LAKE AREA CORN PROCESSORS, LLC

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	June 30, 2007			December 31, 2006*
ASSETS

CURRENT ASSETS
Cash	$	5,561,016		$	6,673,775
Receivables
Ethanol - related party	2,674,549			3,519,875
Distillers grains	442,587			376,710
Incentives	83,333			166,667
Other	14,812			42,738
Inventory
Raw materials	2,086,905			1,965,408
Finished goods	1,064,896			1,220,400
Parts inventory	990,228			971,756
Work in process	533,593			602,501
Derivative financial instruments	5,869,523			8,957,869
Prepaid expenses	157,092			303,961
Total current assets	19,478,534			24,801,660

PROPERTY AND EQUIPMENT
Land	126,097			126,097
Land improvements	2,665,358			2,665,358
Buildings	8,088,853			8,088,853
Equipment	36,785,803			36,571,921
Construction in progess	399,291			—
	48,065,402			47,452,229
Less accumulated depreciation	(13,040,991		)	(11,756,475		)
Net property and equipment	35,024,411			35,695,754

OTHER ASSETS
Goodwill	10,395,766			10,395,766
Guarantee premium	238,294			274,615
Other	674,457			55,233
Total other assets	11,308,517			10,725,614

	$	65,811,462		$	71,223,028

* Derived from audited financial statements

See Notes to Unaudited Consolidated Financial Statements

LAKE AREA CORN PROCESSORS, LLC

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	June 30, 2007		December 31, 2006*
LIABILITIES AND MEMBERS’ EQUITY

CURRENT LIABILITIES
Accounts payable	$	3,072,524	$	5,231,875
Accrued liabilities	854,116		655,866
Short-term notes payable	20,000		—
Current portion of guarantee payable	62,536		62,536
Current portion of notes payable	1,704,152		1,630,674
Total current liabilities	5,713,328		7,580,951

LONG-TERM LIABILITIES
Guarantee payable	340,008		323,276
Notes payable	5,727,350		6,598,419
Total long-term liabilities	6,067,358		6,921,695

COMMITMENTS AND CONTINGENCIES

MEMBERS' EQUITY
Capital units, $0.50 stated value, 29,620,000 units issued and outstanding	14,810,000		14,810,000
Additional paid-in capital	96,400		96,400
Retained earnings	39,124,376		41,813,982
Total members' equity	54,030,776		56,720,382

	$	65,811,462	$	71,223,028

* Derived from audited financial statements

See Notes to Unaudited Consolidated Financial Statements

LAKE AREA CORN PROCESSORS, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended June 30, 2007			Three Months Ended June 30, 2006			Six Months Ended June 30, 2007			Six Months Ended June 30, 2006

REVENUES
Sales	$	3,330,117		$	29,486,531		$	30,932,600		$	51,988,198
Sales - related party	24,234,308			—			24,234,308			—
Incentive income	83,333			93,243			250,000			275,910
Total revenues	27,647,758			29,579,774			55,416,908			52,264,108

COST OF REVENUES	19,775,150			15,573,407			44,172,561			31,637,140

GROSS PROFIT	7,872,608			14,006,367			11,244,347			20,626,968

EXPENSES
General and administrative	929,161			849,315			1,846,249			1,572,413

INCOME FROM OPERATIONS	6,943,447			13,157,052			9,398,098			19,054,555

OTHER INCOME (EXPENSE)
Interest and other income	72,837			48,663			127,066			57,767
Interest expense	(180,358		)	(222,985		)	(366,769		)	(454,720		)
Total other income (expense)	(107,521		)	(174,322		)	(239,703		)	(396,953		)

NET INCOME BEFORE MINORITY INTEREST	6,835,926			12,982,730			9,158,395			18,657,602

MINORITY INTEREST IN SUBSIDIARY	—			(1,551,674		)	—			(2,235,776		)

NET INCOME	$	6,835,926		$	11,431,056		$	9,158,395		$	16,421,826

BASIC AND DILUTED EARNINGS PER CAPITAL UNIT	$	0.23		$	0.39		$	0.31		$	0.55

BASIC AND DILUTED WEIGHTED AVERAGE CAPITAL UNITS OUTSTANDING	29,620,000			29,620,000			29,620,000			29,620,000

DISTRIBUTIONS PER CAPITAL UNIT DECLARED	$	0.20		$	0.10		$	0.40		$	0.20

DISTRIBUTIONS PER CAPITAL UNIT PAID	$	0.20		$	0.10		$	0.40		$	0.20

See Notes to Unaudited Consolidated Financial Statements

LAKE AREA CORN PROCESSORS, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

	2007			2006

OPERATING ACTIVITIES
Net income	$	9,158,395		$	16,421,826
Changes to income not affecting cash
Depreciation	1,296,052			1,161,032
Amortization	47,466			62,497
Minority interest in subsidiary	—			2,235,776
Other	(25,369		)	(14,693		)
(Increase) decrease in
Receivables	890,708			(389,993		)
Inventory	84,442			(623,105		)
Prepaid expenses	146,869			200,186
Derivative financial instruments	3,088,346			(1,739,210		)
Increase (decrease) in
Accounts payable	(2,566,962		)	(2,384,023		)
Accrued liabilities	214,982			25,381
NET CASH FROM OPERATING ACTIVITIES	12,334,929			14,955,674

INVESTING ACTIVITIES
Change in other assets	(197,389		)	—
Acquisition of minority interest in subsidiary	—			(19,219,243		)
Purchase of property and equipment	(624,709		)	(300,019		)
NET CASH USED FOR INVESTING ACTIVITIES	(822,098		)	(19,519,262		)

FINANCING ACTIVITIES
Advances on revolving promissory note	—			479,000
Notes payable issued	—			19,100,000
Principal payments on notes payable	(777,590		)	(1,116,887		)
Financing costs paid	—			(143,250		)
Distributions paid to minority member	—			(816,419		)
Distributions paid to LACP members	(11,848,000		)	(5,924,000		)
NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES	(12,625,590		)	11,578,444

NET INCREASE (DECREASE) IN CASH	(1,112,759		)	7,014,856

CASH AT BEGINNING OF PERIOD	6,673,775			704,282
CASH AT END OF PERIOD	$	5,561,016		$	7,719,138

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid during the period for interest	$	388,887		$	469,807

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES

Account payable incurred in acquisition of minority interest in subisidiary	$	—		$	132,533

See Notes to Unaudited Consolidated Financial Statements

LAKE AREA CORN PROCESSORS, LLC

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

JUNE 30, 2007 AND 2006

NOTE 1 - NATURE OF OPERATIONS

Principal Business Activity

Lake Area Corn Processors, LLC (the Company) is a South Dakota limited liability company located in Wentworth, South Dakota. The Company was organized by investors to provide a portion of the corn supply for a 40 million-gallon (annual capacity) ethanol plant, owned by Dakota Ethanol, LLC (Dakota Ethanol). On September 4, 2001, the ethanol plant commenced its principal operations. The Company sells ethanol and related products to customers located in North America.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The unaudited financial statements contained herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America.

In the opinion of management, all adjustments considered necessary for a fair presentation have been included in the accompanying financial statements. The results of operations for the six and three months ended June 30, 2007 and 2006 are not necessarily indicative of the results to be expected for a full year.

These financial statements should be read in conjunction with the financial statements and notes included in the Company’s financial statements for the year ended December 31, 2006.

Principles of Consolidation

The consolidated financial statements of the Company include the accounts of its subsidiary, Dakota Ethanol. The Company owned 88% of Dakota Ethanol until June 30, 2006 when it became wholly owned. All significant inter-company transactions and balances have been eliminated in consolidation.

Revenue Recognition

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

Cost of Revenues

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

Shipping costs incurred in the sale of distiller’s grains are classified in net revenues. Shipping costs on distiller’s grains were approximately $705,000 and $429,000 for the six and three months ended June 30, 2007, respectively. Shipping costs on distiller’s grains were approximately $1,387,000 and $705,000 for the six and three months ended June 30, 2006, respectively.

General and Administrative Expenses

The primary components of general and administrative expenses are wages and benefits, professional fee expenses (legal and audit), and insurance expenses.

See Notes to Unaudited Consolidated Financial Statements

LAKE AREA CORN PROCESSORS, LLC

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

JUNE 30, 2007 AND 2006

Inventory Valuation

Ethanol and related products are stated at net realizable value. Raw materials, work-in-process, and parts inventory are valued using methods which approximate the lower of cost or market on the first-in, first-out method.

Cash and Cash Equivalents

Cash and cash equivalents consist of demand accounts and other accounts that provide withdrawal privileges. Checks drawn in excess of bank balance are recorded as a liability on the balance sheet and as a financing activity on the statement of cash flows.

Receivables and Credit Policies

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

The carrying amount of trade receivables is reduced by a valuation allowance that reflects management’s best estimate of the amounts that will not be collected. Management reviews all trade receivable balances that exceed sixty days from the invoice date and based on an assessment of current creditworthiness, estimates the portion, if any, of the balance that will not be collected.

Derivative Financial Instruments and Hedging Activities

Dakota Ethanol enters into short-term cash grain, option and futures contracts as a means of securing corn for the ethanol plant and managing exposure to changes in commodity prices. All of Dakota Ethanol’s derivatives are designated as non-hedge derivatives, and accordingly are recorded at fair value with changes in fair value recognized in net income. Although the contracts are considered economic hedges of specified risks, they are not designated as and accounted for as hedging instruments.

