**UNITED STATESSECURITIES AND EXCHANGE COMMISSION****Washington, D.C. 20549**

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**FORM 10-KSB**

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| x          | **Annual report under Section 13 or  15(d) of the Securities Exchange Act of 1934.**                                                       |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |                                                                                                                                                 |
| ** ** | **For the fiscal year ended December 31, 2007**                                                                                                 |
|       |                                                                                                                                                 |
| o          | **Transition report under Section 13 or  15(d) of the Exchange Act of 1934.**                                                              |
|       |                                                                                                                                                 |
| ** ** | **For the transition period from                      to** |

 

**Commission file number 333-136353**

 

**BLACKHAWK BIOFUELS, LLC**

(Name of small business issuer in its charter)

 

| **Delaware**                             | ** ** | **20-2760722**                       |
|------------------------------------------|------------|--------------------------------------|
| (State or other jurisdiction of          |       | (I.R.S. Employer Identification No.) |
| incorporation or organization)           |       |                                 |
|                                     |       |                                 |
| **22 South Chicago Avenue**              | ** ** | **61032**                            |
| **Freeport, Illinois**                   | ** ** | (Zip Code)                           |
| (Address of principal executive offices) | ** ** | ** **                           |

 

**(815) 235-2461**(Issuer’s telephone number)

 

Securities registered under Section l2(b) of the ExchangeAct:

 

**None**

 

Securities registered under Section l2(g) of the ExchangeAct:

 

**Class A Limited Liability Company Units**

** **

Check whether the issuer (1) filedall reports required to be filed by Section 13 or l5(d) of the ExchangeAct during the past 12 months (or for such shorter period that the registrantwas required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days. x Yes o No

 

Check if there is nodisclosure of delinquent filers in response to Item 405 of Regulation S-B isnot contained in this form, and no disclosure will be contained, to the best ofregistrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-KSB.  x

 

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

 

State issuer’s revenuesfor its most recent fiscal year.  None

 

State the aggregatemarket value of the voting and non-voting common equity held by non-affiliatescomputed by reference to the price at which the common equity was sold, or theaverage bid and asked price of such common equity, as of a specified datewithin the past 60 days.  (See definitionof affiliate in Rule 12b-2 of the Exchange Act.)

 

As of March 31, 2008the aggregate market value of the Units held by non-affiliates (computed byreference to the most recent offering price of such Units) was $31,192,000.

 

As of March 31, 2008there were 16,051,000 Units outstanding.

 

**DOCUMENTS INCORPORATED BY REFERENCE**

 

**None**

 

Transitional SmallBusiness Disclosure Format (Check one):  o Yes x No

 

 

 

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** **

**TABLEOF CONTENTS**

** **
| **PART I**                                                                                                                                               | **1**                                                                                                                                                                      |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                                                                                                                                    | ** **                                                                                                                                                                 |
| **ITEM 1. DESCRIPTION  OF BUSINESS.**                                                                                                                         | **1**                                                                                                                                                                      |
| ** **                                                                                                                                                    | ** **                                                                                                                                                                 |
| **ITEM 2. DESCRIPTION  OF PROPERTY.**                                                                                                                         | **4**                                                                                                                                                                      |
| ** **                                                                                                                                                    | ** **                                                                                                                                                                 |
| **ITEM 3. LEGAL  PROCEEDINGS.**                                                                                                                               | **5**                                                                                                                                                                      |
| ** **                                                                                                                                                    | ** **                                                                                                                                                                 |
| **ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.**                                                                                             | **5**                                                                                                                                                                      |
| ** **                                                                                                                                                    | ** **                                                                                                                                                                 |
| **PART II**                                                                                                                                              | **5**                                                                                                                                                                      |
| ** **                                                                                                                                                    | ** **                                                                                                                                                                 |
| **ITEM 5. MARKET  FOR COMMON EQUITY AND RELATED MEMBER MATTERS AND SMALL BUSINESS ISSUER  PURCHASES OF EQUITY SECURITIES.**                                   | **5**                                                                                                                                                                      |
| ** **                                                                                                                                                    | ** **                                                                                                                                                                 |
| **ITEM 6.  MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.**                                                                                 | **6**                                                                                                                                                                      |
| ** **                                                                                                                                                    | ** **                                                                                                                                                                 |
| **ITEM 7. FINANCIAL  STATEMENTS.**                                                                                                                            | **9**                                                                                                                                                                      |
| ** **                                                                                                                                                    | ** **                                                                                                                                                                 |
| **ITEM 8. CHANGES  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.**                                                            | **26**                                                                                                                                                                     |
| ** **                                                                                                                                                    | ** **                                                                                                                                                                 |
| **ITEM 8A. CONTROLS AND PROCEDURES.**                                                                                                                         | **26**                                                                                                                                                                     |
| ** **                                                                                                                                                    | ** **                                                                                                                                                                 |
| **ITEM  8B. OTHER INFORMATION.**                                                                                                                              | **26**                                                                                                                                                                     |
| ** **                                                                                                                                                    | ** **                                                                                                                                                                 |
| **PART III**                                                                                                                                             | **27**                                                                                                                                                                     |
| ** **                                                                                                                                                    | ** **                                                                                                                                                                 |
| **ITEM 9. DIRECTORS;  EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE;  COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT** | **27**                                                                                                                                                                     |
| ** **                                                                                                                                                    | ** **                                                                                                                                                                 |
| **ITEM 10. EXECUTIVE COMPENSATION**                                                                                                                           | **31**                                                                                                                                                                     |
| ** **                                                                                                                                                    | ** **                                                                                                                                                                 |
| **ITEM 11. SECURITY  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER MATTERS**                                                       | **32**                                                                                                                                                                     |
| ** **                                                                                                                                                    | ** **                                                                                                                                                                 |
| **ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE**                                                                       | **33**                                                                                                                                                                     |
| ** **                                                                                                                                                    | ** **                                                                                                                                                                 |
| **ITEM 13. EXHIBITS**                                                                                                                                         | **33**                                                                                                                                                                     |
| ** **                                                                                                                                                    | ** **                                                                                                                                                                 |
| **ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES**                                                                                                          | **35**                                                                                                                                                                     |
| ** **                                                                                                                                                    | ** **                                                                                                                                                                 |
| **SIGNATURES**                                                                                                                                                | **36**                                                                                                                                                                     |
| ** **                                                                                                                                                    | ** **                                                                                                                                                                 |
| **SUPPLEMENTAL  INFORMATION**                                                                                                                                 | ** **                                                                                                                                                                 |
| ** **                                                                                                                                                    | ** **                                                                                                                                                                 |
| **EXHIBIT INDEX**                                                                                                                                             | ** **                                                                                                                                                                 |
| ** **                                                                                                                                                    | ** **                                                                                                                                                                 |
| **EXHIBITS  FILED WITH THIS REPORT:**                                                                                                                         | ** **                                                                                                                                                                 |
| ** **                                                                                                                                                    | ** **                                                                                                                                                                 |
| 10.9                                                                                                                                                          | Management and  Operational Services Agreement between the Registrant and REG Services   Group, LLC and REG Marketing and Logistics Group, LLC dated March 14,  2008. | ** ** |
|                                                                                                                                                          |                                                                                                                                                                       | ** ** |
| 31.1                                                                                                                                                          | Certificate pursuant to 17 CFR 240 15d-14(a).                                                                                                                              | ** ** |
|                                                                                                                                                          |                                                                                                                                                                       | ** ** |
| 31.2                                                                                                                                                          | Certificate pursuant to 17 CFR 240 15d-14(a).                                                                                                                              | ** ** |
|                                                                                                                                                          |                                                                                                                                                                       | ** ** |
| 32.1                                                                                                                                                          | Certificate pursuant to 18 U.S.C. Section 1350.                                                                                                                       | ** ** |

 

 

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**FORWARD LOOKING STATEMENTS**

** **

This report contains forward-looking statementsinvolving future events, future business, industry and other conditions, ourfuture performance, and our plans and expectations for future operations andactions.  In many cases, you can identifyforward-looking statements by the use of words such as “believe,” “expect,”“anticipate,” “intend,” “plan,” “estimate,” “predict,” “hope,” “should,”“could,” “may,” “future,” “continue,” “potential,” or other forms or thenegatives of these terms or other similar expressions.  Many of these forward-looking statements arelocated in this report under the headings “Description of Business,” “Descriptionof Property” and “Management’s Discussion and Analysis or Plan of Operations,”but they may appear in other sections as well.

 

These forward-looking statements are based onassumptions that we believe to be reasonable, beliefs and expectations inreliance on information currently available to management and our estimatesregarding future results, trends and uncertainties.  We caution you not to put undue reliance onany forward-looking statements.

 

You should read this report thoroughly with theunderstanding that our actual results may differ materially from those setforth in the forward-looking statements for many reasons, including eventsbeyond our control and assumptions that prove to be inaccurate orunfounded.  We cannot provide anyassurance with respect to our future performance or results.  Although we believe that our plans andobjectives, as reflected in or suggested by the forward-looking statements, arereasonable, we may never achieve our plans or objectives.  Actual results may differ from anticipated ordesired results due to many possible unforeseen developments, includingdevelopments arising from or relating to the following:

 

·                  The suitability of our biodiesel plant site, availability of requiredinfrastructure and construction of our plant;

 

·                  Competition and technological developments in the biodiesel industryand the energy market generally;

 

·                  Economic, competitive and business conditions in our local and regionalmarkets and in the national and international marketplace;

 

·                  The availability and continuance of environmental and other permits,licenses and incentives;

 

·                  The impact of or changes in laws or regulations relating to thebiodiesel or energy industry, environmental matters and taxation;

 

·                  Our ability to generate cash flow to meet our operating needs, repayindebtedness and make distributions to our Unit holders;

 

·                  The performance of our consultants, contractors and suppliers;

 

·                  The actions of national, state and local legislative, regulatory andjudicial bodies and authorities;

 

·                  Delays or interruptions in the construction or operation of our plantdue to inadequate financing, design or material failures, environmental issues,lack of raw materials, transportation blockages, weather and other factors;

 

·                  The necessity to modify or upgrade our plant, expand or curtail ouroperations, obtain additional capital or change our business strategy; and

 

·                  Other risks discussed elsewhere in this report.

 

 

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The forward-looking statements contained in thisreport speak as of the date of this report and are subject to events anddevelopments occurring after the date of this report.  Except as may be required under the federalsecurities laws, we do not undertake any obligation to update anyforward-looking statements in this report to reflect future events ordevelopments.

 

We are not under any duty to update theforward-looking statements contained in this report.  We cannot guarantee future results, levels ofactivity, performance or achievements. We caution you not to put undue reliance on any forward -lookingstatements, which speak only as of the date of this report.  You should read this report and the documentsthat we reference in this report and have filed as exhibits completely and withthe understanding that our actual future results may be materially different fromwhat we currently expect.  We qualify allof our forward-looking statements by these cautionary statements.

 

 

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# **PART I**

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## **Item 1. DESCRIPTION OF BUSINESS.**

## ** **

**BusinessDevelopment**

** **

Blackhawk Biofuels, LLC (referred to herein as “we,” “us,”the “company” or “Blackhawk Biofuels, LLC”) is a limited liability companyorganized under the laws of the State of Delaware on April 28, 2005.

 

We intend to complete construction of and operate a 45million gallon biodiesel production plant in Danville, Illinois.  Currently, we are a development stage companywith no revenues from operations.  Todate, our efforts have been devoted principally to planning for our project andoperations, obtaining financing for our project, executing agreements relatedto the acquisition of assets for and construction of our plant, and relatedactivities.  We will not generate revenueuntil we complete construction of our proposed plant, which we expect to occurin the fall of 2008.

 

On December 15, 2007 we completed our publicoffering of Units under a registration statement filed with the Securities andExchange Commission.  We sold a total of12,551,000 Units in the offering, raising a total of $25,102,000.  On March 14, 2008 we broke escrow on theoffering.  These funds will be used toprovide financing to complete our biodiesel facility in Danville, Illinois.

