AG SERVICES OF AMERICA INC - 10-Q Quarterly Report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the quarterly period ended August 31, 2003

or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the transition period from to

Commission File Number: 000-19320

Ag Services of America, Inc.
(Exact name of registrant as specified in its charter)

Iowa 42-1264455
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

1309 Technology Parkway, Cedar Falls, Iowa 50613
(Address of principal executive offices) (Zip Code)

(319) 277-0261
(Registrant's telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last
report.)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
[X] Yes [ ] No

5,479,514 common shares were outstanding as of October 14, 2003.

AG SERVICES OF AMERICA, INC.

INDEX

Page
PART I. FINANCIAL INFORMATION

Item 1. Financial statements:
Consolidated condensed balance sheets, August 31, 2003
(unaudited) and February 28, 2003 1
Unaudited consolidated condensed statements of income,
three months and six months ended August 31, 2003 and 2002 2
Unaudited consolidated condensed statements of cash flows,
six months ended August 31, 2003 and 2002 3
Unaudited consolidated statement of stockholders' equity,
six months ended August 31, 2003 4
Notes to consolidated condensed financial statements
(unaudited) 5-12

Item 2. Management's discussion and analysis of
financial condition and results of operations 13-19

Item 3. Quantitative and qualitative disclosures
about market risk 19

Item 4. Controls and procedures 19-20

PART II. OTHER INFORMATION

Item 6. Exhibits and reports on form 8-K: 21

(a) Exhibits

Exhibit 10.44 Sixth Amendment to the Amended and Restated
Credit Agreement 22-30
Exhibit 10.45 Seventh Amendment to the Amended and Restate
Credit Agreement 31-39
Exhibit 31.1 CEO Certification pursuant to Section 302 of the
Sarbanes Oxley Act of 2002 40-41
Exhibit 31.2 CEO Certification pursuant to Section 302 of the
Sarbanes Oxley Act of 2002 42-43
Exhibit 32.1 CEO Certification pursuant to Section 906 of the
Sarbanes Oxley Act of 2002 44
Exhibit 32.2 CEO Certification pursuant to Section 906 of the
Sarbanes Oxley Act of 2002 45

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AG SERVICES OF AMERICA, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)

August 31, February 28
ASSETS 2003 2003*
(Unaudited)
---------- ----------

CURRENT ASSETS
Cash $4 $8
Customer notes receivable, less allowance
for doubtful notes and reserve for
discounts August 31, 2003 $14,019;
February 28, 2003 $12,892 284,601 209,732
Inventory and other assets 1,734 2,714
Prepaid income taxes 768 -
Foreclosed assets held for sale 2,104 2,266
Deferred income taxes, net 5,308 5,524
---------- ----------
Total current assets $294,519 $220,244
---------- ----------

LONG-TERM RECEIVABLES AND OTHER ASSETS
Customer notes receivable, less allowance
for doubtful notes August 31, 2003 $8,544;
February 28, 2003 $5,208; $54,035 $53,418
Deferred financing costs, less accumulated
amortization August 31, 2003 $1,345;
February 28, 2003 $2,090; - 367
Deferred income taxes, net 3,527 1,926
---------- ----------
$57,562 $55,711
---------- ----------
PROPERTY AND EQUIPMENT
Land and building, less accumulated
depreciation August 31, 2003 $224;
February 28, 2003 $137 $5,322 $5,387
Equipment, less accumulated depreciation
August 31, 2003 $2,004; February 28, 2003
$2,087 1,052 1,326
---------- ----------
$6,374 $6,713
---------- ----------
$358,455 $282,668
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Notes payable, including current maturities $266,859 $180,872
Outstanding checks in excess of
bank balances 98 16,488
Accounts payable 10,006 1,037
Accrued expenses 3,036 3,584
Income taxes payable - 168
----------- ----------
Total current liabilities $279,999 $202,149
----------- ----------

LONG-TERM LIABILITIES
Notes payable, less current maturities $2,723 $2,808
----------- ----------
STOCKHOLDERS' EQUITY
Preferred stock, no par or stated value;
authorized 10,000,000 shares, none issued $- $-
Capital stock, common, no par or stated value;
authorized 30,000,000 shares;
issued 5,479,514 shares 24,499 24,499
Retained earnings 51,996 54,379
Accumulated other comprehensive loss 762 1,167
----------- ----------
$75,733 $77,711
----------- ----------
$358,455 $282,668
=========== ==========

*Condensed from Audited Financial Statements.

See Notes to Consolidated Financial Statements.

-1-

AG SERVICES OF AMERICA, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
Three and Six Months Ended August 31, 2003 and 2002
(Dollars in Thousands, Except Per Share Amounts)

Three Months Ended Six Months Ended
August 31, August 31,
---------------------- ----------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------

Net revenues:
Farm inputs $30,402 $70,001 $71,794 $135,801
Financing income 5,833 9,087 11,231 15,403
Customer fees 289 514 1,458 3,000
Other 63 536 271 1,179
---------- ---------- ---------- ----------
$36,587 $80,138 $84,754 $155,383
---------- ---------- ---------- ----------
Cost of revenues:
Farm inputs $28,439 $64,603 $66,681 $125,239
Financing expense 3,943 4,467 7,674 7,849
Provision for doubtful notes 1,108 2,828 4,622 6,905
---------- ---------- ---------- ----------
$33,490 $71,898 $78,977 $139,993
---------- ---------- ---------- ----------

Gross margin $3,097 $8,240 $5,777 $15,390

Selling, general and administrative expenses 2,605 4,172 5,782 7,815
Terminated ASCP transaction costs 3,838 - 3,838 -
---------- ---------- ---------- ----------
Total operating expenses 6,443 4,172 9,620 7,815
---------- ---------- ---------- ----------

Income (loss) before income taxes ($3,346) $4,068 ($3,843) $7,575

Income taxes (benefit) (1,272) 1,566 (1,460) 2,916
---------- ---------- ---------- ----------
Net income (loss) ($2,074) $2,502 ($2,383) $4,659
========== ========== ========== ==========

Earnings (loss) per share:
Basic ($0.38) $0.46 ($0.43) $0.85
========== ========== ========== ==========
Diluted ($0.38) $0.45 ($0.43) $0.85
========== ========== ========== ==========
Weighted average shares:
Basic 5,479,514 5,476,961 5,479,514 5,475,125
========== ========== ========== ==========
Diluted 5,479,514 5,501,575 5,479,514 5,507,416
========== ========== ========== ==========

See Notes to Consolidated Financial Statements.

-2-

AG SERVICES OF AMERICA, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended August 31, 2003 and 2002
(Dollars in Thousands)

2003 2002
---------- ----------

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) ($2,383) $4,659
Adjustments to reconcile net income to
net cash (used in) operating activities:
Depreciation 374 327
Amortization 367 954
Deferred income taxes (1,627) (3,657)
(Gain) on sale of equipment and
foreclosed assets (102) -
Changes in assets and liabilities:
(Increase) in customer notes receivable (75,486) (290,373)
Decrease in inventory and other assets 980 3,331
(Increase) decrease in prepaid and
income taxes payable (936) 6,150
Increase in accounts payable and
accrued expenses 8,421 16,702
---------- ----------
Net cash (used in) operating activities ($70,392) ($261,907)
---------- ----------

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment $22 $31
(Purchases) of building and
equipment (52) (1,174)
Proceeds from sale of foreclosed
assets held for sale 963 296
(Purchases) of foreclosed assets
held for sale (704) (266)
---------- ----------
Net cash (used in) investing activities $229 ($1,113)
---------- ----------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings $181,183 $328,008
Principal payments on short-term borrowings (94,549) (59,068)
Proceeds from long-term borrowings - 6,501
Principal payments on long-term borrowings (85) (6,201)
(Decrease) in excess of outstanding
checks over bank balance (16,390) (5,630)
(Increase) in deferred financing costs - (696)
Proceeds from issuance of capital stock,
net - 81
---------- ----------
Net cash provided by financing
activities $70,159 $262,995
---------- ----------

(Decrease) in cash ($4) ($25)

CASH
Beginning 8 42
---------- ----------
Ending $4 $17
========== ==========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $8,005 $5,654
Income taxes $1,103 $423

See Notes to Consolidated Financial Statements

-3-

AG SERVICES OF AMERICA, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Six Months Ended August 31, 2003
(Dollars in thousands)

Capital Stock
--------------------------
Accumulated
Other
Shares Retained Comprehensive Comprehensive
Issued Amount Earnings Income (loss) Total Income (loss)
------------ ------------ ------------ ------------ ------------ ------------

Balance,
February 28, 2003 5,479,514 $24,499 $54,379 ($1,167) $77,711
Comprehensive income (loss):
Net income (loss) - - (2,383) - (2,383) ($2,383)
Other comprehensive
income, net of tax - - - 405 405 405
------------
Total comprehensive loss ($1,978)
------------ ------------ ------------ ------------ ------------ ============
Balance, August 31, 2003 5,479,514 $24,499 $51,996 ($762) $75,733
============ ============ ============ ============ ============

See Notes to Consolidated Financial Statements

-4-

AG SERVICES OF AMERICA, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

Note 1. Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared
in accordance with the instructions of Form 10-Q and Rule 10-01 of
Regulation S-X. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting
principals generally accepted in the United States of America have been
condensed or omitted. It is suggested these interim consolidated condensed
financial statements be read in conjunction with the financial statements
and notes thereto included in the Company's Annual Report for the year
ended February 28, 2003. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary for a fair
presentation of the financial position, results of operations and cash
flows for the interim periods presented have been made. Operating results
for the six month period ended August 31, 2003 are not necessarily indicative
of the results that may be expected for the year ending February 28, 2004.

