepaid expenses
 and other                                                          |  |                   | 3,846    |                   |   | 2,691    |  
|Deferred taxes,
 net                                                                 |  |                   | 5,000    |                   |   | 6,375    |  
|                                                                                     |  |                   |          |                   |   |          |  
|Total current
 assets                                                                |  |                   | 126,639  |                   |   | 140,098  |  
|Property and equipment, net                                                          |  |                   | 231,101  |                   |   | 246,874  |  
|Other assets                                                                         |  |                   | 7,035    |                   |   | 8,880    |  
|Deferred taxes, net                                                                  |  |                   | 4,282    |                   |   | 8,468    |  
|Equity method investments                                                            |  |                   | 64,360   |                   |   | 44,071   |  
|Investments in debt instruments                                                      |  |                   |         |                   |   | 1,014    |  
|Restricted investments and deposits                                                  |  |                   | 1,600    |                   |   | 2,100    |  
|                                                                                     |  |                   |          |                   |   |          |  
|Total assets                                                                         |  | $                 | 435,017  |                   | $ | 451,505  |  
|                                                                                     |  |                   |          |                   |   |          |  
|Liabilities and equity:                                                              |  |                   |          |                   |   |          |  
|Current liabilities:                                                                 |  |                   |          |                   |   |          |  
|Current portion
 of long-term debt and capital lease obligations, alternative energy |  | $                 | 13,160   |                   | $ | 12,935   |  
|Current portion
 of long-term debt, other                                            |  |                   | 336      |                   |   | 371      |  
|Accounts
 payable, trade                                                             |  |                   | 7,060    |                   |   | 6,976    |  
|Deferred income                                                                      |  |                   | 4,804    |                   |   | 7,818    |  
|Accrued
 restructuring charges                                                       |  |                   | 444      |                   |   | 511      |  
|Accrued real
 estate taxes                                                           |  |                   | 1,526    |                   |   | 2,968    |  
|Derivative
 financial instruments                                                    |  |                   | 2,101    |                   |   | 1,829    |  
|Other current
 liabilities                                                           |  |                   | 6,360    |                   |   | 5,442    |  
|                                                                                     |  |                   |          |                   |   |          |  
|Total current
 liabilities                                                           |  |                   | 35,791   |                   |   | 38,850   |  
|                                                                                     |  |                   |          |                   |   |          |  
|Long-term liabilities:                                                               |  |                   |          |                   |   |          |  
|Long-term debt
 and capital lease obligations, alternative energy                    |  |                   | 103,167  |                   |   | 124,093  |  
|Long-term debt,
 other                                                               |  |                   | 2,011    |                   |   | 2,596    |  
|Deferred income                                                                      |  |                   | 3,125    |                   |   | 6,396    |  
|Derivative
 financial instruments                                                    |  |                   | 4,482    |                   |   | 4,055    |  
|Other                                                                                |  |                   | 4,822    |                   |   | 419      |  
|                                                                                     |  |                   |          |                   |   |          |  
|Total long-term
 liabilities                                                         |  |                   | 117,607  |                   |   | 137,559  |  
|                                                                                     |  |                   |          |                   |   |          |  
|Equity:                                                                              |  |                   |          |                   |   |          |  
|REX
 shareholders equity:                                                           |  |                   |          |                   |   |          |  
|Common stock                                                                         |  |                   | 299      |                   |   | 299      |  
|Paid-in capital                                                                      |  |                   | 142,270  |                   |   | 141,698  |  
|Retained
 earnings                                                                   |  |                   | 300,656  |                   |   | 290,984  |  
|Treasury stock                                                                       |  |                   | (192,207 | )                 |   | (186,407 | )
|Accumulated
 other comprehensive income, net of tax                                  |  |                   |         |                   |   | 49       |  
|                                                                                     |  |                   |          |                   |   |          |  
|Total REX shareholders
 equity                                                      |  |                   | 251,018  |                   |   | 246,623  |  
|Noncontrolling
 interests                                                            |  |                   | 30,601   |                   |   | 28,473   |  
|                                                                                     |  |                   |          |                   |   |          |  
|Total equity                                                                         |  |                   | 281,619  |                   |   | 275,096  |  
|                                                                                     |  |                   |          |                   |   |          |  
|Total
 liabilities and equity                                                        |  | $                 | 435,017  |                   | $ | 451,505  |  
|                                                                                     |  |                   |          |                   |   |          |  

The accompanying notes are an integral part of these
unaudited consolidated condensed financial statements.

3

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REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements Of OperationsUnaudited

|                                                                                                          |  |                                           |        |                               |   |        |   |      |         |   |   |        |  
|--------------------------------------------------------------------------------------------------------- |  | ----------------------------------------- | ------ | ----------------------------- | - | ------ | - | ---- | ------- | - | - | ------ | -
|                                                                                                          |  | Three MonthsEnded
 October 31,            |        | Nine MonthsEnded
 October 31, |  
|                                                                                                          |  |                                           |        |                               |  
|                                                                                                          |  | 2010                                      |        | 2009                          |   | 2010   |   | 2009 |        
|                                                                                                          |  |                                           |        |                               |   |        |   |      |        
|                                                                                                          |  | (In Thousands, Except
 Per Share Amounts) |       
|                                                                                                          |  |                                           |        |                               |   |        |   |      |         |   |   |        |  
|Net sales and
 revenue                                                                                    |  | $                                         | 70,343 |                               | $ | 61,679 |   | $    | 206,738 |   | $ | 93,061 |  
|Cost of sales                                                                                             |  |                                           | 63,538 |                               |   | 55,880 |   |      | 186,516 |   |   | 86,179 |  
|                                                                                                          |  |                                           |        |                               |   |        |   |      |         |   |   |        |  
|Gross profit                                                                                              |  |                                           | 6,805  |                               |   | 5,799  |   |      | 20,222  |   |   | 6,882  |  
|Selling, general
 and administrative expenses                                                             |  |                                           | (1,929 | )                             |   | (1,540 | ) |      | (5,923  | ) |   | (3,701 | )
|Interest income                                                                                           |  |                                           | 121    |                               |   | 92     |   |      | 408     |   |   | 356    |  
|Interest expense                                                                                          |  |                                           | (1,375 | )                             |   | (1,642 | ) |      | (4,135  | ) |   | (3,116 | )
|Loss on early
 termination of debt                                                                        |  |                                           |       |                               |   |       |   |      | (48     | ) |   | (113   | )
|Equity in income
 of unconsolidated ethanol affiliates                                                    |  |                                           | 3,694  |                               |   | 1,221  |   |      | 7,625   |   |   | 1,144  |  
|Other income                                                                                              |  |                                           | 116    |                               |   | 766    |   |      | 117     |   |   | 766    |  
|Losses on
 derivative financial instruments, net                                                          |  |                                           | (495   | )                             |   | (899   | ) |      | (2,538  | ) |   | (1,561 | )
|                                                                                                          |  |                                           |        |                               |   |        |   |      |         |   |   |        |  
|Income from
 continuing operations before provision for income taxes and discontinued
 operations         |  |                                           | 6,937  |                               |   | 3,797  |   |      | 15,728  |   |   | 657    |  
|Provision for
 income taxes                                                                               |  |                                           | (2,538 | )                             |   | (1,140 | ) |      | (5,730  | ) |   | (348   | )
|                                                                                                          |  |                                           |        |                               |   |        |   |      |         |   |   |        |  
|Income from
 continuing operations including noncontrolling interests                                     |  |                                           | 4,399  |                               |   | 2,657  |   |      | 9,998   |   |   | 309    |  
|Income from
 discontinued operations, net of tax                                                          |  |                                           | 546    |                               |   | 628    |   |      | 1,593   |   |   | 1,144  |  
|Gain on disposal
 of discontinued operations, net of tax                                                  |  |                                           | 156    |                               |   |       |   |      | 209     |   |   | 123    |  
|                                                                                                          |  |                                           |        |                               |   |        |   |      |         |   |   |        |  
|Net income
 including noncontrolling interests                                                            |  |                                           | 5,101  |                               |   | 3,285  |   |      | 11,800  |   |   | 1,576  |  
|Net income
 attributable to noncontrolling interests                                                      |  |                                           | (851   | )                             |   | (1,012 | ) |      | (2,128  | ) |   | (195   | )
|                                                                                                          |  |                                           |        |                               |   |        |   |      |         |   |   |        |  
|Net income
 attributable to REX common shareholders                                                       |  | $                                         | 4,250  |                               | $ | 2,273  |   | $    | 9,672   |   | $ | 1,381  |  
|                                                                                                          |  |                                           |        |                               |   |        |   |      |         |   |   |        |  
|                                                                                                          |  |                                           |        |                               |   |        |   |      |         |   |   |        |  
|Weighted average
 shares outstanding  basic                                                              |  |                                           | 9,541  |                               |   | 9,161  |   |      | 9,723   |   |   | 9,229  |  
|                                                                                                          |  |                                           |        |                               |   |        |   |      |         |   |   |        |  
|                                                                                                          |  |                                           |        |                               |   |        |   |      |         |   |   |        |  
|Basic income per
 share from continuing operations attributable to REX common shareholders                |  | $                                         | 0.37   |                               | $ | 0.18   |   | $    | 0.81    |   | $ | 0.01   |  
|Basic income per
 share from discontinued operations attributable to REX common shareholders              |  |                                           | 0.06   |                               |   | 0.07   |   |      | 0.16    |   |   | 0.13   |  
|Basic income per
 share on disposal of discontinued operations attributable to REX common shareholders    |  |                                           | 0.02   |                               |   |       |   |      | 0.02    |   |   | 0.01   |  
|                                                                                                          |  |                                           |        |                               |   |        |   |      |         |   |   |        |  
|Basic net income
 per share attributable to REX common shareholders                                       |  | $                                         | 0.45   |                               | $ | 0.25   |   | $    | 0.99    |   | $ | 0.15   |  
|                                                                                                          |  |                                           |        |                               |   |        |   |      |         |   |   |        |  
|                                                                                                          |  |                                           |        |                               |   |        |   |      |         |   |   |        |  
|Weighted average
 shares outstanding  diluted                                                            |  |                                           | 9,682  |                               |   | 9,464  |   |      | 9,900   |   |   | 9,478  |  
|                                                                                                          |  |                                           |        |                               |   |        |   |      |         |   |   |        |  
|                                                                                                          |  |                                           |        |                               |   |        |   |      |         |   |   |        |  
|Diluted income
 per share from continuing operations attributable to REX common shareholders              |  | $                                         | 0.36   |                               | $ | 0.17   |   | $    | 0.80    |   | $ | 0.01   |  
|Diluted income
 per share from discontinued operations attributable to REX common
 shareholders           |  |                                           | 0.06   |                               |   | 0.07   |   |      | 0.16    |   |   | 0.13   |  
|Diluted income per
 share on disposal of discontinued operations attributable to REX common
 shareholders |  |                                           | 0.02   |                               |   |       |   |      | 0.02    |   |   | 0.01   |  
|                                                                                                          |  |                                           |        |                               |   |        |   |      |         |   |   |        |  
|Diluted net
 income per share attributable to REX common shareholders                                     |  | $                                         | 0.44   |                               | $ | 0.24   |   | $    | 0.98    |   | $ | 0.15   |  
|                                                                                                          |  |                                           |        |                               |   |        |   |      |         |   |   |        |  
|                                                                                                          |  |                                           |        |                               |   |        |   |      |         |   |   |        |  
|Amounts attributable to REX common shareholders:                                                          |  |                                           |        |                               |   |        |   |      |         |   |   |        |  
|Income from
 continuing operations, net of tax                                                            |  | $                                         | 3,548  |                               | $ | 1,645  |   | $    | 7,870   |   | $ | 114    |  
|Income from
 discontinued operations, net of tax                                                          |  |                                           | 702    |                               |   | 628    |   |      | 1,802   |   |   | 1,267  |  
|                                                                                                          |  |                                           |        |                               |   |        |   |      |         |   |   |        |  
|Net income                                                                                                |  | $                                         | 4,250  |                               | $ | 2,273  |   | $    | 9,672   |   | $ | 1,381  |  
|                                                                                                          |  |                                           |        |                               |   |        |   |      |         |   |   |        |  

The accompanying notes are an integral part of these
unaudited consolidated condensed financial statements.

4

---



REX AMERICAN RESOURCES CORPORATION AND
SUBSIDIARIES
Consolidated Condensed Statements Of Equity
Unaudited(In Thousands)

|                                                                              |  |                       |          |        |                  |        |                    |        |        |   |   |                                           |   |                           |         |               |   |         |  |   |     |   |   |        |  |   |         |  
|----------------------------------------------------------------------------- |  | --------------------- | -------- | ------ | ---------------- | ------ | ------------------ | ------ | ------ | - | - | ----------------------------------------- | - | ------------------------- | ------- | ------------- | - | ------- |  | - | --- | - | - | ------ |  | - | ------- | -
|                                                                              |  | REX Shareholders      |          |        |                  |        |                    |        |       
|                                                                              |  |                       |          |        |                  |        |                    |        |       
|                                                                              |  | Common Shares
 Issued |          |        |                  |        |                    |        |        |   |   | Accumulated
 Other
 Comprehensive
 Income |   | Noncontrolling
 Interests |         | Total
 Equity |  
|                                                                              |  |                       | Treasury |        | Paid-in
 Capital |        | Retained
 Earnings |        |        |   |  
|                                                                              |  |                       |          |        |                  |        |                    |        |        |  
|                                                                              |  | Shares                |          | Amount |                  | Shares |                    | Amount |        |   |   |                                           |   |                          
|                                                                              |  |                       |          |        |                  |        |                    |        |        |   |   |                                           |   |                           |         |               |   |         | 
|                                                                              |  |                       |          |        |                  |        |                    |        |        |   |   |                                           |   |                           |         |               |   |         |  |   |     |   |   |        |  |   |         |  
|Balance at January 31, 2010                                                   |  |                       | 29,853   |        | $                | 299    |                    |        | 20,045 |   | $ | (186,407                                  | ) | $                         | 141,698 |               | $ | 290,984 |  | $ | 49  |   | $ | 28,473 |  | $ | 275,096 |  
|                                                                              |  |                       |          |        |                  |        |                    |        |        |   |   |                                           |   |                           |         |               |   |         |  |   |     |   |   |        |  |   |         |  
|Net income                                                                    |  |                       |          |        |                  |        |                    |        |        |   |   |                                           |   |                           |         |               |   | 9,672   |  |   |     |   |   | 2,128  |  |   | 11,800  |  
|                                                                              |  |                       |          |        |                  |        |                    |        |        |   |   |                                           |   |                           |         |               |   |         |  |   |     |   |   |        |  |   |         |  
|Treasury stock acquired                                                       |  |                       |          |        |                  |        |                    |        | 415    |   |   | (6,666                                    | ) |                           |         |               |   |         |  |   |     |   |   |        |  |   | (6,666  | )
|                                                                              |  |                       |          |        |                  |        |                    |        |        |   |   |                                           |   |                           |         |               |   |         |  |   |     |   |   |        |  |   |         |  
|Reclassification adjustment for net gains included in net income, net
 of tax |  |                       |          |        |                  |        |                    |        |        |   |   |                                           |   |                           |         |               |   |         |  |   | (49 | ) |   |        |  |   | (49     | )
|                                                                              |  |                       |          |        |                  |        |                    |        |        |   |   |                                           |   |                           |         |               |   |         |  |   |     |   |   |        |  |   |         |  
|Stock options and related tax effects                                         |  |                       |         |        |                  |       |                    |        | (93    | ) |   | 866                                       |   |                           | 572     |               |   |        |  |   |    |   |   |       |  |   | 1,438   |  
|                                                                              |  |                       |          |        |                  |        |                    |        |        |   |   |                                           |   |                           |         |               |   |         |  |   |     |   |   |        |  |   |         |  
|                                                                              |  |                       |          |        |                  |        |                    |        |        |   |   |                                           |   |                           |         |               |   |         |  |   |     |   |   |        |  |   |         |  
|Balance at October 31, 2010                                                   |  |                       | 29,853   |        | $                | 299    |                    |        | 20,367 |   | $ | (192,207                                  | ) | $                         | 142,270 |               | $ | 300,656 |  | $ |    |   | $ | 30,601 |  | $ | 281,619 |  
|                                                                              |  |                       |          |        |                  |        |                    |        |        |   |   |                                           |   |                           |         |               |   |         |  |   |     |   |   |        |  |   |         |  

|                                      |  |                       |          |        |   |                  |  |                    |        |   |                           |                                           |               |   |         |  |   |         |  |   |    |  |   |        |  |   |         |  
|------------------------------------- |  | --------------------- | -------- | ------ | - | ---------------- |  | ------------------ | ------ | - | ------------------------- | ----------------------------------------- | ------------- | - | ------- |  | - | ------- |  | - | -- |  | - | ------ |  | - | ------- | -
|                                      |  | REX Shareholders      |          |        |   |                  |  |                    |       
|                                      |  |                       |          |        |   |                  |  |                    |       
|                                      |  | Common Shares
 Issued |          |        |   |                  |  |                    |        |   |                           | Accumulated
 Other
 Comprehensive
 Income |               |   |         |  |  
|                                      |  |                       | Treasury |        |   |                  |  |                    |        |   |                           |                                           |              
|                                      |  |                       |          |        |   | Paid-in
 Capital |  | Retained
 Earnings |        |   | Noncontrolling
 Interests |                                           | Total
 Equity |  
|                                      |  | Shares                |          | Amount |   | Shares           |  | Amount             |        |   |                           |                                           |               |  
|                                      |  |                       |          |        |   |                  |  |                    |        |   |                           |                                           |               |   |         |  |   |         | 
|                                      |  |                       |          |        |   |                  |  |                    |        |   |                           |                                           |               |   |         |  |   |         |  |   |    |  |   |        |  |   |         |  
|Balance at January 31, 2009           |  |                       | 29,853   |        | $ | 299              |  |                    | 20,471 |   | $                         | (186,057                                  | )             | $ | 142,486 |  | $ | 282,332 |  | $ |   |  | $ | 24,573 |  | $ | 263,633 |  
|                                      |  |                       |          |        |   |                  |  |                    |        |   |                           |                                           |               |   |         |  |   |         |  |   |    |  |   |        |  |   |         |  
|Net income                            |  |                       |          |        |   |                  |  |                    |        |   |                           |                                           |               |   |         |  |   | 1,381   |  |   |    |  |   | 195    |  |   | 1,576   |  
|                                      |  |                       |          |        |   |                  |  |                    |        |   |                           |                                           |               |   |         |  |   |         |  |   |    |  |   |        |  |   |         |  
|Treasury stock acquired               |  |                       |          |        |   |                  |  |                    | 535    |   |                           | (5,543                                    | )             |   |         |  |   |         |  |   |    |  |   |        |  |   | (5,543  | )
|                                      |  |                       |          |        |   |                  |  |                    |        |   |                           |                                           |               |   |         |  |   |         |  |   |    |  |   |        |  |   |         |  
|Stock based compensation              |  |                       |          |        |   |                  |  |                    |        |   |                           |                                           |               |   | 234     |  |   |         |  |   |    |  |   |        |  |   | 234     |  
|                                      |  |                       |          |        |   |                  |  |                    |        |   |                           |                                           |               |   |         |  |   |         |  |   |    |  |   |        |  |   |         |  
|Unrealized holding gains, net of tax  |  |                       |          |        |   |                  |  |                    |        |   |                           |                                           |               |   |         |  |   |         |  |   | 49 |  |   |        |  |   | 49      |  
|                                      |  |                       |          |        |   |                  |  |                    |        |   |                           |                                           |               |   |         |  |   |         |  |   |    |  |   |        |  |   |         |  
|Stock options and related tax effects |  |                       |         |        |   |                 |  |                    | (148   | ) |                           | 1,345                                     |               |   | 86      |  |   |        |  |   |   |  |   |       |  |   | 1,431   |  
|                                      |  |                       |          |        |   |                  |  |                    |        |   |                           |                                           |               |   |         |  |   |         |  |   |    |  |   |        |  |   |         |  
|                                      |  |                       |          |        |   |                  |  |                    |        |   |                           |                                           |               |   |         |  |   |         |  |   |    |  |   |        |  |   |         |  
|Balance at October 31, 2009           |  |                       | 29,853   |        | $ | 299              |  |                    | 20,858 |   | $                         | (190,255                                  | )             | $ | 142,806 |  | $ | 283,713 |  | $ | 49 |  | $ | 24,768 |  | $ | 261,380 |  
|                                      |  |                       |          |        |   |                  |  |                    |        |   |                           |                                           |               |   |         |  |   |         |  |   |    |  |   |        |  |   |         |  

The accompanying notes are an
integral part of these unaudited consolidated condensed financial statements.