 

Ouroriginal intention was to construct our plant in Freeport, Illinois.  However, in February our anticipatedlenders withdrew their non-binding commitment to provide financing for thatplant.  As we looked for replacementfinancing, we found the opportunity to assume responsibility to completeconstruction of the Danville plant with available debt financing.

 

On March 14, 2008 we entered into an AssetPurchase Agreement (the “Purchase Agreement”) with Biofuels Company of America,LLC (“BCA”), which provides for us to acquire the under-construction assets ofthe Danville facility.  Other parties tothe Purchase Agreement are Renewable Energy Group, Inc. (“REG”), whichwill provide financing for the transaction, and Biodiesel Investment Group, LLCand Bunge North America, Inc., which are the owners of BCA.

 

The Purchase Agreement provides that we will acquirespecified assets of BCA and will assume certain liabilities of BCA.  The consideration payable to BCA will be inthe form of $5,250,000 in cash and 1,980,488 shares of common stock of REG, forwhich we will issue to REG a convertible promissory note pursuant to a loanagreement to be entered into with REG. The promissory note, in the principal amount of $21,700,000, isconsideration for the common stock of REG issuable to BCA and for an additional127,273 shares of series B preferred stock of REG issuable to Bunge inconsideration for Bunge’s agreement to enter into an Oil Feedstock SupplyAgreement with us.  We will also assume,or enter into a new agreement to replace, $24,650,000 in debt financingprovided to the facility by Fifth Third Bank.

 

The completion of the transaction is subject to thesatisfaction of closing conditions and the completion of financing undercommitment letters provided by Fifth Third Bank and REG Ventures, LLC (“REG Ventures”),an affiliate of REG.

 

Also on March 14, 2008 we entered into aManagement and Operational Services Agreement (the “Services Agreement”) withtwo REG affiliates, REG Services Group, LLC (“REG Services”) and REG Marketing &Logistics Group, LLC (“REG Marketing”).  Under the Services Agreement, REG Services and REG Marketing will haveresponsibility for the overall management of our plant, placement of a generalmanager and an operations manager at the plant, procurement of feedstocksnecessary for the operation of the facility, marketing of our production ofbiodiesel and glycerin when our plant commences production and performance ofadministrative, sales and marketing functions for us.  In addition, it provides for the extension oftrade credit by REG Services and REG Marketing to us in connection with thepurchase of raw materials and sale of biodiesel by us or on our behalf.  The trade credit will be secured by ourinventories and receivables.  TheServices Agreement also provides that upon the closing of the PurchaseAgreement, REG Services will be entitled to appoint one member to our board ofmanagers.

 

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The under-construction biodiesel plant assets which wewill acquire were financed by equity invested by BCA and the debt financingfrom Fifth Third Bank which we will assume or replace.  We estimate the capital that we will requireand will have available to complete construction of the plant and commence operationswill be approximately $19,250,000. The resources available will consistprincipally of proceeds of our equity offering. We estimate that the amount required to complete the plant as designedwill be approximately $5,250,000.  Wealso intend to add pre-treatment facilities to the plant at a cost ofapproximately $6,500,000, which will allow us to use animal fats as feedstockfor the plant.  We estimate the amountrequired to complete testing of the plant will be approximately $500,000.  The balance of our resources available afterconstruction and testing will be approximately $7,000,000, $2,000,000 of whichwill be placed in a debt service account with Fifth Third Bank and $5,000,000will be available as initial working capital to commence operations of ourplant.

 

We will also require ongoing working capital for ouroperations.  For that purpose, we have acommitment from Fifth Third Bank to provide $5,000,000 in revolving credit andthe Services Agreement also provides for the extension of trade credit for thepurchase of raw materials and upon the sale of our biodiesel production.

 

**Plant Construction**

 

Our plant is being constructed principally by Fagen, Inc.(“Fagen”) of Granite Falls, Minnesota using technology supplied by De SmetBallestra North America, Inc. (“De Smet”). Fagen is a prominent construction company in the alternative fuelsindustry.  Among other activities, Fagenhas built plants accounting for over half of the total ethanol production inthe United States.  De Smet is asubsidiary of the De Smet Ballestra Group which is based in Belgium. Itstechnology has been used in a significant percentage of the total biodieselproduction capacity in Europe.  REG hasreviewed the De Smet technology and the current status of construction of theplant and is satisfied that upon completion the plant will operate at capacityin accordance with its design.  REG willhave responsibility to construct the animal fat pre-treatment facilities forthe plant.

 

**Products and Feedstocks**

 

Our primary product will be fuel grade biodiesel.  We intend to qualify our plant to meetAmerican Society of Testing and Materials (“ASTM”) D6751 standards for ourproduct.  Fuel grade biodiesel must beproduced in strict compliance with specifications set forth in ASTM D6751 toinsure proper performance in diesel engines. Biodiesel that meets ASTM D6751 requirements is a legal motor fuel thatmay be sold and distributed in the United States.

 

Biodiesel is an engine fuel produced from vegetableoils and animal fats which has favorable environmental and lubricationcharacteristics when used as a blend with or alternative for petroleum baseddiesel fuel.  Biodiesel mixes easily withdiesel fuel at rates between 2% and 100%. Biodiesel improves the lubricity of petroleum based diesel fuelsignificantly at levels as low as 2%, and therefore is a substitute for sulfur,currently found in all petroleum diesel and legislated to be removed in thenext decade.

 

In June 2000, biodiesel became the first and onlyalternative fuel to successfully complete the Tier I and Tier II Health Effectstesting requirements of the Clean Air Act Amendments of 1990.  The Tier I testing involved a detailedanalysis of biodiesel emissions.  TheTier II testing involved a 90-day subchronic inhalation study of biodieselexhaust with specific health assessments. The results of the tests concluded that biodiesel is non-toxic,biodegradable and poses no known threat to human health.

 

Upon completion, our plant will have the capacity toproduce 45 million gallons of biodiesel annually and have the ability toutilize multiple feedstocks.  The cost ofthe feedstock used in biodiesel accounts for 75% to 85% of the overall cost ofproducing biodiesel.  Although soybeanoil has been the predominant feedstock for biodiesel plants in the UnitedStates, recently elevated prices for soybean oil have made other vegetable oilsand animal fats attractive feedstocks. Thus, it is our intention to operate the plant using the feedstock ormix of feedstocks that will allow us to operate taking advantage of opportunitiesto keep our feedstock costs as low as possible. We expect to enter into an oil supply agreement with Bunge North America, Inc.which will assure us of the availability of soybean oil in amounts up toone-third of our requirements.

 

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Our plant will also produce glycerin, which is theprincipal co-product of the biodiesel production process.  Glycerin is split from the triglyceride inthe conversion step, usually in a quantity of about 10% of the amount of inputfeedstock.  Glycerin has combination ofphysical and chemical properties that are utilized in a wide variety ofproducts, including many applications as an ingredient or processing aid incosmetics, toiletries, personal care, pharmaceuticals and food products.  We expect that our plant will produceapproximately 16,800 tons of crude glycerin annually.  Glycerin sales are forecast to represent lessthan 1.0% of our gross sales.

 

We will also produce a small amount of fatty acidwhich is typically sold for use in the animal feed industry.

 

We expect to sell all of the biodiesel and glycerinthat we produce.  Our Services Agreementprovides that REG Marketing will sell our production in regional or nationalmarkets.

 

**Biodiesel Market**

 

Federal and state environmental requirements andincentives have encouraged the production and use of biodiesel in recentyears.  The National Biodiesel Boardreports that as of January 25, 2008 there were 171 biodiesel facilitiesoperating in 41 states with the capacity to produce approximately 2.24 billiongallons of biodiesel annually, with an additional 1.23 billion gallons ofcapacity under construction or expansion. Biodiesel production in 2007 was approximately 750 million gallons.  Annual domestic diesel fuel consumption iscurrently approximately 62 billion gallons, with the biodiesel industrycontributing approximately 1.2% of the U.S. diesel fuel market.  The future demand for biodiesel will dependin part on whether federal and state government incentives and mandates aremaintained and expanded and on the demand for diesel fuel in general.

 

Over the past several years, biodiesel prices havetended to correlate with wholesale diesel fuel prices.  At the same time, price charts for biodieseland prices for feedstocks such as soy oil show that biodiesel prices do notmove with vegetable oil prices.  The lackof correlation between soy oil prices (approximately 80% of our estimated costof production) and biodiesel prices (approximately 98% of our estimatedrevenue) is a significant risk inherent in our business.

 

**Competition**

 

We will be in direct competition with numerous otherbiodiesel plants that produce the same products that we do.  The development of additional biodieselplants, particularly those in close proximity to our proposed plant, willincrease the supply of biodiesel and may result in lower local biodiesel andglycerin prices and higher costs for supplies of feedstocks.

 

Archer Daniels Midland Company, Cargill, Inc. andLouis Dreyfus Agricultural Industries (“Dreyfus”) are major internationalagribusiness corporations which are biodiesel producers with the financial,sourcing and marketing resources to become formidable competitors in thebiodiesel industry, without geographical, funding or feedstock restraints.  ADM has its headquarters and major ethanoland other operations in Decatur, Illinois and may consider placing a biodieselplant in that location.

 

Within a 150 mile radius of our Danville, Illinoisplant site, Stephan Company has a 22 mmgy plant in Millsdale, Illinois;Incobrasa Industries, Ltd. has a 31 mmgy plant in Gilman, Illinois; Dreyfus hasan 80 mmgy plant in Claypool, Indiana; e-biofuels, LLC has a 25 mmgy plant inMiddletown, Indiana; Integrity Biofuels has a 10 mmgy plant in Morristown,Indiana; and Evergreen Renewables has a 5 mmgy plant in Hammond, Indiana.  All of these plants presently use soy oil astheir principal feedstock except the e-biofuels plant which has multi-feedstockcapability.  There are other operatingbiodiesel plants in Illinois and Indiana which are beyond the 150 mile radiusfrom Danville or are insignificant in capacity. There are other plants presently under construction or being planned inIllinois and Indiana which could have an aggregate capacity of over 200 mmgy.

 

The biodiesel industry generally is in competitionwith the petroleum industry and particularly the diesel fuel portion of thepetroleum industry.  The biodieselindustry is insignificant compared to the size of the diesel fuel industry andis able to compete principally as a consequence of government environmentalregulations and incentives, assisted by currently high petroleum and dieselfuel prices.

 

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**Government Incentives**

 

Recognizing the need for a cleaner source of energyand appreciating that biodiesel is renewable and can be produced in the UnitedStates, the federal government and various state governments have createdincentive programs to encourage biodiesel production.  The federal government began encouragingbiodiesel production in 2000.  The 2002Energy Bill provided producers of biodiesel a tax credit of eighty cents pergallon, and mandated all federal, state and local governments with diesel poweredvehicles and diesel powered equipment use a mixture of 2% biodiesel, growing to10% in 2010.

 

The Energy Policy Act of 2005 (the “EP Act”)established a national renewable fuel standard (“RFS”) that set a nationalminimum usage requirement for renewable fuels and extended a volumetric excise taxcredit to blenders of biodiesel in the aggregate amount of $1.00 per gallon.

 

The Energy Independence and Security Act of 2007 (“EISA”)amended the EP Act to require an increase in the usage of  renewable fuels to 36 billion gallons by2022.  Beginning in 2016, cellulosic andother advanced biofuels such as biomass-based diesel must accountfor all increases in the RFS and will increase from 5.5 billion gallons in 2015 to 21billion gallons of the 36 billion gallons renewable fuels total by 2022.

 

**Government Regulation**

 

The construction of our plant and operations aresubject to laws and regulations administered by the United States EnvironmentalProtection Agency (“EPA”) and Illinois EPA (“IEPA”).  We will be subject to extensive air, waterand other environmental regulations.  Anair emission source construction permit and national pollution dischargeelimination system permit were obtained prior to commencement of constructionof the Danville plant and a stormwater pollution prevention plan has been prepared.  Other permits and compliance plans will berequired before or shortly after we commence operations of the plant.  The EPA and IEPA will have continuingoversight authority with respect to our operations.  The air permit contains ongoing emission limitsand monitoring and recordkeeping requirements. EPA and IEPA rules and regulations are subject to change, and anychanges may result in greater regulatory burdens for us.