Principles of Consolidation

The consolidated financial statements include the accounts of Ag Services
of America, Inc. (the Company) and its wholly owned subsidiaries,
Ag Acceptance Corporation and Powerfarm, Inc. All material intercompany
balances and transactions have been eliminated in consolidation.

The Company formed Ag Acceptance Corporation, a wholly owned subsidiary,
in conjunction with a prior credit facility.

In conjunction with the Company's e-commerce initiative, the Company
created Powerfarm, Inc. a wholly owned subsidiary to operate and manage
the Company's website Powerfarm.com.

Revenue Recognition

The Company recognizes revenue from the sales of farm inputs such as seed,
fertilizer and agricultural chemicals upon delivery to the customers.
Customer fees consist primarily of program fees and insurance brokerage
services. Program fees are recognized at estimated realizable amounts as
the services are performed. Insurance brokerage revenues, also classified
as customer fees, are recognized generally on the effective date of the
policies or on the billing date, whichever is later. During the three and
six months ended August 31, 2003 and 2002, the percentage of net revenues
attributable to the sale of seed, fertilizer, agricultural chemicals,
financing income and customer fees was as follows:

-5-

Three Months Ended Six Months Ended
August 31, August 31,
-------------------- --------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Seed 20.6% 27.6% 27.2% 28.9%
Chemicals 37.3% 38.5% 29.5% 32.2%
Fertilizer 25.2% 21.2% 27.9% 26.3%
Financing 15.9% 11.3% 13.3% 9.9%
Customer fees 0.8% 0.6% 1.7% 1.9%
Other 0.2% 0.8% 0.4% 0.8%
--------- --------- --------- ---------
Total 100.0% 100.0% 100.0% 100.0%
--------- --------- --------- ---------

The Company decided in the prior fiscal year to present revenues associated
with the cash advances for fuel, irrigation, land rents and other farm inputs
and revenues associated with the input only program on a net reporting basis
in contrast to the previously presented gross reporting basis. The input
only program is a financing program provided by the Company for various
suppliers and manufacturers. The Company has decided to report its revenue
in this manner because it believes it is a preferable presentation under
current generally accepted accounting principles. This change of presentation
has no impact on future or past earnings of the Company.

Stock options issued to employees:

SFAS No. 123, "Accounting for Stock-Based Compensation", establishes a fair
value based method for the accounting and financial reporting of its
stock-based employee compensation plans. However, as allowed by the
standard, the Company has elected to continue to apply the intrinsic value
based method as prescribed by Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees". Under this method, compensation
is measured as the difference between the market value of the stock on the
grant date, less the amount required to be paid for the stock. The
difference, if any, is charged to expense over the period of service.

Had compensation cost for the Company's two stock based compensation plans
been determined based on the grant date fair values of the awards (the
method prescribed in SFAS No. 123), reported net income and earnings per
common share would have been reduced to the pro forma amounts shown below:

Three Months Ended Six Months Ended
August 31, August 31,
-------------------- --------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Net income (loss) as reported ($2,074) $2,502 ($2,383) $4,659
Deduct: total stock-based
employee compensation expense
determined under fair value
based method for all awards,
net of related tax effects (73) (85) (146) (171)
--------- --------- --------- ---------
Pro forma net income (loss) ($2,147) $2,417 ($2,529) $4,488
========= ========= ========= =========

Basic earnings (loss) per share
As reported ($0.38) $0.46 ($0.43) $0.85
Pro forma ($0.39) $0.44 ($0.46) $0.82

Diluted earnings (loss) per share
As reported ($0.38) $0.45 ($0.43) $0.85
Pro forma ($0.39) $0.44 ($0.46) $0.81

-6-

The fair value of each grant is estimated at the grant date using the
Black-Scholes option-pricing model with the following weighted-average
assumptions for grants during the three and six months ended August 31, 2002:
risk-free interest rate of 3.38%; expected lives of 7 years; price volatility
of 39.8% and no expected dividends. No options were granted during the
three and six months ended August 31, 2003.

Note 2. Financing and Going Concern Matters

Financing Agreements

The availability of lines of credit is essential to the Company's operations.
The Company has arranged for credit facilities to support 2003 crop year
customer loans of up to $260 million compared to total 2002 crop year customer
loans of approximately $465 million. The Company's primary credit facility
is currently a $265 million revolving line of credit used to finance the 2003
crop year customers and older receivables, which expires in October 2004,
and does not allow for the financing of 2004 or future crop years. This
facility limited the amount of 2003 customer loans to $260 million. In
the event this facility is not refinanced by October 31, 2003, the agreement
calls for a wind down of the facility through October 2004, payment of
$2.65 million in deferred fees and an increase in interest rate to 1.5%
over prime. The Company is currently negotiating for a 2004 credit facility
and pursuing other strategic alternatives. There can be no assurance the
Company will be successful in securing financing for future periods and,
if financing is secured, it may be on terms less favorable than current
terms

Termination of ASCP Transaction

The Company entered into a securities purchase agreement during February 2003
with ASP/ASA, LLC, an indirect subsidiary of American Securities Capital
Partners, L.P. (ASCP), a New York private-equity investment firm, under
which ASP/ASA, LLC agreed to invest up to $70 million in the Company in
exchange for convertible preferred stock. The agreement contemplated that
ASP/ASA, LLC would invest up to $70 million in three annual installments;
the first investment of $35 million was subject to, among other things,
satisfactory completion of due diligence and the Company arranging for
long-term financing.

The shareholders of the Company approved the transaction, however, Ag Services
chose to terminate the transaction on September 4, 2003. One condition to the
closing of the Securities Purchase Agreement was that Ag Services obtain
long-term financing on terms satisfactory to ASCP. Ag Services was unable

-7-

to secure a credit facility in an amount and with terms satisfactory to ASCP
in order to complete the transactions contemplated under the securities
purchase agreement. As a result, on September 4, 2003, Ag Services
terminated the securities purchase agreement with ASCP in accordance with
its terms, so other options could be pursued.

The Company incurred costs totaling $3.8 million related to the ASCP
transaction, which were charged to expense in the quarter ended
August 31, 2003. These costs included fees to ASCP and financial advisory,
legal, consulting and accounting expenses.

Company Actions

The Company is actively seeking a credit facility to replace the existing
credit facility and to finance 2004 crop year loans. It is likely that this
will not be accomplished prior to October 31, 2003 (the due date of
$2.65 million in deferred fees and an interest rate increase to 1.5% over
prime), however, the Company is seeking an extension of its current financing
facility to allow the Company to continue normal operations while it explores
alternatives. In the event the Company is unsuccessful in these efforts, the
Company's best option may be to liquidate. The current credit facility
contains a provision which allows for the wind down of the credit facility
through October 2004. The "wind down" provisions allow the Company to
continue to use the revolving credit facility with declining advance rates
beginning in January 2004.

The Company is also seeking other alternatives to liquidation, including
seeking a credit facility that will allow operations to continue at a reduced
rate and the sale of all or a portion of the Company.

Going Concern

The accompanying consolidated financial statements have been prepared on the
going concern basis of accounting and do not reflect any adjustments that
might result if the Company were unable to continue as a going concern.
The Company's current financing expires in October 2004 and the Company has
been unable to secure financing for customers beyond the 2003 crop year.
In the event the Company is unable to obtain new financing, the Company
would be forced to liquidate and discontinue operations.

The three preceding sections entitled "Financing Agreements," "Termination
of ASCP Transaction," and "Company Actions" describe the financing structure
and the actions the Company has taken and is planning to take to alleviate
the situation. These financial statements do not include any adjustments
relating to the recoverability and classification of asset carrying amounts
or the amount and classification of liabilities that might result should the
Company be unable to continue as a going concern.

-8-

Note 3. Pledged Assets and Related Debt

Total amounts outstanding under the following agreements are summarized
below:

As of As of
August 31, February 28,
(Dollars in thousands) 2003 2003
------------ ------------
$265 million revolving line of credit $239,100 $110,600
Asset backed securitized financing
program - 52,386
Participations 22,134 11,630
Building line of credit 2,723 2,808
Loans from executive officers 4,420 4,404
Interest rate swap 1,205 1,852
------------ ------------
Total debt $269,582 $183,680
============ ============

The Company originally negotiated a $200 million revolving line of credit
for the 2003 Crop Year that was set to expire in December 2003. The terms
of the agreement allowed for two variable interest rate alternatives based
on LIBOR or prime. In addition, the Company had a $65 million revolving
line of credit facility that was set to expire on June 30, 2003. This
facility did not allow for the financing of 2003 Crop Year receivables.
Additional terms of the agreement allowed a variable interest rate based
on prime.