As part of its trading activity, Dakota Ethanol uses futures and option contracts offered through regulated commodity exchanges to reduce risk and is exposed to risk of loss in the market value of inventories. To reduce that risk, Dakota Ethanol generally takes positions using cash and futures contracts and options.

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

Dakota Ethanol has recorded an increase to cost of revenues of $1,678,878 and a decrease to the cost of revenues of $1,317,630 related to derivative contracts for the six and three months ended June 30, 2007, respectively. Dakota Ethanol has recorded an increase to cost of revenues of $899,281 and $117,571 related to derivative contracts for the six and three months ended June 30, 2006, respectively. Dakota Ethanol has recorded a decrease to revenues of $384,834 and $327,824 related to derivative contracts for the six and three months ended June 30, 2006, respectively.

Guarantee Premium

The guarantee premium is amortized over the term of the related guarantee using the interest method of amortization.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets

LAKE AREA CORN PROCESSORS, LLC

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

JUNE 30, 2007 AND 2006

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

Goodwill

Goodwill represents the excess of purchase price over the underlying net assets of business acquired. Under Statement of Financial Accounting Standards No. 142, goodwill is not amortized but is subject to annual impairment tests. The Company has performed the required impairment tests, which have resulted in no impairment adjustments.

Environmental Liabilities

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

Operating Segment

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

Recently Issued Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements . This Statement defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This Statement does not require any new fair value measurements, but rather, it provides enhanced guidance to other pronouncements that require or permit assets or liabilities to be measured at fair value. This Statement is effective for fiscal years beginning after November 15, 2007, with earlier adoption permitted. The Company has not yet determined the impact, if any, that the adoption of this Statement will have on its financial position, results of operations and cash flows.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities-Including an Amendment of FASB Statement No. 115 , which provides all entities, including not-for-profit organizations, with an option to report selected financial assets and liabilities at fair value. The objective of the Statement is to improve financial reporting by providing entities with the opportunity to mitigate volatility in earnings caused by measuring related assets and liabilities differently without having to apply the complex provisions of hedge accounting. This Statement is effective for fiscal years beginning after November 15, 2007, with earlier adoption permitted. The Company has not yet determined the impact, if any, that the adoption of this Statement will have on its financial position, results of operations and cash flows.

NOTE 3 - SHORT-TERM NOTES PAYABLE

On May 20, 2007, Dakota Ethanol renewed a revolving promissory note from First National Bank of Omaha in the amount of $3,000,000. The note expires on May 19, 2008 and the amount available is subject to certain financial ratios. Interest on the outstanding principal balances accrues at 50 basis points above the bank’s base rate (8.25 percent at June 30, 2007). This rate is subject to adjustments based on various levels of indebtedness to net worth, as defined by the agreement. There is a commitment fee of 3/8 percent on the unused portion of the $3,000,000

LAKE AREA CORN PROCESSORS, LLC

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

JUNE 30, 2007 AND 2006

availability. The note is collateralized by the ethanol plant, its accounts receivable and inventories. On June 30, 2007, Dakota Ethanol had $20,000 outstanding and $2,980,000 available to be drawn on the revolving promissory note.

NOTE 4 - LONG-TERM NOTES PAYABLE

The balance of the notes payable are as follows:

	June 30,			December 31,
	2007			2006 *
	(unaudited)

Note payable to First National Bank of Omaha
Term Note 2	$	7,431,502		$	8,229,093
Term Note 5	—			—
	7,431,502			8,229,093

Less current portion	(1,704,152		)	(1,630,674		)

	$	5,727,350		$	6,598,419

* Derived from audited financial statements

Minimum principal payments for the next five years are estimated as follows:

Twelve Months Ended June 30,	Amount

2008	$	1,704,152
2009	1,866,601
2010	2,042,845
2011	1,817,904

Dakota Ethanol had the ability to draw upon the entire $5,000,000 available balance on Term Note 5 at June 30, 2007 and December 31, 2006, respectively.

NOTE 5 - RELATED PARTY TRANSACTIONS

On April, 1 2007, Dakota Ethanol purchased a 9% interest in Renewable Products Marketing Group, LLC (RPMG), in which Dakota Ethanol has entered into an ethanol marketing agreement for the exclusive rights to market, sell and distribute the entire ethanol inventory produced by Dakota Ethanol. Dakota Ethanol paid approximately $31,000 in marketing fees for the three months ended June 30, 2007, which is included in revenues.

Dakota Ethanol sells 100% of its ethanol product under this marketing agreement. During the three months ended June 30, 2007, net sales to RPMG were approximately $24,234,000. At June 30, 2007 amounts due from RPMG included in receivables were $2,741,000.

Purchases of corn from corn delivery agreements and cash contracts from the Company’s members totaled approximately $5,628,000 and $3,016,000 for the six and three months ended June 30, 2007, respectively, and approximately $3,645,000 and $1,767,000 for the six and three months ended June 30, 2006, respectively.

LAKE AREA CORN PROCESSORS, LLC

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

JUNE 30, 2007 AND 2006

NOTE 6 - COMMITMENTS, CONTINGENCIES AND AGREEMENTS

Dakota Ethanol receives an incentive payment from the State of South Dakota to produce ethanol. In accordance with the terms of this arrangement, revenue is recorded based on ethanol sold. Incentive revenue of $250,000 and $83,333 was recorded for the six and three months ended June 30, 2007, respectively. Incentive revenue of $275,910 and $93,243 was recorded for the six and three months ended June 30, 2006, respectively. Dakota Ethanol earned its final allocation in March 2007 for the program year ended June 30, 2007. Dakota Ethanol did not receive the annual maximum for the 2007 program year due to budget constraints on the State of South Dakota program and will not likely receive the annual maximum under the 2008 program year.

Environmental – During the year ended December 31, 2002, management became aware that the ethanol plant may have exceeded certain emission levels allowed by their operating permit. The Company has disclosed the situation to the appropriate state regulatory agency and has taken steps to reduce the emissions to acceptable levels. Management has not accrued a liability for environmental remediation costs since the costs, if any, cannot be estimated.

On June 1, 2007, the Company executed a non-binding letter of intent concerning a potential merger between the Company, Dakota Ethanol, and Countryside Renewable Energy, LLC. The proposed merger, which is subject to certain conditions, contemplates that the Company will exchange 100% of its ownership in Dakota Ethanol for a combination of cash and membership/ownership interests (units) of Countryside Renewable Energy, LLC, which would then be distributed to the Company’s members in the future. The letter of intent expires on October 1, 2007.

NOTE 7 - SUBSEQUENT EVENTS

During August 2007, the Company declared and paid a distribution to its members of $2,962,000, or $.10 per capital unit, with a distribution date of August 1, 2007.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

We prepared the following discussion and analysis to help you better understand our financial condition, changes in our financial condition, and results of operations for the three-month and six-month periods ended June 30, 2007, compared to the same periods of the prior fiscal year. This discussion should be read in conjunction with the consolidated financial statements and the Management’s Discussion and Analysis section for the fiscal year ended December 31, 2006, included in the Company’s Annual Report on Form 10-K.

Disclosure Regarding Forward-Looking Statements

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

· Projected growth or overcapacity within the ethanol industry causing supply to exceed demand;

· Actual ethanol and distillers grains production varying from expectations;

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

· Changes in the price and market for ethanol and distillers grains;

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

· Changes in or elimination of governmental laws, tariffs, trade or other controls or enforcement practices such as:

· national, state or local energy policy;

· federal ethanol tax incentives;

· legislation establishing a renewable fuel standard or other legislation mandating the use of ethanol or other oxygenate additives;

· state and federal regulation restricting or banning the use of MTBE; or

· environmental laws and regulations that apply to our plant operations and their enforcement;

· Changes in the weather or general economic conditions impacting the availability and price of corn and natural gas;

· Total U.S. consumption of gasoline;

· Fluctuations in petroleum prices;

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

· Costs of construction and equipment;

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

· Results of our hedging strategies;

· Changes in interest rates or the availability of credit;

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

· Our liability resulting from litigation;

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

· Changes and advances in ethanol production technology;

· Competition from alternative fuels and alternative fuel additives; and

· Other factors described elsewhere in this report.

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

Overview

Lake Area Corn Processors, LLC (the “Company”) is a South Dakota limited liability company that currently owns and manages its wholly-owned subsidiary Dakota Ethanol, LLC. Dakota Ethanol, LLC owns and operates an ethanol plant located near Wentworth, South Dakota that has a nameplate production capacity of 40 million gallons of ethanol per year. Lake Area Corn Processors, LLC is referred to in this report as “LACP,” the “company,” “we,” or “us.” Dakota Ethanol, LLC is referred to in this report as “Dakota Ethanol” “we” “us” or the “ethanol plant.”

Our revenues are derived from the sale and distribution of Dakota Ethanol’s ethanol and distillers grains throughout the continental United States. The ethanol plant currently operates in excess of its nameplate capacity, producing approximately 48 million gallons of ethanol per year. Corn is supplied to us primarily from our members who are local agricultural producers and from purchases of corn on the open market. After processing the corn, the ethanol is transferred to our ethanol marketer, Renewable Products Marketing Group, LLC (RPMG) of Belle Plain, Minnesota which subsequently markets and sells the ethanol to gasoline blenders and refineries located throughout the continental United States. On May 30, 2007, we made a $605,000 capital contribution to RPMG and executed certain other agreements necessary to become a member of RPMG. Specifically, we became parties to RPMG’s operating agreement, we executed a contribution agreement that governs the funding of our capital contribution to RPMG, and we entered into a new member ethanol fuel marketing agreement for members of RPMG. Becoming a member of RPMG allows us to share any profits made by RPMG and reduces the fees we pay RPMG to market our ethanol. Pursuant to our member ethanol fuel marketing agreement, we use a pooled marketing arrangement, which means that the ethanol we produce is pooled with other ethanol producers and marketed by RPMG. RPMG pays us a netback price per gallon that is based upon the difference between the pooled average delivered ethanol selling price and the pooled average distribution expense. These averages are calculated based upon each pool participant’s selling price and expense averaged in direct proportion to the volume of ethanol supplied by each participant to the pool. We have elected to pay our capital contribution to RPMG over time with a portion of our ethanol sales revenue.