5

---



REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements Of Cash Flows
Unaudited

|                                                                                                   |  |                                 |         |      |   |         |  
|-------------------------------------------------------------------------------------------------- |  | ------------------------------- | ------- | ---- | - | ------- | -
|                                                                                                   |  | Nine
 Months Ended
 October 31, |        
|                                                                                                   |  |                                 |        
|                                                                                                   |  | 2010                            |         | 2009 |  
|                                                                                                   |  |                                 |         |      |  
|                                                                                                   |  | (In
 Thousands)                 |        
|Cash flows from operating activities:                                                              |  |                                 |         |      |   |         |  
|Net income including noncontrolling interests                                                      |  | $                               | 11,800  |      | $ | 1,576   |  
|Adjustments to reconcile net income to net cash provided by (used in)
 operating activities:       |  |                                 |         |      |   |         |  
|Depreciation and amortization                                                                      |  |                                 | 12,836  |      |   | 6,489   |  
|Impairment charges                                                                                 |  |                                 | 687     |      |   |        |  
|Income from equity method investments                                                              |  |                                 | (7,625  | )    |   | (1,144  | )
|Gain on disposal of real estate and property and equipment                                         |  |                                 | (461    | )    |   | (51     | )
|Dividends received from equity method investees                                                    |  |                                 | 1,057   |      |   |        |  
|Deferred income                                                                                    |  |                                 | (6,285  | )    |   | (14,031 | )
|Derivative financial instruments                                                                   |  |                                 | 699     |      |   | 514     |  
|Deferred income tax                                                                                |  |                                 | 5,512   |      |   | (1,521  | )
|Other                                                                                              |  |                                 |        |      |   | 248     |  
|Changes in assets and liabilities:                                                                 |  |                                 |         |      |   |         |  
|Accounts receivable                                                                                |  |                                 | (3,119  | )    |   | (5,064  | )
|Inventory                                                                                          |  |                                 | (1,848  | )    |   | 16,701  |  
|Prepaid expenses and other current assets                                                          |  |                                 | 4,216   |      |   | 2,859   |  
|Other long-term assets                                                                             |  |                                 | 1,495   |      |   | 2,211   |  
|Accounts payable, trade                                                                            |  |                                 | 84      |      |   | (6,208  | )
|Other liabilities                                                                                  |  |                                 | (799    | )    |   | (3,320  | )
|                                                                                                   |  |                                 |         |      |   |         |  
|Net cash provided by (used in) operating activities                                                |  |                                 | 18,249  |      |   | (741    | )
|                                                                                                   |  |                                 |         |      |   |         |  
|Cash flows from investing activities:                                                              |  |                                 |         |      |   |         |  
|Capital expenditures                                                                               |  |                                 | (3,799  | )    |   | (34,532 | )
|Purchase of equity method investment                                                               |  |                                 | (9,216  | )    |   | (25     | )
|Principal payments received on investment in debt instruments                                      |  |                                 | 1,014   |      |   |        |  
|Proceeds from sale of real estate and property and equipment                                       |  |                                 | 6,966   |      |   | 1,002   |  
|Restricted cash                                                                                    |  |                                 |        |      |   | (1,025  | )
|Proceeds from sale of restricted investments                                                       |  |                                 | 500     |      |   | 184     |  
|                                                                                                   |  |                                 |         |      |   |         |  
|Net cash used in investing activities                                                              |  |                                 | (4,535  | )    |   | (34,396 | )
|                                                                                                   |  |                                 |         |      |   |         |  
|Cash flows from financing activities:                                                              |  |                                 |         |      |   |         |  
|Payments of long-term debt and capital lease obligations                                           |  |                                 | (21,321 | )    |   | (12,080 | )
|Proceeds from long-term debt                                                                       |  |                                 |        |      |   | 43,974  |  
|Proceeds from exercise of stock options                                                            |  |                                 | 1,438   |      |   | 1,243   |  
|Treasury stock acquired                                                                            |  |                                 | (6,666  | )    |   | (5,543  | )
|                                                                                                   |  |                                 |         |      |   |         |  
|Net cash (used in) provided by financing activities                                                |  |                                 | (26,549 | )    |   | 27,594  |  
|                                                                                                   |  |                                 |         |      |   |         |  
|Net decrease in cash and cash equivalents                                                          |  |                                 | (12,835 | )    |   | (7,543  | )
|Cash and cash equivalents, beginning of period                                                     |  |                                 | 100,398 |      |   | 91,991  |  
|                                                                                                   |  |                                 |         |      |   |         |  
|Cash and cash equivalents, end of period                                                           |  | $                               | 87,563  |      | $ | 84,448  |  
|                                                                                                   |  |                                 |         |      |   |         |  
|Non cash investing activities  Contingent consideration for purchase
 of equity method investment |  | $                               | 4,611   |      | $ |        |  
|                                                                                                   |  |                                 |         |      |   |         |  

The accompanying notes are
an integral part of these unaudited consolidated condensed financial
statements.

6

---



REX AMERICAN RESOURCES CORPORATION AND
SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED CONDENSED
FINANCIAL STATEMENTSOctober 31, 2010

Note 1. Consolidated
Condensed Financial Statements

The
consolidated condensed financial statements included in this report have been
prepared by the Company, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission and include, in the opinion of
management, all adjustments necessary to state fairly the information set forth
therein. Any such adjustments were of a normal recurring nature. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. Financial information as of
January 31, 2010 included in these financial statements has been derived from
the audited consolidated financial statements included in the Companys Annual
Report on Form 10-K for the year ended January 31, 2010 (fiscal year 2009). It
is suggested that these unaudited consolidated condensed financial statements
be read in conjunction with the consolidated financial statements and the notes
thereto included in the Companys Annual Report on Form 10-K for the year ended
January 31, 2010. The results of operations for the interim periods are not
necessarily indicative of the results to be expected for the year.

Basis
of Consolidation  The consolidated condensed financial statements in this
report include the operating results and financial position of REX American Resources
Corporation and its wholly and majority owned subsidiaries. The Company
includes the results of operations of Levelland Hockley County Ethanol, LLC
(Levelland Hockley) and One Earth Energy, LLC (One Earth) in its
Consolidated Condensed Statements of Operations on a delayed basis of one
month.

Nature
of Operations  The Company operates in two reportable segments, alternative
energy and real estate. The Company substantially completed the exit of its
retail business during the second quarter of fiscal year 2009, although it will
continue to recognize revenue and expense associated with administering
extended service policies as discontinued operations.

Reclassifications
 Certain amounts have been reclassified to conform to current year
presentation. In addition, during the fourth quarter of fiscal year 2009, the
Company identified an error in its classification of certain closed retail
stores as continuing operations as of January 31, 2009 and for the interim
periods subsequent to January 31, 2009 and for the classification of its
extended warranty operations as continuing operations for interim periods
subsequent to April 30, 2009. Management evaluated the effects of the error on
the consolidated financial statements and concluded the error was not material;
however, prior period results have been reclassified to correct the
presentation of continuing and discontinued operations as disclosed in the
Companys Annual Report on Form 10-K for the year ended January 31, 2010. The
error had no impact on net income or loss; however it did impact the
classification of income or loss from continuing and discontinued operations.

7

---



Note 2. Accounting
Policies

The
interim consolidated condensed financial statements have been prepared in
accordance with the accounting policies described in the notes to the
consolidated financial statements included in the Companys 2009 Annual Report
on Form 10-K. While management believes that the procedures followed in the
preparation of interim financial information are reasonable, the accuracy of
some estimated amounts is dependent upon facts that will exist or calculations
that will be accomplished at fiscal year end. Examples of such estimates
include management bonuses, restructuring accruals, the fair value of financial
instruments, lower of cost or market inventory calculations, reserves for bad
debts and the provision for income taxes. Any adjustments pursuant to such
estimates during the quarter were of a normal recurring nature. Actual results
could differ from those estimates.

Revenue Recognition

The
Company recognizes sales from the production of ethanol and distillers grains
when title transfers to customers upon shipment from the ethanol plant.
Shipping and handling charges to ethanol customers are included in net sales
and revenue.

The
Company includes income from real estate leasing activities in net sales and
revenue. The Company accounts for these leases as operating leases.
Accordingly, minimum rental revenue is recognized on a straight-line basis over
the term of the lease.

Prior
to exiting the retail business, the Company sold retail product service
contracts covering periods beyond the normal manufacturers warranty periods,
usually with terms of coverage (including manufacturers warranty periods) of
between 12 to 60 months. Contract revenues and sales commissions are deferred
and amortized on a straight-line basis over the life of the contracts after the
expiration of applicable manufacturers warranty periods. The Company retains
the obligation to perform warranty service and such costs are expensed as
incurred. All related revenue and expense is classified as discontinued
operations.

Cost of Sales

Ethanol
cost of sales includes depreciation, costs of raw materials, inbound freight
charges, purchasing and receiving costs, inspection costs, other distribution
expenses, warehousing costs, plant management, certain compensation costs, and
general facility overhead charges.

Real
estate cost of sales includes depreciation, real estate taxes, insurance,
repairs and maintenance and other costs directly associated with operating the
Companys portfolio of real property.

Selling, General and Administrative Expenses

The
Company includes non-production related costs from its alternative energy
segment such as certain payroll and related costs, professional fees and other
general expenses in selling, general and administrative expenses.

8

---



The
Company includes costs not directly related to operating its portfolio of real
property from its real estate segment such as certain payroll and related
costs, professional fees and other general expenses in selling, general and
administrative expenses.

The
Company includes costs associated with its corporate headquarters such as
certain payroll and related costs, professional fees and other general expenses
in selling, general and administrative expenses.

Interest Cost

No
interest was capitalized for the nine months ended October 31, 2010. Interest
expense of $3,116,000 for the nine months ended October 31, 2009 is net of
approximately $1,651,000 of interest capitalized. Cash paid for interest for
the nine months ended October 31, 2010 and 2009 was approximately $3,648,000
and $1,620,000, respectively.

Financial Instruments

The
Company uses derivative financial instruments to manage its balance of fixed
and variable rate debt. The Company does not hold or issue derivative financial
instruments for trading or speculative purposes. Interest rate swap agreements
involve the exchange of fixed and variable rate interest payments and do not
represent an actual exchange of the notional amounts between the parties. The
swap agreements were not designated for hedge accounting pursuant to ASC815.
The interest rate swaps are recorded at their fair values and the changes in
fair values are recorded as gain or loss on derivative financial instruments in
the Consolidated Condensed Statements of Operations. The Company paid
settlements of interest rate swaps of approximately $1,839,000 and $1,047,000
for the nine months ended October 31, 2010 and 2009, respectively.

Forward
grain purchase and ethanol and distillers grain sale contracts are accounted
for under the normal purchases and normal sales scope exemption of ASC 815, Derivatives and Hedging (ASC 815)
because these arrangements are for purchases of grain that will be delivered in
quantities expected to be used by the Company and sales of ethanol and
distillers grain quantities expected to be produced by the Company over a
reasonable period of time in the normal course of business.

Income Taxes

The
Company applies an effective tax rate to interim periods that is consistent with
the Companys estimated annual tax rate. The Company provides for deferred tax
liabilities and assets for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax basis and operating loss and tax
credit carryforwards. The Company provides for a valuation allowance if, based
on the weight of available evidence, it is more likely than not that some or
all of the deferred tax assets will not be realized. The Company paid no income
taxes during the nine months ended October 31, 2010 and 2009. The Company
received income tax refunds of $5,541,000 and $1,009,000 during the nine months
ended October 31, 2010 and 2009, respectively.

9

---



As
of October 31, 2010, total unrecognized tax benefits were $2,200,000 and
accrued penalties and interest were $223,000. If the Company were to prevail on
all unrecognized tax benefits recorded, approximately $129,000 of the reserve
would benefit the effective tax rate. In addition, the impact of penalties and
interest would also benefit the effective tax rate. Interest and penalties
associated with unrecognized tax benefits are recorded within income tax
expense. On a quarterly and annual basis, the Company accrues for the effects
of open uncertain tax positions and the related potential penalties and
interest.

Inventories

Inventories
are carried at the lower of cost or market on a first-in, first-out basis.
Alternative energy segment inventory includes direct production costs and
certain overhead costs such as depreciation, property taxes and utilities
related to producing ethanol and related by-products. Reserves are established
for estimated net realizable value based primarily upon commodity prices. The
components of inventory at October 31, 2010 and January 31, 2010 are as follows
(amounts in thousands):

|                                  |  |                   |        |                   |   |       | 
|--------------------------------- |  | ----------------- | ------ | ----------------- | - | ----- | 
|                                  |  | October 31,
 2010 |        | January 31,
 2010 |  
|                                  |  |                   |        |                   |  
|                                  |  |                   |        |                   |   |       | 
|Ethanol and
 other finished goods |  | $                 | 2,135  |                   | $ | 1,784 | 
|Work in
 process                  |  |                   | 2,066  |                   |   | 1,577 | 
|Grain and
 other raw materials    |  |                   | 6,345  |                   |   | 5,147 | 
|Retail
 merchandise, net          |  |                   |       |                   |   | 190   | 
|                                  |  |                   |        |                   |   |       | 
|Total                             |  | $                 | 10,546 |                   | $ | 8,698 | 
|                                  |  |                   |        |                   |   |       | 

Property and Equipment

Property
and equipment are recorded at cost. Assets under capital leases are capitalized
at the lower of the net present value of minimum lease payments or the fair
market value of the leased asset. Depreciation is computed using the
straight-line method. Estimated useful lives are 15 to 40 years for buildings
and improvements, and 3 to 20 years for fixtures and equipment.

In
accordance with ASC 360-05 Impairment or
Disposal of Long-Lived Assets, the carrying value of long-lived
assets is assessed for recoverability by management when changes in
circumstances indicate that the carrying amount may not be recoverable, based
on an analysis of undiscounted future expected cash flows from the use and
ultimate disposition of the asset. Impairment charges were approximately $0.7
million in the first nine months of fiscal year 2010; $0.5 million of this
amount related to properties classified as discontinued operations and $0.2
million related to the Companys real estate segment. No impairment charges
were recorded in the first nine months of fiscal year 2009. Impairment charges
result from the Companys management performing cash flow analysis and
represent managements estimate of the excess of net book value over fair
value. Fair value is estimated using expected future cash flows on a discounted
basis, appraisals of specific properties, or pending sales contracts of
specific properties as appropriate. Long-lived assets are tested for
recoverability whenever events or changes in circumstances indicate that its
carrying amount may not be recoverable. Generally, declining cash flows from an
ethanol plant or deterioration in local real

10

---



estate market
conditions are indicators of possible impairment for assets held for use.

Investments

In
accordance with ASC 320-10 Investments-Debt
and Equity Securities,the Company periodically evaluates its
investments for impairment due to declines in market value considered to be
other than temporary. Such impairment evaluations include, in addition to
persistent, declining market prices, general economic and company-specific
evaluations. If the Company determines that a decline in market value is other
than temporary, then a charge to earnings is recorded in the accompanying
Consolidated Condensed Statements of Operations for all or a portion of the
unrealized loss and a new cost basis in the investment is established.

Accounting Changes and Recently Issued
Accounting Standards

In
June 2009, the Financial Accounting Standards Board (FASB) issued a new
accounting standard that clarified how a company determines whether an entity,
that is insufficiently capitalized or not controlled through voting (or similar
rights), should be consolidated (ASC Topic 810). This determination of whether
a company is required to consolidate an entity is based on, among other things,
an entitys purpose and design and a companys ability to direct the activities
of the entity that most significantly impact the entitys economic performance.
This standard requires an ongoing reassessment of whether a company is the
primary beneficiary of a variable interest entity. This standard also requires
additional disclosures about a companys involvement in variable interest
entities and any significant changes in risk exposure due to that involvement.
This standard is effective for fiscal years beginning after November 15, 2009.
The Company adopted this standard as of January 31, 2010. This standard did not
have any impact on the Companys consolidated financial condition, results of
operations or cash flows.