During June 2003, the Company amended and combined its $200 million
revolving line of credit with the $65 million revolving line of credit
into one $265 million credit facility. This amended credit facility has
been extended until October 2004 and allows for up to $260 million of 2003
Crop Year financing. However, in the event this facility is not refinanced
by October 31, 2003, the agreement calls for a wind down of the facility
through October 2004. The total amount outstanding under the revolving
line of credit at August 31, 2003 was $239.1 million. At August 31, 2003
the Company had an additional amount available under the line of credit of
approximately $9.7 million based on a borrowing base computation provided
by the agreement. This credit facility accrues interest at prime plus
50 basis points (current effective rate would have been 4.50% at
August 31, 2003).

The above revolving line of credit is collateralized by substantially all
assets of the Company. The agreement as discussed above contains various
restrictive covenants, including, among others, restrictions on; mergers,
issuance of stock, declaration or payment of dividends, transactions with
affiliates, loans to stockholders, and requirements that the Company
maintain certain levels of equity and earnings. These restrictions are in
effect unless written consent is obtained. At August 31, 2003, the Company
was in violation of one financial covenant which has been waived.

During July 2003, the Company fully repaid its obligations under its asset
backed securitized financing program.

-9-

In June 2002, the Company negotiated a credit facility with a financial
institution whereby the Company participates certain customer notes
receivable to this institution effective through January 2004. Advances
and repayments under this credit agreement are based on and collateralized
by the performance of these customer notes receivable. This facility
accrues interest based on the variable interest rates of the underlying
customer notes receivables ranging from prime to 2.50% over prime (current
effective rates range from 4.00% to 6.50% at August 31, 2003). At
August 31, 2003, the Company had $7.0 million outstanding under the agreement.
In April 2003, the Company negotiated an additional $17 million credit
facility with another financial institution to participate certain other
customer notes receivable through January 2004. This facility accrues
interest at prime less 75 basis points (current effective rate is 3.25% at
August 31, 2003). At August 31, 2003 the Company had $15.1 million
outstanding under this agreement.

The Company has a credit agreement whereby the Company may borrow up to
$3.8 million, with a declining balance provision, on a revolving line of
credit through April 2022. This credit agreement was used to finance the
Company's corporate headquarters at a fixed interest rate of 5.74% through
November 2006. At August 31, 2003, the Company had $2.7 million outstanding
under the credit agreement. The agreement also contains various restrictive
financial covenants.

In February 2002, three executive officers of the Company, who are also the
original founders of the Company, loaned an aggregate of $4.4 million to the
Company. The due dates have been extended to November 15, 2004. The Company
makes monthly interest payments to these officers at a variable interest rate
equal to the prime rate (current effective rate is 4.00% at August 31, 2003).
These notes are collateralized by a second mortgage on the Company's
corporate headquarters.

The Company maintains an interest-rate risk-management strategy that uses
derivative instruments to minimize significant, unanticipated earnings
fluctuations caused by interest rate volatility. The Company's specific
goal is to lower (where possible) the cost of its borrowed funds.

In July 2000, the Company entered into an interest rate swap agreement with
an original notional amount of $30 million. The current notional amount of
$15.0 million decreases by $7.5 million annually in July 2004 and 2005. The
swap is utilized to manage interest rate exposures and is designated as a
cash flow hedge. The swap agreement is a variable receive/fixed pay swap,
which expires in July 2005 and has the effect of converting the interest
rate paid on the notional amount of the Company's variable rate debt to a
fixed rate of 9.78%. The differential to be paid or received on the swap
agreement is recognized and accrued over the life of the agreement as other
comprehensive income based on the remaining outstanding notional amount or
changes in interest rates. Included in accumulated other comprehensive income
at August 31, 2003 is a loss of approximately $0.8 million. The difference
between the Company's actual variable interest expense and 9.78% on the
notional amount for the next twelve months is reclassified from other
comprehensive income and recognized as interest expense.

-10-

Note 4. Commitments and Contingencies

Commitments

In the normal course of business, the Company makes various commitments
that are not reflected in the accompanying consolidated condensed financial
statements. These include various commitments to extend credit to customers.
At August 31, 2003 and February 28, 2003 the Company had approximately
$27 million and $101 million, respectively, in commitments to supply farm
inputs. No material losses or liquidity demands are anticipated as a result
of these commitments.

Contingencies

The Company is named in lawsuits in the ordinary course of business.
Management for the Company believes, while the outcome of various legal
proceedings is not certain, it is unlikely that these proceedings will
result in any liability, which will materially affect the financial position
or operating results of the Company.

The availability of lines of credit to finance operations and the existence
of a multi-peril crop insurance program are essential to the Company's
operations. If the federal multi-peril crop insurance program currently in
existence was terminated or negatively modified and no comparable private or
government program was established, this would have a material adverse effect
on the Company's future operations. The federal government has from time to
time evaluated the federal multi-peril insurance program and is likely to
review the program in the future, and there can be no assurance of the outcome
of such evaluations.

Guarantee

In the process of collecting a customer note receivable, the Company has
guaranteed the first mortgage debt of a customer to a third party financial
institution. Under the guarantee, the Company would be required to repay
the debt of the customer under certain default conditions. The outstanding
debt is collateralized by real estate, which could be liquidated to recover
any amounts paid by the Company under the guarantee. The amount guaranteed
by the Company at August 31, 2003 is approximately $2.3 million and expires
once the mortgage is repaid in full.

-11-

Note 5. Earnings Per Share

Basic earnings per share is computed by dividing net income available to
common stockholders by the weighted average number of shares outstanding.
In computing diluted earnings per share, the dilutive effect of stock
options during the periods presented increase the weighted average number
of shares.

Presented below is the computation of earnings per share for the periods
indicated:

Three Months Ended Six Months Ended
August 31, August 31,
---------------------- ----------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------

Computation of weighted average number
of basic shares:
Basic:
Common shares outstanding at
beginning of the period 5,479,514 5,476,864 5,479,514 5,468,864
Weighted average number of shares
issued during the period - 97 - 6,261
---------- ---------- ---------- ----------
Weighted average shares outstanding
(basic) 5,479,514 5,476,961 5,479,514 5,475,125
========== ========== ========== ==========

Net income (loss) available to
stockholders: ($2,074,434) $2,501,922 ($2,383,041) $4,659,371
========== ========== ========== ==========

Basic earnings (loss) per share: ($0.38) $0.46 ($0.43) $0.85
========== ========== ========== ==========
Diluted:
Common shares outstanding at
beginning of the period 5,479,514 5,476,864 5,479,514 5,468,864
Weighted average number of shares
issued during the period - 97 - 6,261
Weighted average of potential dilutive
shares computed using the treasury
stock method using the average market
price during the period:
Options (1) - 24,614 - 32,291
---------- ---------- ---------- ----------
Weighted average shares outstanding
(diluted) 5,479,514 5,501,575 5,479,514 5,507,416
========== ========== ========== ==========

Net income (loss) available to
stockholders: ($2,074,434) $2,501,922 ($2,383,041) $4,659,371
========== ========== ========== ==========

Diluted earnings (loss) per share: ($0.38) $0.45 ($0.43) $0.85
========== ========== ========== ==========

(1) Some of the stock options have been excluded because they are
antidilutive.

-12-

AG SERVICES OF AMERICA, INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

Financing and Going Concern Matters

Financing Agreements

The availability of lines of credit is essential to the Company's operations.
The Company has arranged for credit facilities to support 2003 crop year
customer loans of up to $260 million compared to total 2002 crop year customer
loans of approximately $465 million. The Company's primary credit facility
is currently a $265 million revolving line of credit used to finance the 2003
crop year customers and older receivables, which expires in October 2004,
and does not allow for the financing of 2004 or future crop years. This
facility limited the amount of 2003 customer loans to $260 million. In the
event this facility is not refinanced by October 31, 2003, the agreement
calls for a wind down of the facility through October 2004, payment of
$2.65 million in deferred fees and an increase in interest rate to 1.5% over
prime. The Company is currently negotiating for a 2004 credit facility and
pursuing other strategic alternatives. There can be no assurance the
Company will be successful in securing financing for future periods and,
if financing is secured, it may be on terms less favorable than current
terms.

Termination of ASCP Transaction

The Company entered into a securities purchase agreement during February 2003
with ASP/ASA, LLC, an indirect subsidiary of American Securities Capital
Partners, L.P. (ASCP), a New York private-equity investment firm, under
which ASP/ASA, LLC agreed to invest up to $70 million in the Company in
exchange for convertible preferred stock. The agreement contemplated that
ASP/ASA, LLC would invest up to $70 million in three annual installments;
the first investment of $35 million was subject to, among other things,
satisfactory completion of due diligence and the Company arranging for
long-term financing.