Except for the distillers grains we sell directly to local farmers, our distillers grains are sold through a marketer that markets and sells our product to livestock feeders. Our distillers grains are marketed by Commodity Specialist Company (CSC). We receive a percentage of the selling price actually received by CSC in marketing the distillers grains to its customers.

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

Our two largest costs of production are corn and natural gas. Currently, corn prices per bushel are significantly higher that in the recent past, despite record setting corn yields in recent years. The cost of corn is

affected primarily by supply and demand factors over which we have little or no control, such as crop production, carryout, exports, government policies and programs, risk management and weather. We expect corn prices to remain high due to increased corn demand from existing, new and expanding ethanol plants. Natural gas prices fluctuate with the energy complex in general. Recently we have experienced lower natural gas prices than in previous years. However, over the last few months, natural gas prices have trended higher. We currently anticipate natural gas prices to continue to trend higher in the future. Our costs of production are also affected by the cost of complying with the extensive environmental laws that regulate our industry.

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

The following table shows the results of our operations and the percentage of revenues, cost of goods sold, operating expenses and other items in relation to total revenues in our consolidated statements of operations for the three months ended June 30, 2007 and 2006:

	June 30, 2007				June 30, 2006
Income Statement Data	Amount			%	Amount			%
Revenues	$	27,647,758		100.0	$	29,579,774		100.0

Cost of Revenues	$	19,775,150		71.5	$	15,573,407		52.6

Gross Profit	$	7,872,608		28.5	$	14,006,367		47.4

General and Administrative Expense	$	929,161		3.4	$	849,315		2.9

Income from Operations	$	6,943,447		25.1	$	13,157,052		44.5

Other Income (Expense)	$	(107,521	)	0.4	$	(174,322	)	0.6

Net Income Before Minority Interest	$	6,835,926		24.7	$	12,982,730		43.9

Minority Interest in Subsidiary Income	$	—		—	$	(1,551,674	)	5.2

Net Income	$	6,838,926		24.7	$	11,431,056		38.6

Revenues . Our revenues for the quarter ended June 30, 2007 include approximately $24,234,000 in sales of ethanol and approximately $3,330,000 in sales of distillers grains, in addition to approximately $83,000 of incentive income. Our total revenues for the quarter ended June 30, 2007 decreased by approximately 6.5% compared to the same period of 2006. While we experienced a slight increase in the gallons of ethanol we sold, we experienced a decrease in the price we received for our ethanol of approximately 11%. We experienced an approximately 11% increase in tons of distillers grains sold for the second fiscal quarter of 2007 as compared to the same period of 2006. We are currently marketing more wet distillers grains than we have previously marketed. Due to the changing composition of our distillers grains we sold for the quarter ended June 30, 2007, compared to the same period of 2006, our revenues from distillers grains sales increased approximately 34%. Some of the increase in the price of our distillers grains results from increased corn prices due to the higher than usual demand for corn. At the same time, due to increased ethanol production, supplies of distillers grains have increased, thereby putting downward pressure on distillers grains prices. We expect distillers grains prices to decrease for the remaining quarters of 2007 both due to increased supplies of distillers grains and an anticipated decrease in corn prices.

The price we received for our ethanol for the second fiscal quarter of 2007 was approximately 11% lower than the price we received during the same period of 2006. Management expects that ethanol prices will remain stable or trend downward for the remaining quarters of 2007. We expect that ethanol prices may trend downward for the remainder of the fiscal year due to the end of the peak summer driving season near Labor Day, which typically results in lower unleaded gasoline and ethanol prices. In addition, we expect the increased production and supply of ethanol will lead to lower ethanol prices as new plants become operational and the supply of ethanol increases. As of July 23, 2007, the Renewable Fuels Association reports that there were 123 ethanol plants in

operation nationwide with the capacity to produce more than 6.4 billion gallons annually, with approximately 76 additional plants under construction, along with seven existing plants undergoing expansions. This is expected to expand total ethanol production capacity in the ethanol industry by approximately 6.3 billion gallons. Accordingly, the price of ethanol may trend downward if supply exceeds demand which would negatively impact our earnings. In the near future, the ethanol industry will need to grow demand for ethanol in order to create a market for this additional ethanol supply.

According to Ethanol Producer Magazine, ethanol demand has been relatively stable at approximately 6.2 billion gallons per year throughout 2007. Ethanol demand has been reasonably flat since ethanol began replacing MTBE as a fuel oxygenate due to environmental contamination concerns surrounding MTBE. The ethanol industry must continue to grow demand and expand ethanol blending facilities in order to increase demand for ethanol at a similar rate to the increase in ethanol supply.

Incentive revenue from the State of South Dakota decreased from $93,243 for the three months ended June 30, 2006, to $83,333 for the three months ended June 30, 2007. We expect that Dakota Ethanol will not receive the maximum allocation from the State of South Dakota ethanol producer subsidy for the 2007 program year due to state budget constraints.

Cost of Revenues . Our cost of revenues as a percentage of revenues was approximately 71.5% and approximately 52.6% for the three months ended June 30, 2007 and 2006, respectively. Our total cost of revenues, in real terms, increased by approximately $4,202,000 in the three months ended June 30, 2007 compared to the same period of 2006. This increase in our cost of revenues was primarily a result of higher corn prices for the second fiscal quarter of 2007 compared to the same period of 2006. Our cost per bushel of corn increased approximately 50% for the period ended June 30, 2007 as compared to the same period of 2006. We also increased the number of bushels we used by approximately 5.7% for the second fiscal quarter of 2007 compared to the same period of 2006 due to our increased ethanol production. These two factors increased our total corn cost by approximately 58%. We anticipate that our corn costs will remain relatively stable for the remaining two quarters of 2007 due to the fact that we have entered into contracts to purchase much of the corn we expect to require through the end of the fiscal year. We expect continued volatility in corn prices as the market continues to adjust to significantly increased corn demand.

In addition, the total cost of our natural gas increased by approximately 3% for the three months ended June 30, 2007 compared to the three months ended June 30, 2006. The price we paid per MMBTU of natural gas for the three months ended June 30, 2007 increased by approximately 6% compared to the same period of 2006. We offset some of the increase in natural gas prices with lower natural gas consumption due to our increased marketing of distillers grains locally with higher moisture content, thereby decreasing the natural gas we use in the drying process. We expect that natural gas prices will be stable or decrease somewhat through the end of the year.

We recognize the gains or losses that result from changes in the value of our derivative instruments in cost of revenues as the changes occur. As corn and natural gas prices fluctuate, the value of our derivative instruments are impacted, which affects our financial performance. We partially offset these losses with the cash price we paid for corn. We experienced a decrease to cost of revenues of $1,317,630 related to derivative instruments for the three months ended June 30, 2007, compared to an increase to cost of revenues of $117,571 related to derivative instruments for the three months ended June 30, 2006. We anticipate continued volatility in our cost of revenues due to the timing of the changes in value of our derivative instruments relative to the cost and use of the commodity being hedged.

General and Administrative Expense . Our general and administrative expenses as a percentage of revenues remained relatively unchanged at 3.4% and 2.9% for the three months ended June 30, 2007 and 2006, respectively. The slight increase in our administrative expenses is primarily a result of increased environmental compliance costs and increased professional services costs associated with Sarbanes-Oxley Section 404 compliance activities.

Income from Operations . Our income from operations before minority interest for the three months ended June 30, 2007 totaled approximately $6,943,000 compared to approximately $13,157,000 for the three months ended June 30, 2006. This change was a result of significantly increased costs of revenues and slightly lower revenues for the three months ended June 30, 2007 compared to the same period of 2006.

Other Income (Expense) . Our total other income and expense for the three months ended June 30, 2007 decreased approximately 38% compared to the same period of 2006, primarily due to decreased interest expenses as we continue to pay off our long-term debt.

Minority Interest in Subsidiary Income . Minority interest in subsidiary income was $0 for the three months ended June 30, 2007 as compared to approximately $1,552,000 for the three months ended June 30, 2006. There is no longer a minority interest in Dakota Ethanol due to the fact that we repurchased the Broin family minority interest in June 2006.

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

	June 30, 2007				June 30, 2006
Income Statement Data	Amount			%	Amount			%
Revenues	$	55,416,908		100.0	$	52,264,108		100.0

Cost of Revenues	$	44,172,561		79.7	$	31,637,140		60.5

Gross Profit	$	11,244,347		20.3	$	20,626,968		39.5

General and Administrative Expense	$	1,846,249		3.3	$	1,572,413		3.0

Income from Operations	$	9,398,098		17.0	$	19,054,555		36.5

Other Income (Expense)	$	(239,703	)	0.4	$	(396,953	)	0.8

Net Income Before Minority Interest	$	9,158,395		16.5	$	18,657,602		35.7

Minority Interest in Subsidiary Income	$	—		—	$	(2,235,776	)	4.3

Net Income	$	9,158,395		16.5	$	16,421,826		31.4

Revenues . Our revenues for the six months ended June 30, 2007 include approximately $48,571,000 in sales of ethanol and approximately $6,596,000 in sales of distillers grains, in addition to $250,000 of incentive revenue.