In
January 2010, the FASB issued Accounting Standards Update (ASU) 2010-06,
Fair Value Measurements and Disclosures (ASU 2010-06), which adds new
disclosure requirements for transfers into and out of Levels 1 and 2 in the
fair value hierarchy and additional disclosures about purchases, sales,
issuances and settlements relating to Level 3 fair value measurements. This ASU
also clarifies existing fair value disclosures about the level of
disaggregation about inputs and valuation techniques used to measure fair
value. The ASU was effective February 1, except for the requirement to provide
the Level 3 activity on a gross basis, which is effective for fiscal years
beginning after December 15, 2010 and interim periods within those years. This
standard did not have any impact on the Companys consolidated financial
condition, results of operations or cash flows.

11

---



Note 3. Comprehensive
Income

The
components of comprehensive income are as follows (amounts in thousands):

|                                                                              |  |                     |                    |                    |   |                    |  |                    |       |   |   |       | 
|----------------------------------------------------------------------------- |  | ------------------- | ------------------ | ------------------ | - | ------------------ |  | ------------------ | ----- | - | - | ----- | 
|                                                                              |  | Three
 Months Ended | Nine
 Months Ended |                   
|                                                                              |  | October
 31,
 2010  |                    | October
 31,
 2009 |   | October
 31,
 2010 |  | October
 31,
 2009 |      
|                                                                              |  |                     |                    |                    |   |                    |  |                    |       |   |   |       | 
|                                                                              |  |                     |                    |                    |   |                    |  |                    |       |   |   |       | 
|Net income attributable to REX common shareholders                            |  | $                   | 4,250              |                    | $ | 2,273              |  | $                  | 9,672 |   | $ | 1,381 | 
|Unrealized holding gains on available for sale securities, net of tax         |  |                     |                   |                    |   | 12                 |  |                    |      |   |   | 49    | 
|Reclassification adjustment for net gains included in net income, net
 of tax |  |                     |                   |                    |   |                   |  |                    | (49   | ) |   |      | 
|                                                                              |  |                     |                    |                    |   |                    |  |                    |       |   |   |       | 
|Total comprehensive income                                                    |  | $                   | 4,250              |                    | $ | 2,285              |  | $                  | 9,623 |   | $ | 1,430 | 
|                                                                              |  |                     |                    |                    |   |                    |  |                    |       |   |   |       | 

Note 4. Sale and Leaseback
Transaction and Other Leases

On
April 30, 2007, the Company completed a transaction for the sale of 86 of its
former store locations to KLAC REX, LLC (Klac) for $74.5 million in cash,
before selling expenses. The Company also entered into leases to leaseback 40
of the properties from Klac for initial lease terms expiring January 31, 2010.
All of the leases with Klac had been terminated as of January 31, 2010.

This
transaction resulted in a gain (realized and deferred) of $14.8 million. Of
this gain, $3.9 million was recognized in the first nine months of fiscal year
2009. No gain was recognized in the first nine months of fiscal year 2010. As a
result of the wind down of the Companys retail business, the term over which
the deferred gain was being amortized was shortened and is based upon the Company
abandoning, or otherwise ceasing use of, the leased property. See Note 13 for a
discussion of restructuring related charges.

At
October 31, 2010, the Company has leases, as landlord, for all or portions of
16 owned former retail store and warehouse locations, which are included in
property and equipment, net on the Consolidated Condensed Balance Sheet. All of
the leases are accounted for as operating leases.

12

---



The
following table is a summary of future minimum rentals on such leases (amounts
in thousands):

|                        |  |   |                  |  | 
|----------------------- |  | - | ---------------- |  | 
|Years Ended January 31, |  |   | Minimum
 Rentals | 
|                        |  |   |                  | 
|                        |  |   |                  | 
|Remainder of 2011       |  | $ | 321              | 
|2012                    |  |   | 1,123            | 
|2013                    |  |   | 1,069            | 
|2014                    |  |   | 939              | 
|2015                    |  |   | 920              | 
|Thereafter              |  |   | 1,979            | 
|                        |  |   |                  | 
|Total                   |  | $ | 6,351            | 
|                        |  |   |                  | 

The
Company leases, as lessee, certain real estate and equipment for its ethanol
plants. The leases have been classified as capital leases. The following is a
summary, at October 31, 2010, of the aggregate future minimum annual rental
commitments for all capital leases (amounts in thousands):

|                                                      |  |                  |       |  | 
|----------------------------------------------------- |  | ---------------- | ----- |  | 
|Years Ended January 31,                               |  | Minimum
 Rentals |      
|                                                      |  |                  |       | 
|                                                      |  |                  |       | 
|Remainder of 2011                                     |  | $                | 148   | 
|2012                                                  |  |                  | 593   | 
|2013                                                  |  |                  | 529   | 
|2014                                                  |  |                  | 393   | 
|                                                      |  |                  |       | 
|Total minimum lease
 payments                         |  |                  | 1,663 | 
|Less amount representing
 interest                    |  |                  | 104   | 
|                                                      |  |                  |       | 
|Present value of minimum
 capital lease payments      |  |                  | 1,559 | 
|Less current maturities of
 capital lease obligations |  |                  | 524   | 
|                                                      |  |                  |       | 
|Long term capital lease
 obligations                  |  | $                | 1,035 | 
|                                                      |  |                  |       | 

Note 5. Fair Value

The
Company applies ASC 820, Fair Value
Measurements and Disclosures, (ASC 820) which provides a framework
for measuring fair value under GAAP. This accounting standard defines fair
value as the exchange price that would be received for an asset or paid to
transfer a liability (an exit price) in the principal or most advantageous
market for the asset or liability in an orderly transaction between market
participants on the measurement date.

The
Company determines the fair market values of its financial instruments based on
the fair value hierarchy established by ASC 820. ASC 820 requires an entity to
maximize the use of observable inputs and minimize the use of unobservable
inputs when measuring fair value. The standard describes three levels of inputs
that may be used to measure fair values which are provided below. The Company
carries cash equivalents, investments in debt securities, restricted
investments, derivative liabilities and contingent consideration liabilities at
fair value.

13

---



Level 1  Quoted prices in active markets for
identical assets or liabilities. Level 1 assets and liabilities include debt
and equity securities and derivative contracts that are traded in an active
exchange market, as well as certain U.S. Treasury securities that are highly
liquid and are actively traded in over-the-counter markets.

Level
2  Observable inputs other than Level 1 prices such as quoted prices for
similar assets or liabilities; quoted prices in markets that are not active; or
other inputs that are observable or can be corroborated by observable market
data for substantially the full term of the assets or liabilities. Level 2
assets and liabilities include derivative contracts whose value is determined
using a pricing model with inputs that are observable in the market or can be
derived principally or corroborated by observable market data.

Level
3  Unobservable inputs that are supported by little or no market activity and
that are significant to the fair value of the assets or liabilities. Level 3
assets and liabilities include financial instruments whose value is determined
using pricing models, discounted cash flow methods, or similar techniques, as
well as instruments for which the determination of fair value requires
significant management judgment or estimation. Unobservable inputs shall be
developed based on the best information available, which may include the
Companys own data.

The
fair values of interest rate swaps are determined by using quantitative models
that discount future cash flows using the LIBOR forward interest rate curve.
Estimation risk is greater for derivative asset and liability positions that
are either option-based or have longer maturity dates where observable market
inputs are less readily available or are unobservable, in which case interest
rate, price or index scenarios are extrapolated in order to determine the fair
value. The fair values of derivative assets and liabilities include adjustments
for market liquidity, counterparty credit quality, the Companys own credit standing
and other specific factors, where appropriate. To ensure the prudent
application of estimates and management judgment in determining the fair value
of derivative assets and liabilities, various processes and controls have been
adopted, which include: model validation that requires a review and approval
for pricing, financial statement fair value determination and risk
quantification; periodic review and substantiation of profit and loss reporting
for all derivative instruments.

The
fair values of contingent consideration liabilities are determined using
quantitative models that require the use of multiple market inputs including
interest rates. In addition, inputs such as the Companys cost of capital and
the timing of certain cash flows are estimated using managements assumptions
and projections.

14

---



Financial
assets and liabilities measured at fair value on a recurring basis at October
31, 2010 are summarized below (amounts in thousands):

|                                |  |          |     |          |   |          |  |             |       |  |   |        | 
|------------------------------- |  | -------- | --- | -------- | - | -------- |  | ----------- | ----- |  | - | ------ | 
|                                |  | Level
 1 |     | Level
 2 |   | Level
 3 |  | Fair
 Value |      
|                                |  |          |     |          |   |          |  |             |      
|                                |  |          |     |          |   |          |  |             |       |  |   |        | 
|Cash equivalents                |  | $        | 2   |          | $ |         |  | $           |      |  | $ | 2      | 
|Restricted investments          |  |          | 857 |          |   |         |  |             |      |  |   | 857    | 
|                                |  |          |     |          |   |          |  |             |       |  |   |        | 
|Total assets                    |  | $        | 859 |          | $ |         |  | $           |      |  | $ | 859    | 
|                                |  |          |     |          |   |          |  |             |       |  |   |        | 
|Interest rate swap
 liabilities |  | $        |    |          | $ | 6,583    |  | $           |      |  | $ | 6,583  | 
|Contingent consideration        |  |          |    |          |   |         |  |             | 4,611 |  |   | 4,611  | 
|                                |  |          |     |          |   |          |  |             |       |  |   |        | 
|Total liabilities               |  | $        |    |          | $ | 6,583    |  | $           | 4,611 |  | $ | 11,194 | 
|                                |  |          |     |          |   |          |  |             |       |  |   |        | 

Assets
measured at fair value on a non-recurring basis over various dates through
October 31, 2010 are summarized below (amounts in thousands):

|                             |  |          |   |          |   |          |  |               |       |  |   |     | 
|---------------------------- |  | -------- | - | -------- | - | -------- |  | ------------- | ----- |  | - | --- | 
|                             |  | Level
 1 |   | Level
 2 |   | Level
 3 |  | Total
 Losses |      
|                             |  |          |   |          |   |          |  |               |       |  |   |     | 
|                             |  |          |   |          |   |          |  |               |       |  |   |     | 
|Property and equipment,
 net |  | $        |  |          | $ |         |  | $             | 1,720 |  | $ | 256 | 

Financial
assets and liabilities measured at fair value on a recurring basis at January
31, 2010 are summarized below (amounts in thousands):

|                                |  |          |        |          |   |          |  |             |   |  |   |        | 
|------------------------------- |  | -------- | ------ | -------- | - | -------- |  | ----------- | - |  | - | ------ | 
|                                |  | Level
 1 |        | Level
 2 |   | Level
 3 |  | Fair
 Value |  
|                                |  |          |        |          |   |          |  |             |  
|                                |  |          |        |          |   |          |  |             |   |  |   |        | 
|Cash equivalents                |  | $        | 81,625 |          | $ |         |  | $           |  |  | $ | 81,625 | 
|Investments in debt
 securities |  |          |       |          |   | 1,014    |  |             |  |  |   | 1,014  | 
|Restricted investments          |  |          | 1,357  |          |   |         |  |             |  |  |   | 1,357  | 
|                                |  |          |        |          |   |          |  |             |   |  |   |        | 
|Total assets                    |  | $        | 82,982 |          | $ | 1,014    |  | $           |  |  | $ | 83,996 | 
|                                |  |          |        |          |   |          |  |             |   |  |   |        | 
|Interest rate swap
 liabilities |  | $        |       |          | $ | 5,884    |  | $           |  |  | $ | 5,884  | 
|                                |  |          |        |          |   |          |  |             |   |  |   |        | 
|Total liabilities               |  | $        |       |          | $ | 5,884    |  | $           |  |  | $ | 5,884  | 
|                                |  |          |        |          |   |          |  |             |   |  |   |        | 

Assets
measured at fair value on a non-recurring basis over various dates through
January 31, 2010 are summarized below (amounts in thousands):

|                             |  |          |   |          |   |          |  |               |       |  |   |       | 
|---------------------------- |  | -------- | - | -------- | - | -------- |  | ------------- | ----- |  | - | ----- | 
|                             |  | Level
 1 |   | Level
 2 |   | Level
 3 |  | Total
 Losses |      
|                             |  |          |   |          |   |          |  |               |      
|                             |  |          |   |          |   |          |  |               |       |  |   |       | 
|Property and equipment,
 net |  | $        |  |          | $ |         |  | $             | 6,161 |  | $ | 1,533 | 

The
fair value of the Companys debt is approximately $117.1 million and $138.4
million at October 31, 2010 and January 31, 2010, respectively.

15

---



Note 6. Property and
Equipment

The components of property and equipment at
October 31, 2010 and January 31, 2010 are as follows (amounts in thousands):

|                                   |  |                    |         |                    |   |         |  
|---------------------------------- |  | ------------------ | ------- | ------------------ | - | ------- | -
|                                   |  | October
 31,
 2010 |         | January
 31,
 2010 |  
|                                   |  |                    |         |                    |   |         |  
|                                   |  |                    |         |                    |   |         |  
|Land and improvements              |  | $                  | 24,061  |                    | $ | 26,405  |  
|Buildings and improvements         |  |                    | 52,017  |                    |   | 59,024  |  
|Machinery, equipment and
 fixtures |  |                    | 186,489 |                    |   | 187,526 |  
|Leasehold improvements             |  |                    | 554     |                    |   | 569     |  
|Construction in progress           |  |                    | 2,476   |                    |   | 127     |  
|                                   |  |                    |         |                    |   |         |  
|                                   |  |                    | 265,597 |                    |   | 273,651 |  
|Less:  accumulated
 depreciation   |  |                    | (34,496 | )                  |   | (26,777 | )
|                                   |  |                    |         |                    |   |         |  
|                                   |  |                    |         |                    |   |         |  
|                                   |  | $                  | 231,101 |                    | $ | 246,874 |  
|                                   |  |                    |         |                    |   |         |  

Note 7. Other Assets

The
components of other assets at October 31, 2010 and January 31, 2010 are as
follows (amounts in thousands):

|                               |  |                    |       |                    |   |       | 
|------------------------------ |  | ------------------ | ----- | ------------------ | - | ----- | 
|                               |  | October
 31,
 2010 |       | January
 31,
 2010 |  
|                               |  |                    |       |                    |  
|                               |  |                    |       |                    |   |       | 
|Deferred financing costs,
 net |  | $                  | 2,943 |                    | $ | 3,633 | 
|Prepaid commissions, net       |  |                    | 2,382 |                    |   | 4,320 | 
|Other                          |  |                    | 1,710 |                    |   | 927   | 
|                               |  |                    |       |                    |   |       | 
|Total                          |  | $                  | 7,035 |                    | $ | 8,880 | 
|                               |  |                    |       |                    |   |       | 

Note 8. Long Term Debt and
Interest Rate Swaps

Levelland Hockley Subsidiary Level Debt

During the second quarter of fiscal year
2008, pursuant to the terms of the construction loan agreement with GE Capital
(the Bank), Levelland Hockley converted its construction loan into a
permanent term loan. Beginning with the first monthly payment on June 30, 2008,
payments are due in 59 equal monthly payments of principal plus accrued
interest with the principal portion calculated based on a 120 month
amortization schedule. One final installment will be required on the maturity
date (June 30, 2013) for the remaining unpaid principal balance with accrued
interest. The term loan bears interest at a floating rate of 400 basis points
above LIBOR (4.3% at October 31, 2010), adjusted monthly through the maturity
date. Borrowings are secured by all of the assets of Levelland Hockley. This
debt is recourse only to Levelland Hockley and not to REX American Resources
Corporation or any of its wholly owned subsidiaries. As of October 31, 2010,
approximately $33.9 million was

16

---



outstanding on the term
loan. Levelland Hockley is also subject to certain financial covenants under
the loan agreement, including required levels of EBITDAR, debt service coverage
ratio requirements and other common covenants. On September 1, 2010, Levelland
Hockley amended its loan agreement with the Bank to make certain covenants less
restrictive and to waive defaults occurring prior to July 1, 2010. As a
condition of the amendment of the loan agreement, which did not meet the
requirements of a substantial modification, REX agreed to increase its line of credit
facility to Levelland Hockley from $3.0 million to $4.0 million (inclusive of a
$1.0 million letter of credit) through January 31, 2011. In exchange for REX
increasing the line of credit facility, REX received a warrant which entitles
REX to subscribe for and purchase from Levelland Hockley 324,675 membership
units at an exercise price of $3.08 per membership unit.

Management
believes, based on forecasts which are primarily based on estimates of plant
production, the implicit crush spread obtained from outstanding forward
contracts, prices of ethanol, milo, distillers grains and natural gas as well
as other assumptions management believes to be reasonable, that it is not
probable that Levelland Hockley will fail to maintain compliance with the
requirements of its debt covenants for the next 12 months. However, if a
material adverse change in the financial position or operations of Levelland
Hockley should occur, or if actual sales, the availability of milo or if
expenses are substantially different than forecasted, Levelland Hockleys
liquidity and ability to fund future operating and capital requirements and
compliance with debt covenants could be negatively impacted. Should Levelland
Hockley fail to maintain such compliance and be unable to obtain a waiver from
the Bank or refinance the debt, the related debt would become immediately due
and payable. Ultimately, this could result in a material impairment charge.

Levelland
Hockley paid approximately $3.5 million in financing costs related to the
original term loan. These costs are recorded as prepaid loan fees and are
amortized ratably over the term of the loan.

The
Companys proportionate share of restricted net assets related to Levelland
Hockley was $9.6 million and $13.2 million at October 31, 2010 and January 31,
2010, respectively. Levelland Hockleys restricted net assets, which are 100%
of total net assets, are approximately $17.1 million and $23.6 million at
October 31, 2010 and January 31, 2010, respectively. Such assets may not be
paid in the form of dividends or advances to the parent company or other
members of Levelland Hockley per the terms of the loan agreement with the Bank.