The shareholders of the Company approved the transaction, however,
Ag Services chose to terminate the transaction on September 4, 2003.
One condition to the closing of the Securities Purchase Agreement was
that Ag Services obtain long-term financing on terms satisfactory to ASCP.
Ag Services was unable to secure a credit facility in an amount and with
terms satisfactory to ASCP in order to complete the transactions
contemplated under the securities purchase agreement. As a result, on
September 4, 2003, Ag Services terminated the securities purchase agreement
with ASCP in accordance with its terms, so other options could be pursued.

The Company incurred costs totaling $3.8 million related to the ASCP
transaction, which were charged to expense in the quarter ended
August 31, 2003. These costs included fees to ASCP and financial
advisory, legal, consulting and accounting expenses.

Company Actions

The Company is actively seeking a credit facility to replace the existing
credit facility and to finance 2004 crop year loans. It is likely that
this will not be accomplished prior to October 31, 2003 (the due date of
$2.65 million in deferred fees and an increase in interest rate to
1.5% over prime), however, the Company is seeking an extension of its
current financing facility to allow the Company to continue normal
operations while it explores alternatives. In the event the Company is

-13-

unsuccessful in these efforts, the Company's best option may be to liquidate.
The current credit facility contains a provision which allows for the wind
down of the credit facility through October 2004. The "wind down" provisions
allow the Company to continue to use the revolving credit facility with
declining advance rates beginning in January 2004.

The Company is also seeking other alternatives to liquidation, including
seeking a credit facility that will allow operations to continue at a reduced
rate and the sale of all or a portion of the Company.

Results of Operations

The following table sets forth percentages of net revenues represented by
the selected items in the unaudited condensed statements of income of the
Company for the three and six months ended August 31, 2003 and 2002. In
the opinion of management, all normal and recurring adjustments necessary
for a fair statement of the results for such periods have been included.
The operating results for any period are not necessarily indicative of
results for any future period. Fiscal 2004 revenues and earnings were
significantly impacted by the Company's limited financing capabilities
and the termination of the ASCP transaction. For Crop Year 2003, the
Company was limited to $260 million of customer loan commitments compared
to approximately $465 million of customer loan commitments granted for
Crop Year 2002 which results in an approximate 45% reduction in volume.

Percentage Percentage
of Net Revenues of Net Revenues
------------------ ------------------
Three Months Ended Six Months Ended
August 31, August 31,
------------------ ------------------
2003 2002 2003 2002
-------- -------- -------- --------

Net Revenues:
Farm inputs 83.1% 87.4% 84.7% 87.4%
Financing income 15.9% 11.3% 13.3% 9.9%
Customer fees 0.8% 0.6% 1.7% 1.9%
Other 0.2% 0.7% 0.3% 0.8%
-------- -------- -------- --------
100.0% 100.0% 100.0% 100.0%
-------- -------- -------- --------
Cost of Revenues:
Farm inputs 77.7% 80.6% 78.7% 80.6%
Financing expense 10.8% 5.6% 9.1% 5.1%
Provision for doubtful notes 3.0% 3.5% 5.4% 4.4%
-------- -------- -------- --------
91.5% 89.7% 93.2% 90.1%
-------- -------- -------- --------

Gross margin 8.5% 10.3% 6.8% 9.9%

Selling, general and administrative expenses 7.1% 5.2% 6.8% 5.0%
Terminated ASCP transaction costs 10.5% 0.0% 4.5% 0.0%
-------- -------- -------- --------
Total operating expenses 17.6% 5.2% 11.3% 5.0%

Income (loss) before income taxes (9.1%) 5.1% (4.5%) 4.9%

Income taxes (benefit) (3.5%) 2.0% (1.7%) 1.9%
-------- -------- -------- --------

Net income (loss) (5.6%) 3.1% (2.8%) 3.0%
======== ======== ======== ========

-14-

Net Revenues

Net revenues decreased $43.6 million or 54.3% during the three months ended
August 31, 2003, compared with the three months ended August 31, 2002. Net
revenues decreased $70.6 million or 45.5% during the six months ended
August 31, 2003, compared with the six months ended August 31, 2002.
The decrease in net revenues was primarily the result of the smaller credit
facility available to the Company for 2003 customer loan commitments.
Financing income as a percentage of net revenues increased to 15.9% and 13.3%
for the three and six months ended August 31, 2003 from 11.3% and 9.9% for
the three and six months ended August 31, 2002. Financing income overall
decreased $3.3 million and $4.2 million from the prior year for the three
and six months ended August 31, 2003 due to reduced customer loan commitments
as described above.

In addition to financing income, net revenues primarily consist of the sale
of farm inputs, which includes seed, agricultural chemicals and fertilizer.
Customer fees primarily consist of program fees and insurance brokerage
services. Net revenue for the three and six months ended August 31, 2003
and 2002 are summarized below.

Three Months Ended August 31, 2003 August 31, 2002
---------------- ----------------
Net Revenue (Dollars in thousands)
Seeds $7,537 20.6% $22,140 27.6%
Chemicals 13,644 37.3% 30,841 38.5%
Fertilizer 9,221 25.2% 17,020 21.2%
Financing income 5,833 15.9% 9,087 11.3%
Customer fees 289 0.8% 514 0.6%
Other income 63 0.2% 536 0.8%
----------------- ----------------
Net Revenue $36,587 100.0% $80,138 100.0%
================= ================

Six Months Ended August 31, 2003 August 31, 2002
---------------- ----------------
Net Revenue (Dollars in thousands)
Seeds $23,093 27.2% $44,913 28.9%
Chemicals 25,039 29.5% 50,053 32.2%
Fertilizer 23,662 27.9% 40,835 26.3%
Financing income 11,231 13.3% 15,403 9.9%
Customer fees 1,458 1.7% 3,000 1.9%
Other income 271 0.4% 1,179 0.8%
----------------- ----------------
Net Revenue $84,754 100.0% $155,383 100.0%
================= ================

-15-

Cost of Revenues

The total cost of revenues was 91.5% and 93.2% of net revenues for the three
and six months ended August 31, 2003, as compared to 89.7% and 90.1% for the
three and six months ended August 31, 2002. The gross margin on the sale
of farm inputs decreased slightly to 6.5% and 7.1% for the three and six
months ended August 31, 2003 from 7.7% and 7.8% for the three and six months
ended August 31, 2002 as a result of lower margins on seed and fertilizer
sales. Gross margin from financing income decreased to 5.1% and 4.2% of net
revenues for the three and six months ended August 31, 2003 as compared to
5.7% and 4.8% for the same period one year ago. This decrease was the result
of several factors. The Company's average receivable portfolio decreased
in size by approximately 23% compared to the prior year. Increased costs of
approximately $2.8 million associated with the Company's 2003 credit facility
also reduced financing income. Offsetting these decreases was a 49 basis point
increase in the yield on the Company's portfolio. The provision for doubtful
notes was 3.0% and 5.5% of net revenues for the three and six months ended
August 31, 2003 as compared to 3.5% and 4.4% of net revenues for the three
and six months ended August 31, 2002. The Company made an additional provision
to its allowance for doubtful accounts of $1.5 million during the three months
ended May 31, 2003. The adjustment to the allowance was a result of the
Company's strategy in its western region where the agricultural industry has
been impacted economically by low commodity prices and declining real estate
values.

Operating Expenses

Operating expenses increased to 17.6% and 11.3% of net revenues for the
three and six months ended August 31, 2003, as compared to 5.2% and 5.0%
for the three and six months ended August 31, 2002. The increase in operating
expenses as a percentage of net revenues is the result of a 54.3% and 45.5%
decline in net revenues of the Company during the three and six months ended
August 31, 2003 compared to the three and six months ended August 31, 2002.
Also attributing to the increase in operating expenses as a percentage of
net revenues during Fiscal 2004 was the addition of $3.8 million in expenses
associated with the terminated ASCP transaction. Partially offsetting
these increases was the reduction in manpower expenses during the three and
six months ended August 31, 2003. The Company implemented several cost
cutting measures of which most significantly was the reduction of its
workforce by nearly 30% in May 2003 in response to a smaller customer
portfolio for the 2003 crop year. Payroll and payroll related expenses
decreased to $1.7 and $3.8 million for the three and six months ended
August 31, 2003 from $3.0 and $5.5 million for the three and six months
ended August 31, 2002.

Net Income

Net income decreased $4.6 million to a loss of $2.1 million for the three
months ended August 31, 2003 from $2.5 million net income for the three
months ended August 31, 2002 and decreased $7.0 million to a loss of
$2.4 million for the six months ended August 31, 2003 from $4.7 million net
income for the six months ended August 31, 2003. The decrease in net income
is primarily attributable to the lower level of customer volume for the
2003 crop year, the additional provision for doubtful notes made during the
first quarter, higher financing costs and the one-time charge for expenses
related to the ASCP transaction.

-16-

Inflation

The Company does not believe the Company's net revenues and net income
were significantly impacted by inflation or changing prices in Fiscal 2003
or the first six months of Fiscal 2004.