The increase in revenues for the six months ended June 30, 2007 compared to the six months ended June 30, 2006 is due primarily to a combination of an increase in the price and amount of ethanol sold. For the six months ended June 30, 2007, the average price of the ethanol we sold increased approximately 2.5% from the average price paid for the six months ended June 30, 2006. Volume of ethanol sold in the six months ended June 30, 2007 increased approximately 1% compared to the volume sold in the six months ended June 30, 2006.

Cost of Revenues . Our cost of revenues as a percentage of revenues was approximately 79.7% and approximately 60.5% for the six months ended June 30, 2007 and 2006, respectively. Our total cost of revenues increased by approximately $12,535,000 in the six months ended June 30, 2007 compared to the same period of 2006. The increase in our cost of revenues was primarily the result of a significant increase in our cost per bushel of corn, which rose approximately 83% from the six months ended June 30, 2007 compared to the same period of 2006. Along with this significant increase in our cost of corn, our total cost associated with natural gas actually decreased by approximately 22% for the six months ended June 30, 2007 compared to the same period of 2006. This was a result of a combination of decreased natural gas prices and decreased natural gas consumption for the six months ended June 30, 2007 as compared to the same period of 2006.

We recognize the gains or losses that result from changes in the value of our derivative instruments in cost of revenues as the changes occur. As corn and natural gas prices fluctuate, the value of our derivative instruments are impacted, which affects our financial performance. We partially offset these losses with the cash price we paid for corn. We experienced an increase to cost of revenues of $1,678,878 related to derivative instruments for the six months ended June 30, 2007 compared to an increase to cost of revenues of $899,281 related to derivative instruments for the six months ended June 30, 2006. We anticipate continued volatility in our cost of revenues due to the timing of the changes in value of our derivative instruments relative to the cost and use of the commodity being hedged.

General and Administrative Expense . Our general and administrative expenses as a percentage of revenues were 3.3% and 3.0% for the six months ended June 30, 2007 and 2006, respectively. This slight increase in our administrative expenses was primarily the result of increased environmental compliance costs and increased costs associated with Sarbanes-Oxley Section 404 compliance.

Income from Operations . Our income from operations was approximately 51% lower for the six months ended June 30, 2007, compared to the same period of 2006. This decrease in income from operations was primarily the result of our significantly increased costs of revenues due to increased corn costs. For the six months ended June 30, 2006, the Broin family minority interest decreased our net income by approximately $2,236,000. This minority interest was eliminated in June 2006.

Other Income (Expense) . Our total other expense for the six months ended June 30, 2007 decreased by approximately 40% for the six months ended June 30, 2007 compared to the same period of 2006. This decrease was primarily the result of decreased interest expense from our continuing debt service payments and increased interest income for the six months ended June 30, 2007 compared to the same period of 2006.

Changes in Financial Condition for the Six Months Ended June 30, 2007

Consolidated assets totaled approximately $65,811,000 at June 30, 2007 compared to approximately $71,223,000 at December 31, 2006. This decrease is primarily the result of decreased current assets at June 30, 2007 compared to December 31, 2006. Current assets totaled approximately $19,479,000 at June 30, 2007, a decrease from approximately $24,802,000 at December 31, 2006. This decrease in current assets is primarily the result of decreased ethanol receivables as ethanol values decreased and a lower asset value for our derivative financial instruments. The value of our derivative financial instruments can be volatile from period to period.

Consolidated current liabilities totaled approximately $5,713,000 at June 30, 2007 as compared to approximately $7,581,000 at December 31, 2006. The decrease in current liabilities is due primarily to significantly decreased accounts payable. This decrease in accounts payable is primarily due to higher accounts payable on December 31, 2006 associated with deferred corn payments.

Long term liabilities totaled approximately $6,067,000 at June 30, 2007, down from approximately $6,922,000 at December 31, 2006, due primarily to our regularly scheduled loan payments.

Plant Operations

Management anticipates that the plant will continue to operate at or above name-plate capacity of 40 million gallons per year for the next 12 months. We expect to have sufficient cash from cash flow generated by continuing operations, current lines of credit through our revolving promissory note, and cash reserves to cover our usual operating costs over the next 12 months, which consist primarily of corn supply, natural gas supply, staffing, office, audit, legal, compliance, working capital costs and debt service obligations.

A number of factors that are outside of our control affect our operating costs and revenues, including, but not limited to, the following:

· Changes in the availability and price of corn;

· Changes in federal ethanol tax incentives;

· Changes in the environmental regulations that apply to our plant operations;

· Increased competition in the ethanol industry;

· Changes in interest rates or the availability of credit;

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

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

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

· Changes in the availability and price of natural gas;

· Increases or decreases in the supply and demand for distillers grains; and

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

Liquidity and Capital Resources

The following table shows cash flows for the six months ended June 30, 2007 and 2006:

	Six Months Ended June 30,
	2007			2006
Net cash from operating activities	$	12,334,929		$	14,955,674
Net cash used for investing activities	$	(822,098	)	$	(19,519,262	)
Net cash provided by (used for) financing activities	$	(12,625,590	)	$	11,578,444

Cash Flow From Operations . The decrease in net cash flow provided from operating activities between 2007 and 2006 was primarily due to increased corn prices. The increase in corn prices was offset by an increase in cash provided by derivative financial instruments. Our capital needs are being adequately met through cash from our operating activities and our current credit facilities.

Cash Flow From Investing Activities . Investing activities decreased in the six months ended June 30, 2007 as compared to the six months ended June 30, 2006, primarily due to the purchase of the minority interest in Dakota Ethanol that occurred in June 2006.

Cash Flow From Financing Activities . The decrease in cash flow provided by financing activities was due to issuing notes payable for the minority interest purchase in 2006 which resulted in positive cash flow from financing activities. Increased distributions to members in 2007 also used more cash compared to 2006.

Management anticipates sufficient cash flow from operating activities and revolving debt to cover debt service obligations, operations and planned capital expenditures for the next 12 months.

Indebtedness

First National Bank of Omaha is Dakota Ethanol’s primary lender. Dakota Ethanol has two notes or loans outstanding with First National Bank pursuant to a Construction Loan Agreement and Construction Note dated September 25, 2000 and amendments thereto.

Short-Term Debt Sources

On May 20, 2007, Dakota Ethanol renewed a revolving promissory note from First National Bank of Omaha in the amount of $3,000,000. The note expires on May 19, 2008 and the amount available is subject to certain financial ratios. Interest on any outstanding principal balance accrues at fifty basis points above the bank’s base rate (8.25% on June 30, 2007). There is a commitment fee of 3/8% on the unused portion of the $3,000,000 availability. The note is collateralized by the ethanol plant, its accounts receivable and inventories. On June 30, 2007, Dakota Ethanol had an outstanding balance on the note of $20,000, and $2,980,000 was available to be drawn on the revolving promissory note.

Long-Term Debt Sources

Dakota Ethanol originally had a $26,600,000 note payable to First National Bank of Omaha for the construction and permanent financing of the plant, referred to as Term Note 1. On July 29, 2002, Dakota Ethanol amended the construction loan agreement to create two term notes from its original Term Note 1, creating Term Notes 2 and 3. Term Note 3 was converted into Term Notes 4 and 5 on November 1, 2002. Term Note 2 is the only note which still has an outstanding balance. Dakota Ethanol is subject to certain restrictive covenants establishing minimum reporting requirements, ratios, working capital and net worth requirements pursuant to the loan agreement. Term Note 2 is secured by the ethanol plant. The note is subject to prepayment penalties based on the cost incurred by the Bank to break its fixed interest rate commitment.

The balance of Term Note 2 requires quarterly installments of $581,690 which commenced on October 1, 2002. The balance is due September 1, 2011. Interest on outstanding principal balances accrues at a rate of 9% annually. The principal balance on the note as of June 30, 2007 was $7,431,502.

Finally, Dakota Ethanol has a long-term debt obligation on a portion of a $1.323 million tax increment revenue bond series issued by Lake County, South Dakota on December 2, 2003. The portion for which Dakota Ethanol is obligated is estimated at $511,120. The bond was issued in connection with the refunding of a tax increment financing bond issued by Lake County in 2001, of which Dakota Ethanol was the recipient of the proceeds. In 2003, Lake County became aware that the taxes collected from the property on which the plant was located would be insufficient to cover the debt service of the 2001 bond issue. Based on this deficiency and change in interest rates during December of 2003, Lake County refunded the 2001 bond issue and replaced it with two separate bonds: a tax-exempt bond in the amount of $824,599 and a taxable bond in the amount of $1,323,024. As a part of this refund, Dakota Ethanol entered into an agreement with the holder of these bonds to guarantee the entire debt service on the taxable bond issue. The taxes levied on Dakota Ethanol’s property are used first towards paying the debt service of the tax-exempt bonds and any remaining taxes are used for paying the debt service of the taxable bonds. Since the property taxes on the property are currently sufficient to cover a portion of the debt service on the taxable bond series, Dakota Ethanol’s obligation under the guarantee is to cover the shortfall in debt service, representing the difference between the original taxable bond amount ($1,323,024) and the estimated amount expected to be collected in property taxes from the real property on which Dakota Ethanol’s plant is located. The interest rate on the bonds is 7.75% annually. The taxable bonds require semi-annual payments of interest on December 1 and June 1, in addition to a payment of principal on December 1 of each year. While Dakota Ethanol’s obligation under the guarantee is expected to continue until maturity in 2018, such obligation may cease at some point in time if the property on which the plant is located appreciates in value to the extent that Lake County is able to collect a sufficient amount in taxes to cover the principal and interest payments on the taxable bonds. The principal balance outstanding was $1,162,126 as of June 30, 2007.