One Earth Energy Subsidiary Level Debt

In September 2007, One Earth entered into a
$111,000,000 financing agreement consisting of a construction loan agreement
for $100,000,000 together with a $10,000,000 revolving loan and a $1,000,000
letter of credit with First National Bank of Omaha (the Bank). The
construction loan was converted into a term loan on July 31, 2009 as all of the
requirements, for such conversion, of the construction and term loan agreement
were fulfilled. The term loan bears interest at variable interest rates ranging
from LIBOR plus 300 basis points to LIBOR plus 310 basis points (3.3% -3.5% at
October 31, 2010). Beginning with the first quarterly payment on October 8,
2009, payments are due in 20 quarterly payments of principal plus accrued
interest with the principal portion calculated based on a 120 month
amortization schedule. One final installment will be required on the maturity
date (July 31, 2014) for the remaining unpaid principal balance with accrued
interest.

17

---



Borrowings
are secured by all of the assets of One Earth. This debt is recourse only to
One Earth and not to REX American Resources Corporation or any of its wholly
owned subsidiaries. As of October 31, 2010, approximately $80.9 million was
outstanding on the term loan. One Earth is also subject to certain financial
covenants under the loan agreement, including required levels of EBITDA, debt
service coverage ratio requirements, net worth requirements and other common
covenants. One Earth was in compliance with all covenants at October 31, 2010.
One Earth paid approximately $1.4 million in financing costs. These costs are
recorded as prepaid loan fees and are amortized ratably over the term of the
loan.

The
Companys proportionate share of restricted net assets related to One Earth was
$61.1 million and $47.9 million at October 31, 2010 and January 31, 2010,
respectively. One Earths restricted net assets, which are less than 100% of
total net assets, total approximately $83.0 million and $65.0 million at
October 31, 2010 and January 31, 2010, respectively. Such assets may not be
paid in the form of dividends or advances to the parent company or other
members of One Earth per the terms of the loan agreement with the Bank.

Note 9. Financial Instruments

One
Earth entered into two forward interest rate swaps in the notional amounts of
$50.0 million and $25.0 million with the Bank. The swap settlements commenced
as of July 31, 2009; the $50.0 million swap terminates on July 8, 2014 and the
$25.0 million swap terminates on July 31, 2011. The $50.0 million swap fixed a
portion of the variable interest rate of the term loan subsequent to the plant
completion date at 7.9% while the $25.0 million swap fixed the rate at 5.49%.
At October 31, 2010, the Company recorded a liability of approximately $6.6
million related to the fair value of the swaps. The change in fair value is
recorded in the Consolidated Condensed Statements of Operations.

The
notional amounts and fair values of derivatives, all of which are not
designated as cash flow hedges at October 31, 2010, are summarized in the table
below (amounts in thousands):

|                    |  |                  |        |                       |   |       | 
|------------------- |  | ---------------- | ------ | --------------------- | - | ----- | 
|                    |  | Notional
 Amount |        | Fair Value
 Liability |  
|                    |  |                  |        |                       |  
|                    |  |                  |        |                       |   |       | 
|Interest rate swaps |  | $                | 69,508 |                       | $ | 6,583 | 

As
the interest rate swaps are not designated as cash flow hedges, the unrealized
gain and loss on the derivatives is reported in current earnings. The Company
reported losses of $495,000 and $899,000 in the third quarters of fiscal years
2010 and 2009, respectively. The Company reported losses of $2,538,000 and
$1,561,000 in the first nine months of fiscal years 2010 and 2009,
respectively.

Note 10. Stock Option Plans

The
Company has stock-based compensation plans under which stock options have been
granted to directors, officers and key employees at the market price on the
date of the grant. No options have been granted since fiscal year 2004.

18

---



The
fair values of options granted were estimated as of the date of grant using a
Black-Scholes option pricing model with the following weighted average
assumptions used for grants in the fiscal year ended January 31, 2005:
risk-free interest rate of 4.7%, expected volatility of 65.4% and a weighted
average stock option life of nine years for all option grants.

The total intrinsic value of options
exercised during the nine months ended October 31, 2010 and 2009 was
approximately $0.7 million and approximately $0.5 million, respectively,
resulting in tax deductions to realize benefits of approximately $0.3 million
and approximately $0.2 million, respectively. The following table summarizes
options granted, exercised and canceled or expired during the nine months ended
October 31, 2010:

|                                                 |  |        |         |                                    |   |                                                           |  |                                             |     |  |   |       | 
|------------------------------------------------ |  | ------ | ------- | ---------------------------------- | - | --------------------------------------------------------- |  | ------------------------------------------- | --- |  | - | ----- | 
|                                                 |  | Shares |         | Weighted
 Average
 Exercise
 Price |   | Weighted Average
 Remaining
 Contractual Term
 (in years) |  | Aggregate
 Intrinsic
 Value
 (in thousands) |    
|                                                 |  |        |         |                                    |   |                                                           |  |                                             |     |  |   |       | 
|Outstanding at January 31,
 2010                 |  |        | 824,421 |                                    | $ | 10.14                                                     |  |                                             |     |  |   |       | 
|Exercised                                        |  |        | (92,518 | )                                  | $ | 9.78                                                      |  |                                             |     |  |   |       | 
|                                                 |  |        |         |                                    |   |                                                           |  |                                             |     |  |   |       | 
|Outstanding and
 exercisable at October 31, 2010 |  |        | 731,903 |                                    | $ | 10.19                                                     |  |                                             | 1.4 |  | $ | 4,684 | 
|                                                 |  |        |         |                                    |   |                                                           |  |                                             |     |  |   |       | 

At
October 31, 2010, there was no unrecognized compensation cost related to
nonvested stock options.

19

---



Note 11. Income
Per Share from Continuing Operations Attributable to REX Common Shareholders

The
following table reconciles the computation of basic and diluted net income per
share from continuing operations for the periods presented (in thousands,
except per share amounts):

|                                                                                             |  |                                       |       |                                       |  |             |  |        |      |        |   |             |  |  |       |  |   |      | 
|-------------------------------------------------------------------------------------------- |  | ------------------------------------- | ----- | ------------------------------------- |  | ----------- |  | ------ | ---- | ------ | - | ----------- |  |  | ----- |  | - | ---- | 
|                                                                                             |  | Three Months Ended 
 October 31, 2010 |       | Three Months Ended 
 October 31, 2009 | 
|                                                                                             |  |                                       |       |                                       | 
|                                                                                             |  | Income                                |       | Shares                                |  | Per 
 Share |  | Income |      | Shares |   | Per 
 Share | 
|                                                                                             |  |                                       |       |                                       |  |             |  |        |      |        |   |             | 
|Basic income per share from continuing
 operations attributable to REX common shareholders   |  | $                                     | 3,548 |                                       |  | 9,541       |  | $      | 0.37 |        | $ | 1,645       |  |  | 9,161 |  | $ | 0.18 | 
|                                                                                             |  |                                       |       |                                       |  |             |  |        |      |        |   |             |  |  |       |  |   |      | 
|Effect of stock options                                                                      |  |                                       |      |                                       |  | 141         |  |        |      |        |   |            |  |  | 303   |  |   |      | 
|                                                                                             |  |                                       |       |                                       |  |             |  |        |      |        |   |             |  |  |       |  |   |      | 
|Diluted income per share from continuing
 operations attributable to REX common shareholders |  | $                                     | 3,548 |                                       |  | 9,682       |  | $      | 0.36 |        | $ | 1,645       |  |  | 9,464 |  | $ | 0.17 | 
|                                                                                             |  |                                       |       |                                       |  |             |  |        |      |        |   |             |  |  |       |  |   |      | 

|                                                                                             |  |                                      |       |                                      |  |             |  |        |      |        |   |             |  |  |       |  |   |      | 
|-------------------------------------------------------------------------------------------- |  | ------------------------------------ | ----- | ------------------------------------ |  | ----------- |  | ------ | ---- | ------ | - | ----------- |  |  | ----- |  | - | ---- | 
|                                                                                             |  | Nine Months Ended 
 October 31, 2010 |       | Nine Months Ended 
 October 31, 2009 | 
|                                                                                             |  |                                      |       |                                      | 
|                                                                                             |  | Income                               |       | Shares                               |  | Per 
 Share |  | Income |      | Shares |   | Per 
 Share | 
|                                                                                             |  |                                      |       |                                      |  |             |  |        |      |        |   |             | 
|Basic income per share from continuing
 operations attributable to REX common shareholders   |  | $                                    | 7,870 |                                      |  | 9,723       |  | $      | 0.81 |        | $ | 114         |  |  | 9,229 |  | $ | 0.01 | 
|                                                                                             |  |                                      |       |                                      |  |             |  |        |      |        |   |             |  |  |       |  |   |      | 
|Effect of stock options                                                                      |  |                                      |      |                                      |  | 177         |  |        |      |        |   |            |  |  | 249   |  |   |      | 
|                                                                                             |  |                                      |       |                                      |  |             |  |        |      |        |   |             |  |  |       |  |   |      | 
|Diluted income per share from continuing
 operations attributable to REX common shareholders |  | $                                    | 7,870 |                                      |  | 9,900       |  | $      | 0.80 |        | $ | 114         |  |  | 9,478 |  | $ | 0.01 | 
|                                                                                             |  |                                      |       |                                      |  |             |  |        |      |        |   |             |  |  |       |  |   |      | 

For
the three months ended October 31, 2010 and 2009, a total of 12,468 shares and
692,323 shares, respectively, and for the nine months ended October 31, 2010
and 2009, a total of 0 shares and 692,323 shares, respectively, subject to
outstanding options were not included in the common equivalent shares
outstanding calculation as the effect from these shares is antidilutive.

Note 12. Investments
and Restricted Deposits

The
following table summarizes investments in debt securities at January 31, 2010
(amounts in thousands):

|                                               |  |               |       |          |            |                |                    |                    |   |                      |  |   |     |  |  | 
|---------------------------------------------- |  | ------------- | ----- | -------- | ---------- | -------------- | ------------------ | ------------------ | - | -------------------- |  | - | --- |  |  | 
|Investment                                     |  | Coupon 
 Rate |       | Maturity |            | Classification |                    | Fair Market
 Value |   | Initial 
 Investment | 
|                                               |  |               |       |          |            |                |                    |                    |   |                      | 
|                                              
|Patriot Renewable Fuels, LLC Convertible
 Note |  |               | 16.00 | %        | 11/25/2011 |                | Available for Sale |                    | $ | 1,014                |  | $ | 933 | 
|                                               |  |               |       |          |            |                |                    |                    |   |                      |  |   |     |  | 

20

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Unrealized
holding gains were $81,000 ($49,000 net of income taxes) at January 31, 2010.
During fiscal year 2010, Patriot Renewable Fuels, LLC (Patriot) repaid the
Company the outstanding principal balance and accrued interest on the note.

The Company
has approximately $743,000 at October 31, 2010, and January 31, 2010 on deposit
with the Florida Department of Financial Services to secure its obligation to
fulfill future obligations related to extended warranty contracts sold in the
state of Florida. As such, this deposit is restricted from use for general
corporate purposes. The deposits earned 2.8% and 2.7% at October 31, 2010 and
January 31, 2010, respectively.

In addition
to the deposit with the Florida Department of Financial Services, the Company
has $857,000 and $1,357,000 at October 31, 2010 and January 31, 2010,
respectively, invested in a money market mutual fund to satisfy Florida
Department of Financial Services regulations. As such, this investment is
restricted from use for general corporate purposes. This investment earned 0.1%
at October 31, 2010 and January 31, 2010.

The
following table summarizes equity method investments at October 31, 2010 and
January 31, 2010 (amounts in thousands):

Equity Method Investments October 31, 2010

|                                           |  |                        |    |                 |   |                    |  |   |        | 
|------------------------------------------ |  | ---------------------- | -- | --------------- | - | ------------------ |  | - | ------ | 
|Entity                                     |  | Ownership 
 Percentage |    | Carrying Amount |   | Initial Investment | 
|                                           |  |                        |    |                 |   |                    | 
|                                           |  |                        |    |                 |   |                    |  |   |        | 
|Big River Resources, LLC                   |  |                        | 10 | %               | $ | 28,363             |  | $ | 20,025 | 
|Patriot Renewable Fuels, LLC               |  |                        | 23 | %               |   | 21,810             |  |   | 16,000 | 
|NuGen Energy, LLC                          |  |                        | 48 | %               |   | 14,187             |  |   | 13,827 | 
|                                           |  |                        |    |                 |   |                    |  |   |        | 
|                                           |  |                        |    |                 |   |                    |  |   |        | 
|Total Equity Method Investments            |  |                        |    |                 | $ | 64,360             |  | $ | 49,852 | 
|                                           |  |                        |    |                 |   |                    |  |   |        | 
|                                           |  |                        |    |                 |   |                    |  |   |        | 
|Equity Method Investments January 31, 2010 |  |                        |    |                 |   |                    |  |   |        | 
|                                           |  |                        |    |                 |   |                    |  |   |        | 
|Entity                                     |  | Ownership 
 Percentage |    | Carrying Amount |   | Initial Investment | 
|                                           |  |                        |    |                 |   |                    | 
|                                           |  |                        |    |                 |   |                    |  |   |        | 
|Big River Resources, LLC                   |  |                        | 10 | %               | $ | 25,660             |  | $ | 20,025 | 
|Patriot Renewable Fuels, LLC               |  |                        | 23 | %               |   | 18,411             |  |   | 16,000 | 
|                                           |  |                        |    |                 |   |                    |  |   |        | 
|                                           |  |                        |    |                 |   |                    |  |   |        | 
|Total Equity Method Investments            |  |                        |    |                 | $ | 44,071             |  | $ | 36,025 | 
|                                           |  |                        |    |                 |   |                    |  |   |        | 

During the
third quarters of fiscal years 2010 and 2009, the Company recorded income of
$1,543,000 and $514,000 respectively as its share of earnings from Big River.
During the first nine months of fiscal years 2010 and 2009, the Company
recorded income of $3,505,000 and $688,000 respectively as its share of
earnings from Big River.

21

---



During
the third quarters of fiscal years 2010 and 2009, the Company recorded income
of $1,536,000 and $707,000, respectively as its share of earnings from Patriot.
During the first nine months of fiscal
years 2010 and 2009, the Company recorded income of $3,504,000 and $456,000,
respectively as its share of earnings or loss from Patriot.

Effective
July 1, 2010, the Company purchased a 48% equity interest in NuGen Energy, LLC
(NuGen) which operates an ethanol producing facility in Marion, South Dakota
with an annual nameplate capacity of 100 million gallons. The Companys
investment included $2,410,361 paid at closing to the then sole shareholder of
NuGen and $6,805,055 contributed directly to NuGen. An additional $6,451,300 is
due based upon cash distributions from NuGen that the Company is entitled to
until such balance is paid (Contingent Consideration). The Company determined
that the fair value of the Contingent Consideration was $4,611,000, of which
$374,000 is included in other current liabilities and $4,237,000 is included in
other long-term liabilities on the Consolidated Condensed Balance Sheet. The
results of NuGen are recognized by the Company on a delayed basis of one month.
During the third quarter and first nine months of fiscal year 2010, the Company
recorded income of $616,000 as its share of earnings from NuGen.

The
Company has an option to purchase for a purchase price of $1,138,389, (which is
payable in cash, partially based upon cash distributions from NuGen that the
Company is entitled to) additional ownership units from NuGens majority
shareholder, which, if exercised, would result in the Company owning 51% of the
total outstanding voting and economic interests of NuGen on a fully diluted
basis.

Summarized
balance sheet information for NuGen is presented in the following table as of
July 31, 2010, which approximates financial information as of the date of the
investment (amounts in thousands):

|                      |  |   |         | 
|--------------------- |  | - | ------- | 
|Current assets        |  | $ | 25,098  | 
|Long-term assets      |  |   | 86,526  | 
|                      |  |   |         | 
|Total assets          |  | $ | 111,624 | 
|                      |  |   |         | 
|                      |  |   |         | 
|Current liabilities   |  | $ | 3,663   | 
|Long-term liabilities |  |   | 93,241  | 
|                      |  |   |         | 
|Total liabilities     |  | $ | 96,904  | 
|                      |  |   |         | 

Summarized
income statement information for Patriot, Big River and NuGen is presented in
the

22

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following table for the three and nine month periods ended October 31,
2010 and October 31, 2009 (amounts in thousands):

|                                  |  |                                      |        |                                     |   |         |  |         |        |           |   |         |  |   |         |  |   |        | 
|--------------------------------- |  | ------------------------------------ | ------ | ----------------------------------- | - | ------- |  | ------- | ------ | --------- | - | ------- |  | - | ------- |  | - | ------ | 
|                                  |  | Three Months Ended
 October 31, 2010 |        | Nine Months Ended
 October 31, 2010 |  
|                                  |  | Patriot                              |        | Big River                           |   | NuGen   |  | Patriot |        | Big River |   | NuGen   | 
|                                  |  |                                      |        |                                     |   |         |  |         |        |           |   |         | 
|                                  |  |                                      |        |                                     |   |         |  |         |        |           |   |         | 
|Net sales and revenue             |  | $                                    | 62,834 |                                     | $ | 175,174 |  | $       | 55,093 |           | $ | 169,051 |  | $ | 482,514 |  | $ | 55,093 | 
|Gross profit                      |  | $                                    | 8,438  |                                     | $ | 19,115  |  | $       | 3,532  |           | $ | 19,174  |  | $ | 46,514  |  | $ | 3,532  | 
|Income from continuing operations |  | $                                    | 6,585  |                                     | $ | 15,756  |  | $       | 1,616  |           | $ | 15,027  |  | $ | 35,923  |  | $ | 1,616  | 
|Net income                        |  | $                                    | 6,585  |                                     | $ | 15,756  |  | $       | 1,616  |           | $ | 15,027  |  | $ | 35,923  |  | $ | 1,616  | 

The table
above excludes results from the equity method investees prior to the Company
acquiring an interest in them. Thus, the quarter and year to date results for
NuGen are the same as the Company acquired its interest in NuGen on July 1,
2010.

|                                  |  |                                      |        |                                     |   |         |  |           |         |  |   |         | 
|--------------------------------- |  | ------------------------------------ | ------ | ----------------------------------- | - | ------- |  | --------- | ------- |  | - | ------- | 
|                                  |  | Three Months Ended
 October 31, 2009 |        | Nine Months Ended
 October 31, 2009 |  
|                                  |  | Patriot                              |        | Big River                           |   | Patriot |  | Big River |        
|                                  |  |                                      |        |                                     |   |         |  |           |        
|                                  |  |                                      |        |                                     |   |         |  |           |        
|Net sales and revenue             |  | $                                    | 53,033 |                                     | $ | 102,238 |  | $         | 150,151 |  | $ | 250,709 | 
|Gross profit                      |  | $                                    | 6,881  |                                     | $ | 16,611  |  | $         | 10,508  |  | $ | 18,738  | 
|Income from continuing operations |  | $                                    | 3,033  |                                     | $ | 5,264   |  | $         | 1,955   |  | $ | 7,050   | 
|Net income                        |  | $                                    | 3,033  |                                     | $ | 5,264   |  | $         | 1,955   |  | $ | 7,050   | 

Patriot,
Big River and NuGen have debt agreements that limit and restrict amounts
available to pay in the form of dividends or advances to owners. The restricted
net assets of Patriot, Big River and NuGen combined at October 31, 2010 and
January 31, 2010 are approximately $348,768,000 and approximately $298,076,000
(Patriot and Big River only), respectively. The Companys proportionate share
of restricted net assets of Patriot, Big River and NuGen combined at October
31, 2010 and January 31, 2010 are approximately $51,914,000 and approximately
$38,926,000 (Patriot and Big River only), respectively. Undistributed earnings of equity method investees totaled approximately
$13.6 million at October 31, 2010, and approximately $6.8 million at January
31, 2010.