Seasonality

The Company's revenues and income are directly related to the growing cycle
for crops. Accordingly, quarterly revenues and income vary during each
fiscal year. The following tables show the Company's quarterly net revenues
and net income for Fiscal 2003 and the first two quarters of Fiscal 2004.
This information is derived from unaudited consolidated financial statements,
which include, in the opinion of management, all normal and recurring
adjustments which management consider necessary for a fair statement of
results of those periods. The operating results for any quarter are not
necessarily indicative of the results for any future period.

Fiscal 2004 Quarter Ended
May 31 August 31 November 30 February 29
----------- ----------- ----------- -----------
(Dollars in thousands)
Net revenues $48,167 $36,587

Net income (loss) ($309) ($2,074)

Fiscal 2003 Quarter Ended
May 31 August 31 November 30 February 28
----------- ----------- ----------- -----------
(Dollars in thousands)
Net revenues $75,245 $80,138 $18,466 $24,017

Net income $2,157 $2,502 $1,354 ($115)

Liquidity and Capital Resources

At August 31, 2003 the Company had working capital of $14.5 million, a
decrease of $3.6 million since February 28, 2003. The components of this
net decrease, since February 28, 2003, were $3.6 million decrease resulting
from operating activities, consisting of approximately $2.4 million in net
loss, $74.9 million increase in customer notes receivable, $86.0 million
increase in notes payable, $16.4 million decrease in outstanding checks in
excess of bank balances, $9.0 million increase in accounts payable and the
remainder from a net change in other working capital.

The Company originally negotiated a $200 million revolving line of credit
for the 2003 Crop Year that was set to expire in December 2003. The terms
of the agreement allowed for two variable interest rate alternatives based
on LIBOR or prime. In addition, the Company had a $65 million revolving
line of credit facility that was set to expire on June 30, 2003. This
facility did not allow for the financing of 2003 Crop Year receivables.
Additional terms of the agreement allowed a variable interest rate based
on prime.

During June 2003, the Company amended and combined its $200 million
revolving line of credit with the $65 million revolving line of credit
into one $265 million credit facility. This amended credit facility has

-17-

been extended until October 2004 and allows for up to $260 million of 2003
Crop Year financing. However, in the event this facility is not refinanced
by October 31, 2003, the agreement calls for a wind down of the facility
through October 2004. The total amount outstanding under the revolving line
of credit at August 31, 2003 was $239.1 million. At August 31, 2003 the
Company had an additional amount available under the line of credit of
approximately $9.7 million based on a borrowing base computation provided by
the agreement. This credit facility will accrues interest at prime plus
50 basis points (current effective rate would have been 4.50% at
August 31, 2003).

The above revolving line of credit is collateralized by substantially all
assets of the Company. The agreement as discussed above contains various
restrictive covenants, including, among others, restrictions on; mergers,
issuance of stock, declaration or payment of dividends, transactions with
affiliates, loans to stockholders, and requirements that the Company
maintain certain levels of equity and earnings. These restrictions are
in effect unless written consent is obtained. At August 31, 2003, the
Company was in violation of one financial covenant which has been waived.

During July 2003, the Company fully repaid its obligations under its asset
backed securitized financing program.

In June 2002, the Company negotiated a credit facility with a financial
institution whereby the Company participates certain customer notes
receivable to this institution effective through January 2004. Advances
and repayments under this credit agreement are based on and collateralized
by the performance of these customer notes receivable. This facility
accrues interest based on the variable interest rates of the underlying
customer notes receivables ranging from prime to 2.50% over prime (current
effective rates range from 4.00% to 6.50% at August 31, 2003). At
August 31, 2003, the Company had $7.0 million outstanding under the agreement.
In April 2003, the Company negotiated an additional $17 million credit
facility with another financial institution to participate certain other
customer notes receivable through January 2004. This facility accrues
interest at prime less 75 basis points (current effective rate is 3.25% at
August 31, 2003). At August 31, 2003 the Company had $15.1 million
outstanding under this agreement.

The Company has a credit agreement whereby the Company may borrow up to
$3.8 million, with a declining balance provision, on a revolving line of
credit through April 2022. This credit agreement was used to finance the
Company's corporate headquarters at a fixed interest rate of 5.74% through
November 2006. At August 31, 2003, the Company had $2.7 million
outstanding under the credit agreement. The agreement also contains
various restrictive financial covenants.

In February 2002, three executive officers of the Company, who are also
the original founders of the Company, loaned an aggregate of $4.4 million
to the Company. The due dates have been extended to November 15, 2004.
The Company makes monthly interest payments to these officers at a variable
interest rate equal to the prime rate (current effective rate is 4.00% at
August 31, 2003). These notes are collateralized by a second mortgage on
the Company's corporate headquarters.

The Company maintains an interest-rate risk-management strategy that uses
derivative instruments to minimize significant, unanticipated earnings
fluctuations caused by interest rate volatility. The Company's specific
goal is to lower (where possible) the cost of its borrowed funds.

-18-

In July 2000, the Company entered into an interest rate swap agreement with
an original notional amount of $30 million. The current notional amount of
$15.0 million decreases by $7.5 million annually in July 2004 and 2005. The
swap is utilized to manage interest rate exposures and is designated as a
cash flow hedge. The swap agreement is a variable receive/fixed pay swap,
which expires in July 2005 and has the effect of converting the interest
rate paid on the notional amount of the Company's variable rate debt to a
fixed rate of 9.78%. The differential to be paid or received on the swap
agreement is recognized and accrued over the life of the agreement as
other comprehensive income based on the remaining outstanding notional
amount or changes in interest rates. Included in accumulated other
comprehensive income at August 31, 2003 is a loss of approximately
$0.8 million. The difference between the Company's actual variable
interest expense and 9.78% on the notional amount for the next twelve
months is reclassified from other comprehensive income and recognized
as interest expense.

"Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995

Information contained in this report, other than historical information,
should be considered forward looking, which reflect Management's current
views of future events and financial performance that involve a number of
risks and uncertainties. The factors that could cause actual results to
differ materially include, but are not limited to, the following: general
economic conditions within the agriculture industry; competitive factors
and pricing pressures; changes in product mix; changes in the seasonality
of demand patterns; changes in weather conditions; changes in agricultural
regulations; technological problems; unexpected changes in collateral
values; ability to obtain long-term financing; unknown risks; and other
risks detailed in the Company's Securities and Exchange Commission filings.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At August 31, 2003 the Company had $270.0 million outstanding in notes
payable at an average variable interest rate of 5.46%. The Company has
an interest rate swap that effectively converts $15.0 million of this
variable rate debt to a fixed rate instrument. After considering the
effect of this swap, the Company has floating rate debt of $250.7 million
at an average variable interest rate of 5.08%. A 10% increase in the
average variable interest rate would increase interest expense by
approximately 51 basis points. Assuming similar average outstanding
borrowings as Fiscal 2003 of $331 million, this would increase the
Company's interest expense by approximately $1.7 million.

The above sensitivity analysis is to provide information about the Company's
potential market risks as they pertain to an adverse change in interest
rates. The above analysis excludes the positive impact that increased
interest rates would have on financing income as approximately 95% of the
Company's notes receivable are variable rate notes.

ITEM 4. CONTROLS AND PROCEDURES

During the 90-day period prior to the filing date of this report, management,
including the Company's Chief Executive Officer and Chairman of the Board
(Principal Financial and Accounting Officer), evaluated the effectiveness
of the design and operation of the Company's disclosure controls and
procedures. Based upon, and as of the date of that evaluation,

-19-

the Chief Executive Officer and Chairman of the Board concluded that the
disclosure controls and procedures were effective, in all material respects,
to ensure that information required to be disclosed in the reports the
Company files and submits under the Exchange Act is recorded, processed,
summarized and reported as and when required.

There have been no significant changes in the Company's internal controls or
in other factors which could significantly affect internal controls
subsequent to the date the Company carried out its evaluation. There
were no significant deficiencies or material weaknesses identified in
the evaluation and therefore, no corrective actions were taken.

-20-

AG SERVICES OF AMERICA, INC.

PART II. OTHER INFORMATION

Item 6. EXHIBITS AND REPORTS ON FROM 8-K

(a) Exhibits

Exhibit 10.44 Sixth Amendment to the Amended and Restated Credit Agreement
Exhibit 10.45 Seventh Amendment to the Amended and Restated Credit Agreement
Exhibit 31.1 CEO Certification pursuant to Section 302 of the Sarbanes
Oxley Act of 2002
Exhibit 31.2 CFO Certification pursuant to Section 302 of the Sarbanes
Oxley Act of 2002
Exhibit 32.1 CEO Certification pursuant to Section 906 of the Sarbanes
Oxley Act of 2002
Exhibit 32.2 CFO Certification pursuant to Section 906 of the Sarbanes
Oxley Act of 2002

(b) Reports on Form 8-K

No reports on Form 8-K were filed during the period covered by this
report.

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.

AG SERVICES OF AMERICA, INC.
(Registrant)

/s/ Gaylen D. Miller
------------------------------
Gaylen D. Miller
Chairman of the Board
(Principal Financial and
Accounting Officer)

Date: October 14, 2003

-21-

EXHIBIT 10.44

SIXTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

This SIXTH AMENDMENT (this "Amendment"), dated as of September 18, 2003,
is among AG SERVICES OF AMERICA, INC., an Iowa corporation (the "Borrower"),
various Lenders, and COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH, as agent (in such capacity, the
"Agent") for the Lenders.