Contractual Obligations and Commercial Commitments

On June 4, 2007, Dakota Ethanol, our wholly owned subsidiary, entered into a non-binding letter of intent to merge with Countryside Renewable Energy, Inc. of Des Moines, Iowa (Countryside) in exchange for cash and ownership interests in Countryside. There are numerous terms associated with this proposed merger including that another ethanol plant with production capacity of at least 50 million gallons per year must be included in the proposed merger. No final agreement has been reached with Countryside with respect to the final terms of any proposed merger and no other ethanol plant has been identified by Countryside to be involved in the proposed merger. Should a definitive agreement be reached, it will be presented to our members for approval and all details of any proposed merger will be described in a proxy statement issued by us. Members are encouraged not to make any decision on any proposed merger until a final agreement has been reached and we issue a proxy statement seeking member approval of the proposed merger.

In the first fiscal quarter of 2007, Dakota Ethanol commenced construction of an 860,000 bushel grain storage bin. The total cost of this project is expected to be approximately $2,000,000. Construction commenced on the grain storage bin in June 2007. As of June 30, 2007, we have spent approximately $399,000 on the construction of the grain storage bin. We anticipate completing the construction of the additional grain storage by the third fiscal quarter of 2007.

Distribution to Unit Holders

On May 30, 2007, our board of managers announced a cash distribution of $0.10 per membership unit for a total distribution of $2,962,000.00 to our unit holders of record as of April 1, 2007.

On August 1, 2007, subsequent to the end of the second fiscal quarter of 2007, our board announced a cash distribution of $0.10 per membership unit for a total distribution of $2,962,000.00 to our unit holders of record as of July 1, 2007.

Critical Accounting Estimates

On June 30, 2006 the Company acquired the minority interest of Dakota Ethanol. As a result, the Company also acquired goodwill in the amount of $10,395,766. Under Financial Accounting Standards Board (FASB) Statement No. 142, Goodwill and Other Intangible Assets , it is not permissible to amortize goodwill to expense. Rather, an impairment approach must be used for valuation whereby a decrease in the intangible asset’s fair value below its carrying amount will result in a write-down of the asset. If there is no decrease in value below the carrying amount as determined by impairment testing, the carrying amount of goodwill does not change. For the six months ended June 30, 2007, management reviewed the fair value of goodwill and determined that it was not impaired.

There were no other material changes in the Company’s accounting estimates during the three and six months ended June 30, 2007.

Off-Balance Sheet Arrangements.

We currently have no off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are exposed to the impact of market fluctuations associated with interest rates and commodity prices as discussed below. We have no exposure to foreign currency risk as all of our business is conducted in U.S. Dollars. We use derivative financial instruments as part of an overall strategy to manage market risk. We use cash, futures and option contracts to hedge changes to the commodity prices of corn, natural gas and ethanol. We do not enter into these derivative financial instruments for trading or speculative purposes, nor do we designate these contracts as hedges for accounting purposes pursuant to the requirements of SFAS 133, Accounting for Derivative Instruments and Hedging Activities .

Interest Rate Risk

We are exposed to market risk from changes in interest rates. Exposure to interest rate risk results from holding long term notes which bear variable interest rates. Specifically, we have $20,000 outstanding in a variable rate, revolving loan as of June 30, 2007. The specifics of each note are discussed in greater detail in “ Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Indebtedness .” Dakota Ethanol manages its interest rate risk by monitoring the effect of market changes on interest rates and primarily using fixed rate debt.

Commodity Price Risk

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

The immediate recognition of hedging gains and losses can cause net income to be volatile from quarter to quarter due to the timing of the change in value of the derivative instruments relative to the cost and use of the commodity being hedged. We recorded an increase to cost of revenues of $1,678,878 and a decrease to cost of revenues of $1,317,630 related to derivative instruments for the six and three months ended June 30, 2007, respectively. We recorded an increase to cost of revenues of $899,281 and $117,571 related to derivative instruments for the six and three months ended June 30, 2006, respectively. There are several variables that could affect the extent to which our derivative instruments are impacted by price fluctuations in the cost of corn, natural

gas or ethanol. However, it is likely that commodity cash prices will have the greatest impact on the derivatives instruments with delivery dates nearest the current cash price.

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

We estimate that our expected corn usage is approximately 17 million bushels per year for the production of 48 million gallons of ethanol. We have price protection for approximately 95% of our expected corn usage for fiscal year ended December 31, 2007 using forward delivery contracts, CBOT futures and options and over the counter option contracts. As we move forward, additional protection may be necessary. As corn prices move in reaction to market trends and information, our income statement will be affected depending on the impact such market movements have on the value of our derivative instruments. As we move forward, additional price protection may be required to solidify our margins into fiscal year 2008. Depending on market movements, crop prospects and weather, these price protection positions may cause immediate adverse effects, but are expected to produce long-term positive growth for us.

As of June 30, 2007, Dakota Ethanol is committed to purchasing 121,000 mmBtu’s of natural gas for 2007, valued at approximately $788,000. The natural gas purchases represent approximately 52% of the annual plant requirements.

A sensitivity analysis has been prepared to estimate our exposure to corn and natural gas price risk. The following table presents the fair value of our derivative instruments as of June 30, 2007 and December 31, 2006 and the potential loss in fair value resulting from a hypothetical 10% adverse change in such prices. The fair value of the positions is a summation of the fair values calculated by valuing each net position at quoted market prices as of the applicable date. The results of this analysis, which may differ from actual results, are as follows:

	Fair Value		Effect of Hypothetical Adverse Change— Market Risk
June 30, 2007	$	5,869,523	$	586,952
December 31, 2006	$	8,957,869	$	895,787

ITEM 4. CONTROLS AND PROCEDURES.

Our management, including our Chief Executive Officer (the principal executive officer), Scott Mundt, along with our Chief Financial Officer (the principal financial officer), Robbi Buchholtz, have reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of June 30, 2007. Based upon this review and evaluation, these officers have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods required by the forms and rules of the Securities and Exchange Commission; and to ensure that the information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our management, including our principal executive officer and principal financial officer, have reviewed and evaluated any changes in our internal control over financial reporting that occurred as of June 30, 2007 and there has been no change that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

No material developments have occurred in the three months ended June 30, 2007.

ITEM 1A. RISK FACTORS.

The following Risk Factor is provided due to material changes from the Risk Factors previously disclosed in the Company’s Annual Report on Form 10-K. The Risk Factor set forth below should be read in conjunction with the Risk Factors section and the Management’s Discussion and Analysis section for the fiscal year ended December 31, 2006, included in the Company’s Annual Report on Form 10-K.

Risks Related to a Potential Change in Corporate Structure or Merger

Any change to our corporate structure, merger, public offering or business combination may present additional challenges and risks that negatively impact our future financial performance.

On June 4, 2007, our board of managers issued an announcement to investors that the board was engaging in preliminary discussions concerning a potential change in corporate structure, merger, public offering or business combination of Lake Area Corn Processors, LLC with one or more companies. However, as of the date of this report, no definitive or binding agreement, arrangement or understanding concerning a potential transaction had been reached. The use of cash to finance expenditures related to a change in corporate structure, merger, public offering or business combination could impact our ability to make future distributions to our members. Furthermore, there is no assurance that any such transaction will reduce our operating costs or increase our operating income. There is no guarantee or assurance that our past financial performance can accurately predict future results, especially in connection with such a change to our business. In addition, any change in corporate structure or merger may result in additional costs that may negatively impact our future financial performance and could present additional challenges and risks that reduce our profitability.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

We held our 2007 annual members meeting on June 5, 2007. At the annual members meeting, the members elected Rick Kasperson and Douglas Van Duyn to our board of managers to serve until the 2010 annual members meeting and until their successors are duly elected and qualified. The two nominees receiving the most votes were elected. The votes cast for each nominee are as follows:

	For	Percent of Total
Jay Van Liere	37	6.15
Bruce Kleinjan	95	15.78
Rick Kasperson	161	26.74
Bob Schmidt	24	3.99
Terry Schultz	104	17.28
Douglas Van Duyn	181	30.07

The other managers whose terms of office continued after the meeting are Brian Woldt, Ronald Alverson, Randy Hansen, Dale Thompson and Todd Brown.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

(a) The following exhibits are filed as part of this report.

	10.1	Contribution Agreement between Dakota Ethanol, LLC and Renewable Products Marketing Group, LLC dated April 1, 2007.

	10.2	Member Ethanol Fuel Marketing Agreement between Dakota Ethanol, LLC and Renewable Products Marketing Group, LLC dated April 1, 2007.

	31.1	Certificate pursuant to 17 CFR 240.13a-14(a).

	31.2	Certificate pursuant to 17 CFR 240.13a-14(a).

	32.1	Certificate pursuant to 18 U.S.C. § 1350.

	32.2	Certificate pursuant to 18 U.S.C. § 1350.

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.