Note 13. Restructuring
and Other

During
the fourth quarter of fiscal year 2008, the Company entered into an agreement
with Appliance Direct, Inc. pursuant to which (i) the Company agreed to sell
certain appliance inventory, furniture, fixtures and equipment at the store
locations to be taken over by Appliance Direct and (ii) subsidiaries of
Appliance Direct leased 37 retail store locations owned by the Company.

During
the fourth quarter of fiscal year 2008, the Company recorded a restructuring
charge of approximately $4.2 million related to (i) a workforce reduction of a
majority of employees located at its

23

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corporate
headquarters, retail stores and distribution facilities and (ii) certain costs
associated with the transition of the Companys retail business to Appliance
Direct.

The
Company substantially completed its exit of the retail business as of July 31,
2009. In addition, on September 30, 2009, the Company entered into a letter
agreement with Appliance Direct pursuant to which (i) Appliance Direct agreed
to vacate all properties leased from the Company and turn over possession of
the leased premises to the Company and (ii) the Company and Appliance Direct
agreed to release and discharge each other from all claims or causes of action
whatsoever.

The
following is a summary of restructuring charges and payments for the nine
months ended October 31, 2010 (amounts in thousands):

|                                      |  |                                        |     |                             |   |                                 |   |   |      |  
|------------------------------------- |  | -------------------------------------- | --- | --------------------------- | - | ------------------------------- | - | - | ---- | -
|                                      |  | Employee 
 Severance and 
 Bonus Costs |     | Lease 
 Termination 
 Costs |   | Total 
 Restructuring 
 Accrual |  
|                                      |  |                                        |     |                             |   |                                 |  
|                                      |  |                                        |     |                             |   |                                 |   |   |      |  
|Balance,
 January 31, 2010            |  | $                                      | 219 |                             | $ | 439                             |   | $ | 658  |  
|                                      |  |                                        |     |                             |   |                                 |   |   |      |  
|Restructuring
 charges                |  |                                        |    |                             |   |                                |   |   |     |  
|Payment of
 restructuring liabilities |  |                                        | (7  | )                           |   | (75                             | ) |   | (82  | )
|                                      |  |                                        |     |                             |   |                                 |   |   |      |  
|Balance,
 April 30, 2010              |  |                                        | 212 |                             |   | 364                             |   |   | 576  |  
|Restructuring
 charges                |  |                                        |    |                             |   |                                |   |   |     |  
|Payment of
 restructuring liabilities |  |                                        | (30 | )                           |   | (71                             | ) |   | (101 | )
|                                      |  |                                        |     |                             |   |                                 |   |   |      |  
|Balance,
 July 31, 2010               |  |                                        | 182 |                             |   | 293                             |   |   | 475  |  
|Restructuring
 charges                |  |                                        | 43  |                             |   |                                |   |   | 43   |  
|Payment of
 restructuring liabilities |  |                                        |    |                             |   | (74                             | ) |   | (74  | )
|                                      |  |                                        |     |                             |   |                                 |   |   |      |  
|Balance,
 October 31, 2010            |  | $                                      | 225 |                             | $ | 219                             |   | $ | 444  |  
|                                      |  |                                        |     |                             |   |                                 |   |   |      |  

All
of the accrued balance of $444,000 is classified within current liabilities.
The restructuring charges are all classified as discontinued operations in the
accompanying Consolidated Condensed Statements of Operations. The accrued
balances at October 31, 2010 are managements best estimate of the amounts to
be incurred for the related categories.

The
following is a summary of restructuring charges and payments for the nine
months ended

24

---



October 31,
2009 (amounts in thousands):

|                                      |  |                                        |       |                             |   |                            |   |              |      |                                 |   |      |   |   |        |  
|------------------------------------- |  | -------------------------------------- | ----- | --------------------------- | - | -------------------------- | - | ------------ | ---- | ------------------------------- | - | ---- | - | - | ------ | -
|                                      |  | Employee 
 Severance and 
 Bonus Costs |       | Lease 
 Termination 
 Costs |   | Investment 
 Banker 
 Fees |   | ESP 
 Credit |      | Total 
 Restructuring 
 Accrual |  
|                                      |  |                                        |       |                             |   |                            |   |              |      |                                 |  
|                                      |  |                                        |       |                             |   |                            |   |              |      |                                 |  
|Balance, January 31, 2009             |  | $                                      | 2,839 |                             | $ |                           |   | $            | 834  |                                 | $ | 498  |   | $ | 4,171  |  
|Restructuring
 charges                |  |                                        |      |                             |   | 1,460                      |   |              |     |                                 |   |     |   |   | 1,460  |  
|Payment of
 restructuring liabilities |  |                                        | (436  | )                           |   | (409                       | ) |              |     |                                 |   |     |   |   | (845   | )
|                                      |  |                                        |       |                             |   |                            |   |              |      |                                 |   |      |   |   |        |  
|Balance,
 April 30, 2009              |  |                                        | 2,403 |                             |   | 1,051                      |   |              | 834  |                                 |   | 498  |   |   | 4,786  |  
|Restructuring
 charges                |  |                                        | 28    |                             |   | 1,492                      |   |              |     |                                 |   |     |   |   | 1,520  |  
|Restructuring
 benefits               |  |                                        | (706  | )                           |   |                           |   |              | (325 | )                               |   | (287 | ) |   | (1,318 | )
|Payment of
 restructuring liabilities |  |                                        | (838  | )                           |   | (975                       | ) |              |     |                                 |   | (211 | ) |   | (2,024 | )
|                                      |  |                                        |       |                             |   |                            |   |              |      |                                 |   |      |   |   |        |  
|Balance,
 July 31, 2009               |  |                                        | 887   |                             |   | 1,568                      |   |              | 509  |                                 |   |     |   |   | 2,964  |  
|Restructuring
 charges                |  |                                        | 57    |                             |   |                           |   |              |     |                                 |   |     |   |   | 57     |  
|Reversal of
 restructuring charges    |  |                                        |      |                             |   | (41                        | ) |              |     |                                 |   |     |   |   | (41    | )
|Payment of
 restructuring liabilities |  |                                        | (422  | )                           |   | (967                       | ) |              | (509 | )                               |   |     |   |   | (1,898 | )
|                                      |  |                                        |       |                             |   |                            |   |              |      |                                 |   |      |   |   |        |  
|Balance,
 October 31, 2009            |  | $                                      | 522   |                             | $ | 560                        |   | $            |     |                                 | $ |     |   | $ | 1,082  |  
|                                      |  |                                        |       |                             |   |                            |   |              |      |                                 |   |      |   |   |        |  

Note 14. Income
Taxes

The
effective tax rate on consolidated pre-tax income from continuing operations
was 36.4% for the nine months ended October 31, 2010, 33.5% for the year ended
January 31, 2010 and 53.0% for the nine months ended October 31, 2009. Included
in these amounts was the provision for state taxes which was approximately 5%
for the nine months ended October 31, 2010 and 2009. The effective tax rate on
consolidated pre-tax income from continuing operations was 36.6% for the three
months ended October 31, 2010 and 30.0% for the three months ended October 31,
2009. The primary reason for the differences between the statutory and
effective tax rates is the income of consolidated subsidiaries
being presented in the Consolidated Condensed Statements of Operations after
the income tax provision or benefit.

The Company files
a U.S. federal income tax return and income tax returns in various states. In
general, the Company is no longer subject to U.S. federal, state or local income
tax examinations by tax authorities for years ended January 31, 2007 and prior.
A reconciliation of the beginning and ending amount of unrecognized tax
benefits, including interest and penalties, is as follows (amounts in
thousands):

|                                            |  |   |       | 
|------------------------------------------- |  | - | ----- | 
|Unrecognized tax benefits, February 1, 2010 |  | $ | 2,338 | 
|Changes for prior years tax positions      |  |   | 85    | 
|Changes for current year tax positions      |  |   |      | 
|                                            |  |   |       | 
|Unrecognized tax benefits, October 31, 2010 |  | $ | 2,423 | 
|                                            |  |   |       | 

25

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Note 15. Discontinued
Operations and Assets Held for Sale

During
fiscal year 2009, the Company completed the exit of its retail business.
Accordingly, all operations of the Companys former retail segment and certain
sold properties have been classified as discontinued operations for all periods
presented. Once real estate property has been sold, and no continuing
involvement is expected, the Company classifies the results of the operations
as discontinued operations. The results of operations were previously reported
in the Companys retail or real estate segment, depending on when the store
ceased operations. Below is a table reflecting certain items of the
Consolidated Condensed Statements of Operations that were reclassified as
discontinued operations for the period indicated:

|                                                         |  |                                  |       |                                 |   |       |   |      |       |   |   |        |  
|-------------------------------------------------------- |  | -------------------------------- | ----- | ------------------------------- | - | ----- | - | ---- | ----- | - | - | ------ | -
|                                                         |  | Three Months Ended 
 October 31, |       | Nine Months Ended 
 October 31, |  
|                                                         |  | 2010                             |       | 2009                            |   | 2010  |   | 2009 |      
|                                                         |  |                                  |       |                                 |   |       |   |      |      
|                                                         |  | (In Thousands)                   |      
|                                                        
|Net sales
 and revenue                                   |  | $                                | 1,860 |                                 | $ | 2,780 |   | $    | 6,322 |   | $ | 32,632 |  
|Cost of
 sales                                           |  |                                  | 304   |                                 |   | 522   |   |      | 1,082 |   |   | 22,899 |  
|                                                         |  |                                  |       |                                 |   |       |   |      |       |   |   |        |  
|Income
 before income taxes                              |  |                                  | 886   |                                 |   | 988   |   |      | 2,510 |   |   | 1,799  |  
|Provision
 for income taxes                              |  |                                  | (340  | )                               |   | (360  | ) |      | (917  | ) |   | (655   | )
|                                                         |  |                                  |       |                                 |   |       |   |      |       |   |   |        |  
|Income from
 discontinued operations, net of tax         |  | $                                | 546   |                                 | $ | 628   |   | $    | 1,593 |   | $ | 1,144  |  
|                                                         |  |                                  |       |                                 |   |       |   |      |       |   |   |        |  
|Gain on disposal                                         |  | $                                | 253   |                                 | $ |      |   | $    | 284   |   | $ | 193    |  
|Provision
 for income taxes                              |  |                                  | (97   | )                               |   |      |   |      | (75   | ) |   | (70    | )
|                                                         |  |                                  |       |                                 |   |       |   |      |       |   |   |        |  
|Gain on
 disposal of discontinued operations, net of tax |  | $                                | 156   |                                 | $ |      |   | $    | 209   |   | $ | 123    |  
|                                                         |  |                                  |       |                                 |   |       |   |      |       |   |   |        |  

The
Company has classified one property with a carrying value of approximately
$92,000 as held for sale at October 31, 2010, which is included in other assets
in the accompanying Consolidated Condensed Balance Sheet.

Note 16. Commitments
and Contingencies

The
Company is involved in various legal actions arising in the normal course of
business. After taking into consideration legal counsels evaluations of such
actions, management is of the opinion that their outcome will not have a
material effect on the Companys consolidated condensed financial statements.

Levelland
Hockley and One Earth have combined forward purchase contracts for 1,927,000
bushels of sorghum and corn, the principal raw materials for their ethanol
plants. Levelland Hockley and One Earth expect to take delivery of the grain
through November 2010. The unrealized loss of such contracts was approximately
$1,000 at September 30, 2010.

Levelland
Hockley and One Earth have combined sales commitments for 7.1 million gallons
of ethanol and 116,000 tons of distillers grains. Levelland Hockley and One
Earth expect to deliver the

26

---



ethanol and
distillers grains through November 2010. The unrealized loss of such contracts
was approximately $1,116,000 at September 30, 2010.

Note 17. Segment
Reporting

Beginning
in the second quarter of fiscal year 2009, the Company realigned its reportable
business segments to be consistent with changes to its management structure and
reporting. The Company has two segments: alternative energy and real estate. In
prior years, the real estate segment was formerly included in the retail
segment and historical amounts have been reclassified to conform to the current
year segment reporting presentation. For stores and warehouses closed for which
the Company has a retained interest in the related real estate, operations are
presented in the real estate segment when retail operations cease. Former
retail operations results are classified as discontinued operations. The
Company evaluates the performance of each reportable segment based on segment
profit. Segment profit excludes income taxes, indirect interest expense,
discontinued operations, indirect interest income and certain other items that
are included in net income determined in accordance with accounting principles
generally accepted in the United States of America. Segment profit includes
realized and unrealized gains and losses on derivative financial instruments.
The following table summarizes segment and other results and assets (amounts in
thousands):

|                              |  |                                  |        |                                |   |        |  |      |         |   |   |        | 
|----------------------------- |  | -------------------------------- | ------ | ------------------------------ | - | ------ |  | ---- | ------- | - | - | ------ | 
|                              |  | Three Months Ended 
 October 31, |        | Nine Months Ended
 October 31, |  
|                              |  | 2010                             |        | 2009                           |   | 2010   |  | 2009 |        
|                              |  |                                  |        |                                |   |        |  |      |        
|Net sales
 and revenue:       |  |                                  |        |                                |   |        |  |      |         |   |   |        | 
|Alternative
 energy           |  | $                                | 69,974 |                                | $ | 61,368 |  | $    | 205,797 |   | $ | 92,296 | 
|Real estate                   |  |                                  | 369    |                                |   | 311    |  |      | 941     |   |   | 765    | 
|                              |  |                                  |        |                                |   |        |  |      |         |   |   |        | 
|Total net
 sales and revenues |  | $                                | 70,343 |                                | $ | 61,679 |  | $    | 206,738 |   | $ | 93,061 | 
|                              |  |                                  |        |                                |   |        |  |      |         |   |   |        | 
|                              |  |                                  |        |                                |   |        |  |      |         |   |   |        | 
|Segment
 gross profit (loss): |  |                                  |        |                                |   |        |  |      |         |   |   |        | 
|Alternative
 energy           |  | $                                | 7,155  |                                | $ | 5,790  |  | $    | 20,951  |   | $ | 6,740  | 
|Real estate                   |  |                                  | (350   | )                              |   | 9      |  |      | (729    | ) |   | 142    | 
|                              |  |                                  |        |                                |   |        |  |      |         |   |   |        | 
|Total gross
 profit           |  | $                                | 6,805  |                                | $ | 5,799  |  | $    | 20,222  |   | $ | 6,882  | 
|                              |  |                                  |        |                                |   |        |  |      |         |   |   |        | 

27

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|                                                                                    |  |                                 |         |                                |   |         |   |      |        |   |   |        |  
|----------------------------------------------------------------------------------- |  | ------------------------------- | ------- | ------------------------------ | - | ------- | - | ---- | ------ | - | - | ------ | -
|                                                                                    |  | Three Months Ended
 October 31, |         | Nine Months Ended
 October 31, |  
|                                                                                    |  | 2010                            |         | 2009                           |   | 2010    |   | 2009 |       
|                                                                                    |  |                                 |         |                                |   |         |   |      |       
|Segment profit (loss):                                                              |  |                                 |         |                                |   |         |   |      |        |   |   |        |  
|Alternative
 energy                                                                 |  | $                               | 7,929   |                                | $ | 4,569   |   | $    | 18,599 |   | $ | 2,222  |  
|Real estate                                                                         |  |                                 | (392    | )                              |   | (54     | ) |      | (896   | ) |   | (11    | )
|Corporate expense                                                                   |  |                                 | (605    | )                              |   | (740    | ) |      | (2,099 | ) |   | (1,592 | )
|Interest expense                                                                    |  |                                 | (81     | )                              |   | (60     | ) |      | (231   | ) |   | (192   | )
|Investment income                                                                   |  |                                 | 86      |                                |   | 82      |   |      | 355    |   |   | 230    |  
|                                                                                    |  |                                 |         |                                |   |         |   |      |        |   |   |        |  
|Income from continuing operations before
 income taxes and noncontrolling interests |  | $                               | 6,937   |                                | $ | 3,797   |   | $    | 15,728 |   | $ | 657    |  
|                                                                                    |  |                                 |         |                                |   |         |   |      |        |   |   |        |  
|                                                                                    |  |                                 |         |                                |   |         |   |      |        |   |   |        |  
|                                                                                    |  | October 31,
 2010               |         | January 31, 2010               |   |         |   |      |        |   |  
|                                                                                    |  |                                 |         |                                |   |         |   |      |        |   |  
|Assets:                                                                             |  |                                 |         |                                |   |         |   |      |        |   |   |        |  
|Alternative
 energy                                                                 |  | $                               | 314,730 |                                | $ | 302,228 |   |      |        |   |   |        |  
|Real estate                                                                         |  |                                 | 25,220  |                                |   | 31,796  |   |      |        |   |   |        |  
|Corporate                                                                           |  |                                 | 95,067  |                                |   | 117,481 |   |      |        |   |   |        |  
|                                                                                    |  |                                 |         |                                |   |         |   |      |        |   |   |        |  
|Total assets                                                                        |  | $                               | 435,017 |                                | $ | 451,505 |   |      |        |   |   |        |  
|                                                                                    |  |                                 |         |                                |   |         |   |      |        |   |   |        |  
|                                                                                    |  |                                 |         |                                |   |         |   |      |        |   |   |        |  
|                                                                                    |  | Three Months Ended
 October 31, |         | Nine Months Ended
 October 31, |  
|                                                                                    |  | 2010                            |         | 2009                           |   | 2010    |   | 2009 |       
|                                                                                    |  |                                 |         |                                |   |         |   |      |       
|Sales of
 products alternative energy segment:                                      |  |                                 |         |                                |   |         |   |      |        |   |   |        |  
|Ethanol                                                                             |  |                                 | 83      | %                              |   | 84      | % |      | 83     | % |   | 81     | %
|Dried distillers
 grains                                                            |  |                                 | 14      | %                              |   | 12      | % |      | 14     | % |   | 12     | %
|Wet distillers
 grains                                                              |  |                                 | 3       | %                              |   | 4       | % |      | 3      | % |   | 7      | %
|                                                                                    |  |                                 |         |                                |   |         |   |      |        |   |   |        |  
|Total                                                                               |  |                                 | 100     | %                              |   | 100     | % |      | 100    | % |   | 100    | %
|                                                                                    |  |                                 |         |                                |   |         |   |      |        |   |   |        |  
|                                                                                    |  |                                 |         |                                |   |         |   |      |        |   |   |        |  
|Sales of services real estate segment:                                              |  |                                 |         |                                |   |         |   |      |        |   |   |        |  
|Lease revenue                                                                       |  |                                 | 100     | %                              |   | 100     | % |      | 100    | % |   | 100    | %
|                                                                                    |  |                                 |         |                                |   |         |   |      |        |   |   |        |  

Certain
corporate costs and expenses, including information technology, employee
benefits and other shared services are allocated to the business segments. The
allocations are generally amounts agreed upon by management, which may differ
from amounts that would be incurred if such services were purchased separately
by the business segment. Corporate assets are primarily cash and deferred
income tax benefits.