RECITALS

The parties described above are parties to an Amended and Restated Credit
Agreement dated as of December 11, 2002, and amended as of February 25, 2003,
March 28, 2003, April 15, 2003, June 13, 2003, and June 26, 2003 (as so amended,
the "Original Agreement").

The Borrower has requested that certain amendments be made with respect
to the Original Agreement and the Required Lenders have agreed to accommodate
such requests on the terms and subject to the conditions set forth in this
Amendment.

ACCORDINGLY, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

ARTICLE I
DEFINITIONS

1.1 Original Agreement Definitions. Terms defined in the Original
Agreement shall have the same meaning when used herein unless otherwise
expressly indicated.

ARTICLE II
AMENDMENTS

2.1 Amendments to Definitions.

(a) Section 1.1 of the Original Agreement is hereby amended to add or
amend in their entirety the following definitions in their appropriate
alphabetical positions:

"'Applicable Margin': The margin specified in the table below
relating to the applicable Advance type and Loan type.

-22-

Loan Type Eurodollar Rate Advances Base Rate Advances
- --------- ------------------------ ----------------------------
A Loan Not Applicable 0.50% from the date of the
Fifth Amendment to and
including October 15, 2003,
and, if the Loans have not
been repaid in full on or
prior to October 15, 2003,
the Applicable Margin shall
be 1.50% on and after
October 16, 2003
- --------- ------------------------ ----------------------------
B Loan Not Applicable O.50% from the date of the
Fifth Amendment to and
including October 15, 2003,
and, if the Loans have not
been repaid in full on or
prior to October 15, 2003,
the Applicable Margin shall
be 1.50% on and after
October 16, 2003
- --------- ------------------------ ----------------------------

"'Sixth Amendment': means the Sixth Amendment to Amended and
Restated Credit Agreement dated as of September 18, 2003, among the
Borrower, the Agent and the Lenders."

(b) Section 1.1 of the Original Agreement is hereby amended so that
all references to "September 15, 2003" in clauses (d) and (e) of the
definition of "Borrowing Base B" are replaced with references to
"October 15, 2003."

2.2 Amendment of Section 2.9(d) of the Original Agreement: Section
2.9(d) of the Original Agreement is hereby amended to read in its entirety
as follows:

"(d) Arrangement Fee. The Borrower shall pay the following
fees (collectively, the "Arrangement Fees") to the Agent in
Immediately Available Funds for the pro rata account of the Lenders:

(i) if the Borrower has not paid all of the Obligations
in full in Immediately Available Funds prior to 1:00 p.m.
(New York time) on October 15, 2003, or any of the Commitments
remain outstanding on October 15, 2003, a fee in the amount
of 1.00% of the sum of the Aggregate Facility A Commitment
Amount and the Aggregate Facility B Commitment Amount (in
each case as measured on the date of the Fifth Amendment),
payable prior to the close of business on October 15, 2003,
and

(ii) if the Borrower has not paid all of the Obligations
in full in Immediately Available Funds prior to 1:00 p.m.
(New York time) on October 31, 2004, or any of the Commitments

-23-

remain outstanding on October 31, 2004, a fee in the amount of
0.60% of the sum of the Aggregate Facility A Commitment Amount
and the Aggregate Facility B Commitment Amount (in each case
as measured on the date of the Fifth Amendment), payable prior
to the close of business on October 31, 2004.

The parties hereto acknowledge that the foregoing fees shall be
payable in lieu of, and shall replace, the deferred fees referenced
in the Fee Letter."

2.3 Amendment to Section 5.6 to the Original Agreement. All references
to "September 15, 2003" in Section 5.6 of the Original Agreement are hereby
amended to read "October 15, 2003."

2.4 Amendment to Section 5.10 of the Original Agreement. All references
to "July 18, 2003" in Section 5.10 of the Original Agreement are hereby amended
to read "October 15, 2003."

2.5 Amendment to Section 5.14 to the Original Agreement. Section 5.14
of the Original Agreement is hereby amended to read in its entirety as follows:

"Section 5.14. Orderly Liquidation; Marketing Intermediate Loans.
If the Obligations have not been paid in full on or before
October 15, 2003, (a) begin, in good faith and with reasonable commercial
diligence, an orderly liquidation of the Borrower's and Ag Acceptance's
portfolios and (b) begin, not later than November 1, 2003, to market the
Intermediate Loans in good faith and with reasonable commercial diligence
through a third party sales agent reasonably acceptable to the Agent and
the Lenders (which the Borrower agrees to engage on or before
November 1, 2003)."

ARTICLE III
WAIVER

3.1 Waiver of Default. The Borrower was in violation of Section 6.12
as of its Fiscal Quarter ended on or about August 31, 2003. Upon the
effectiveness of this Amendment, the Lenders hereby waive such Event of
Default. The foregoing waiver shall be effective only in this specific
instance and for the special purpose for which it is given, and shall not
be deemed to be a waiver of any other Default or Event of Default now existing
or hereafter arising under the Original Agreement as amended hereby.
Furthermore such waiver shall not entitle the Borrower to any other or
further waiver in any similar or other circumstances.

ARTICLE IV
CONDITIONS PRECEDENT

4.1 Conditions to Effectiveness of this Amendment. This Amendment shall

-24-

become effective when the Agent shall have received the following:

(a) This Amendment, duly executed by the Borrower and each Lender;
and
(b) The Acknowledgment of Guarantor attached to this Amendment,
duly executed by Powerfarm.

ARTICLE V
REPRESENTATIONS AND WARRANTIES

5.1 Representations and Warranties. To induce the Required Lenders to
enter into this Amendment, the Borrower hereby represents and warrants to the
Required Lenders as follows:

(a) The Borrower's execution, delivery and performance of this
Amendment and the Borrower's performance of the Original Agreement (as
amended by this Amendment), have been duly authorized by all necessary
corporate or other organizational action, and do not and will not
(i) contravene the terms of any of the Borrower's organizational
documents; (ii) conflict with or result in any breach or contravention
of, or the creation of any Lien under, any contractual obligation to
which the Borrower is a party or any order, injunction, writ or decree
of any Governmental Body to which the Borrower, any of its Subsidiaries,
or any of their respective properties is subject; or (iii) violate any
law, rule or regulation.

(b) This Amendment, the Original Agreement (as amended by this
Amendment), and the other Loan Documents are the legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms, except as enforcement may be
limited by applicable bankruptcy, insolvency, moratorium and other
laws applicable to creditors' rights generally and by general principles
of equity.

(c) No action, suit or proceeding is pending or, to the Borrower's
knowledge, threatened against the Borrower or any of its Subsidiaries
that could have a material adverse effect on the business, operations,
property, assets or condition, financial or otherwise, of the Borrower
or any of its Subsidiaries.

ARTICLE VI
MISCELLANEOUS

6.1 Reference to and Effect on the Original Agreement and the other
Loan Documents.

(a) The Original Agreement, as hereby amended, and the other Loan
Documents remain in full force and effect and are hereby ratified and
confirmed (including, without limitation, the release effected by
Section 5.3 of the Fifth Amendment).

-25-

(b) The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of the
Agent or the Lenders under the Original Agreement or any of the other
Loan Documents, nor constitute a waiver of any provision thereof.

(c) This Amendment constitutes a Loan Document as such term is
used in the Original Agreement as amended hereby.

6.2 Continuation of Representations and Warranties. The Borrower
represents and warrants to the Agent and the Lenders that on and as of the
date hereof and after giving effect to this Amendment, (i) all of the
representations and warranties contained in the Original Agreement are
correct and complete in all material respects as of the date hereof, as
though made on and as of such date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case they
were true and correct as of such earlier date, and (ii) no Default or Event
of Default shall have occurred and be continuing.

6.3 Merger and Integration, Superseding Effect. This Amendment,
together with the Original Agreement as amended by this Amendment, from
and after the date hereof, embodies the entire agreement and understanding
between the parties hereto and supersedes and has merged into it all prior
oral and written agreements on the same subjects by and between the
parties hereto with the effect that the Original Agreement, as amended
by this Amendment, shall control.

6.4 Expenses. As provided in Section 9.2 of the Original Agreement,
the Borrower agrees to pay all of the expenses, including reasonable
attorney's fees and expenses, incurred by the Agent in connection with this
Amendment. The Borrower agrees to pay all future expenses, including
reasonable attorney's fees and expenses, incurred by the Agent in connection
enforcement of any of the Loan Documents, on a monthly basis. The Borrower
also agrees to pay all expenses, including reasonable attorney's fees and
expenses, incurred by the Agent in connection with any amendment to the
Original Agreement as amended by this Amendment entered into to accomplish
the purposes of Section 5.14 of the Original Agreement as amended by this
Amendment (though the Agent and the Lenders agree that they will not charge
any fee payable directly to the Agent or the Lenders in connection with any
such amendment).

6.5 Counterparts. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and either of the parties hereto may execute this Amendment by
signing any such counterpart.