		LAKE AREA CORN PROCESSORS, LLC


Date:	August 13, 2007	/s/ Scott Mundt
		Scott Mundt
		Chief Executive Officer


Date:	August 13, 2007	/s/ Robbi Buchholtz
		Robbi Buchholtz
		Chief Financial Officer

Exhibit 10.2

MEMBER ETHANOL FUEL MARKETING AGREEMENT

THIS AGREEMENT , entered into as of this 1st day of April, 2007, (“Effective Date”) by and between RENEWABLE PRODUCTS MARKETING GROUP, LLC, a Minnesota limited liability company, hereinafter referred to as “Renewable Products”; and DAKOTA ETHANOL L.L.C., a South Dakota limited liability company, hereinafter referred to as “Member”.

WITNESSETH:

WHEREAS , Renewable Products is a Minnesota limited liability company formed for the purpose of marketing fuel grade ethanol (“Ethanol”)for its members and others, and

WHEREAS , Dakota Ethanol is a South Dakota limited liability company formed for the purpose of operating a plant in Wentworth SD for the production of Ethanol, and is a member of Renewable Products, and

WHEREAS , as a condition to its membership in Renewable Products, Member has agreed to market all of the Ethanol produced by Member through Renewable Products and Renewable Products has agreed to market such Ethanol production; and

WHEREAS , the parties desire to enter into this Agreement, for purposes of setting out the terms and conditions of the marketing arrangement;

NOW THEREFORE , in consideration of the mutual covenants and promises herein contained, the parties hereto agree as follows:

1. Exclusive Marketing Representative . Renewable Products shall, subject to the terms and conditions of this Agreement, be the sole marketing representative for the entire Ethanol production of Member at the plant located at Wentworth during the term of this Agreement. *_ (Insert any exceptions i.e. alcohol for human consumption, limited sale of E 85).

2. Ethanol Specifications . All of the Ethanol produced by Member and marketed by Renewable Products will, when delivered to a common carrier by Member, be Ethanol of merchantable quality and will be fit for its intended purpose. All such Ethanol will conform to the specifications described in A.S.T.M. 4806 and such other specifications that may be, from time to time, promulgated by the industry for E-Grade denatured fuel ethanol.

3. Best Efforts to Market . Since Renewable Products shall have the exclusive right to market all the Ethanol produced by Member during the term of this Agreement as described in Section 1 herein, Renewable Products shall use its best efforts and good faith to market all such Ethanol; provided, however, that Renewable Products’ obligation hereunder shall be excused in case of war, insurrection, civil disturbance, transportation shortage or interruption, fire, flood, other natural calamity, labor dispute, any adverse

governmental statute, regulations or decree (including any court order or decree) or other act of God beyond the control of Renewable Products that directly effects Renewable Products’ ability to market Ethanol generally.

4. Risk of Loss . Renewable Products shall be responsible for and shall bear the risk of loss of (subject to the terms of this Agreement) all Ethanol produced by Member as described in Section 1 herein from the time the common carrier or customer takes custody of the product at Member’s facility in either a railcar and/or tank truck.

5. Specific Marketing Tasks . Renewable Products shall be responsible for and shall have complete discretion in the marketing, sale and delivery of all Ethanol produced from Member’s facility during the term of this Agreement, including, but not limited to:

· Obtaining sufficient railcar, tank trucks and other transport as may be needed to transport said production;

· Negotiating the rates and tariffs to be charged for delivery of such production to the customer;

· Promoting and advertising the sale of Ethanol as appropriate;

· Ascertaining that such production is delivered where contracted and intended;

· Handling all purchase agreements with consumers and any complaints in connection therewith; and

· Collecting all accounts and undertaking any legal collection procedures as may be necessary.

6. Negotiation of Ethanol Price . Renewable Products will use its best efforts to obtain the best price for all Ethanol sold by it subject to the terms of this Agreement, but shall have complete discretion to fix the price, terms and conditions of the sale of Member’s Ethanol production which shall include the right to pool production of Member with the production of other Members and non-members that have agreed to market Ethanol production through Renewable Products.

7. Ethanol Marketing Under Pooling Arrangement . Renewable Products shall market the Ethanol production of Member under the pooling arrangement maintained by Renewable Products for its Members and other contracting producers. Under such pooling arrangement, Renewable Products will market the aggregate production of all Members and other contracting non-member producers to customers. Member shall furnish estimates of production to Renewable Products as hereinafter provided and based on such estimates and the estimated production of all other pool participants, Renewable Products shall contract for the sale of such estimated production. Determination of Member’s share of revenue and payment of the Ethanol selling price to Member shall be made by Renewable Products as follows:

(a) The Estimated Price for Ethanol Sold to Renewable Products by Member . Renewable Products agrees to pay Member a price for all Ethanol sold on behalf of Member by Renewable Products under this Agreement that is equal to the “Actual Pooled Netback Ethanol Selling Price,”as defined in this Section 7. For purposes of this Agreement, a preliminary Estimated Pooled Netback Ethanol Price will be calculated and paid as follows:

(i) The Estimated Delivered Ethanol Selling Price . Each week, Renewable

Products shall calculate the estimated delivered ethanol selling price per gallon of all of the Member’s Ethanol that Renewable Products sells to its customers through operation of the ethanol pool. This amount will hereinafter be referred to as the “Estimated Delivered Ethanol Selling Price.”

(ii) The Pooled Average Delivered Ethanol Selling Price . Based upon the Estimated Delivered Ethanol Selling Price calculated for each pool participant, Renewable Products shall calculate the Pooled Average Delivered Ethanol Selling Price which shall be a weighted average of each pool participant’s Estimated Delivered Ethanol Selling Price averaged in direct proportion to the volume of Ethanol supplied to the pool by each pool participant for the week in which the estimate is calculated.

(iii) The Deduction for Estimated Direct Ethanol Distribution Expense . Each week Renewable Products shall calculate the estimated distribution expenses directly incurred in connection with distributing the Ethanol sold under this Agreement for the account of each pool participant (the “Estimated Direct Ethanol Distribution Expense”). The Estimated Direct Ethanol Distribution Expense will include, but not necessarily be limited to, all of Renewable Products’ transportation costs, rail car costs, throughput costs, storage costs, demurrage at unloading locations, inventory costs, and other distribution costs directly incurred in connection with distributing the Ethanol sold under this Agreement for the account of each pool participant.

(iv) The Pooled Average Direct Ethanol Distribution Expense . Based upon the Estimated Direct Ethanol Distribution Expense calculated for each pool participant, Renewable Products shall calculate the Pooled Average Direct Ethanol Distribution Expense which shall be a weighted average of each pool participant’s Estimated Direct Ethanol Distribution Expense averaged in direct proportion to the volume of Ethanol supplied to the pool by each pool participant for the week for which the estimate is calculated.

(v) The Estimated Pooled Netback Ethanol Selling Price . The difference between the Pooled Average Estimated Delivered Ethanol Selling Price and the Pooled Average Direct Ethanol Distribution Expense shall be the Estimated Pooled Netback Ethanol Selling Price to be paid to Member by Renewable Products for the applicable week.

(vi) Invoices and Payments Between Member and Renewable Products . Member will invoice Renewable Products, upon shipment, at the applicable Estimated Pooled Netback Ethanol Selling Price less the estimated prevailing management fee as determined from time to time by the Board of Governors for all Ethanol to be sold by Renewable Products on behalf of Member under this Agreement. Renewable Products will use its best efforts to pay Member for all such Ethanol within 10 business days from the date of delivery, with delivery occurring at the time the common carrier takes possession of the Ethanol.

(b) The Actual Pooled Netback Ethanol Selling Price for Ethanol Sold to Renewable Products by Member .

(i) The Actual Pooled Netback Ethanol Selling Price . Since the Actual Pooled Netback Ethanol Selling Price cannot be determined before Renewable Products sells the Ethanol delivered by Member under this Agreement, Renewable Products shall reconcile the Estimated Pooled Netback Ethanol Selling Price with Actual Pooled Netback Ethanol Selling Price on a monthly basis as provided below.

(ii) Calculation of Actual Selling Prices After Each Month . At the end of each month, promptly after the information necessary to calculate the Actual Pooled Netback Ethanol Selling Price becomes available; Renewable Products will calculate the Actual Pooled Netback Ethanol Selling Price for the preceding month. Renewable Products shall use the same methodology that is used to calculate the Estimated Pooled Netback Ethanol Selling Price except that the calculation shall be based on the Actual Delivered Ethanol Selling Price sold during the month and the Actual Direct Distribution Expense incurred by Renewable Products during the period. Renewable Products will provide that Actual Pooled Netback Ethanol Selling Price to Member along with a summary of the calculations used by Renewable Products to arrive at the Actual Pooled Netback Ethanol Selling Price.

(iii) Reconciliation of Estimated Selling Prices and Actual Selling Prices After Each Month . Within ten (10) days after Renewable Products provides Member with the Actual Pooled Netback Ethanol Selling Price for the preceding month, the parties will reconcile the difference between the Estimated Pooled Netback Ethanol Selling Price and the Actual Pooled Netback Ethanol Selling Price for the preceding month, and the difference between the estimated management fee and actual management fee for the preceding month. If the Estimated Pooled Netback Ethanol Selling Price exceeded the Actual Pooled Netback Ethanol Selling Price then Member will refund to Renewable Products the overpayments that it previously received from Renewable Products within ten (10) days after the completion of the reconciliation. On the other hand, if the Estimated Pooled Netback Ethanol Selling Price was less than the Actual Pooled Netback Ethanol Selling Price, then Renewable Products will pay Member the additional amounts owed to Member within ten (10) days after the completion of the actual and estimated selling price reconciliation. A similar adjustment will be made to reconcile the actual management fee to the estimated management fee. In lieu of Member directly refunding any amounts to Renewable Products by separate payment and Renewable Products directly refunding any amounts to Member by separate payment, under this Section 7 the parties may offset the required amounts on their next respective monthly payments.