 

Much of the cost of compliance with federal and stateenvironmental laws and regulations, including permit application procedures, isincluded in the construction cost of the plant. We have not yet prepared an estimate of environmental compliance costsafter commencement of operations.  Thesecosts could be significant.  In addition,any failure to comply with environmental requirements could result in a noticeof violation and penalties which could include fines and even a requirement tocease plant operations until the violation is remedied.

 

**Employees**

 

We presently have no employees.  Prior to completion of the plant constructionand commencement of operations, we plan to hire a chief executive officer and achief financial officer with overall responsibilities for the administration ofour company.  In addition, we intend toobtain the services of approximately 30 additional full-time employees throughREG.

 

## **Item 2. DESCRIPTION OF PROPERTY.**

## ** **

The site for our plant is located in the city ofDanville and is approximately 7 acres in size. We will use the site under a ground lease from Bunge Milling, Inc.  The ground lease will expire in 2036, subjectto extension at our option for four additional five year terms.  We expect that until 2016 the rent will be$1.00 per year.  Rent thereafter iscurrently being negotiated.

 

The site is adjacent to a soybean oilseed crushingfacility which provides easy access to soybean oil feedstock for ourplant.  We will also have access toNorfolk Southern Railway loading and unloading facilities on the Bunge property.

 

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Our leasehold interest on the site and plant willserve as collateral for the debt financing provided by Fifth Third Bank and REGVentures.

 

## **Item 3. LEGAL PROCEEDINGS.**

## ** **

We are not involved in any legal proceedings and arenot aware of any proceeding that a governmental authority is contemplating withrespect to us.  In the ordinary course ofour business, we may be named as a defendant in legal proceedings related tovarious matters, including worker’s compensation claims, tort claims andcontractual disputes.  In addition, theoperation of our plant could give rise to litigation or administrativeproceedings relating to nuisance, environmental matters and the like.  We intend to carry insurance that willprovide protection against some types and amounts of claims that we mightencounter.

 

## **Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.**

## ** **

We did not submit any matter to a vote of our Unitholders through the solicitation of proxies or otherwise during the fourthfiscal quarter of 2007.

#  

# **PART II**

#  

## **Item 5. MARKET FOR COMMON EQUITY AND RELATED MEMBER MATTERS AND SMALLBUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.**

## ** **

There is no public trading market for our Units.

 

At December 31, 2007, we had 104 Unit holders ofrecord.  At March 31, 2008, we had641 Unit holders of record.

 

We have not declared or paid any distributions on ourUnits.  We do not expect to generateearnings until after our plant commences operations, which is expected to occurin the fall of 2008.  We cannot predict theamount of cash, if any, that we may generate from operations.  Distributions are payable at times and inaggregate amounts determined by our board of managers in its sole discretion,subject to loan covenants or restrictions imposed by our lenders.  Subject to the availability of cash, theboard’s discretion and lenders’ limitations, we intend to make cashdistributions of “net cash flow” sufficient to discharge our members’anticipated combined federal, state and local income tax liabilities (based on theboard’s estimate of anticipated federal and Illinois statutory rates) arisingfrom allocations to them of taxable income by us.  Our board of managers may also declarefurther distributions from time to time. However, in the exercise of its discretion, our board of managers mayelect to retain cash to finance operations, retire debt, improve our plant orexpand our business.

 

The terms of our committed debt financing from FifthThird Bank and REG Ventures will limit our ability to make distributions.  No distributions may be made until 24 monthsafter our plant has commenced production, if our fixed charge coverage ratiowould be less than 1.50 to 1.00, if we report a net loss, or if there exists orthe distribution would cause any default or event of default.  Distributions may not exceed 50% of our netincome in any year.  Subject to theforegoing limitations, we may make distributions for the pass-through taxliabilities of our members.

 

Distributions to holders of Class A Units will bemade in proportion to the Units that each Unit holder holds relative to thetotal number of Class A Units outstanding. If Units of any other class are issued in the future, each Unit of thatother class will have the distribution rights that are established for that classby the board of managers without member approval.  “Net cash flow” means the gross cash proceedsof our operations less the portion thereof used to pay or establish reservesfor all of our expenses, debts, obligations and liabilities, including capitalimprovements, replacements and contingencies, as reasonably determined by ourboard of managers.  Net cash flow is notreduced by depreciation, amortization, cost recovery deductions or similarallowances, but is increased by any reductions of reserves previouslyestablished.  The definition of net cashflow may be amended by the affirmative vote of a majority of our board ofmanagers, without a vote of our members.

 

5

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On December 15, 2006, a registration statement (No. 333-136353)for a an offering of a minimum of 10,000,000 and a maximum of 17,500,000 of ourClass A Units was declared effective. The offering commenced on December 22, 2006.  On December 15, 2007 we completed theoffering having sold a total of 12,551,000 Units and raising a total of$25,102,000.  On March 14, 2008 webroke escrow on the offering.  As of December 31,2007 no proceeds of the offering had been spent.  As of that date, $618,229 in offeringexpenses had been incurred by us, of which approximately $500,000 had been paidfrom resources other than proceeds of the offering.  Except for a small amount of out-of-pocketexpenses reimbursed to our officers and managers, none of such payments were madeto officers, managers, holders of more than 10% of our equity securities or ouraffiliates.  No underwriting or finderfees or expenses were incurred in the offering. The proceeds of the offering will be used to complete construction ofour biodiesel facility in Danville, Illinois.

 

On June 30, 2006, each member of our board ofmanagers at the time was granted warrants for the purchase of 50,000 of our Class AUnits, amounting to an aggregate of 650,000 Units.  The warrants are exercisable at an exerciseprice of $1.00 per Unit.  The warrantswill become exercisable upon the commencement of operations of our plant andwill remain exercisable for a period of one year.

 

**Equity Compensation Plan Information**

** **
| **Plan Category**                                           | ** ** | **Number of Units to be issued  upon exercise of outstanding  warrants** | ** ** | **Weighted- average exercise  price of outstanding  warrants** | ** ** | **Number of Units  remaining available for  future issuance under  equity compensation plans  (excluding Units reflected  in column (a)** | ** ** |
|-------------------------------------------------------------|------------|--------------------------------------------------------------------------|------------|----------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------|------------|
| ** **                                                  | ** ** | **(a)**                                                                  | ** ** | **(b)**                                                        | ** ** | **(c)**                                                                                                                                   | ** ** |
| Equity  compensation plans not approved by security holders |       | 650,000                                                                  |       | $                                                              | 1.00       |                                                                                                                                      | 0          |   |
|                                                             |            |                                                                          |            |                                                                |            |                                                                                                                                           |            |  |

 

## **Item 6.  MANAGEMENT’S DISCUSSIONAND ANALYSIS OR PLAN OF OPERATIONS.**

## ** **

**This report contains forward-lookingstatements that involve significant risks and uncertainties.  The following discussion, which focuses onour plan of operation through the commencement of operations of our plant,consists almost entirely of forward-looking information and statements.  Actual events or results may differmaterially from those indicated or anticipated, as discussed in the sectionentitled “Forward Looking Statements.” The following discussion of our financial condition and plan ofoperation should also be read in conjunction with our financial statements andnotes to financial statements contained in this report.**

 

**Introduction**

 

Blackhawk Biofuels, LLC (referred to herein as “we,” “us,”the “company” or “Blackhawk Biofuels, LLC”) is a limited liability companyorganized under the laws of the State of Delaware on April 28, 2005.  We intend to complete construction of andoperate a biodiesel production plant in Danville, Illinois (the “plant”).  Currently, we are a development stage companywith no revenues from operations.  Todate, our efforts have been devoted principally to planning for our project andoperations, obtaining financing for our project, executing agreements relatedto the acquisition of assets for and construction of our plant, and relatedactivities.  We will not generate revenueuntil we complete construction of our plant, which we expect to occur in thefall of 2008.

 

The plant will have a design capacity to produce 45million gallons of biodiesel per year (“mmgy”). In addition, we expect the plant will produce approximately 16,800 tonsof glycerin each year.  The plant willconsist principally of a materials handling and storage area, atransesterification reactor in which the biodiesel is produced, a storage andloading area for biodiesel and glycerin, truck scales and an administrativeoffice.

 

The plant will have the ability to utilize multiplefeedstocks, including soybean oil, other vegetable oils and animal fats.  The primary product will be fuel gradebiodiesel meeting ASTM D6751 standards.

 

6

----

 

 

 

On March 14, 2008 we entered into the PurchaseAgreement with BCA to acquire the under-construction assets of our plant.  The Purchase Agreement provides that we willacquire specified assets of BCA and will assume certain liabilities ofBCA.  The consideration payable to BCAwill be in the form of $5,250,000 in cash and 1,980,488 shares of common stockof REG, for which we will issue to REG a convertible promissory note pursuantto a loan agreement to be entered into with REG.  The promissory note, in the principal amountof $21,700,000, is consideration for the common stock of REG issuable to BCAand for an additional 127,273 shares of series B preferred stock of REGissuable to Bunge in consideration for Bunge’s agreement to enter into an OilFeedstock Supply Agreement with us.  Wewill also assume, or enter into a new agreement to replace, $24,650,000 in debtfinancing provided to the facility by Fifth Third Bank.  The completion of the transaction is subjectto the satisfaction of closing conditions and the completion of financing undercommitment letters provided by Fifth Third Bank and REG Ventures.

 

Also on March 14, 2008 we entered into theServices Agreement with REG Services and REG Marketing.

 

The under-construction biodiesel plant assets which wewill acquire were financed by equity invested by BCA and the debt financingfrom Fifth Third Bank which we will assume or replace.  We estimate the capital that we will requireand will have available to complete construction of the plant and commence operationswill be approximately $19,250,000. The resources available will consistprincipally of proceeds of our equity offering. We estimate that the amount required to complete the plant as designedwill be approximately $5,250,000.  Wealso intend to add pre-treatment facilities to the plant at a cost ofapproximately $6,500,000, which will allow us to use animal fats as feedstockfor the plant.  We estimate the amountrequired to complete testing of the plant will be approximately $500,000.  The balance of our resources available afterconstruction and testing will be approximately $7,000,000, $2,000,000 of whichwill be placed in a debt service account with Fifth Third Bank and $5,000,000will be available as initial working capital to commence operations of ourplant.

 

We will also require ongoing working capital for ouroperations.  For that purpose, we have acommitment from Fifth Third Bank to provide $5,000,000 in revolving credit andthe Services Agreement also provides for the extension of trade credit for thepurchase of raw materials and upon the sale of our biodiesel production.

 

**BusinessStrategy**

** **

Our business strategy revolves around two main goals:utilization of low-cost feedstocks and production of a high quality biodieselproduct.  To reach our goal of using thelowest cost feedstocks, we will incorporate feedstock pretreatment capabilitiesin our facility.  Our goal to providehigh quality biodiesel led us to enter into the Services Agreement with REGServices and REG Management.

 

**Planof Operations**

** **

From the present to our expected commencement ofoperations in the fall of 2008, we will be actively involved in seven principaltasks:

 
| (1)    |   | Negotiating  final terms of loan agreements with Fifth Third Bank and REG Ventures for the  debt capital required to finance the acquisition of the under-construction  assets of our plant; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                         |
| (2)    |   | Completing the  acquisition of our plant assets;                                                                                                                                             |
|   |   |                                                                                                                                                                                         |
| (3)    |   | Working with REG  to plan for the commencement of operations, including the purchase of initial  feedstocks and utility services and marketing of our biodiesel and glycerin  products;      |
|   |   |                                                                                                                                                                                         |
| (4)    |   | Hiring executive  management personnel and, through REG, operations management and employees;                                                                                                |
|   |   |                                                                                                                                                                                         |
| (5)    |   | Completing  construction of our plant, including a pre-treatment facility to allow the  plant to use animal fats as feedstock;                                                               |
|   |   |                                                                                                                                                                                         |
| (6)    |   | Testing and  accepting the plant from our technology and construction contractors; and                                                                                                       |

 

7

----

 
| (7) |   | Commencing  operations of our plant. |
|-----|--------|--------------------------------------|

 

Assuming that we successfully complete our debtfinancing with Fifth Third Bank and REG, we believe that we will havesufficient cash resources to cover all of our expenses associated with theforegoing tasks.  We also believe that wewill have sufficient operating capital to cover our staff, office, audit,legal, compliance, training and other start-up expenses during this period.