Cash,
except for cash held by Levelland Hockley and One Earth, is considered to be
fungible and available for both corporate and segment use dependent on
liquidity requirements. Cash of approximately $14.2 million held by Levelland
Hockley and One Earth will be used to fund working capital and other needs for
those entities.

28

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Note 18. Related-Party
Transactions

During
the third quarter and first nine months of 2010, the Company purchased
approximately $38.0 million and approximately $103.4 million, respectively, of
corn from the Alliance Grain Elevator, an equity investor in One Earth. During
the third quarter and first nine months of 2009, the Company purchased
approximately $30.5 million and approximately $35.4 million, respectively, of
corn from the Alliance Grain Elevator.

Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations.

Overview

Historically,
we were a specialty retailer in the consumer electronics/appliance industry
serving small to medium-sized towns and communities. In addition, we have been
an investor in various alternative energy entities beginning with synthetic
fuel partnerships in 1998 and later ethanol production facilities beginning in
2006.

In
fiscal year 2007 we began to evaluate strategic alternatives for our retail
segment with a focus on closing unprofitable or marginally profitable retail
stores and monetizing our retail-related real estate assets. We did not believe
that we were generating an adequate return from our retail business due to the
competitive nature of the consumer electronics and appliance industry and the
overall economic conditions in the United States. Reflecting this focus, in
fiscal year 2008, we commenced an evaluation of a broad range of alternatives
intended to derive value from the remaining retail operations and our real
estate portfolio. We engaged an investment banking firm to assist us in
analyzing and ultimately marketing our retail operations. As part of those
marketing efforts, late in fiscal year 2008 we leased 37 owned store locations
to a third party. During fiscal year 2009, the lease agreements were
terminated. We are marketing the vacant properties to lease or sell.

We
completed our exit of the retail business as of July 31, 2009. Going forward,
we expect that our only retail related activities will consist of the
administration of previously sold extended service plans and the payment of
related claims. All activities related to extended service plans are classified
as discontinued operations.

We
currently have approximately $139 million of equity and debt investments in
five ethanol limited liability companies, two of which we have a majority
ownership interest in. We may consider making additional investments in the
alternative energy segment or in other industrial operations during fiscal year
2010.

Our
ethanol operations are highly dependent on commodity prices, especially prices
for corn, sorghum, ethanol, distillers grains and natural gas. As a result of
price volatility for these commodities, our operating results can fluctuate
substantially. The price and availability of corn and sorghum are subject to
significant fluctuations depending upon a number of factors that affect
commodity prices in general, including crop planting and conditions, weather,
federal policy and foreign trade. Because the market price of ethanol is not
always directly related to corn and sorghum prices, at times ethanol prices may
lag movements in corn prices and, in an environment of higher prices, reduce
the overall

29

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margin structure at the
plants. As a result, at times, we may operate our plants at negative or
marginally positive operating margins.

We
expect our ethanol plants to produce approximately 2.8 gallons of denatured
ethanol for each bushel of grain processed in the production cycle. We refer to
the difference between the price per gallon of ethanol and the price per bushel
of grain (divided by 2.8) as the crush spread. Should the crush spread
decline, it is possible that our ethanol plants will generate operating results
that do not provide adequate cash flows for sustained periods of time. In such
cases, production at the ethanol plants may be reduced or stopped altogether in
order to minimize variable costs at individual plants. We expect these
decisions to be made on an individual plant basis, as there are different
market conditions at each of our ethanol plants.

We
attempt to manage the risk related to the volatility of grain and ethanol
prices by utilizing forward grain purchase and forward ethanol and distillers
grain sale contracts. We attempt to match quantities of ethanol and distillers
grains sale contracts with an appropriate quantity of grain purchase contracts
over a given period of time when we can obtain an adequate gross margin
resulting from the crush spread inherent in the contracts we have executed.
However, the market for future ethanol sales contracts is not a mature market.
Consequently, we generally execute contracts for no more than three months into
the future at any given time. As a result of the relatively short period of
time our contracts cover, we generally cannot predict the future movements in
the crush spread for more than three months; thus, we are unable to predict the
likelihood or amounts of future income or loss from the operations of our
ethanol facilities.

Critical Accounting Policies and Estimates

During
the three months ended October 31, 2010, we did not change any of our
critical accounting policies as disclosed in our 2009 Annual Report on Form
10-K as filed with the Securities and Exchange Commission on April 16, 2010.
All other accounting policies used in preparing our interim fiscal year 2010
Condensed Consolidated Financial Statements are the same as those described in
our Form 10-K.

Fiscal Year

All
references in this report to a particular fiscal year are to REXs fiscal year
ended January 31. For example, fiscal year 2010 means the period February 1,
2010 to January 31, 2011.

We
are no longer presenting the comparable prior year quarter end balance sheet
(October 31, 2009) which was included in prior year quarterly filings. With the
exit of the retail business, and the lack of seasonality of working capital
balances in the alternative energy and real estate segments, we believe such
information is no longer useful to understand trends in our business.

Results of Operations

For
a detailed analysis of period to period changes, see the segment discussion
that follows this section as this is how management views and monitors our
business.

30

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Comparison of Three Months and Nine Months Ended October 31,
2010 and 2009

Net
sales and revenue in the quarter ended October 31, 2010 were approximately
$70.3 million compared to approximately $61.7 million in the prior years third
quarter, representing an increase of approximately $8.6 million. Net sales and
revenue do not include sales from retail and real estate operations classified
as discontinued operations. The increase was primarily caused by higher sales
in our alternative energy segment of approximately $8.6 million. Net sales and
revenue from our real estate segment were consistent with the prior years
third quarter.

Net
sales and revenue for the first nine months of fiscal year 2010 were approximately $206.7 million compared
to approximately $93.1 million
for the first nine months of fiscal year 2009. This represents an increase of approximately $113.6 million. A
majority of the increase was caused by higher sales in our alternative energy
segment of approximately $113.5
million, primarily a result of One
Earth becoming fully operational during the third quarter of fiscal year 2009.

The
following table reflects the approximate percent of net sales for each major
product and service group for the following periods:

|                        |  |                                 |     |                                |  |      |   |      |     |   |  |     |  
|----------------------- |  | ------------------------------- | --- | ------------------------------ |  | ---- | - | ---- | --- | - |  | --- | -
|                        |  | Three Months Ended
 October 31, |     | Nine Months Ended
 October 31, | 
|Product Category        |  | 2010                            |     | 2009                           |  | 2010 |   | 2009 |    
|                        |  |                                 |     |                                |  |      |   |      |    
|Ethanol                 |  |                                 | 83  | %                              |  | 83   | % |      | 83  | % |  | 81  | %
|Dried distillers grains |  |                                 | 13  |                                |  | 12   |   |      | 13  |   |  | 12  |  
|Wet distillers grains   |  |                                 | 3   |                                |  | 4    |   |      | 3   |   |  | 6   |  
|Leasing                 |  |                                 | 1   |                                |  | 1    |   |      | 1   |   |  | 1   |  
|                        |  |                                 |     |                                |  |      |   |      |     |   |  |     |  
|Total                   |  |                                 | 100 | %                              |  | 100  | % |      | 100 | % |  | 100 | %
|                        |  |                                 |     |                                |  |      |   |      |     |   |  |     |  

Gross
profit of approximately $6.8 million (9.7% of net sales and revenue) in the
third quarter of fiscal year 2010 was approximately $1.0 million higher than
the approximately $5.8 million (9.4% of net sales and revenue) recorded in the
third quarter of fiscal year 2009. Gross profit for the third quarter of fiscal
year 2010 increased by approximately $1.4 million compared to the prior year
from our alternative energy segment. Gross loss for the third quarter of fiscal
year 2010 increased by approximately $0.4 million compared to the prior year
from our real estate segment.

Gross
profit for the first nine months of fiscal year 2010 was approximately $20.2 million (9.8% of
net sales and revenue) which was approximately $13.3 million higher compared to
approximately $6.9 million (7.4%
of net sales and revenue) for the first nine months of fiscal year 2009. Gross
profit for the nine months ended October 31, 2010 increased by approximately $14.2 million compared
to the prior year as a result of operations in the alternative energy segment.
Gross profit for the first nine months of fiscal year 2010 decreased by approximately $0.9 million compared to
the prior year from our real estate segment.

Selling,
general and administrative expenses for the third quarter of fiscal year 2010
were approximately $1.9
million (2.7% of net sales and revenue), an increase of approximately $0.4 million from approximately $1.5 million (2.5% of net sales and revenue) for
the third quarter of fiscal year

31

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2009. Selling, general and administrative expenses
were approximately $5.9
million (2.9% of net sales and revenue) for the first nine months of fiscal
year 2010 representing an increase of
approximately $2.2 million from approximately
$3.7 million (4.0% of net sales and revenue) for the first nine months
of fiscal year 2009. For the third quarter of fiscal year 2010, these expenses
increased approximately $0.5 million compared to the prior year in the
alternative energy segment. For the first nine months of fiscal year 2010,
these expenses increased approximately $1.7 million and approximately $0.5 million compared to the prior year in the
alternative energy segment and the corporate and other category, respectively.

Interest
income was $121,000 and $92,000 for the third quarters of fiscal years 2010 and
2009, respectively. Interest income was $408,000 and $356,000 for the first
nine months of fiscal years 2010 and 2009, respectively. We expect interest
income to remain consistent with the prior year results for the remainder of
fiscal year 2010.

Interest
expense was approximately
$1.4 million for the third quarter of fiscal year 2010, a decrease of approximately $0.2 million from the
prior year third quarter. Interest expense was approximately $4.1 million for the first nine months of fiscal
year 2010 compared to approximately $3.1
million for the first nine months of fiscal year 2009, an increase of approximately $1.0 million. The
increases were primarily attributable to the alternative energy segment as we
had higher amounts of average debt outstanding upon the completion of
construction of One Earths ethanol plant. We expect interest expense,
subsequent to the quarter ended October 31, 2010 to be consistent with prior
year amounts as the construction of One Earths ethanol plant was completed
prior to the end of the second quarter of fiscal year 2009. Consequently, we
ceased capitalizing interest related to such construction during the second
quarter of fiscal year 2009.

During
the first nine months of fiscal year 2010, we paid off real estate related debt
prior to its maturity. As a result, we incurred prepayment penalties and the
write off of prepaid loan fees of approximately $48,000 compared to $113,000
incurred during the first nine months of fiscal year 2009.

During
the third quarters of fiscal years 2010 and 2009, we recognized income of
approximately $3,694,000 and $1,221,000, respectively, from our equity
investments in Big River, Patriot and NuGen. During the first nine months of
fiscal years 2010 and 2009, we recognized income of approximately $7,625,000
and $1,144,000, respectively, from our equity investments in Big River, Patriot
and NuGen. Big River has
a 92 million gallon plant which has been in operation since 2004. Big River
opened an additional 100 million gallon plant during the second quarter of
fiscal year 2009 and acquired a 50.5% ownership in a 100 million gallon plant
in August 2009. Patriot has a 100 million gallon plant which has been in operation
since the second quarter of fiscal year 2008. We acquired a 48% ownership
interest in NuGen, which operates a 100 million gallon plant, on July 1, 2010.

Due
to the inherent volatility of the crush spread, we cannot predict the
likelihood of future operating results from Big River, Patriot and NuGen being
similar to fiscal year 2010 results.

During
the third quarter of fiscal year 2009, Levelland Hockley entered into an
agreement with Layne Christensen Company (Layne) to settle litigation
between the two parties. As a result of the settlement agreement, Layne paid
Levelland Hockley approximately $1.5
million. Of the proceeds received, approximately $0.3 million was recognized as
other income during the third quarter of fiscal

32

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year 2009. The remainder of the settlement offset
contingent legal expenses and reduced the carrying amount of certain plant
equipment.

During
the third quarter of fiscal year 2009, Levelland Hockley received notification
from the United States Department of Agriculture that Levelland Hockley had
been approved to receive funds under the Advanced Biofuel Producer Program. As
a result, approximately $0.5 million was recognized as other income during the
third quarter of fiscal year 2009. We recognized income of approximately $0.1
million during the third quarter of fiscal year 2010 related to residual
payments of the 2009 grant.

We
recognized losses of approximately $0.5 million and approximately $0.9 million during the
third quarters of fiscal years 2010 and 2009, respectively, related to forward
starting interest rate swap agreements that One Earth and Levelland Hockley
entered into during fiscal year 2007. We recognized a loss related to the swaps
of approximately $2.5 million during the first nine months of fiscal year 2010
compared to approximately $1.6
million during the first nine months of fiscal year 2009. Levelland Hockleys
swap expired in April 2010 while One Earths swaps will expire in July 2011 and
July 2014. In general, declining interest rates have a negative effect on our
interest rate swaps as our swaps fixed the interest rate of variable rate debt.
Should interest rates continue to decline, we would expect to experience
continued losses on the interest rate swaps. We would expect to incur gains on
the interest rate swaps should interest rates increase. We cannot predict the
future movements in interest rates; thus, we are unable to predict the
likelihood or amounts of future gains or losses related to interest rate swaps.

Our
effective tax rate was 36.6% and 30.0% for the third quarters of fiscal years
2010 and 2009, respectively. Our effective tax rate for the first nine months
of fiscal year 2010 was 36.4% compared to 53.0% for the first nine months of
fiscal year 2009. Our effective tax rate decreased, as the noncontrolling
interests in the income or loss of consolidated subsidiaries is presented in
the Consolidated Condensed Statements of Operations after the income tax
provision or benefit. The noncontrolling interests in the income or loss of
Levelland and One Earth were a higher proportion of pre-tax income in fiscal
year 2009 compared to the pre-tax income for fiscal year 2010. In addition, the
provision for uncertain tax positions increased the tax provision recognized
during fiscal year 2009.

As
a result of the foregoing, income from continuing operations including
noncontrolling interests was approximately $4.4 million for the third quarter
of fiscal year 2010 versus approximately $2.7 million for the third quarter of
fiscal year 2009. Income from continuing operations including noncontrolling
interests was approximately $10.0 million for the first nine months of fiscal
year 2010 versus approximately $0.3 million for the first nine months of fiscal
year 2009.

During
fiscal year 2009, we closed our remaining retail stores and warehouse
operations and reclassified all retail related results as discontinued
operations. As a result of these closings and certain other retail store and
real estate property closings from prior years, we had income from discontinued
operations, net of tax, of approximately $0.5 million in the third quarter of
fiscal year 2010 and approximately $0.6 million in the third quarter of fiscal
year 2009. We had income from discontinued operations, net of tax
benefit, of approximately $1.6 million for the first nine months of fiscal year
2010 compared to approximately $1.1 million for the first nine months of fiscal
year 2009. The improvement in
profitability in the current year nine months results from no unprofitable
retail

33

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operations in the current
year since we exited the retail business during fiscal year 2009. Going
forward, we expect current year results to be lower than historical results as
our extended warranty policies continue to expire, thus reducing the related
recognition of deferred income. Eight properties classified as discontinued
operations were sold during the first nine months of fiscal year 2010,
resulting in gains, net of taxes of $209,000, compared to gains, net of tax of
$123,000 during the first nine months of fiscal year 2009.

Income
related to noncontrolling interests was approximately $0.9 million and
approximately $1.0 million during the third quarters of fiscal years 2010 and
2009, respectively, and approximately
$2.1 million and approximately $0.2
million for the nine months ended October 31, 2010 and 2009, respectively, and represents the owners (other than us)
share of the income or loss of Levelland Hockley and One Earth.

As
a result of the foregoing, net income attributable to REX common shareholders
for the third quarter of fiscal year 2010 was approximately $4.3 million, an
increase of approximately $2.0
million from approximately $2.3
million for the third quarter of fiscal year 2009. Net income attributable to
REX common shareholders for the first nine months of fiscal year 2010 was
approximately $9.7 million, an increase of approximately $8.3 million from approximately $1.4 million for the first nine months of fiscal
year 2009.

Business
Segment Results

During
fiscal year 2009, we realigned our reportable business segments to be
consistent with changes to our management structure and reporting. We presently
have two segments: alternative energy and real estate. The real estate segment
was previously included in the former retail segment. For former retail stores
and warehouses closed which we have a retained interest in the related real
estate, operations are currently presented in the real estate segment based
upon when retail operations ceased. Historical results from retail store
operations have been reclassified as discontinued operations for all periods
presented.