6.6 Successors. This Amendment shall be binding upon the Borrower,
Powerfarm, the Agent and the Lenders and their respective successors and
assigns, and shall inure to the benefit of the Borrower, the Agent and the
Lenders and the successors and assigns of the Borrower, the Agent and Lenders.

-26-

6.7 Headings. The headings of various sections of this Amendment have
been inserted for reference only and shall not be deemed to be a part of this
Amendment.

6.8 Governing Law. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF
THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS
PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

6.9 Borrower Acknowledgements. The Borrower hereby acknowledges
(a) receipt of a copy of each Loan Document and each other document and
agreement executed in connection with this Amendment or the Obligations
under any Loan Document, (b) that it has been advised by counsel in the
negotiation, execution and delivery of this Amendment and the other Loan
Documents, (c) that neither the Agent nor any Lender has any fiduciary
relationship to the Borrower, the relationship being solely that of debtor
and creditor, (d) that no joint venture exists between the Borrower and
the Agent or any Lender, and (e) that neither the Agent nor any Lender
undertakes any responsibility to the Borrower to review or inform the
Borrower of any matter in connection with any phase of the business or
operations of the Borrower and the Borrower shall rely entirely upon
its own judgment with respect to its business, and any review, inspection
or supervision of, or information supplied to, the Borrower by the Agent
or any Lender is for the protection of the Lenders and neither the Borrower
nor any third party is entitled to rely thereon.

[Signature Pages Follow]

-27-

IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AMENDMENT SHOULD BE
READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER
TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT OR IN THE OTHER
LOAN DOCUMENTS MAY BE LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS
AMENDMENT ONLY BY ANOTHER WRITTEN AGREEMENT.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the
date first above written.

AG SERVICES OF AMERICA, INC.

By:
--------------------------
Name:
------------------------
Title:
-----------------------

COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK
BRANCH,
individually and as Agent

By:
--------------------------
Title:
-----------------------

By:
--------------------------
Title:
-----------------------

[Signature Page One of Two to Sixth Amendment]

-28-

U.S. BANK NATIONAL ASSOCIATION

By:
--------------------------
Title:
-----------------------

-29-

[Signature Page Two of Two to Sixth Amendment]

ACKNOWLEDGEMENT OF GUARANTOR

Please refer to our Guaranty (the "Guaranty") and to our Security
Agreement (the "Security Agreement") each dated as of August 31, 2000,
relating to Ag Services of America, Inc. (the "Borrower"). We have
previously acknowledged the Amended and Restated Credit Agreement dated as
of December 11, 2003 and amended as of February 25, 2003, March 28, 2003,
April 15, 2003, June 15, 2003, and June 26, 2003 (as so amended, the
"Original Agreement" and, as amended by the Amendment referenced below,
the "Credit Agreement") among the Borrower, various Lenders and
Cooperatieve Centrale Raiffeisen - Boerenleenbank, B.A., "Rabobank Nederland",
New York Branch (individually, "Rabobank"), as Agent for such Lenders (in such
capacity, the "Agent"). We now acknowledge receipt of a copy of, and consent
to the execution and delivery of, a Sixth Amendment to Amended and Restated
Credit Agreement dated as of September 18, 2003 amending the terms of the
Original Agreement (the "Amendment").

POWERFARM, INC.

By:
--------------------------
Title:
-----------------------

-30-

EXHIBIT 10.45

SEVENTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

This SEVENTH AMENDMENT (this "Amendment"), dated as of October 10, 2003,
is among AG SERVICES OF AMERICA, INC., an Iowa corporation (the "Borrower"),
various Lenders, and COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH, as agent (in such capacity, the
"Agent") for the Lenders.

RECITALS

The parties described above are parties to an Amended and Restated Credit
Agreement dated as of December 11, 2002, and amended as of February 25, 2003,
March 28, 2003, April 15, 2003, June 13, 2003, June 26, 2003 and September 18,
2003 (as so amended, the "Original Agreement").

The Borrower has requested that certain amendments be made with respect
to the Original Agreement and the Required Lenders have agreed to accommodate
such requests on the terms and subject to the conditions set forth in this
Amendment.

ACCORDINGLY, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

ARTICLE I
DEFINITIONS

1.1 Original Agreement Definitions. Terms defined in the Original
Agreement shall have the same meaning when used herein unless otherwise
expressly indicated.

ARTICLE II
AMENDMENTS

2.1 Amendments to Definitions.

(a) Section 1.1 of the Original Agreement is hereby amended to add or
amend in their entirety the following definitions in their appropriate
alphabetical positions:

"'Applicable Margin': The margin specified in the table below
relating to the applicable Advance type and Loan type.

-31-

Loan Type Eurodollar Rate Advances Base Rate Advances
- --------- ------------------------ ----------------------------
A Loan Not Applicable 0.50% from the date of the
Fifth Amendment to and
including October 31, 2003,
and, if the Loans have not
been repaid in full on or
prior to October 31, 2003,
the Applicable Margin shall
be 1.50% on and after
November 1, 2003
- --------- ------------------------ ----------------------------
B Loan Not Applicable O.50% from the date of the
Fifth Amendment to and
including October 31, 2003,
and, if the Loans have not
been repaid in full on or
prior to October 31, 2003,
the Applicable Margin shall
be 1.50% on and after
November 1, 2003
- --------- ------------------------ ----------------------------

(b) Section 1.1 of the Original Agreement is hereby amended so that
all references to "October 15, 2003" in clauses (d) and (e) of the definition
of "Borrowing Base B" are replaced with references to "October 31, 2003."

2.2 Amendment of Section 2.9(d) of the Original Agreement:
Section 2.9(d) of the Original Agreement is hereby amended to read in
its entirety as follows:

"(d) Arrangement Fee. The Borrower shall pay the following
fees (collectively, the "Arrangement Fees") to the Agent in
Immediately Available Funds for the pro rata account of the Lenders:

(i) if the Borrower has not paid all of the Obligations
in full in Immediately Available Funds prior to 1:00 p.m.
(New York time) on October 31, 2003, or any of the Commitments
remain outstanding on October 31, 2003, a fee in the amount of
1.00% of the sum of the Aggregate Facility A Commitment Amount
and the Aggregate Facility B Commitment Amount (in each case
as measured on the date of the Fifth Amendment), payable prior
to the close of business on October 31, 2003, and

(ii) if the Borrower has not paid all of the Obligations
in full in Immediately Available Funds prior to 1:00 p.m.
(New York time) on October 31, 2004, or any of the Commitments
remain outstanding on October 31, 2004, a fee in the amount of
0.60% of the sum of the Aggregate Facility A Commitment Amount
and the Aggregate Facility B Commitment Amount (in each case as

-32-

measured on the date of the Fifth Amendment), payable prior to
the close of business on October 31, 2004.

The parties hereto acknowledge that the foregoing fees shall be
payable in lieu of, and shall replace, the deferred fees referenced
in the Fee Letter."

2.3 Amendment to Section 5.6 to the Original Agreement. All references
to "October 15, 2003" in Section 5.6 of the Original Agreement are hereby
amended to read "October 31, 2003."

2.4 Amendment to Section 5.10 of the Original Agreement. All references
to "October 15, 2003" in Section 5.10 of the Original Agreement are hereby
amended to read "October 31, 2003."

2.5 Amendment to Section 5.14 to the Original Agreement. Section 5.14
of the Original Agreement is hereby amended to read in its entirety as follows:

"Section 5.14. Orderly Liquidation; Marketing Intermediate Loans.
If the Obligations have not been paid in full on or before
October 31, 2003, (a) begin, in good faith and with reasonable commercial
diligence, an orderly liquidation of the Borrower's and Ag Acceptance's
portfolios and (b) begin, not later than November 14, 2003, to market
the Intermediate Loans in good faith and with reasonable commercial
diligence through a third party sales agent reasonably acceptable to
the Agent and the Lenders (which the Borrower agrees to engage on or
before November 14, 2003)."

ARTICLE III
CONDITIONS PRECEDENT

3.1 Conditions to Effectiveness of this Amendment. This Amendment shall
become effective when the Agent shall have received the following:

(a) This Amendment, duly executed by the Borrower and each Lender;
and

(b) The Acknowledgment of Guarantor attached to this Amendment,
duly executed by Powerfarm.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

4.1 Representations and Warranties. To induce the Required Lenders to
enter into this Amendment, the Borrower hereby represents and warrants to the
Required Lenders as follows:

(a) The Borrower's execution, delivery and performance of this
Amendment and the Borrower's performance of the Original Agreement

-33-

(as amended by this Amendment), have been duly authorized by all
necessary corporate or other organizational action, and do not and
will not (i) contravene the terms of any of the Borrower's
organizational documents; (ii) conflict with or result in any breach
or contravention of, or the creation of any Lien under, any contractual
obligation to which the Borrower is a party or any order, injunction,
writ or decree of any Governmental Body to which the Borrower, any of
its Subsidiaries, or any of their respective properties is subject; or
(iii) violate any law, rule or regulation.