 

Following the commencement of operations of our plant,our activities will be focused on the successful operation of our plant.  That will involve working closely with REG inmonitoring and supervising the selection and mix of feedstocks for our plant,the terms on which the production of our biodiesel and glycerin will bemarketed and sold, and risk management with respect to our feedstocks andproducts.  Assuming that we successfullycomplete the availability of an operating line of credit with Fifth Third Bank,and utilizing trade credit under the terms of our Service Agreement with REGServices and REG Marketing, we expect to have sufficient operating capital forpurposes of our operations for at least the next twelve months.

 

***Plant Constructionand Start-up of Plant Operations***

*** ***

The completion of construction of our plant willinclude completion and approval of all aspects of the physical plant asoriginally planned.  In addition, it willinclude the design and construction of feedstock pre-treatment facilities foranimal fats and integration of those facilities into the plant.  It will also include testing of all equipmentand facilities of the plant.  Anyadjustments which appear necessary based on testing will also becompleted.  Final operating permits willalso be secured during this period.  Thetesting and start-up period will also include training of plant operationspersonnel and incorporation of operational testing, quality control and safetyprocedures.  Assuming the availability offinal operating permits, and following a final capacity test run andcertification by our construction engineers, the plant will be turned over tous and REG for the commencement of commercial operations.

 

***Management,Supply and Marketing Agreements***

*** ***

Under our Services Agreement, REG Services and REGMarketing will have responsibility for the overall management of our plant,placement of a general manager and an operations manager at the plant,procurement of feedstocks necessary for the operation of the facility,marketing of our production of biodiesel and glycerin when our plant commencesproduction and performance of administrative, sales and marketing functions forus.  In addition, it provides for theextension of trade credit by REG Marketing to us in connection with the sale ofbiodiesel by us or on our behalf.  TheServices Agreement also provides that upon the closing of the Purchase Agreement,REG Services will be entitled to appoint one member to our board of managers.

 

REG Services will have the responsibility under theServices Agreement to manage the supply of soybean oil, other vegetable oilsand animal fat feedstocks for our use.  Inaddition, we expect to enter into an Oil Feedstock Supply Agreement with Bunge which will assure us of access tosoybean oil for up to one-third of our needs. Feedstock procurement will include consideration of ways to assure thesupply and price of feedstocks, which might include supply or purchaseagreements and hedging instruments and accounts.

 

The Services Agreement also provides for REG Marketingto market the biodiesel and glycerin produced by us.  We expect that the biodiesel produced by ourplant will be marketed under REG’s Soypower trade name.  Product marketing may also involve the use ofextended term contracts and hedging facilities.

 

The Services Agreement provides for compensation toREG Services in an amount of $75,000 per month plus $.0425 per gallon ofbiodiesel produced, in each case subject to a consumer price index escalator,plus a bonus of 6% of our net income.  Inaddition, we will pay additional compensation to REG Services for testing andstart-up services in the amount of $483,000 and will pay for any additionalservices provided by REG Services beyond the scope of the Services Agreement.

 

8

----

 

**Employees**

** **

Prior to completion of the plant construction andcommencement of operations, we plan to hire a chief executive officer and achief financial officer with overall responsibilities for the administration ofour company.  In addition, we intend toobtain the services of approximately 30 additional full-time employees throughREG.  We expect that two of theseemployees will be involved primarily in management and administration and theremainder will be involved primarily in plant operations.  We expect to fill the general managerposition by the beginning of construction. We do not presently offer an employee benefits package and expect thatany benefits for personnel provided by REG will be made available through REGplans.

 

***Off-BalanceSheet Arrangements***

*** ***

We do not have any off-balance sheet arrangements.

 

**CriticalAccounting Estimates**

** **

In accordance with United States generally acceptedaccounting principles, we use estimates and assumptions in preparing ourfinancial statements.  These estimatesand assumptions may have an impact on the amounts of revenues, expenses, assetsand liabilities reported in our financial statements.  We believe that the estimates and assumptionswe have used with respect to the financial statements included in this reportare reasonable.

 

The Company accounts forequity-based compensation in accordance with SFAS No. 123R.Under the provisions of SFAS No. 123R,equity-based compensation cost is estimated at thegrant date based on the award’s fair value as calculated by theBlack-Scholes-Merton (“BSM”) option-pricing model and is recognized as expenseratably over the requisite service period. The BSM model requires varioushighlyjudgmentalassumptions including volatility, forfeiture rates, and expected option life.If any of the assumptions used in the BSM model change significantly,equity-based compensation expense maydiffer materially in the future from that recorded in the current period.

 

## **Item 7.   FINANCIAL STATEMENTS.**

## ** **

****

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

Board of Managers

Blackhawk Biofuels, LLC

Freeport, Illinois

 

We have audited theaccompanying balance sheet of Blackhawk Biofuels, LLC (a development stagecompany) as of December 31, 2007 and 2006, and the related statements ofoperations, changes in stockholders’ equity, and cash flows for the fiscalyears ended December 31, 2007 and 2006 and from inception (April 28, 2005) toDecember 31, 2007.  These financialstatements are the responsibility of the Company’s management.  Our responsibility is to express an opinionon these financial statements based on our audit.

 

We conducted our audit inaccordance with the standards of the Public Company Accounting Oversight Board(United States).  Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement.  The Company is not required to have, nor werewe engaged to perform, an audit of its internal control over financialreporting.  Our audit included considerationof internal control over financial reporting as a basis for designing auditprocedures that are appropriate in the circumstances, but not for the purposesof expressing an opinion on the effectiveness of the Company’s internal controlover financial reporting.  Accordingly,we express no such opinion.  An auditincludes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements.  An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overallfinancial statement presentation.  Webelieve that our audit provides a reasonable basis for our opinion.

 

In our opinion, thefinancial statements referred to above present fairly, in all materialrespects, the financial position of Blackhawk Biofuels, LLC (a developmentstage company) as of December 31, 2007 and 2006, and the results of itsoperations and its cash flows for the years ended December 31, 2007 and 2006,and from inception (April 28, 2005) to December 31, 2007 in conformity withU.S. generally accepted accounting principles.

 

 
|   |   | /s/ Boulay,  Heutmaker, Zibell & Co. PLLP |
|--------|--------|-----------------------------------------------|
|   |   | Certified Public  Accountants                 |

 

Minneapolis, Minnesota

March 31, 2008

 

9

----

 

**BLACKHAWKBIOFUELS, LLC**

(A DevelopmentStage Company)

 

Balance Sheet

 
| ** **                                                                                                                           | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                                                                                                                           | ** ** | **2007**              | ** ** | **2006**              | ** ** |
| **ASSETS**                                                                                                                           |       |                  |       |                  |       |
|                                                                                                                                 |       |                  |       |                  |       |
| **Current  Assets**                                                                                                                  |       |                  |       |                  |       |
| Cash                                                                                                                                 |       | $                     | 7,042      |                  | $          | 538,648 |   |
| Other receivable                                                                                                                     |       | 50,000                |       | —                |       |
| Prepaid expenses                                                                                                                     |       | 15,910                |       | 14,478                |       |
| Total current  assets                                                                                                                |       | 72,952                |       | 553,126               |       |
|                                                                                                                                 |       |                  |       |                  |       |
| **Property  and Equipment**                                                                                                          |       |                  |       |                  |       |
| Computers and  office equipment                                                                                                      |       | 2,892                 |       | 2,892                 |       |
| Construction in  progress                                                                                                            |       | —                |       | 2,320,336             |       |
| Total property  and equipment                                                                                                        |       | 2,892                 |       | 2,323,228             |       |
| Less accumulated  depreciation                                                                                                       |       | 677                   |       | 99                    |       |
| Net property and  equipment                                                                                                          |       | 2,215                 |       | 2,323,129             |       |
|                                                                                                                                 |       |                  |       |                  |       |
| **Other  Assets**                                                                                                                    | ** ** | ** **            | ** ** | ** **            | ** ** |
| Deferred  offering costs                                                                                                             |       | 618,229               |       | 432,435               |       |
| Debt issuance  costs                                                                                                                 |       | —                |       | 50,000                |       |
| Deposit                                                                                                                              |       | —                |       | 180,301               |       |
| Total other  assets                                                                                                                  |       | 618,229               |       | 662,736               |       |
|                                                                                                                                 |       |                  |       |                  |       |
| **Total Assets**                                                                                                                     |       | $                     | 693,396    |                  | $          | 3,538,991 |   |
|                                                                                                                                 |       |                  |       |                  |       |
| **LIABILITIES AND EQUITY**                                                                                                           |       |                  |       |                  |       |
|                                                                                                                                 |       |                  |       |                  |       |
| **Current  Liabilities**                                                                                                             |       |                  |       |                  |       |
| Accounts payable                                                                                                                     |       | $                     | 204,755    |                  | $          | 153,670 |   |
| Construction  payable                                                                                                                |       | 358,020               |       | —                |       |
| Total current  liabilities                                                                                                           |       | 562,775               |       | 153,670               |       |
|                                                                                                                                 |       |                  |       |                  |       |
| **Commitments  and Contingencies**                                                                                                   |       |                  |       |                  |       |
|                                                                                                                                 |       |                  |       |                  |       |
| **Members’  Equity**                                                                                                            | ** ** | ** **            | ** ** | ** **            | ** ** |
| Member  contributions, net of costs related to capital contributions,3,500,000 units outstanding at  December 31, 2007 and 2006 |       | 3,482,433             |       | 3,482,433             |       |
| Additional paid  in capital                                                                                                          |       | 519,400               |       | 185,500               |       |
| Deficit  accumulated during development stage                                                                                        |       | (3,871,212            | )          | (282,612              | )          |
| Total members’  equity                                                                                                          |       | 130,621               |       | 3,385,321             |       |
|                                                                                                                                 |       |                  |       |                  |       |
| **Total  Liabilities and Members’ Equity**                                                                                      |       | $                     | 693,396    |                  | $          | 3,538,991 |   |

 
| Notes to  Financial Statements are an integral part of this Statement. |   |   |   |   |   |
|------------------------------------------------------------------------|--------|--------|--------|--------|--------|

 

10

----

** **

**BLACKHAWKBIOFUELS, LLC**

(A DevelopmentStage Company)

** **

Statements ofOperations

 
| ** **                              | ** ** | **Year**                        | ** ** | **Year**                        | ** ** | **Inception**                          | ** ** |
|-----------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|----------------------------------------|------------|
| ** **                              | ** ** | **Ended**                       | ** ** | **Ended**                       | ** ** | **(April 28, 2005) to** | ** ** |
| ** **                              | ** ** | **December 31, 2007** | ** ** | **December 31, 2006** | ** ** | **December 31, 2007**        | ** ** |
|                                    |       |                            |       |                            |       |                                   |       |
| **Revenues**                            |       | $                               | —     |                            | $          | —                                 |       | $ | — |   |
|                                    |       |                            |       |                            |       |                                   |       |
| **Operating  Expenses**                 |       |                            |       |                            |       |                                   |       |
| Professional  fees                      |       | 217,078                         |       | 177,841                         |       | 398,919                                |       |
| Impairment of  long-lived assets        |       | 2,917,311                       |       | —                          |       | 2,917,311                              |       |
| General and  administrative             |       | 459,846                         |       | 223,527                         |       | 684,018                                |       |
| Total                                   |       | 3,594,235                       |       | 401,368                         |       | 4,000,248                              |       |
|                                    |       |                            |       |                            |       |                                   |       |
| **Operating  Loss**                     |       | (3,594,235                      | )          | (401,368                        | )          | (4,000,248                             | )          |
|                                    |       |                            |       |                            |       |                                   |       |
| **Other  Income**                       |       |                            |       |                            |       |                                   |       |
| Grant revenue                           |       | —                          |       | 100,000                         |       | 102,500                                |       |
| Interest income                         |       | 5,635                           |       | 20,901                          |       | 26,536                                 |       |
| Total                                   |       | 5,635                           |       | 120,901                         |       | 129,036                                |       |
|                                    |       |                            |       |                            |       |                                   |       |
| **Net  Loss**                           |       | $                               | (3,588,600 | )                               | $          | (280,467                               | )          | $ | (3,871,212 | ) |
|                                    |       |                            |       |                            |       |                                   |       |
| **Weighted  Average Units Outstanding** |       | 3,500,000                       |       | 2,589,699                       |       | 2,272,740                              |       |
|                                    |       |                            |       |                            |       |                                   |       |
| **Net  Loss Per Unit**                  |       | $                               | (1.03      | )                               | $          | (0.11                                  | )          | $ | (1.70 | ) |

 
| Notes to  Financial Statements are an integral part of this Statement. |
|------------------------------------------------------------------------|