The
following sections discuss the results of operations for each of our business
segments and corporate and other. As discussed in Note 17, our chief operating
decision maker (as defined by ASC280, Segment Reporting) evaluates the
operating performance of our business segments using a measure we call segment
profit. Segment profit includes gains and losses on derivative financial
instruments. Segment profit excludes income taxes, indirect interest expense,
discontinued operations, indirect interest income and certain other items that
are included in net income determined in accordance with accounting principles
generally accepted in the United States of America. Management believes these
are useful financial measures; however, they should not be construed as being
more important than other comparable GAAP measures.

Items
excluded from segment profit generally result from decisions made by corporate
executives. Financing, divestiture and tax structure decisions are generally
made by corporate executives. Excluding these items from our business segment
performance measure enables us to evaluate business segment operating
performance based upon current economic conditions.

34

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The
following table sets forth, for the periods indicated, sales and profits by
segment (amounts in thousands):

|                                                                                    |  |                                 |        |                                |   |        |   |      |         |   |   |        |  
|----------------------------------------------------------------------------------- |  | ------------------------------- | ------ | ------------------------------ | - | ------ | - | ---- | ------- | - | - | ------ | -
|                                                                                    |  | Three Months Ended
 October 31, |        | Nine Months Ended
 October 31, |  
|                                                                                    |  | 2010                            |        | 2009                           |   | 2010   |   | 2009 |        
|                                                                                    |  |                                 |        |                                |   |        |   |      |        
|Net sales and
 revenue:                                                             |  |                                 |        |                                |   |        |   |      |         |   |   |        |  
|Alternative
 energy                                                                 |  | $                               | 69,974 |                                | $ | 61,368 |   | $    | 205,797 |   | $ | 92,296 |  
|Real estate                                                                         |  |                                 | 369    |                                |   | 311    |   |      | 941     |   |   | 765    |  
|                                                                                    |  |                                 |        |                                |   |        |   |      |         |   |   |        |  
|Total net sales
 and revenues                                                       |  | $                               | 70,343 |                                | $ | 61,679 |   | $    | 206,738 |   | $ | 93,061 |  
|                                                                                    |  |                                 |        |                                |   |        |   |      |         |   |   |        |  
|                                                                                    |  |                                 |        |                                |   |        |   |      |         |   |   |        |  
|Segment gross
 profit (loss):                                                       |  |                                 |        |                                |   |        |   |      |         |   |   |        |  
|Alternative
 energy                                                                 |  | $                               | 7,155  |                                | $ | 5,790  |   | $    | 20,951  |   | $ | 6,740  |  
|Real estate                                                                         |  |                                 | (350   | )                              |   | 9      |   |      | (729    | ) |   | 142    |  
|                                                                                    |  |                                 |        |                                |   |        |   |      |         |   |   |        |  
|Total gross
 profit                                                                 |  | $                               | 6,805  |                                | $ | 5,799  |   | $    | 20,222  |   | $ | 6,882  |  
|                                                                                    |  |                                 |        |                                |   |        |   |      |         |   |   |        |  
|                                                                                    |  |                                 |        |                                |   |        |   |      |         |   |   |        |  
|Segment profit
 (loss):                                                             |  |                                 |        |                                |   |        |   |      |         |   |   |        |  
|Alternative
 energy                                                                 |  | $                               | 7,929  |                                | $ | 4,569  |   | $    | 18,599  |   | $ | 2,222  |  
|Real estate                                                                         |  |                                 | (392   | )                              |   | (54    | ) |      | (896    | ) |   | (11    | )
|Corporate
 expense                                                                  |  |                                 | (605   | )                              |   | (740   | ) |      | (2,099  | ) |   | (1,592 | )
|Interest expense                                                                    |  |                                 | (81    | )                              |   | (60    | ) |      | (231    | ) |   | (192   | )
|Investment
 income                                                                  |  |                                 | 86     |                                |   | 82     |   |      | 355     |   |   | 230    |  
|                                                                                    |  |                                 |        |                                |   |        |   |      |         |   |   |        |  
|Income from
 continuing operations before income taxes and noncontrolling interests |  | $                               | 6,937  |                                | $ | 3,797  |   | $    | 15,728  |   | $ | 657    |  
|                                                                                    |  |                                 |        |                                |   |        |   |      |         |   |   |        |  

Alternative
Energy

The
alternative energy segment includes the consolidated financial statements of
Levelland Hockley and One Earth, our equity method investments in ethanol
facilities, the income related to those investments and certain administrative
expenses. One Earth began limited production operations late in the second
quarter of fiscal year 2009 and became fully operational during the third
quarter of fiscal year 2009. We acquired a 48% interest in NuGen during the
second quarter of fiscal year 2010.

Trends and Uncertainties Impacting the
Ethanol Industry and Our Operations

Government
Legislation and Regulations

The
ethanol industry and our business are assisted by various federal ethanol
supports and tax incentives, including those included in the Energy Policy Act
of 2005 and the Energy Independence and Security Act of 2007. Government
incentives for ethanol production, including federal tax incentives, may be reduced
or eliminated in the future, which could hinder our ability to operate at a
profit. Federal ethanol supports, such as the renewable fuels standard (RFS),
help support a market for ethanol that might disappear without this incentive;
as such, a waiver of minimum levels of renewable fuels included in gasoline
could have a material adverse effect on our results of operations. The
elimination or reduction of tax incentives to the ethanol industry, such as the
VEETC available to

35

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gasoline refiners and blenders, could reduce the
market for ethanol, causing prices, revenues, and profitability to decrease.
VEETC is set to expire on December 31, 2010, unless extended.

On
September 1, 2010, Levelland Hockley amended its loan agreement with the Bank
to make certain covenants less restrictive and to waive defaults occurring
prior to July 1, 2010. As a condition of the modification of the loan
agreement, REX agreed to increase its line of credit facility to Levelland
Hockley from $3.0 million to $4.0 million (inclusive of a $1.0 million letter
of credit) through January 31, 2011. In exchange for REX increasing the line of
credit facility, REX received a warrant which entitles REX to subscribe for and
purchase from Levelland Hockley 324,675 membership units at an exercise price
of $3.08 per membership unit.

Management
believes, based on forecasts which are primarily based on estimates of plant
production, the implicit crush spread obtained from outstanding forward
contracts, prices of ethanol, milo, distillers grains and natural gas as well
as other assumptions management believes to be reasonable, that it is not
probable that Levelland Hockley will fail to maintain compliance with the
requirements of its debt covenants for the next 12 months. However, if a material
adverse change in the financial position or operations of Levelland Hockley
should occur, or if actual sales, the availability of milo or if expenses are
substantially different than forecasted, Levelland Hockleys liquidity and
ability to fund future operating and capital requirements and compliance with
debt covenants could be negatively impacted. Should Levelland Hockley fail to
maintain such compliance and be unable to obtain a waiver from the Bank or
refinance the debt, the related debt would become immediately due and payable.
Ultimately, this could result in a material impairment charge.

We
completed an impairment analysis of the long lived assets of Levelland Hockley
as of October 31, 2010. This analysis resulted in no impairment charges being
recorded as the estimated future gross undiscounted cash flows generated by
Levelland Hockley, over the estimated remaining useful life of the assets,
exceeded the carrying value. However, a significant change in the estimates
used in this analysis could result in the carrying value of Levelland Hockleys
long lived assets exceeding its estimated future gross undiscounted cash flows,
which would require further analysis of fair value and could require an
impairment charge in the near term. The impairment charge could be material.

The
following table summarizes sales from Levelland Hockley and One Earth by
product group (amounts in thousands):

|                        |  |                                 |        |                                |   |        |  |      |         |  |   |        | 
|----------------------- |  | ------------------------------- | ------ | ------------------------------ | - | ------ |  | ---- | ------- |  | - | ------ | 
|                        |  | Three Months Ended
 October 31, |        | Nine Months Ended
 October 31, |  
|                        |  | 2010                            |        | 2009                           |   | 2010   |  | 2009 |        
|                        |  |                                 |        |                                |   |        |  |      |        
|                       
|Ethanol                 |  | $                               | 58,394 |                                | $ | 51,332 |  | $    | 171,677 |  | $ | 75,108 | 
|Dried distillers grains |  |                                 | 9,612  |                                |   | 7,636  |  |      | 28,129  |  |   | 10,925 | 
|Wet distillers grains   |  |                                 | 1,910  |                                |   | 2,268  |  |      | 5,639   |  |   | 5,958  | 
|Other                   |  |                                 | 58     |                                |   | 132    |  |      | 352     |  |   | 305    | 
|                        |  |                                 |        |                                |   |        |  |      |         |  |   |        | 
|Total                   |  | $                               | 69,974 |                                | $ | 61,368 |  | $    | 205,797 |  | $ | 92,296 | 
|                        |  |                                 |        |                                |   |        |  |      |         |  |   |        | 

36

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The following table summarizes certain operating data
from Levelland Hockley and One Earth:

|                                                          |  |                                 |        |                                |   |        |  |      |        |  |   |        | 
|--------------------------------------------------------- |  | ------------------------------- | ------ | ------------------------------ | - | ------ |  | ---- | ------ |  | - | ------ | 
|                                                          |  | Three Months Ended
 October 31, |        | Nine Months Ended
 October 31, |  
|                                                          |  | 2010                            |        | 2009                           |   | 2010   |  | 2009 |       
|                                                          |  |                                 |        |                                |   |        |  |      |       
|                                                         
|Average selling
 price per gallon of ethanol              |  | $                               | 1.71   |                                | $ | 1.59   |  | $    | 1.67   |  | $ | 1.59   | 
|Average selling
 price per ton of dried distillers grains |  | $                               | 118.88 |                                | $ | 100.94 |  | $    | 117.30 |  | $ | 113.39 | 
|Average selling
 price per ton of wet distillers grains   |  | $                               | 36.53  |                                | $ | 43.67  |  | $    | 33.63  |  | $ | 48.04  | 
|Average cost per
 bushel of grain                         |  | $                               | 3.81   |                                | $ | 3.63   |  | $    | 3.70   |  | $ | 3.61   | 
|Average cost of
 natural gas (per mmbtu)                  |  | $                               | 4.81   |                                | $ | 3.63   |  | $    | 5.00   |  | $ | 4.17   | 

Segment
Results  Third Quarter Fiscal Year 2010 Compared to Third Quarter Fiscal Year
2009

Net
sales and revenue increased approximately $8.6 million to approximately $70.0
million primarily as a result of approximately 1.7 million more gallons of
ethanol and approximately 6,000 more tons of distillers grains sold during the
current year compared to the prior year. The increases in gallons of ethanol
and tons of distillers grains sold primarily relate to production efficiencies
realized at One Earth during the current year over the prior year as One Earth
becoming fully operational during the third quarter of fiscal year 2009. The
average selling price per gallon of ethanol increased from the prior year level
of $1.59 to $1.71 in the current year. Our ethanol sales were based upon
approximately 34.1 million gallons of ethanol in the current year compared to
approximately 32.4 million gallons of ethanol in the prior year. The average
selling price per ton of dried distillers grains increased from the prior year
level of $100.94 to $118.88 in the current year. Our sales were based upon
approximately 81,000 tons of dried distillers grains in the current year
compared to approximately 76,000 tons of dried distillers grains in the prior
year. The average selling price per ton of wet distillers grains decreased from
the prior year level of $43.67 to $36.53 in the current year. Our sales were
based upon approximately 52,000 tons of wet distillers grains in the current
year compared to approximately 51,000 tons of wet distillers grains in the
prior year. We expect that net sales and revenue in future periods will be
based upon annual production of approximately 130 million to 140 million
gallons of ethanol and approximately 300,000 tons to 330,000 tons of dried
distillers grains per year. This expectation assumes that One Earth and
Levelland will operate at or near nameplate capacity, which is dependent upon
the crush spread realized at each respective plant.

Gross
profit from these sales was approximately $7.2 million (10.2% of net sales and
revenue) during the current year compared to approximately $5.8 million (9.4%
of net sales and revenue) during the prior year. Gross profit improved
primarily because of the volume increases in ethanol and distillers grains sold
discussed above and because of an improved spread between ethanol and grain
prices in the current year compared to the prior year. Grain accounted for
approximately 75.4% ($47.4 million) of our cost of sales during the current
year compared to 76.0% ($42.2 million) during the prior year. Natural gas
accounted for approximately 7.1% ($4.5 million) of our cost of sales during the
current year compared to 6.2% ($3.4 million) during the prior year. Given the
inherent volatility in ethanol and grain

37

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prices, we cannot predict
the trend of the spread between ethanol and grain prices in future periods
compared to historical periods.

Selling,
general and administrative expenses were approximately $1.3 million in the
current year, an increase of $0.6 million over the $0.7 million incurred during
the prior year. A majority of the increase results from higher incentive
compensation during the current year, commensurate with the higher
profitability levels in 2010.

Interest
expense decreased approximately $0.3 million in the current year compared to
the prior year to $1.4 million, as our average outstanding debt has decreased
related to principal repayments. Based on current interest rates, we expect
interest expense in future quarters to be consistent with the first nine months
of fiscal year 2010 amounts based on current debt levels.

Income
from equity method investments in Big River, Patriot and NuGen increased from
$1.2 million in the prior year to $3.7 million in the current year. We
recognized approximately $1.5 million of income from Big River in the current
year compared to approximately $0.5 million in the prior year. We recognized
approximately $1.5 million of income from Patriot in the current year compared
to approximately $0.7 million in the prior year. We recognized approximately
$0.6 million of income from NuGen in the current year; this was the first
quarter we reported income from NuGen given that our acquisition of our
interest in NuGen was effective July 1, 2010. The improvement in Big Rivers
and Patriots profitability over the prior year levels is primarily a result of
improved crush spreads. Given the inherent volatility in the factors that
affect the crush spread, we cannot predict the likelihood that the trend with
respect to income from equity method investments will continue in future
periods.

Losses
on derivative financial instruments held by One Earth were approximately $0.5
million in the current year compared to approximately $0.9 million in the prior
year for derivatives held by One Earth and Levelland, driven by declining
interest rates. Since the gains or losses on these derivative financial
instruments are primarily a function of the movement in interest rates, we
cannot predict the likelihood that such gains or losses in future periods will
be consistent with current year results.

As
a result of the factors discussed above, segment profit increased to
approximately $7.9 million in the current year compared to approximately $4.6
million in the prior year.

Segment
Results  Nine Months Ended October 31, 2010 Compared to Nine Months Ended
October 31, 2009

Net
sales and revenue in the current year increased approximately $113.5 million,
compared to the prior year, to approximately $205.8 million, primarily a result
of One Earth becoming fully operational during the third quarter of fiscal year
2009. The average selling price per gallon of ethanol increased to $1.67 in the
current year from $1.59 in the prior year. Our sales were based upon
approximately 103.0 million gallons of ethanol in the current year compared to
approximately 75.1 million gallons of ethanol in the prior year. The average
selling price per ton of dried distillers grains increased from the prior year
level of $113.39 to

38

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$117.30 in the current year.
Our sales were based upon approximately 240,000 tons of dried distillers grains
in the current year compared to approximately 97,000 tons of dried distillers
grains in the prior year. We expect that net sales and revenue in future
periods will be based upon annual production of approximately 130 million to
140 million gallons of ethanol and approximately 300,000 tons to 330,000 tons
of dried distillers grains per year. This expectation assumes that One Earth
and Levelland will operate at or near nameplate capacity, which is dependent
upon the crush spread realized at each respective plant.

Gross
profit from these sales was approximately $21.0 million (10.2% of net sales and
revenue) during the current year compared to approximately $6.7 million (7.3%
of net sales and revenue) during the prior year. Gross profit improved
primarily because of the volume increases in ethanol and distillers grains sold
discussed above and because of an improved spread between ethanol and grain
prices in the current year compared to the prior year. Grain accounted for
approximately 74.6% ($137.9 million) of our cost of sales during the current
year compared to 75.0% ($64.2 million) during the prior year. Natural gas
accounted for approximately 7.8% ($14.4 million) of our cost of sales during
the current year compared to 6.9% ($5.9 million) during the prior year. Given
the inherent volatility in ethanol and grain prices, we cannot predict the
trend of the spread between ethanol and grain prices in future periods compared
to historical periods.

Selling,
general and administrative expenses were approximately $3.7 million in the
current year, a $1.7 million increase from approximately $2.0 million in the
prior year. Incentive compensation was the primary reason for the increase as
    this expense was approximately $0.9 million higher compared to the prior
    year, as profitability from this segment during the current year exceeded
    the prior year. In addition, expenses increased approximately $0.3 million
    over the prior year, primarily related to One Earth commencing production
    operations subsequent to the first quarter of fiscal year 2009. Professional
    fees increased approximately $0.2 million over the prior year, primarily
    related to higher tax planning fees and costs incurred related to the acquisition
of our interest in NuGen.

Interest
expense increased approximately $0.9 million in the current year over the prior
year to approximately $4.0 million, as we no longer capitalize interest on the
One Earth credit facility subsequent to the commencement of operations at the
plant. In addition, One Earth borrowed approximately $49.0 million during
fiscal year 2009 as it completed construction of its ethanol plant; the
resulting higher outstanding debt amount also contributed to the increase in
interest expense. Based on current interest rates, we expect interest expense
in future quarters to be consistent with the first nine months of fiscal year
2010 based on current debt levels.

Income
from equity method investments in Big River, Patriot and NuGen increased from
approximately $1.1 million in the prior year to approximately $7.6 million in
the current year. We recognized approximately $3.5 million of income from Big
River in the current year compared to approximately $0.7 million in the prior
year. We recognized approximately $3.5 million of income from Patriot in the
current year compared to approximately $0.5 million in the prior year. We
recognized approximately $0.6 million of income from NuGen in the current year;
this was the first period we reported income from NuGen given that our
acquisition of our interest in NuGen was effective July 1, 2010. The
improvement in Big Rivers and Patriots

39

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profitability over the prior
year levels is primarily a result of improved crush spreads. Given the inherent
volatility in the factors that affect the crush spread, we cannot predict the
likelihood that the trend with respect to income from equity method investments
will continue in future periods.

Losses
on derivative financial instruments held by One Earth and Levelland were
approximately $2.5 million in the current year compared to approximately $1.6
million in the prior year. Since the gains or losses on these derivative
financial instruments are primarily a function of the movement in interest
rates, we cannot predict the likelihood that such gains or losses in future
periods will be consistent with current year results.