(c) Audit . Within ninety (90) days following each anniversary date of this Agreement and subject to the confidentiality provisions of this Agreement, Member shall

name have the right to inspect the books and records of Renewable Products for the purpose of auditing calculations of the Actual Pooled Netback Ethanol Selling Price and actual management fees for the preceding year. Member shall give written notice to Renewable Products of its desire to conduct an audit and Renewable Products shall provide reasonable access to all financial information necessary to complete such audit. The audit shall be conducted by an accounting firm agreeable to both parties and shall be completed within 45 days following appointment of the auditor. The cost of the audit shall be the responsibility of Member unless the auditor determines that Renewable Products underpaid Member by more than 3% for the period audited, in which case Renewable Products shall pay the cost of the audit. If the auditor determines that Renewable Products underpaid Member, Renewable Products shall promptly pay such underpayment to Member and if the auditor determines that Renewable Products overpaid Member, Member shall promptly pay the overpayment to Renewable Products. The determination of the auditor shall be binding on both parties. If Member fails to exercise its right to audit as provided in this Section 7(c) for any year, it shall be deemed to have waived any claim to dispute the Actual Netback Ethanol Selling Price and management fee for such year.

(d) Most Favorable Terms . If Renewable Products enters into any Ethanol marketing agreement, with any current or future Ethanol pool participant on terms that are more favorable to the pool participant than the terms provided to Member under this Agreement, Renewable Products shall provide to Member a copy of such agreement and Member shall have the right, by written notice to Renewable Products given not more than ten (10) business days after receipt of such agreement, to receive the same rights and benefits conferred under such other agreement.

8. Accounts Receivable/Rail Car Leases/Termination of Contract . Renewable Products shall do all billing in regard to the sale of Ethanol pursuant to this Agreement, collect all receivables and be responsible for any delinquent accounts. All risks associated with accounts receivable shall be borne by Renewable Products. Renewable Products will lease railcars to be used by Member and all lease costs will be included in the calculation of Direct Ethanol Distribution Expense. If this Agreement is terminated for any reason the lease for the railcars leased by Renewable Products for the transport of Member’s Ethanol may be assigned to Member at the sole option of Renewable Products. In such case Member shall assume the lease and shall be obligated to the terms and conditions of said lease. Renewable Products shall provide Member the opportunity to review and approve the terms and conditions of any such railcar lease as well as the terms and conditions of any amendments or modifications to any such railcar lease before Renewable Products first executes the same. The parties understand that the assignment of the lease is subject to the approval of the lessor of the railcars.

9. No “Take or Pay ” The parties agree that this is not a “take or pay contract” and that Renewable Products’ liability is limited to payment for Ethanol delivered by Member pursuant to this Agreement.

10. Term . The term of this Agreement shall commence on the Effective Date and

shall continue so long as Member remains a member of Renewable Products.

11. Termination . This Agreement may be terminated under the circumstances set out below.

(a) Termination for Intentional Misconduct . If either party engages in intentional misconduct reasonably likely to result in significant adverse consequences to the other party, the party harmed or likely to be harmed by the intentional misconduct may terminate this Agreement immediately, upon written notice to the party engaging in the intentional misconduct.

(b) Termination for Uncured Breach . If one of the parties breaches the terms of this Agreement, the other party may give the breaching party a notice in writing which specifically sets out the nature and extent of the breach, and the steps that must be taken to cure the breach. After receiving the written notice, the breaching party will then have thirty (30) days to cure the breach, if the breach does not involve a failure to market and distribute Ethanol as required by this Agreement. If the breach involves a failure to market and distribute Ethanol as required by this Agreement, then the breaching party will have five (5) days after receiving the written notice to cure the breach. If the breaching party does not cure any breach within the applicable cure period, then the non-breaching party will have the right to terminate this Agreement immediately.

(c) Member Insolvency, etc . Renewable Products may terminate this Agreement if Member becomes insolvent, has a receiver appointed over its business or assets and such receiver is not discharged within 30 days, files a petition in bankruptcy or has a petition in bankruptcy filed against it which, in either case, is not dismissed within 30 days, or ceases to produce Ethanol for 30 days or more.

(d) Termination by Mutual Written Agreement . This Agreement may also be terminated upon any terms and under any conditions which are mutually agreed upon in writing by the parties.

12. Licenses and Permits . At all times from the commencement of this Agreement, Member shall possess and maintain in good standing all of the licenses and permits necessary to operate its production facilities and Renewable Products shall possess and maintain in good standing at all times during the term of this Agreement all of the licenses and permits necessary to perform its obligations under this Agreement.

13. Estimated 12-Month Volume . As of the Effective Date Member will provide Renewable Products with Member’s best estimate of its anticipated monthly Ethanol production for the next twelve (12) months to assist Renewable Products in developing appropriate marketing strategies for the Ethanol to be produced by Member.

14. Updated Monthly Volume Estimates . On or before the first day of each month after the Effective Date, Member will provide Renewable Products with its updated best

estimate of Member’s anticipated monthly Ethanol production for the next twelve (12) months, so that Renewable Products will have Ethanol production estimates from Member for each of the next twelve (12) months during the entire time that this Agreement is in effect. Renewable Products shall be entitled to rely upon such estimates in marketing and selling the pooled Ethanol production of all pool participants. From time to time Renewable Products may enter into forward contracts to sell estimated pooled production beyond the 12-month period covered by the estimated production of Member. Any such commitment will be based on market conditions and projected pooled production based on all pool participants estimated and historical production. Member acknowledges that such commitments are in the best interest of pool participants and Renewable Products may rely on Member’s continued production beyond the 12 month estimates for such purpose. Renewable Products shall provide Member with a schedule of committed pooled production at least monthly.

15. Obligation to Deliver after Termination . Notwithstanding termination of this Agreement, Member shall be obligated to deliver to Renewable Products for marketing by Renewable Products in accordance with this Agreement, the estimated production of Member for the twelve (12) months following termination of this Agreement and Member’s percentage of any committed pooled production beyond such twelve (12) month period based upon Member’s average monthly percentage contribution to the total pooled production for the preceding 12 months.

16. Ethanol Shortage/Open Market Purchase . If Member is unable to deliver its estimated monthly Ethanol production and if as a consequence of the non-delivery and in order to meet its sale obligations to third parties, Renewable Products is required to purchase ethanol in the marketplace, Renewable Products may purchase ethanol in the marketplace at such reasonable price and in such reasonable quantity as is required to meet its delivery obligations; provided, however, that prior to making such purchases Renewable Products shall communicate the terms and conditions of such purchases to Member and Member shall have the right to meet such terms and conditions.. If Member is unable or unwilling to deliver the required ethanol on such terms and conditions, Renewable Products may complete the purchase. If it does so, and as a result thereof incurs a financial loss, Member will reimburse Renewable Products for any such loss or Renewable Products may elect to set off such financial loss against future payments to Member over a period not to exceed twenty four (24) months.

17. Good and Marketable Title . Member represents that it will have good and marketable title to all of the Ethanol marketed for it by Renewable Products and that said Ethanol will be free and clear of all liens and encumbrances.

18. Subordination . In order to satisfy the payment obligations in Section 7 of this Agreement, Renewable Products may be required to obtain working capital from financing resources. Member agrees and acknowledges that the payment terms in this Agreement are a benefit to Member and agrees that it will, upon the reasonable request of Renewable Products, subordinate its right to payment hereunder to the rights of any lender providing working capital to Renewable Products, provided that all Members of

Renewable Products are required to agree to such subordination. Member shall execute such subordination agreement and other documents as may be necessary to evidence this undertaking.

19. Independent Contractor . Nothing contained in this Agreement will make Renewable Products the agent of Member for any purpose other than the marketing of Member’s Ethanol production as stated in this Agreement. Renewable Products and its employees shall be deemed to be independent contractors with full control over the manner and method of performance of the services they will be providing on behalf of Member under this Agreement. Neither party shall have the right to bind the other party except as expressly provided herein.

20. Separate Entities . The parties hereto are separate entities and nothing in this Agreement or otherwise shall be construed to create any rights or liabilities of either party to this Agreement with regard to any rights, privileges, duties or liabilities of any other party to this Agreement.

21. Testing of Samples . At the request of Renewable Products, Member agrees to provide Renewable Products with samples of its Ethanol produced at its production facility so that it may be tested for product quality on a regular basis. Any and all costs of third party testing shall be paid for by Renewable Products.

22. Insurance . During the entire term of this Agreement, Member will maintain insurance coverage. At a minimum, Member’s insurance coverage must include:

(a) Commercial general product and public liability insurance, with liability limits of at least $5 million in the aggregate;

(b) Property and casualty insurance adequately insuring its production facilities and its other assets against theft, damage and destruction on a replacement cost basis;

(d) Renewable Products shall be added as an additional insured under the commercial general product and public liability insurance policy and the property and casualty insurance policy.

Member will not change its insurance coverage during the term of this Agreement if such change results in a failure to maintain the minimums set out above, and the policies shall provide that they may not be cancelled or terminated without at least 30 days prior written notice to Renewable Products. Renewable Products shall maintain at all times such combined general product and public liability insurance, property and casualty insurance and other insurance as it deems necessary and appropriate.