 

11

----

 

**BLACKHAWKBIOFUELS, LLC**

(A DevelopmentStage Company)

 

Statement ofChanges in Members’ Equity

 
| ** **                                                                | ** ** | ** **        | ** ** | **Additional**   | ** ** | **Deficit Accumulated** | ** ** |
|---------------------------------------------------------------------------|------------|-------------------|------------|------------------|------------|------------------------------|------------|
| ** **                                                                | ** ** | **Member**        | ** ** | **Paid in** | ** ** | **During**                   | ** ** |
| ** **                                                                | ** ** | **Contributions** | ** ** | **Capital**      | ** ** | **Development Stage**   | ** ** |
|                                                                      |       |              |       |             |       |                         |       |
| **Balance  - Inception, April 28, 2005**                             |       | $                 | —     |             | $          | —                       |       | $ | — |   |
|                                                                      |       |              |       |             |       |                         |       |
| Net loss                                                                  |       | —            |       | —           |       | (2,145                       | )          |
|                                                                      |       |              |       |             |       |                         |       |
| **Balance  - December 31, 2005**                                     |       | —            |       | —           |       | (2,145                       | )          |
|                                                                      |       |              |       |             |       |                         |       |
| Capital contributions  - 1,770,000 units, $1.00 per unit, March 2006 |       | 1,770,000         |       | —           |       | —                       |       |
| Less units  subscribed receivable                                         |       | (630,000          | )          |             |       |                         |       |
|                                                                      |       |              |       |             |       |                         |       |
| Capital  contributions - 1,730,000 units, $1.00 per unit, April 2006 |       | 1,730,000         |       | —           |       | —                       |       |
|                                                                      |       |              |       |             |       |                         |       |
| Collection of  units subscribed receivable - April 2006              |       | 630,000           |       | —           |       | —                       |       |
|                                                                      |       |              |       |             |       |                         |       |
| Cost of raising  capital                                                  |       | (17,567           | )          | —           |       | —                       |       |
|                                                                      |       |              |       |             |       |                         |       |
| Compensation  recognized from warrant issuance                            |       | —            |       | 185,500          |       | —                       |       |
|                                                                      |       |              |       |             |       |                         |       |
| Net loss for the  year ending December 31, 2006                      |       | —            |       | —           |       | (280,467                     | )          |
|                                                                      |       |              |       |             |       |                         |       |
| **Balance  - December 31, 2006**                                     |       | 3,482,433         |       | 185,500          |       | (282,612                     | )          |
|                                                                      |       |              |       |             |       |                         |       |
| Compensation  recognized from warrant issuance                            |       | —            |       | 333,900          |       | —                       |       |
|                                                                      |       |              |       |             |       |                         |       |
| Net loss for the  year ending December 31, 2007                      |       | —            |       | —           |       | (3,588,600                   | )          |
|                                                                      |       |              |       |             |       |                         |       |
| **Balance  - December 31, 2007**                                     |       | $                 | 3,482,433  |             | $          | 519,400                      |       | $ | (3,871,212 | ) |

 

Notes to FinancialStatements are an integral part of this Statement.

 

12

----

 

**BLACKHAWKBIOFUELS, LLC**

(A DevelopmentStage Company)

 

Statements of CashFlows

 
| ** **                                                      | ** ** | **Year**                        | ** ** | **Year**                        | ** ** | **From Inception**                 | ** ** |
|-----------------------------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|-----------------------------------------|------------|
| ** **                                                      | ** ** | **Ended**                       | ** ** | **Ended**                       | ** ** | **(April 28, 2005)**          | ** ** |
| ** **                                                      | ** ** | **December 31, 2007** | ** ** | **December 31, 2006** | ** ** | **to December 31, 2007** | ** ** |
|                                                            |       |                            |       |                            |       |                                    |       |
| **Cash  Flows from Operating Activities**                       |       |                            |       |                            |       |                                    |       |
| Net loss                                                        |       | $                               | (3,588,600 | )                               | $          | (280,467                                | )          | $ | (3,871,212 | ) |
| Adjustments to  reconcile net loss to net cash from operations: |       |                            |       |                            |       |                                    |       |
| Construction  costs impaired                                    |       | 2,917,311                       |       | —                          |       | 2,888,443                               |       |
| Compensation  recognized from warrant issuance                  |       | 333,900                         |       | 185,500                         |       | 519,400                                 |       |
| Depreciation                                                    |       | 578                             |       | 99                              |       | 677                                     |       |
| Grant income                                                    |       | —                          |       | 500                             |       | —                                  |       |
| Change in assets  and liabilities                               |       |                            |       |                            |       |                                    |       |
| Prepaid expenses                                                |       | (1,432                          | )          | (14,478                         | )          | (15,910                                 | )          |
| Accounts payable                                                |       | 96,205                          |       | 31,247                          |       | 156,320                                 |       |
| Net cash used in  operating activities                          |       | (242,038                        | )          | (77,599                         | )          | (322,282                                | )          |
|                                                            |       |                            |       |                            |       |                                    |       |
| **Cash  Flows from Investing Activities**                       |       |                            |       |                            |       |                                    |       |
| Capital  expenditures                                           |       | (13,500                         | )          | (2,323,228                      | )          | (2,516,392                              | )          |
| Deposit                                                         |       | —                          |       | (179,664                        | )          | —                                  |       |
| Construction in  process                                        |       | (16,286                         | )          | —                          |       | (16,286                                 | )          |
| Net cash used in  investing activities                          |       | (29,786                         | )          | (2,502,892                      | )          | (2,532,678                              | )          |
|                                                            |       |                            |       |                            |       |                                    |       |
| **Cash  Flows from Financing Activities**                       |       |                            |       |                            |       |                                    |       |
| Payments for  debt issuance costs                               |       | —                          |       | (50,637                         | )          | (50,637                                 | )          |
| Member  contributions received                                  |       | —                          |       | 3,500,000                       |       | 3,500,000                               |       |
| Payments  received from (paid to) prospective members           |       | —                          |       | (65,000                         | )          | —                                  |       |
| Payments for  cost of raising capital                           |       | —                          |       | (17,567                         | )          | (17,567                                 | )          |
| Payments for  deferred offering costs                           |       | (259,782                        | )          | (310,012                        | )          | (569,794                                | )          |
| Net cash (used  in) provided by financing activities            |       | (259,782                        | )          | 3,056,784                       |       | 2,862,002                               |       |
|                                                            |       |                            |       |                            |       |                                    |       |
| **Net  Increase (Decrease) in Cash**                            |       | (531,606                        | )          | 476,293                         |       | 7,042                                   |       |
|                                                            |       |                            |       |                            |       |                                    |       |
| **Cash –  Beginning of Period**                            |       | 538,648                         |       | 62,355                          |       | —                                  |       |
|                                                            |       |                            |       |                            |       |                                    |       |
| **Cash –  End of Period**                                  |       | $                               | 7,042      |                            | $          | 538,648                                 |       | $ | 7,042 |   |
|                                                            |       |                            |       |                            |       |                                    |       |
| **Supplemental  Disclosure of Noncash Financing Activities**    |       |                            |       |                            |       |                                    |       |
| Deferred  offering costs included in accounts payable           |       | $                               | 48,435     |                            | $          | 122,423                                 |       | $ | 48,435 |   |
| Construction  deposit capitalized as construction in process    |       | $                               | 179,664    |                            | $          | 2,320,336                               |       | $ | — |   |
| Construction  costs included in construction payable            |       | $                               | 358,020    |                            | $          | —                                  |       | $ | 358,020 |   |

 

Notes to FinancialStatements are an integral part of this Statement.

 

13

----

 

**BLACKHAWKBIOFUELS, LLC**

(A DevelopmentStage Company)

 

Notes to FinancialStatements

 

December 31, 2007and 2006

 

**1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

 

*Nature ofBusiness*

 

The Company, which anticipated its plant location tobe in Stephenson County, Illinois, was organized to fund and construct a 30million gallon biodiesel production facility. The Company was formed on April 28, 2005 to have an indefinitelife.

 

As of March 14, 2008, the Company abandoned theaforementioned site and agreed to purchase the under–construction assets of anexisting project located in Danville, Illinois from an unrelated thirdparty.  This existing project wasorganized by the unrelated party to fund and construct a 45 million gallonbiodiesel production facility.  TheCompany continues to operate in the development stage with its effortsprincipally devoted to organizational development and construction of theplant.  The Company anticipatescompletion of the plant in the fall of 2008.

 

## *AccountingEstimates*

 

Management usesestimates and assumptions in preparing these financial statements in accordancewith generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assetsand liabilities, the disclosure of contingent assets and liabilities, and thereported revenues and expenses.  Actualresults could differ from those estimates.

 

Significantestimates include the fair value of the warrants issued to members of the boardof managers.  It is at least reasonablypossible that these estimates may change in the near term.

 

## *Cash*

 

The Companymaintains its accounts at one financial institution.  At times throughout the year, the Company’scash balances may exceed amounts insured by the Federal Deposit InsuranceCorporation.

 

*Propertyand Equipment*

 

Property andequipment is stated at cost. Depreciation is provided over an estimated useful life by use of thestraight line depreciation method. Maintenance and repairs are expensed asincurred; major improvements and betterments are capitalized. The Companycapitalizes construction costs until the assets are placed in service, at whichtime depreciation will be provided over the estimated useful life of theassets.

 

14

----

 

**BLACKHAWKBIOFUELS, LLC**

(A DevelopmentStage Company)

 

Notes to FinancialStatements

 

December 31, 2007and 2006

 

The Company had incurredsubstantial consulting, permitting, purchases of construction equipment, andother pre-construction services related to building its plant facilities, whichare capitalized as construction in process.  On March 14, 2008, theCompany entered into a purchase agreement to acquire the assets of anunder-construction project located in Danville, Illinois and have thereforeconsidered the construction costs related to the Freeport, Illinois siteimpaired.

 

*Carrying Value of Long-livedAssets*

 

The Company testslong-lived assets or asset groups for recoverability when events or changes incircumstances indicate that their carrying amount may not be recoverable.Circumstances which could trigger a review include, but are not limited to:significant decreases in the market price of the asset; significant adversechanges in the business climate or legal factors; accumulation of costssignificantly in excess of the amount originally expected for the acquisitionor construction of the asset; current period cash flow or operating lossescombined with a history of losses or a forecast of continuing losses associatedwith the use of the asset; and current expectation that the asset will morelikely than not be sold or disposed significantly before the end of itsestimated useful life.

 

Recoverability isassessed based on the carrying amount of the asset and its fair value which isgenerally determined based on the sum of the undiscounted cash flows expectedto result from the use and the eventual disposal of the asset, as well asspecific appraisal in certain instances. An impairment loss is recognized whenthe carrying amount is not recoverable and exceeds fair value.

 

Asset impairment chargesare recorded for long-lived assets subject to depreciation when events andcircumstances indicate that such assets may be impaired and the undiscountednet cash flows estimated to be generated by those assets are less than theircarrying value.  Asset impairment chargesof $2,917,311 related to construction in progress costs incurred were recordedfor the year ended December 31, 2007.