As
a result of the factors discussed above, segment profit increased to
approximately $18.6 million in the current year compared to approximately $2.2
million in the prior year.

Real
Estate

The
real estate segment includes all owned and sub-leased real estate including
those previously used as retail store and distribution center operations, our
real estate leasing activities and certain administrative expenses. It excludes
results from discontinued operations.

At
October 31, 2010, we have lease agreements, as landlord, for all or parts of 15
owned former retail stores (100,000 square feet leased and 20,000 square feet
vacant). Of these lease agreements, six are temporary, seasonal leases. We have
19 owned former retail stores (229,000 square feet) that are vacant at October
31, 2010. In addition, one former distribution center is partially leased
(156,000 square feet), partially occupied by our corporate office personnel
(10,000 square feet) and partially vacant (300,000 square feet). We are
marketing all of our fully and partially vacant properties for lease or sale.

Segment Results
 Third Quarter Fiscal Year 2010 Compared to Third Quarter Fiscal Year 2009

Net
sales and revenue of $369,000 were consistent with the prior year amount of
$311,000. We expect lease revenue for the remainder of fiscal year 2010 to be
consistent with the first nine months of fiscal year 2010 based upon leases
currently executed.

Gross
loss in the current year was $350,000 compared to gross profit of $9,000 in the
prior year. The increase in gross loss compared to the prior year is primarily
a result of impairment charges of $256,000 related to three locations. We
expect our gross loss for the remainder of fiscal year 2010 to be consistent
with the first nine months of fiscal year 2010 based upon leases currently
executed. If we are successful in our marketing efforts related to vacant
properties, we would expect gross profit (loss) to improve over the first nine
months of fiscal year 2010 results.

As
a result of the factors discussed above, segment loss increased to $392,000 in
the current year from $54,000 in the prior year.

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Segment Results  Nine Months Ended October
31, 2010 Compared to Nine Months Ended October 31, 2009

Net
sales and revenue increased in the current year to $941,000 from $765,000 in
the prior year. This increase is primarily the result of a lease we entered
into for a portion of one of our distribution centers which began during the
fourth quarter of fiscal year 2009. We expect lease revenue for the remainder
of fiscal year 2010 to be consistent with the first nine months of fiscal year
2010 based upon leases currently executed.

Gross
loss in the current year was approximately $0.7 million compared to gross
profit of $0.1 million in the prior year. Gross profit declined compared to the
prior year as a result of expenses associated with vacant properties and
impairment charges. A majority of the vacant properties were being used in our
retail segment during the first quarter of fiscal year 2009. Impairment charges
were $256,000 in fiscal year 2010 and related to three properties. We expect gross
loss for the remainder of fiscal year 2010 to be consistent with the first nine
months of fiscal year 2010 based upon leases currently executed. If we are
successful in our marketing efforts related to vacant properties, we would
expect gross profit (loss) to improve over the first nine months of fiscal year
2010 results.

As
a result of the factors discussed above, segment loss increased to $896,000 in
the current year from $11,000 in the prior year.

Corporate and Other

Corporate
and other includes certain administrative expenses of the corporate
headquarters, interest expense and investment income not directly allocated to
the alternative energy or real estate segments.

Corporate and Other
Results  Third Quarter Fiscal Year 2010 Compared to Third Quarter Fiscal Year
2009

Selling,
general and administrative expenses were approximately $0.6 million in the
current year consistent with approximately $0.7 million in the prior year. We
expect selling, general and administrative expenses for the remainder of fiscal
year 2010 to be consistent with the first nine months of fiscal year 2010
results.

Interest
income was approximately $86,000 in the current year consistent with
approximately $82,000 in the prior year. Interest expense was approximately
$81,000 in the current year consistent with approximately $60,000 in the prior
year. We expect interest income and interest expense for the remainder of
fiscal year 2010 to be consistent with the first nine months of fiscal year
2010 results

Corporate and Other
Results  Nine Months Ended October 31, 2010 Compared to Nine Months Ended
October 31, 2009

Selling,
general and administrative expenses were approximately $2.1 million in the
current year compared to approximately $1.6 million in the prior year.
Professional fees and insurance were

41

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the categories
primarily responsible for the increase in expenses. We expect selling, general
and administrative expenses for the remainder of fiscal year 2010 to be
consistent with the first nine months of fiscal year 2010 results.

Interest
income and interest expense were consistent with the prior year amounts.

Liquidity and Capital Resources

Net
cash provided by operating activities was approximately $18.2 million for the
first nine months of fiscal year 2010, compared to cash used of approximately
$0.7 million for the first nine months of fiscal year 2009. For the first nine
months of fiscal year 2010, cash was provided by net income of approximately
$11.8 million, adjusted for non-cash items of approximately $5.4 million, which
consisted of depreciation and amortization, impairment charges, income from
equity method investments, gain on disposal of real estate and property and
equipment, deferred income, losses on derivative financial instruments and the
deferred income tax provision. Dividends received from our equity method
investees were approximately $1.1 million in the first nine months of fiscal
year 2010. In addition, prepaid expense and other current and long term assets
provided cash of approximately $5.7 million, primarily a result of federal
income tax refunds received. Accounts receivable and inventory used cash of
approximately $3.1 million and approximately $1.9 million, respectively, a
result of normal variations in production and sales levels. A decrease in other
liabilities also used cash of approximately $0.8 million which is the result of
paying certain real estate taxes.

Net
cash used in operating activities was approximately $0.7 million for the first
nine months of fiscal year 2009. For the first nine months of fiscal year 2009,
cash was provided by net income of approximately $1.6 million, non-cash items
of approximately $(9.4) million, which consisted of depreciation and amortization,
income from equity method investments, deferred income, losses on derivative
financial instruments, other items and the deferred income tax provision. In
addition, inventory and other assets provided cash of approximately $16.7
million and approximately $5.1 million, respectively, primarily a result of the
wind down of our retail business. The primary use of cash was a decrease in
accounts payable of approximately $6.2 million as we finalized several
outstanding retail vendor accounts associated with the wind down of our retail
business. Accounts receivable increased approximately $5.1 million as a result
of production and sales from both of our consolidated ethanol entities. Other
liabilities decreased approximately $3.3 million as we paid certain payroll and
other accrued expenses in connection with the wind down of our retail business.

At
October 31, 2010, working capital was approximately $90.8 million compared to
approximately $101.2 million at January 31, 2010. This decrease is primarily a
result of repayments of long term debt and our purchase of a minority interest
in NuGen. The ratio of current assets to current liabilities was 3.5 to 1 at
October 31, 2010 and 3.6 to 1 at January 31, 2010.

Cash
of approximately $4.5 million was used in investing activities for the first
nine months of fiscal year 2010, compared to approximately $34.4 million of
cash used during the first nine months of fiscal year 2009. We acquired a 48%
interest in NuGen during the second quarter of fiscal year 2010, which used
approximately $9.2 million of cash. During the first nine months of fiscal year
2010, we had capital expenditures of approximately $3.8 million, primarily
related to additional grain storage infrastructure at the One Earth ethanol plant,
improvements at the Levelland Hockley ethanol plant and

42

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certain real
estate properties. We received approximately $1.0 million from Patriot as
repayments on their promissory note and received approximately $7.0 million
from proceeds of sales of real estate and property and equipment.

Cash
of approximately $34.4 million was used in investing activities for the first
nine months of fiscal year 2009. During the first nine months of fiscal year
2009, we received proceeds of approximately $1.0 million from the sale of real
estate and property and equipment. We had capital expenditures of approximately
$34.5 million during the first nine months of fiscal year 2009, primarily
related to construction at the One Earth ethanol plant. We deposited approximately
$1.0 million into a restricted account as collateral for a letter of credit on
behalf of Levelland Hockley to secure grain purchasing.

Cash
used in financing activities totaled approximately $26.5 million for the first
nine months of fiscal year 2010 compared to cash provided of approximately
$27.6 million for the first nine months of fiscal year 2009. Cash was used by
debt payments of approximately $21.3 million, primarily on Levelland Hockleys
and One Earths term loans. Stock option activity generated cash of
approximately $1.4 million. In addition, cash of approximately $6.7 million was
used to repurchase approximately 415,000 shares of our common stock.

As
of October 31, 2010, we had approximately 568,000 authorized shares remaining
available for purchase under the stock buy-back program.

Cash
provided by financing activities totaled approximately $27.6 million for the
first nine months of fiscal year 2009. Cash of approximately $12.1 million was
used to repay debt and capital lease obligations. Cash was provided by debt
borrowings of approximately $44.0 million on One Earths construction loan and
stock option activity of approximately $1.2 million. Cash of approximately $5.5
million was also used to acquire 535,000 shares of our common stock.

One
Earth will be completing, during the fourth quarter of fiscal year 2010, the
construction of additional grain storage silos at its ethanol plant, expected
to cost approximately $5.0 million. Through October 31, 2010, One Earth had
spent approximately $2.0 million on the grain storage silos.

We
expect that our primary sources of cash for the remainder of the year will be
cash generated by operations and cash and cash equivalents on hand. We expect
that our ethanol plants uses of cash for the remainder of the year will
include repayments of debt and related interest, capital expenditures and to
fund working capital requirements. We plan to seek and evaluate various
investment opportunities at the parent company level. We can make no assurances
that we will be successful in our efforts to find such opportunities.

We
believe the Company has sufficient working capital and credit availability, at
the parent level, to fund our commitments and to maintain our operations at
their current levels for at least the next twelve months and foreseeable
future.

43

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Off-Balance Sheet
Arrangements

We
do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future material effect on our consolidated
financial condition, results of operations or liquidity.

Forward-Looking
Statements

This
Form 10-Q contains or may contain forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995. Such statements can be
identified by use of forward-looking terminology such as may, expect,
believe, estimate, anticipate or continue or the negative thereof or
other variations thereon or comparable terminology. Readers are cautioned that
there are risks and uncertainties that could cause actual events or results to
differ materially from those referred to in such forward-looking statements.
These risks and uncertainties include the risk factors set forth from time to
time in the Companys filings with the Securities and Exchange Commission and
include among other things: the impact of legislative changes, the price
volatility and availability of corn, sorghum, distillers grains, ethanol,
gasoline and natural gas, ethanol plants operating efficiently and according to
forecasts and projections, changes in the national or regional economies,
weather, the effects of terrorism or acts of war and changes in real estate
market conditions. The Company does not intend to update publicly any
forward-looking statements except as required by law. Other factors that could
cause actual results to differ materially from those in the forward-looking
statements are set forth in Item 1A of the Companys Annual Report on Form 10-K
for the fiscal year ended January 31, 2010 (File No. 001-09097).

Item 3. Quantitative and Qualitative Disclosures About Market
Risk

We
are exposed to the impact of market fluctuations associated with interest rates
and commodity prices as discussed below.

Interest Rate Risk

We
are exposed to market risk from changes in interest rates. Exposure to interest
rate risk results primarily from holding term and revolving loans that bear
variable interest rates. Specifically, we have approximately $117.1 million outstanding
in debt as of October 31, 2010, all of which is variable-rate. Interest rates
on our variable-rate debt are determined based upon the market interest rate of
LIBOR plus 300 to 400 basis points. A 10% adverse change (for example from 4.0%
to 4.4%) in market interest rates would affect our interest cost on such
debt by approximately $0.4 million per year in the aggregate.

One
Earth entered into two forward interest rate swaps in the notional amounts of
$50.0 million and $25.0 million with the First National Bank of Omaha during
fiscal years 2008 and 2007. The $50.0 million swap fixed the variable interest
rate of a portion of One Earths term loan at 7.9%, while the $25.0 million
swap fixed the variable interest rate of a portion of One Earths term loan at
5.49%. The swap settlements commenced on July 31, 2009; the $50.0 million swap
terminates on July 8, 2014 and the $25.0 million swap terminates on July 31,
2011. A hypothetical 10% change (for example, from 4.0% to 3.6%) in market interest
rates at October 31, 2010 would change the fair value of the interest rate
swaps by approximately $0.7 million.

44

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Commodity Price Risk

We
generally do not employ derivative instruments such as futures and options to
hedge our commodity price risk. Our strategy is to flat price a portion of
our electricity and natural gas requirements, and to purchase the remainder on
a floating index. A sensitivity analysis has been prepared to estimate our
exposure to ethanol, grain and natural gas price risk. Market risk related to
these factors is estimated as the potential change in income resulting from a
hypothetical 10% adverse change in our average corn, natural gas price and
ethanol prices as of October 31, 2010. The volumes are based on our actual use
and sale of these commodities for the quarter and nine months ended October 31,
2010. The results of this analysis are as follows:

|            |  |                                                 |            |                  |  |                                         |  |                                         |    |   |   |           | 
|----------- |  | ----------------------------------------------- | ---------- | ---------------- |  | --------------------------------------- |  | --------------------------------------- | -- | - | - | --------- | 
|            |  | Volume for the
 Quarter Ended
 October 31, 2010 |            | Unit of
 Measure |  | Hypothetical
 Adverse
 Change in
 Price |  | Approximate
 Adverse
 Change to
 Income |   
|Natural Gas |  |                                                 | 925,888    |                  |  | MMBtu                                   |  |                                         | 10 | % | $ | 445,000   | 
|Ethanol     |  |                                                 | 34,074,236 |                  |  | Gallons                                 |  |                                         | 10 | % | $ | 5,840,000 | 
|Grain       |  |                                                 | 12,438,252 |                  |  | Bushels                                 |  |                                         | 10 | % | $ | 4,735,000 | 

|            |  |                                                     |             |                  |  |                                         |  |                                        |    |   |   |            | 
|----------- |  | --------------------------------------------------- | ----------- | ---------------- |  | --------------------------------------- |  | -------------------------------------- | -- | - | - | ---------- | 
|            |  | Volume for the Nine
 Months ended
 October 31, 2010 |             | Unit of
 Measure |  | Hypothetical
 Adverse
 Change in
 Price |  | Approximate
 Adverse
 Change to Income |   
|Natural Gas |  |                                                     | 2,873,348   |                  |  | MMBtu                                   |  |                                        | 10 | % | $ | 1,438,000  | 
|Ethanol     |  |                                                     | 102,985,782 |                  |  | Gallons                                 |  |                                        | 10 | % | $ | 17,173,000 | 
|Grain       |  |                                                     | 37,109,756  |                  |  | Bushels                                 |  |                                        | 10 | % | $ | 13,718,000 | 

Item 4. Controls and
Procedures

Our
management evaluated, with the participation of our Chief Executive Officer and
Chief Financial Officer, the effectiveness of our disclosure controls and
procedures, as of the end of the period covered by this report. Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures are effective to ensure that
information required to be disclosed by us in the reports that we file or
submit under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commissions rules and forms and is accumulated and communicated to
our management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure.

There
were no changes in our internal control over financial reporting that occurred
during our last fiscal quarter that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.

45

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PART II. OTHER INFORMATION

Item 1A. Risk Factors

During
the quarter ended October 31, 2010, there have been no material changes to the
risk factors discussed in our Annual Report on Form 10-K for the year ended
January 31, 2010.

46

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Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds

Issuer Purchases of Equity Securities

|                      |  |                                    |         |                                 |   |                                                                                          |  |                                                                                        |         |  |  |         | 
|--------------------- |  | ---------------------------------- | ------- | ------------------------------- | - | ---------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------- | ------- |  |  | ------- | 
|Period                |  | Total Number
 of Shares
 Purchased |         | Average
 Price
 Paid per
 Share |   | Total Number of
 Shares Purchased
 as Part of Publicly
 Announced Plans
 or Programs (1) |  | Maximum Number
 of Shares that May
 Yet Be Purchased
 Under the Plans
 or Programs (1) |        
|                      |  |                                    |         |                                 |   |                                                                                          |  |                                                                                        |        
|August 1-31,
 2010    |  |                                    | 156,288 |                                 | $ | 15.09                                                                                    |  |                                                                                        | 156,288 |  |  | 137,143 | 
|September
 1-30, 2010 |  |                                    | 51,127  |                                 |   | 14.22                                                                                    |  |                                                                                        | 51,127  |  |  | 86,016  | 
|October
 1-31, 2010   |  |                                    | 17,972  |                                 |   | 14,95                                                                                    |  |                                                                                        | 17,972  |  |  | 568,044 | 
|                      |  |                                    |         |                                 |   |                                                                                          |  |                                                                                        |         |  |  |         | 
|Total                 |  |                                    | 225,387 |                                 | $ | 14.88                                                                                    |  |                                                                                        | 225,387 |  |  | 568,044 | 
|                      |  |                                    |         |                                 |   |                                                                                          |  |                                                                                        |         |  |  |         | 

| |     |                                                                                                                                                                                                                             
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | On October
 7, 2010, our Board of Directors increased our share repurchase authorization
 by an additional 500,000. At October 31, 2010, a total of 568,044 shares
 remained available to purchase under this authorization.

Item 6. Exhibits.

The
following exhibits are filed with this report:

| |      |                                                                                                                                                                                                                                                  
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 4(a) | Fourth
 Amendment of Construction Loan Agreement dated June 1, 2010 among One Earth
 Energy, LLC, First National Bank of Omaha, as a Bank and as Administrative
 Agent, Accounts Bank and Collateral Agent, and the other Banks party
 thereto.
| |      |                                                                                                                                                                                                                                                  
| | 31   | Rule
 13a-14(a)/15d-14(a) Certifications                                                                                                                                                                                                         
| |      |                                                                                                                                                                                                                                                  
| | 32   | Section 1350
 Certifications                                                                                                                                                                                                                     

47

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SIGNATURES

Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

| |                                                
| | -----------------------------------------------
| | REX AMERICAN
 RESOURCES CORPORATION
 Registrant

|                          |                                        |                  
|------------------------- | -------------------------------------- | -----------------
|Signature                 | Title                                  | Date             
|                          |                                        |                  
|                          |                                        |                  
|/s/
 Stuart A. Rose       | Chairman of the Board                  |                  
|                          | (Chief Executive Officer)              | December
 9, 2010
|(Stuart
 A. Rose)         |                                        |                  
|                          |                                        |                  
|/s/
 Douglas L. Bruggeman | Vice President, Finance
 and Treasurer |                  
|                          | (Chief Financial Officer)              | December 9, 2010 
|(Douglas
 L. Bruggeman)   |                                        |                  

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