(b) This Amendment, the Original Agreement (as amended by this
Amendment), and the other Loan Documents are the legal, valid and
binding obligations of the Borrower, enforceable against the Borrower
in accordance with their respective terms, except as enforcement may be
limited by applicable bankruptcy, insolvency, moratorium and other laws
applicable to creditors' rights generally and by general principles of
equity.

(c) No action, suit or proceeding is pending or, to the Borrower's
knowledge, threatened against the Borrower or any of its Subsidiaries
that could have a material adverse effect on the business, operations,
property, assets or condition, financial or otherwise, of the Borrower
or any of its Subsidiaries.

ARTICLE V
MISCELLANEOUS
5.1 Reference to and Effect on the Original Agreement and the other
Loan Documents.

(a) The Original Agreement, as hereby amended, and the other Loan
Documents remain in full force and effect and are hereby ratified and
confirmed (including, without limitation, the release effected by
Section 5.3 of the Fifth Amendment).

(b) The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of the
Agent or the Lenders under the Original Agreement or any of the other
Loan Documents, nor constitute a waiver of any provision thereof.

(c) This Amendment constitutes a Loan Document as such term is
used in the Original Agreement as amended hereby.

5.2 Continuation of Representations and Warranties. The Borrower
represents and warrants to the Agent and the Lenders that on and as of the
date hereof and after giving effect to this Amendment, (i) all of the
representations and warranties contained in the Original Agreement are
correct and complete in all material respects as of the date hereof, as
though made on and as of such date, except to the extent such
representations and warranties specifically relate to an earlier date,
in which case they were true and correct as of such earlier date, and

-34-

(ii) no Default or Event of Default shall have occurred and be continuing.

5.3 Merger and Integration, Superseding Effect. This Amendment,
together with the Original Agreement as amended by this Amendment, from
and after the date hereof, embodies the entire agreement and understanding
between the parties hereto and supersedes and has merged into it all prior
oral and written agreements on the same subjects by and between the parties
hereto with the effect that the Original Agreement, as amended by this
Amendment, shall control.

5.4 Expenses. As provided in Section 9.2 of the Original Agreement,
the Borrower agrees to pay all of the expenses, including reasonable
attorney's fees and expenses, incurred by the Agent in connection with
this Amendment. The Borrower agrees to pay all future expenses, including
reasonable attorney's fees and expenses, incurred by the Agent in connection
enforcement of any of the Loan Documents, on a monthly basis. The Borrower
also agrees to pay all expenses, including reasonable attorney's fees and
expenses, incurred by the Agent in connection with any amendment to the
Original Agreement as amended by this Amendment entered into to
accomplish the purposes of Section 5.14 of the Original Agreement as
amended by this Amendment (though the Agent and the Lenders agree that
they will not charge any fee payable directly to the Agent or the Lenders
in connection with any such amendment).

5.5 Counterparts. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the
same instrument, and either of the parties hereto may execute this
Amendment by signing any such counterpart.

5.6 Successors. This Amendment shall be binding upon the Borrower,
Powerfarm, the Agent and the Lenders and their respective successors and
assigns, and shall inure to the benefit of the Borrower, the Agent and the
Lenders and the successors and assigns of the Borrower, the Agent and
Lenders.

5.7 Headings. The headings of various sections of this Amendment
have been inserted for reference only and shall not be deemed to be a
part of this Amendment.

5.8 Governing Law. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY
OF THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICT
OF LAWS PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).

5.9 Borrower Acknowledgements. The Borrower hereby acknowledges
(a) receipt of a copy of each Loan Document and each other document and
agreement executed in connection with this Amendment or the Obligations
under any Loan Document, (b) that it has been advised by counsel in the
negotiation, execution and delivery of this Amendment and the other Loan
Documents, (c) that neither the Agent nor any Lender has any fiduciary
relationship to the Borrower, the relationship being solely that of
debtor and creditor, (d) that no joint venture exists between the
Borrower and the Agent or any Lender, and (e) that neither the Agent

-35-

nor any Lender undertakes any responsibility to the Borrower to review
or inform the Borrower of any matter in connection with any phase of
the business or operations of the Borrower and the Borrower shall rely
entirely upon its own judgment with respect to its business, and any
review, inspection or supervision of, or information supplied to, the
Borrower by the Agent or any Lender is for the protection of the Lenders
and neither the Borrower nor any third party is entitled to rely thereon.

[Signature Pages Follow]

-36-

IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AMENDMENT SHOULD BE
READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO
OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT OR IN
THE OTHER LOAN DOCUMENTS MAY BE LEGALLY ENFORCED. YOU MAY CHANGE THE
TERMS OF THIS AMENDMENT ONLY BY ANOTHER WRITTEN AGREEMENT.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized, as of
the date first above written.

AG SERVICES OF AMERICA, INC.

By:
---------------------------
Name:
-------------------------
Title:
------------------------

COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH,
individually and as Agent

By:
---------------------------

Title:
------------------------

By:
---------------------------
Title:
------------------------

[Signature Page One of Two to Seventh Amendment]

-37-

U.S. BANK NATIONAL ASSOCIATION

By:
--------------------------

Title:
-----------------------

[Signature Page Two of Two to Seventh Amendment]

-38-

ACKNOWLEDGEMENT OF GUARANTOR

Please refer to our Guaranty (the "Guaranty") and to our Security
Agreement (the "Security Agreement") each dated as of August 31, 2000,
relating to Ag Services of America, Inc. (the "Borrower"). We have
previously acknowledged the Amended and Restated Credit Agreement dated
as of December 11, 2003 and amended as of February 25, 2003, March 28, 2003,
April 15, 2003, June 15, 2003, June 26, 2003 and September 18, 2003 (as so
amended, the "Original Agreement" and, as amended by the Amendment referenced
below, the "Credit Agreement") among the Borrower, various Lenders and
Cooperatieve Centrale Raiffeisen - Boerenleenbank, B.A., "Rabobank Nederland",
New York Branch (individually, "Rabobank"), as Agent for such Lenders (in such
capacity, the "Agent"). We now acknowledge receipt of a copy of, and consent
to the execution and delivery of, a Seventh Amendment to Amended and Restated
Credit Agreement dated as of October 10, 2003 amending the terms of the
Original Agreement.

POWERFARM, INC.

By:
---------------------------
Title:
------------------------

-39-

EXHIBIT 31.1

CERTIFICATIONS

I, Kevin D. Schipper, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Ag Services
of America, Inc.;

2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Securities Exhange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and we have:

a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and

c) disclosed in this report any change in the registrant's internal
control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f) that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter
in the case of an annual report) that has materially affected, or
is reasonably likely to materially affect, the registrant's internal
control over financial reporting.

5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.

-40-

Date: October 14, 2003

/s/ Kevin D. Schipper
-------------------------
Kevin D. Schipper
Chief Executive Officer

-41-

Exhibit 31.2

CERTIFICATIONS

I, Gaylen D. Miller, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Ag Services
of America, Inc.;

2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Securities Exhange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and we have:

a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and

c) disclosed in this report any change in the registrant's internal
control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f) that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter
in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting.

5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.

-42-

Date: October 14, 2003

/s/ Gaylen D. Miller
--------------------------
Gaylen D. Miller
Chairman of the Board
(Principal Accounting and
Financial Officer)

-43-

EXHIBIT 32.1

STATEMENT FURNISHED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002,
18 U.S.C. SECTION 1350

The undersigned, Kevin D. Schipper, is the Chief Executive Officer of
Ag Services of America, Inc. (the "Company").

This statement is being furnished in connection with the filing by the Company
of the Company's Quarterly Report on Form 10-Q for the quarter ended
August 31, 2003 (the "Report").

By execution of this statement, I certify that:

A) the Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or
78o(d)) and

B) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company as of the dates and for the periods covered by the
Report.

This statement is authorized to be attached as an exhibit to the Report so
that this statement will accompany the Report at such time as the Report is
filed with the Securities and Exchange Commission, pursuant to Section 906 pf
the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. It is not intended
that this statement be deemed to be filed for purposes of the Securities
Exchange Act of 1934, as amended.

Date: October 14, 2003

/s/ Kevin D. Schipper
-------------------------
Kevin D. Schipper

-44-

EXHIBIT 32.2

STATEMENT FURNISHED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002,
18 U.S.C. SECTION 1350

The undersigned, Gaylen D. Miller, is the Chairman of the Board of Ag Services
of America, Inc. (the "Company").

This statement is being furnished in connection with the filing by the Company
of the Company's Quarterly Report on Form 10-Q for the quarter ended
August 31, 2003 (the "Report").

By execution of this statement, I certify that:

A) the Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d))
and

B) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of
the Company as of the dates and for the periods covered by the Report.

This statement is authorized to be attached as an exhibit to the Report so
that this statement will accompany the Report at such time as the Report is
filed with the Securities and Exchange Commission, pursuant to Section 906 pf
the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. It is not intended
that this statement be deemed to be filed for purposes of the Securities
Exchange Act of 1934, as amended.

Date: October 14, 2003

/s/Gaylen D. Miller
-------------------------
(Principal Financial and
Accounting Officer)

-45-