 

*DeferredOffering Costs*

 

The Company defersthe costs incurred to raise equity financing until that financing occurs.  At such time that the issuance of new equityoccurs, these costs will be netted against the proceeds received or if thefinancing does not occur, they will be expensed.

 

*Debt Issuance Costs*

 

Debt issuancecosts will be amortized over the term of the related debt by use of theeffective interest method.

 

*IncomeTaxes*

 

The Company is treated asa partnership for federal and state income tax purposes and generally does notincur income taxes.  Instead, itsearnings and losses are included in the income tax returns of the members.  Therefore, no provision or liability forfederal or state income taxes has been included in these financial statements.

 

In June 2006, theFinancial Accounting Standards Board (“FASB”) issued Interpretation No. 48,“Accounting for Uncertainty in Income Taxes — an Interpretation of SFAS No.109” (“FIN 48”). The Interpretation creates a single model to addressaccounting for uncertainty in tax positions. Specifically, the pronouncementprescribes a recognition threshold and a measurement attribute for thefinancial statement recognition and measurement of a tax position taken orexpected to be taken in a tax return. The Interpretation also provides guidanceon derecognition, classification, interest and penalties, accounting in interimperiods, disclosure and transition of certain tax positions.

 

The Company adopted theprovisions of FIN 48 effective January 1, 2007. The adoption of this accountingprinciple did not have an effect on the Company’s financial statements at, andfor the two years ended December 31, 2007.

 

*Grants*

 

The Companyrecognizes grant proceeds as other income for reimbursement of expensesincurred upon complying with the conditions of the grant.  For reimbursements of incremental expenses(expenses the Company otherwise would not have incurred had it not been for thegrant), the grant proceeds are recognized as a reduction of the relatedexpense.  For reimbursements of capitalexpenditures, the grants are recognized as a reduction of the basis of theasset upon complying with the conditions of the grant.

 

15

----

 

**BLACKHAWKBIOFUELS, LLC**

(A DevelopmentStage Company)

 

Notes to FinancialStatements

 

December 31, 2007and 2006

 

*Stock-Based Compensation*

 

OnJanuary 1, 2006 the Company adopted Statement of Financial AccountingStandard No. 123 (revised 2004) (“SFAS No. 123R”), *Share-Based Payment*, which addresses theaccounting for stock-based payment transactions in which an enterprise receivesemployee services in exchange for (a) equity instruments of the enterpriseor (b) liabilities that are based on the fair value of the enterprise’sequity instruments or that may be settled by the issuance of such equityinstruments. In 2005, the SEC issued SAB No. 107, which providessupplemental implementation guidance for SFAS No. 123R. SFAS No. 123Reliminates the ability to account for stock-based compensation transactionsusing the intrinsic value method under Accounting Principles Board (“APB”)Opinion No. 25, *Accounting for StockIssued to Employees*, and instead generally requires that suchtransactions be accounted for using a fair-value-based method. The Company didnot issue unit options until 2006, so the Company did not have to transition toSFAS 123R.  The Company uses theBlack-Scholes-Merton (“BSM”) option-pricing model to determine the fair-valueof stock-based awards.

 

*RecentlyIssued Accounting Pronouncements*

 

Management hasreviewed recently issued, but not yet effective, accounting pronouncements anddoes not expect the implementation of these pronouncements to have asignificant effect on the Company’s financial statements.

 

In September 2006, the FASB issued SFAS No. 157, “FairValue Measurements” (SFAS No. 157) to increase consistency and comparability infair value measurements by defining fair value, establishing a framework formeasuring fair value in generally accepted accounting principles, and expandingdisclosures about fair value measurements. SFAS No. 157 emphasizes that fair valueis a market-based measurement, not an entity-specific measurement and iseffective for the fiscal years beginning after November 15, 2007. The Companyis in the process of evaluating the effect, if any, that the adoption of SFAS No.157 will have on its results of operations and financial condition.

 

In February 2007, the FASB issued SFAS No. 159, “TheFair Value Option for Financial Assets and Financial Liabilities” (SFAS No. 159)which included an amendment of FASB Statement 115. This Statement providescompanies with an option to report selected financial assets and liabilities atfair value. This Statement is effective for fiscal years beginning after November15, 2007 with early adoption permitted. The Company is in the process ofevaluating the effect, if any, that the adoption of SFAS No. 159 will have onits results of operations and financial condition.

 

16

----

 

**BLACKHAWKBIOFUELS, LLC**

(A DevelopmentStage Company)

 

Notes to FinancialStatements

 

December 31, 2007and 2006

 

*Fair Value of FinancialInstruments*

 

The carrying value of allfinancial instruments, which consists of cash, approximates their fairvalue.  The Company estimates that thefair value of all financial instruments as of December 31, 2007 does not differmaterially from the aggregate carrying values of the financial instrumentsrecorded in the accompanying balance sheet. The estimated fair value amounts have been determined by the Companyusing appropriate valuation methodologies.

 

*EarningsPer Share*

 

Earnings per shareare calculated on a basic and fully diluted basis using the weighted averageunits outstanding during the period. Warrants, representing 650,000 units, are not considered in the fullydiluted calculation since they are anti-dilutive.

 

**2.  MEMBERS’ EQUITY**

 

The Company wascapitalized by 108 members contributing a total of $3,500,000 for 3,500,000units.  These contributions were pursuantto a private placement memorandum in which the Company offered a maximum of3,500,000 units at a cost of $1.00 per unit for a maximum of $3,500,000.  Each investor was required to purchase aminimum of 25,000 units for a minimum investment of $25,000 and had the optionto purchase additional units in increments of 2,500 units thereafter.  This offering was closed and the units wereissued on April 12, 2006.

 

As specified inthe Company’s limited liability company agreement, the Company is authorized toissue additional units as needed.  TheCompany has one class of units, which include certain transfer restrictions asspecified in the limited liability company agreement and pursuant to applicabletax and securities laws.  Each unitrepresents a pro rata ownership interest in the Company’s profits, losses anddistributions.

 

The Company filed Form SB-2Registration Statement with the Securities and Exchange Commission (SEC), whichwas declared effective December 15, 2006. The Offering was for a minimum of 10,000,000 units and a maximum of17,500,000 units for sale at $2.00 per unit. The minimum purchase requirement was 12,500. To become a member, a 10%deposit was required at the time of subscription with these funds beingdeposited in an escrow account.  Inaddition, a signed full recourse promissory note for the remaining 90% was alsodue at subscription.  As of December 31,2007, the Company had raised approximately $25,102,000 under thisoffering.  These funds will not beincluded in the financial statements until the effective date of the closing ofthe escrow agreement.

 

As of March 14,2008, the Company agreed to purchase, for approximately $50,000,000 (see Note8) the under-construction assets of an existing project in Danville, Illinoisfor the construction of a 45 million gallon biodiesel plant, including theassumption of the existing debt financing of $24,650,000, a commitment letterwith the intent to enter into a $20,300,000 convertible secured subordinatednote and payment of $5,250,000 in cash, which allowed the Company to breakescrow based on the requirements of the escrow agreement.  The total amount raised in the offering andreleased from escrow as of that date totaled $25,102,000.  These funds will be used to provide financingto complete the Company’s biodiesel facility in Danville, Illinois.

 

17

----

 

**BLACKHAWKBIOFUELS, LLC**

(A DevelopmentStage Company)

 

Notes to FinancialStatements

 

December 31, 2007and 2006

 

**3. ASSETIMPAIRMENT**

 

During the March 2008,the Company determined the intended site for the construction of the Freeport,Illinois 35 million gallon biodiesel plant was to be abandoned and have furtherdetermined that based on the factors present as of December 31, 2007should reflect asset impairment as of that date.  In connection with the decision to abandonthis project, the Company recorded an asset impairment of $2,917,311 to writeoff the book value of the construction costs incurred by vendors in preparationfor the construction of the plant.  TheCompany determined these costs had no value to the intended project underconstruction located in Danville, Illinois.

 

**4.  INCOME TAXES**

 

The differencesbetween financial statement basis and tax basis of assets are as follows:

 
| ** **                                                                   | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|------------------------------------------------------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                                                                   | ** ** | **2007**              | ** ** | **2006**              | ** ** |
| Financial  statement basis of total assets                                   |       | $                     | 693,396    |                  | $          | 3,538,991 |   |
|                                                                         |       |                  |       |                  |       |
| Start up and  organizational costs expensed for financial reporting purposes |       | 3,638,930             |       | 406,013               |       |
|                                                                         |       |                  |       |                  |       |
| Income tax basis  of total assets                                            |       | $                     | 4,332,326  |                  | $          | 3,945,004 |   |

 

There were nodifferences between the financial statement basis and tax basis of the Company’sliabilities.

 

On January 1, theCompany adopted the provisions of FIN 48, which requires that the Companyrecognize in its consolidated financial statements only those tax positionsthat are “more-likely-than-not” of being sustained as of the adoption date,based on the technical merits of the position. As a result of theimplementation of FIN 48, the Company performed a comprehensive review of itsmaterial tax positions in accordance with recognition and measurement standardsestablished by FIN 48.

 

The Company issubject to the following material taxing jurisdictions: U.S. and Illinois.  The tax years that remain open to examinationby the Internal Revenue Service are 2005 through 2007. The tax years that remainopen to examination by the Illinois Department of Revenue are 2005 through2007.   Our policy is to recognizeinterest and penalties related to uncertain tax benefits in income tax expense.We have no accrued interest or penalties related to uncertain tax positions asof January 1, 2007 or December 31, 2007.

 

**5.  FINANCING**

 

InAugust 2007, the Company obtained an updated term sheet proposal from afinancial institution to obtain long term financing for the construction of theformer 30 million gallon biodiesel facility. Under the terms of the proposal, the financial institution would providea maximum construction loan of $26,000,000, subject to minimum total memberequity contributions of $32,300,000. Subsequent to December 31, 2007 thebank notified the Company that they intended to withdraw their proposal.

 

In August 2007,the Company obtained two conditional commitments from the United StatesDepartment of Agriculture (USDA) which were to provide loan note guarantees inthe amounts of $20,000,000 and $7,500,000, subject to the conditions andrequirements specified in the agreements. Due to the Company’s agreement topurchase the assets of an under-construction plant located in Danville,Illinois these UDSA note guarantees are no longer available for the Company.

 

18

----

 

**BLACKHAWKBIOFUELS, LLC**

(A DevelopmentStage Company)

 

Notes to FinancialStatements

 

December 31, 2007and 2006

 

On March 14,2008 the Company entered into a commitment letter with a third party lender forthe purpose of purchasing the under-construction assets of the Danville,Illinois project as well as funding construction and operational requirementsfor that project.  The commitment letterprovides for a $24,650,000 term loan and a $5,000,000 revolving line ofcredit.  The term loan provides forinterest only payments through March 31, 2009 with level payments ofprincipal and interest due monthly thereafter. Interest will accrue on the outstanding balance at the 30-day LIBOR rateplus 275 basis points until June 30, 2009 at which time the rate willfloat based on the LIBOR rate plus basis points as determined by the Company’sEBITA.  The note will mature on November 3,2011.  The revolving line of credit willaccrue interest at the Company’s choice of the 30-day LIBOR rate plus 300 basispoints or the Lender’s prime rate plus 25 basis points and is due in monthlypayments.

 

The revolving notewill mature 364 days from the closing and is subject to borrowing basecalculations.  The notes are secured by amortgage on the Danville property and are subject to financial and otherreporting covenants.

 

Also on March 14,2008, as a result of the purchase agreement for the under-construction assetsof  the Danville, Illinois project, the Company entered into a commitment letterwith REG Ventures, LLC a wholly owned subsidiary of Renewable Energy Group(REG) principally for the purpose of funding acquisition of the projectassets.  The $21,700,000 convertiblesecured subordinated note (see Note 8) requires the Company pay interest at theLIBOR rate plus 500 basis points quarterly beginning July 1, 2008.  All amounts outstanding under the note,including both principal and interest, shall be convertible, at the option ofthe lender, into units at a price of $2.00 per unit at any time.  The note will be secured with a subordinatedmortgage security.