23. Audit Right . The parties hereto agree that, upon request in writing, either party may require the other to make available its books and records, at reasonable intervals, in order to account for all dealings, transactions and sums relevant to this Agreement. Any such independent public accountants hired by either party will be subject to the same confidentiality obligations that the parties are subject to under Section 24

of this Agreement. Each party agrees to inform its accountants of those confidentiality obligations.

24. Confidential Information . The parties acknowledge that they will be exchanging information about their businesses under this Agreement which is confidential and proprietary, and the parties agree to handle that confidential and proprietary information in the manner described in this Section 23.

(a) Definition of Confidential Information . For purposes of this Agreement, the term “Confidential Information” will mean information related to the business operations of Member or Renewable Products that meets all of the following criteria:

(i) The information must not be generally known to the public and must not be a part of the public domain;

(ii) The information must belong to the party claiming it is confidential and must be in that party’s possession;

(iii) The information must have been protected and safeguarded by the party claiming it is confidential by measures that were reasonable under the circumstances before the information was disclosed to the other party’

(iv) Written information must be clearly designated in writing as “Confidential Information” by the party claiming it is confidential before it is disclosed to the other party, except that all information about costs and prices will always be considered Confidential Information under this Agreement without the need for specifically designating it as such; and

(v) Verbal Confidential Information which is disclosed to the other party must be summarized in writing, designated in writing as “Confidential Information” and transmitted to the other party within ten (10) days of the verbal disclosure.

(b) Limitations on the Use of Confidential Information . Each party agrees that it will not use any Confidential Information that it obtains about the other party for any purpose other than to perform its obligations under this Agreement.

(c) The Duty not to Disclose Confidential Information . The parties agree that they will not disclose any Confidential information about each other to any person or organization, other than their respective legal counsel and accountants, without first getting written consent to do so from the other party. Notwithstanding the foregoing, if a party or anyone to whom such party transmits Confidential Information in accordance with this Agreement is requested or required (by deposition, interrogatories, requests for information or documents in legal proceedings, subpoenas, civil investigative demand or similar process, SEC filings or administrative proceedings) in connection with any proceeding, to disclose any Confidential Information, such party will give the disclosing party prompt written notice of such request or requirement so that the disclosing party may seek an appropriate protective order or other remedy and/or waive

compliance with the provisions of this Agreement, and the receiving party will cooperate with the disclosing party to obtain such protective order. The fees and costs of obtaining such protective order, including payment of reasonable attorney’s fees, shall be paid for by the disclosing party. If such protective order or other remedy is not obtained or the disclosing party waives compliance with the relevant provisions of this Agreement, the receiving party (or such other persons to whom such request is directed) will furnish only that portion of the Confidential Information which, in the opinion of legal counsel, is legally required to be disclosed, and upon the disclosing party’s request, use commercially reasonable efforts to obtain assurances that the confidential treatment will be accorded to such information. This will be the case both while this Agreement is in effect and for a period of five (5) years after it has been terminated.

(d) The Duty to Notify the Other Party in Cases of Improper Use or Disclosure . Each party agrees to immediately notify the other party if either party becomes aware of any improper use of or any improper disclosure of the Confidential information of the other party at any time while this Agreement is in effect, and for a period of five (5) years after it has been terminated.

(e) Protection of the Confidential Information . Each party agrees to develop effective procedures for protecting the Confidential Information that it obtains from the other party, and to implement those procedures with the same degree of care that it uses in protecting its own Confidential Information.

(f) Return of the Confidential Information . Immediately upon the termination of this Agreement, each party agrees to return to the other party all of the other party’s Confidential Information that is in its possession or under its control.

25. Indemnification and Hold Harmless – Member . If a third party makes a claim against Renewable Products or any person or organization related to it as the result of the actions or omissions of Member or any person or organization related to Member including, but not limited to, claims relating to the quality of Ethanol produced by Member or the performance of its obligations under this Agreement, Member shall indemnify Renewable Products and its related persons and organizations and hold them harmless from any liabilities, damages, costs and/or expenses, including costs of litigation and reasonable attorneys fees which they incur as a result of any such claims.

26. Indemnification and Hold Harmless – Renewable Products . The indemnification obligations of the parties under this Agreement will be mutual and Renewable Products, therefore, makes the same commitment to indemnify Member and its related persons or organizations to the extent any claim is made against Member or its related person arising out of any action or omission of Renewable Products.

27. Survival of Terms/Dispute Resolution . All representations, warranties and

agreements made in connection with this Agreement will survive the termination of this Agreement. The parties will, therefore, be able to pursue claims related to those representations, warranties and agreements after the termination of this Agreement, unless those claims are barred by the applicable statute of limitations. Similarly, any claims that the parties have against each other that arise out of actions or omissions that take place while this Agreement is in effect will survive the termination of this Agreement. This means that the parties may pursue those claims even after the termination of this Agreement, unless applicable statutes of limitation bar those claims. The parties agree that, should a dispute between them arise in connection with this Agreement, the parties will complete, in good faith, a mediation session prior to the filing of any action in any court. Such mediation session shall occur at a place that is mutually agreeable, and shall be conducted by a mediator to be selected by mutual agreement of the parties.

28. Choice of Law . This Agreement shall be governed by, interpreted under and enforced in accordance with Minnesota law, without regard to conflicts of law principles.

29. Assignment . Neither party may assign its rights or obligations under this Agreement without the written consent of the other party, which consent will not be unreasonably withheld. Renewable Products shall not be required to consent to an assignment by Member other than to another member of Renewable Products or if required by Member for financing purposes.

30. Entire Agreement . This Agreement constitutes the entire agreement between the parties covering everything agreed upon or understood in the transaction. There are no oral promises, conditions, representations, understandings, interpretations, or terms of any kind as conditions or inducements to the execution hereof or in effect between the parties, except as expressed in this Agreement. No change or addition shall be made to this Agreement except by a written document signed by all parties hereto.

31. Execution of Counterparts . This Agreement may be executed by the parties on any number of separate counterparts, and by each party on separate counterparts, each of such counterparts being deemed by the parties to be an original instrument; and all of such counterparts, taken together, shall be deemed to constitute one and the same instrument.

32. Duplicate Counterpart Includes Facsimile . The parties specifically agree and acknowledge that a duplicate hereof shall include, but not be limited to, a counterpart produced by virtue of a facsimile (“fax”) machine.

33. Binding Effect . This Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and there respective heirs, personal representatives, successors and assigns.

34. Notices . Any notice or other communication required or permitted hereunder shall be in writing and shall be considered delivered in all respects when it has been delivered by hand or mailed by first class mail postage prepaid, addressed as follows:

TO: Renewable Products Marketing Group, LLC

809 East Main Street, Suite 2

Belle Plaine, MN 56011

With a copy to:

TO: Dakota Ethanol, LLC

P.O. Box 100

46269 SD Hwy 34

Wentworth, SD 57075

With a copy to:

IN WITNESS WHEREOF , the parties hereto have set their hands the day and year first written above.

Renewable Products Marketing Group, LLC

By: Its CEO. C Stephen Bleyl
/s/ C. Stephen Bleyl

Dakota Ethanol L.L.C

/s/ Brian Woldt
By: Its:
Chairman

x		Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the quarterly period ended June 30, 2007.

OR

o		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the transition period from to .

South Dakota	000-50254	46-0460790
(State or other jurisdiction of	(Commission File Number)	(I.R.S. Employer Identification No.)
incorporation or organization)



CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
	Balance Sheets
	Statements of Operations
	Statements of Cash Flows
	Notes to Financial Statements

RENEWABLE PRODUCTS
MARKETING GROUP, LLC


By	/s/ Ron B. Gillis

Its CFO

DAKOTA ETHANOL L.L.C.

By	/s/ Brian Woldt

Its Chairman

LAKE AREA CORN PROCESSORS, LLC

LAKE AREA CORN PROCESSORS, LLC

LAKE AREA CORN PROCESSORS, LLC

LAKE AREA CORN PROCESSORS, LLC

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

JUNE 30, 2007 AND 2006

LAKE AREA CORN PROCESSORS, LLC

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

LAKE AREA CORN PROCESSORS, LLC

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

LAKE AREA CORN PROCESSORS, LLC

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Short-Term Debt Sources

Long-Term Debt Sources

2. Consideration . In consideration for its Membership in RPMG, DAKOTA ETHANOL L.L.C. shall make the following capital contribution:

a. An initial contribution of $105,000, receipt of which is hereby acknowledged;

b. An additional $500,000 to be paid on a monthly basis in an amount equal to $0.0075 multiplied by the total gallons of ethanol production sold by RPMG for DAKOTA ETHANOL L.L.C. during the month;

c. DAKOTA ETHANOL L.L.C. may at any time prepay all or any part of the outstanding balance of its capital contribution;

4. Governing Law . This Agreement and the rights of the parties hereunder will be governed by, interpreted, and enforced in accordance with the laws of the State of Minnesota.

5. Binding Effect . This Agreement will be binding upon and inure to the benefit of the parties and their respective successors and assigns.

PART I. FINANCIAL INFORMATION

	ITEM 1. FINANCIAL STATEMENTS.
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 4. CONTROLS AND PROCEDURES.

PART II. OTHER INFORMATION

	ITEM 1. LEGAL PROCEEDINGS.
	ITEM 1A. RISK FACTORS
	ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
	ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
	ITEM 5. OTHER INFORMATION.
	ITEM 6. EXHIBITS.

SIGNATURES

	/s/ Scott Mundt
	Scott Mundt
	Principal Executive Officer
	Dated: August 13, 2007

	/s/ Robbi Buchholtz
	Robbi Buchholtz
	Principal Financial Officer
	Dated: August 13, 2007