1229899--12/29/2006--LITTLE_SIOUX_CORN_PROCESSORS

related topics

{gas, price, oil}

{property, intellectual, protect}

{cost, contract, operation}

{competitive, industry, competition}

{loss, insurance, financial}

{acquisition, growth, future}

{cost, regulation, environmental}

{personnel, key, retain}

{control, financial, internal}

{cost, operation, labor}

{regulation, change, law}

Risks Relating to Our Business We have a limited operating history and our business may not be as successful as we anticipate. Our business is not diversified. Our financial performance is significantly dependent on corn and natural gas prices and generally we cannot pass on increases in input prices to our customers. Risks Relating to Our Business - We engage in hedging transaction which involve risks that can harm our business The spread between ethanol and corn prices can vary significantly and we do not expect the spread to remain at recent high levels. Our revenues will be greatly affected by the price at which we can sell our ethanol and distillers grains. We sell all of the ethanol we produce to ADM in accordance with an ethanol marketing agreement. We engage in hedging transactions which involve risks that can harm our business. Operational difficulties at our Plant could negatively impact our sales volumes and could cause us to incur substantial losses. Disruptions to infrastructure, or in the supply of fuel, natural gas or water, could materially and adversely affect our business. Competition for qualified personnel in the ethanol industry is intense and we may not be able to hire and retain qualified personnel to operate our Plant. Technological advances could significantly decrease the cost of producing ethanol or result in the production of higher-quality ethanol, and if we are unable to adopt or incorporate technological advances into our operations, our Plant could become uncompetitive or obsolete. Risks Related to Our Expansion Strategy We give no assurances that we will be able to implement our expansion strategy as planned or at all. If the Plant expansion costs more than we expect, the expansion may be unprofitable. Construction delays could increase our costs. Defects in Plant expansion construction could impair our ability to produce ethanol and its co-products. Risks Related to Ethanol Industry Overcapacity within the ethanol industry could cause an oversupply of ethanol and a decline in ethanol prices. We expect to operate in a competitive industry and compete with larger, better financed entities which could impact our ability to operate profitably. Competition from the advancement of alternative fuels may lessen the demand for ethanol. Certain countries can export ethanol to the United States duty-free, which may undermine the ethanol production industry in the United States . Consumer resistance to the use of ethanol based on the belief that ethanol is expensive, adds to air pollution, harms engines and takes more energy to produce that it contributes may affect the demand for ethanol. The expansion of domestic ethanol production in combination with state bans on MTBE and/or state renewable fuels standards may place strains on related infrastructure such that our ethanol cannot be marketed and shipped to blending terminals that would otherwise provide us the best cost advantages. Risks Related to Regulation and Governmental Action A change in government policies favorable to ethanol may cause demand for ethanol to decline. Loss of or ineligibility for favorable tax benefits for ethanol production could hinder our ability to operate at a profit and reduce the value of your investment in us. Changes in environmental regulations or violations of the regulations could be expensive and reduce our profitability.

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1229899--12/29/2006--LITTLE_SIOUX_CORN_PROCESSORS_LLC