 

**6.  EQUITY-BASED COMPENSATION**

 

The Company has anequity-based compensation plan (the Plan) under which the Company issued unitoptions (warrants) to members of the board of managers, for the purpose ofproviding services to facilitate the construction and planned future operationsof the plant.  The Plan authorizes grantsof options to purchase up to 650,000 units of authorized but unissued memberunits.  Under the Plan, the right topurchase the units will be exercisable at any time from and after the date onwhich the plant commences (vesting date) and will continue for a period of oneyear following such date, after which all such rights shall terminate.

 

The following tablepresents the weighted average assumptions used to estimate the fair values ofthe units underlying the warrants granted to members of the board of managersin the periods presented, using the BSM option-pricing formula: The risk-freeinterest rate for periods within the contractual life of the option is based onthe U.S. Treasury yield curve in effect at the time of grant.

 

19

----

 

**BLACKHAWKBIOFUELS, LLC**

(A DevelopmentStage Company)

 

Notes to FinancialStatements

 

December 31, 2007and 2006

 

The expected life andexpected volatility is based on the average reported lives and volatilities ofa representative sample of one comparable company in our industry sector.

 
| ** **                                                                  | ** ** | **Year  ended  December 31,  2007** | ** ** | **Year  ended  December 31,  2006** | ** ** |
|-----------------------------------------------------------------------------|------------|------------------------------------------|------------|------------------------------------------|------------|
|                                                                        |       |                                     |       |                                     |       |
| Risk-free  interest rate                                                    |       |                                     | *          | 4.90                                     | %          |
| Expected  volatility                                                        |       |                                     | *          | 25.43                                    | %          |
| Expected life  (in years)                                                   |       |                                     | *          | 3.00                                     |       |
| Dividend yield                                                              |       |                                     | *          | —                                   |       |
| Weighted-average  estimated fair value of options granted during the period |       |                                     | *          | $                                        | 1.14       |   |
|                                                                             |            |                                          |            |                                          |            |  |

 

----

* No unit options(warrants) issued in 2007.

 

20

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**BLACKHAWKBIOFUELS, LLC**

(A DevelopmentStage Company)

 

Notes to FinancialStatements

 

December 31, 2007and 2006

 

The followingtable summarizes the activity for outstanding members of the board of managers’warrants:

 
| ** **                                                | ** ** | **Warrants  Outstanding**    | ** ** |
|-----------------------------------------------------------|------------|------------------------------|------------|
| ** **                                                | ** ** | **Number of  warrants** | ** ** | **Weighted-  Average   Exercise  Price** | ** ** | **Weighted-  Average  Remaining  Contractual   Term  (in years)** | ** ** | **Aggregate  Intrinsic Value  (1)** | ** ** |
|                                                      |       |                         |       |   |   |   |   |   |   |
| Balance at  December 31, 2005                        |       | —                       |       | $ | — |   |   |   |   |   |
| Granted                                                   |       | 650,000                      |       | $ | 1.00 |   |   |   |   |   |
| Exercised                                                 |       | —                       |       | $ | — |   |   |   |   |   |
| Canceled/forfeited/expired                                |       | —                       |       | $ | — |   |   |   |   |   |
| Balance at  December 31, 2006                        |       | 650,000                      |       | $ | 1.00 |   |   |   |   |   |
| Granted                                                   |       | —                       |       | $ | — |   |   |   |   |   |
| Exercised                                                 |       | —                       |       | $ | — |   |   |   |   |   |
| Canceled/forfeited/expired                                |       | —                       |       | $ | — |   |   |   |   |   |
| Balance at  December 31, 2007                        |       | 650,000                      |       | $ | 1.00 |   | 1.5 |   | $ | 650,000 |   |
| Vested and  exercisable as of December 31, 2007      |       | —                       |       | $ | — |   |   |   | $ | — |   |
| Vested and  expected to vest as of December 31, 2007 |       | 650,000                      |       | $ | 1.00 |   | 1.5 |   | $ | 650,000 |   |

 

----

| (1) |   | The aggregate intrinsic value is calculated as  approximately the difference between the weighted average exercise price of  the underlying awards and the Company’s estimated current fair market value  of $2.00 per unit at December 31, 2007. |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

The Company recognized unit-based compensation expenseof approximately $333,900 during the year ending December 31, 2007 andapproximately $519,400 for the period from inception (April 28, 2005) to December 31,2007 and is included in general and administrative expense on the statement ofoperations.  As of December 31,2007, approximately $222,600 of total unrecognized compensation cost related tounit options is expected to be recognized over a period of 1 year.  To the extent the forfeiture rate isdifferent than we have anticipated; unit-based compensation related to theseawards will be different from our expectations.

 

21

----

 

**BLACKHAWKBIOFUELS, LLC**

(A DevelopmentStage Company)

 

Notes to FinancialStatements

 

December 31, 2007and 2006

 

**7.  GRANTS**

 

In December 2007,the Company was awarded a grant contract through the Renewable FuelsDevelopment Program.  The Company wouldhave received $3,400,000 of funding to be used solely for the construction ofthe biodiesel facility.  The Companywould have been required to secure all financing for the project and provide acopy of the authorization for the contractor to proceed with the constructionof the biodiesel facility before any grant funds would have been released.

 

On March 14,2008 the Company abandoned the Freeport, Illinois site and agreed to acquirethe under-construction assets of an existing project located in Danville,Illinois.  This project had been awarded$4,000,000 from the Renewable Fuels Development program and has alreadyreceived $3,800,000 as of December 31, 2007; therefore the Company is nolonger eligible to receive the aforementioned $3,400,000 grant award.  The Company has submitted a request for atransfer of $1,500,000 of the total $3,400,000 grant award to be utilized onthe Danville project; however the transfer of the grant money is unlikely.

 

**8.  COMMITMENTS AND CONTINGENCIES**

 

*PlantConstruction*

 

The total cost ofthe Freeport project, including the construction of the biodiesel plant andstart-up expenses, was expected to approximate $62,000,000.  In April 2006, the Company entered intoa preconstruction services agreement with REG to provide preliminary design,engineering, permitting and purchasing services for the development andconstruction of the plant for approximately $2,500,000, which was paid during2006. Had the Company proceeded with the construction of the biodieselfacility, the $2,500,000 would have been applied to the final design-buildagreement contract price. Due to the Company’s agreement to purchase the assetsof an under-construction plant located in Danville, Illinois this project costinformation is no longer applicable for the Company’s project.

 

As a result of theCompany abandoning the project at the Freeport location, the aforementionedconstruction costs and expenditures will not be utilized to further theconstruction of the Danville project (see Note 3).  The Company has a verbal agreement with REGfor the release of liability in relation to the costs incurred through March 14,2008 by the general contractor on behalf of the Company in excess of the$2,500,000 already paid for the construction of the intended plant site inFreeport, Illinois.  REG has agreed toretain the materials and attempt to recover the costs expended with no right ofrefund to the Company.

 

22

----

 

**BLACKHAWKBIOFUELS, LLC**

(A DevelopmentStage Company)

 

Notes to FinancialStatements

 

December 31, 2007and 2006

 

On March 14, 2008the Company entered into an asset purchase agreement totaling $50,200,000 withunrelated third parties for the purpose of acquiring the under-constructionassets of an existing biodiesel project located in Danville, Illinois. Theconsideration consists of 1,980,488 shares of REG common stock, valued at$20,300,000, and $5,250,000 in cash.  Inaddition, the Company has agreed to assume or replace $24,650,000 of theseller’s long-term debt in accordance with a commitment letter with thefinancial institution (see Note 5).  Ofthe consideration to be paid at closing, 97,561 shares and $250,000 will beheld in escrow for a period of one year to support representations andwarranties made by the seller.  REG hasagreed to supply the common stock for the transaction in consideration of aconvertible promissory note from the Company. A portion of the promissory note also covers 127,273 shares of REGseries B preferred stock, valued at $1,400,000, that REG has agreed issue toone of the owners of the seller on our behalf in connection with an oilfeedstock supply agreement to be entered into with that owner.  The total principal amount of the promissorynote is $21,700,000.

 

*LandContracts*

 

In June 2006,the Company entered into a contract with the Freeport Area Economic DevelopmentFoundation to have the option to purchase 23.14 acres of land in StephensonCounty, Illinois for $15,000 per surveyed acre until December 31,2006,  later amended to March 31,2008.  The Company paid $825 on the firstof each month commencing August 1, 2006, and each month thereafter inconsideration for the option to purchase the land. As of December 31,2007, the Company has incurred approximately $14,000 under this optionagreement, which has been recognized in general and administrative expense.   As a result of the acquisition in theDanville project, the Company does not intend to exercise the land option andwill let the option expire.

 

*ConsultingContracts*

 

In May 2006,the Company entered into an agreement with an unrelated party for consultationand contract negotiations.  The contractrequired payments totaling $35,000.  Theconsultant will also receive 1% of any grant funds received by the Company,excluding any possible funds received from the USDA VAPG and Energy grantprograms.  In February 2007, theCompany extended this agreement for the purpose of consultation, contractnegotiations and monitoring of construction phases of the plant.  The contract required a payment of $5,000 atthe time the contract was executed, a payment of $5,000 upon breaking escrowand also a payment of $15,000 due on August 15, 2007.  When construction commences, additionalcompensation will be made in the form of units in the amount of $25,000.  Either party may terminate this contract uponfourteen days written advance notice.

 

In August 2006,the Company entered into a management and operational services agreement withREG to provide for the overall management of the Company, including providingon-site general and operations managers, acquiring feed stocks and the basicchemicals necessary for operation, performing administrative, sales andmarketing functions, and other as needed services  Pursuant to the Company entering into anagreement to purchase the assets of an under-construction plant located in Danville,Illinois this agreement has been replaced with that as described below.

 

23

----

 

**BLACKHAWKBIOFUELS, LLC**

(A DevelopmentStage Company)

 

Notes to FinancialStatements

 

December 31, 2007and 2006

 

During March 2008,in connection with the agreement to purchase the under-construction assets ofthe Danville, Illinois project, and upon termination of the aforementionedmanagement and operational services agreement, the Company entered into a new managementand operational services agreement with REG. The agreement provides for the overall management of the Company,including providing on-site general and operations managers, acquiring feedstocks and the basic chemicals necessary for operation, performing administrative,sales and marketing functions, and other as needed services.  The contract requires a monthly fee equal to$0.0425 per gallon of biodiesel produced and a flat fee of $75,000 per month.  The Company shall also pay an annual netincome bonus of 6% of the net income of the Company.  The term of the agreement is five years afterthe end of the first month in which biodiesel is produced for sale.  The agreement shall continue after theinitial term unless and until one party gives written notice of termination tothe other of a proposed termination date at least 24 months in advance of aproposed termination date.    

 

In August 2006,the Company entered into an escrow agreement with a bank.  Under the terms of the escrow agreement, theescrow agent will receive compensation for its services equal to 15 basispoints (0.15%) of the yield on the escrowed funds.  The escrow agent shall also be reimbursed forreasonable out-of-pocket expenses.  As ofMarch 14, 2008, the Company, met the requirements escrow agreement and hassince then been provided the money held with the bank as discussed further inNote 2.

 

Pursuant to theagreement to acquire the under-construction assets of the Danville, Illinoisproject, the Memorandum of Understanding as described below is in the processof being terminated by the Company.  Asof March 14, 2008 the Company had paid the County the $374,300 as definedin the agreement and further disclosed below.

 

In September 2006,the Company entered into a Memorandum of Understanding with the Freeport AreaEconomic Development Foundation (FAEDF), an Illinois not-for-profitcorporation, which sets forth the conditions and actions which shall be takenby the parties for the construction of respective infrastructure items andoperation of the biodiesel facility.  In July 2007,the Company entered into an Economic Development Agreement with the County ofStephenson, Illinois (the County) which more fully sets forth the terms,conditions and obligations of the agreement. The Company was required to obtain all necessary permits, engineering,architectural, legal and other professional services in order to completeconstruction of the biodiesel facility. Thereafter, the Company was required to commence operations and complywith the Illinois Prevailing Wage Act. The Company was responsible for all costs incurred resulting from theseobligations.  The County was obligated toprovide fill material required to elevate land site upon which the biodieselfacility will be constructed.  The Countywas required to construct an aggregate base course for a public highway whichshall provide road access to the biodiesel facility and a portion of theparallel lead track necessary to provide rail access to the facility.

 

24

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**BLACKHAWKBIOFUELS, LLC**

(A DevelopmentStage Company)

 

Notes to FinancialStatements

 

December 31, 2007and 2006

 

If either party wasprohibited from performing the covenants and agreements or enjoying the rightsand privileges contained in the agreement, either party could terminate thecontract by providing 60 days advance written notice to the other.  As of December 31, 2007, the Company hasincurred approximately $374,300 under this agreement which was expensed, and ofwhich approximately $358,000 is included in construction payable.

 

As discussedabove, as of March 14, 2008, the Company has entered into an agreement toacquire the under-construction assets of the Danville, Illinois biodieselproject.  The total cost of the plant,including estimated working capital needs, is estimated at $74,000,000.  The Company estimates approximately$19,250,000 will be expended to add pre-treatment facilities to the plant, andtest the plant once construction is complete. The Company has a commitment letter with a third party lender (see Note5) for the financing of the remaining costs to complete the plant.

 

25

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**Item 8.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIALDISCLOSURE.**

 

None.

 

### **Item 8A. CONTROLS AND PROCEDURES.**

** **

Our management is responsible for establishing andmaintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) underthe Securities Exchange Act of 1934, as amended).  Under Section 404of the Sarbanes-Oxley Act of 2002, our management is required to evaluate the effectivenessof our internal control over financial reporting as of the end of each fiscal year and report, based on that evaluation,whether our internal control over financial reporting was effective.

 

Our internal control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for externalpurposes of accounting principles generally accepted in the United States.  Internalcontrol over financial reporting, no matter how well designed, has inherentlimitations. Therefore, internal control over financial reporting determined tobe effective can provide only reasonable assurance with respect to financialstatement preparation and may not prevent or detect all misstatements.Moreover, projections of any evaluation of effectiveness to future periods aresubject to the risk that controls may become inadequate because of changes inconditions, or that the degree of compliance with the policies or proceduresmay deteriorate.

 

Our management, including Ronald Mapes, our Chair(principal executive officer) and Ronald Fluegel, our Treasurer (principalfinancial officer), have evaluated the effectiveness of our internal control over financial reporting asof December 31, 2007.  In makingthis assessment, our management used the criteria set forth by the Committee ofSponsoring Organizations of the Treadway Commission (COSO) in internal Control— Integrated Framework. These criteria coverthe areas of control environment, risk assessment, control activities,information and communication, and monitoring. Our management’s evaluation included documenting, evaluating and testingthe design and operating effectiveness of our internal control over financialreporting.  Based upon thisevaluation, our management has concluded that, as of December 31, 2007,our internal control over financialreporting was effective.

 

This annual report does notinclude an attestation report of our registered public accounting firmregarding internal control over financial reporting.  Management’s report was not subject toattestation by our registered public accounting firm pursuant to temporary rules ofthe Securities and Exchange Commission that permit us to provide onlymanagement’s report in this annual report.

 

Our management, including ourprincipal executive officer and principal financial officer, has reviewed andevaluated any changes in our internal control over financial reporting thatoccurred during the quarter ended December 31, 2007 and there has been nochange that has materially affected, or is reasonably likely to materiallyaffect, our internal control over financial reporting.

 

**Item 8B.OTHER INFORMATION.**

 

None.

 

26

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# **PART III**

#  

## **Item 9. DIRECTORS; EXECUTIVE OFFICERS, CONTROL PERSONS AND CORPORATEGOVERNANCE; COMPLIANCE WITH SECTION **16(a) OF THE EXCHANGE ACT

## ** **

**Identificationof Directors, Executive Officers and Significant Employees**

** **

Our board of managers has the principal power andresponsibility to govern our business and affairs.  Our chief executive officer and otherofficers, who are elected or appointed by the board of managers, manage ouroperations.  Subject to limited powers toapprove amendments to our Amended and Restated Limited Liability CompanyAgreement proposed by our board of managers or to cause us to dissolve, ourmembers have virtually no role in our management.

 

We have a board of managers consisting of not lessthan nine managers to be elected by the members.  The number of managers is subject todetermination from time to time by the board of managers.  There is no maximum number of managersspecified by our Amended and Restated Limited Liability Company Agreement.  Managers are elected by the respectiveclasses of Units which are outstanding at any time.  There is no cumulative voting formanagers.  Currently, our board ofmanagers has 11 managers who represent the Class A Units, the only classof Units outstanding.

 

Our present managers were elected as managers in March 2006and were reelected in January 2008 for three-year staggered terms.  We may agree to give members or lenders whosupply significant amounts of equity or debt capital to us the right todesignate managers to serve on our board of managers.

 

Our Services Agreement with REG Services and REGMarketing provides that upon the closing of the Purchase Agreement to acquireassets of BCA, REG Services will be entitled to appoint one member to our boardof managers.

 

Our managers have other business commitments that willcontinue to require most of their time and attention.  Our agreements with REG are intended toassist us in constructing our plant and with respect to all aspects of ouroperations.  Consequently, after ourequity offering is completed and the plant is constructed and operating, weexpect that the responsibilities of our managers for our operations will bereduced and their role will be limited to overall direction and policies.  We expect that those responsibilities willrequire one or two days per month and that our managers will have adequate timefor that purpose.

 

**Boardof Managers**

** **

The names, addresses, ages, positions with our companyand terms of our managers are as follows:

 
| **Name and Address**                                        | ** ** | **Age** | ** ** | **Position**         | ** ** | **Term  Expires** |
|-------------------------------------------------------------|------------|---------|------------|----------------------|------------|-------------------|
| Ronald Mapes  9184 E. Binkley Rd.  Stockton, IL 61085       |       | 67      |       | Manager, Chair       |       | 2010              |
|                                                        |       |    |       |                 |       |              |
| Jon Rosenstiel  73 Route 73 South  Pearl City, IL 61062     |       | 44      |       | Manager, Vice  Chair |       | 2011              |
|                                                        |       |    |       |                 |       |              |
| Ronald Fluegel  2398 N. Crossroads Road  Lena, IL 61048     |       | 48      |       | Manager,  Treasurer  |       | 2011              |
|                                                        |       |    |       |                 |       |              |
| Quentin Davis  13779 W. White Oak Road  Forreston, IL 61030 |       | 54      |       | Manager,  Secretary  |       | 2010              |
|                                                        |       |    |       |                 |       |              |

 

27

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| Gary Bocker  10662 Illinois Route 64 W.  Polo, IL 61064    |   | 63     |   | Manager                                                            |   | 2010   |
|------------------------------------------------------------|--------|--------|--------|--------------------------------------------------------------------|--------|--------|
|                                                       |   |   |   |                                                               |   |   |
| Criss Davis  17092 Blackhawk Road   Shullsburg, WI 53586   |   | 48     |   | Manager and Vice  President, Government and Organizational Affairs |   | 2009   |
|                                                       |   |   |   |                                                               |   |   |
| Karl Lawfer  4874 S. Willow Road  Kent, IL 61044           |   | 42     |   | Manager and Vice  President Industry Relations                     |   | 2010   |
|                                                       |   |   |   |                                                               |   |   |
| David Shockey  6408 E. Shockey Road  Ridott, IL 61067      |   | 50     |   | Manager                                                            |   | 2009   |
|                                                       |   |   |   |                                                               |   |   |
| Brad Smith  2946 Otter Creek Road  Milledgeville, IL 61051 |   | 35     |   | Manager and Vice  President, Operations                            |   | 2009   |
|                                                       |   |   |   |                                                               |   |   |
| Dennis Wilke  11745 Freeport Road  Durand, IL 61024        |   | 55     |   | Manager and Vice  President, Transportation and Logistics          |   | 2011   |
|                                                       |   |   |   |                                                               |   |   |
| Marvin Wurster   139 W. Maple Avenue  Stockton, IL 61085   |   | 63     |   | Manager and Vice  President, Market Development                    |   | 2011   |

 

***Ronald Mapes*** — Ron farms in a family grain and beef cattleoperation near Stockton, Illinois.  Ronis also a partner in Northwest Grain Inc. and attended the University ofWisconsin.  Ron serves on the Jo DaviessCounty Board (chair of the Economic Development Committee), is a trustee forStockton Township, and serves on the Mt. Carroll Mutual Insurance Companyboard.  A member of the Jo Daviess CountyFarm Bureau and Illinois Beef Association, Ron previously served on theIllinois Soybean Promotion Board, United Soybean Board, and U.S. MeatFederation Board and Executive Committee. He is also past president of the Jo Daviess County Fair.

 

***Jon Rosenstiel*** — Jon operates a diversified grain and beef cattleoperation near Pearl City, Illinois.  Agraduate of Illinois State University with a BS in Ag Business, Jon also worksfull-time for Stephenson Service Company as Senior Sales Lead and Ridottlocation manager, overseeing key agronomy accounts and managing the company’sseed division.  A member of theStephenson County Farm Bureau Board of Directors (chairing the Education TaskForce and serving on the Government & Local Affairs Task Force), Jonis a board member of the Conservation & Ag Partners (CAP)Foundation.  He previously served as aboard member and chairman of the Stephenson County SWCD and is an active memberand treasurer of the Pearl City Lions Club.

 

***Ronald Fluegel*** — Ron operates a grain and livestock farm near Lena,Illinois.  A graduate of HighlandCommunity College, Ron has participated in numerous leadership developmentprograms including the Northwestern University Kellogg Masters MarketingProgram, the Illinois Ag Leadership Program, and the Young Dairy LeadersInstitute.  Ron currently serves on theboard of the Adkins Energy Cooperative and remains active in the local andstate Holstein Associations, where he once served as county president and statecommittee member.  He is a past chairmanof the Stephenson County Extension Council, a former board member and officerof the Stephenson County Farm Bureau, and a past member and president of theLe-Win Jaycees.  Ron is active in the

 

28

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Lena United MethodistChurch, Lena Lions Club, and is a licensed IHSA basketball official.  He also maintains a Mycogen seed dealershipand represents Bio Vet Animal Products.

 

***Quentin Davis*** — A graduate of the University of Colorado with a BSin Civil/Environmental Engineering, Quentin is retired after 29 years as aregistered Professional Engineer in Illinois, first as a project engineerfollowed by ownership and management of a local firm.  He currently is serving in a part-timecapacity as Projects Administrator for the non-profit Freeport DowntownDevelopment Foundation after previously serving on its board.  He is also a member of the board of theFreeport Area Economic Development Foundation.  Quentin is involved at Park Hills Evangelical Free Church, having servedon the trustee board and building committee. A United Way volunteer and a graduate of the Highland Community CollegeLeadership Institute, Quentin served as co-chair for the Forestville ValleySchool District Citizens Advisory Building Committee.

 

***Gary Bocker*** — Gary started Bocker Grain Inc. in 1971 andcurrently operates the grain business, a 7-unit trucking operation, a customfarming enterprise, an excavating firm, and a 4,000 acre family farmingoperation near Polo, Illinois.  Garystarted farming at age 18 and built all of the grain storage systems in hisbusiness.  He served for many years onthe board of trustees of Forreston Grove Church and on the business council ofCrossroads Community Church in Freeport, where he is assisting in efforts to developa satellite church in Polo.  Gary hasalso been very active with the Rockford Rescue Mission and the Lions Club wherehe served as District Governor in 1999 & 2000 and currently is aLions’ Foundation trustee.

 

***Criss Davis*** — Criss resides near Shullsburg, Wisconsin where hemaintains farming operations in Wisconsin and Illinois, including generalpartnerships in Swigart & Davis Farms and Monticello Pork LLC.  Criss attended the University ofWisconsin-Platteville and Westfield State College in Massachusetts.  A past director of the Wisconsin Corn GrowersAssociation and the National Corn Growers Association, Criss also served aspast chairman of the United Soybean Board where he was a founding director ofthe Qualisoy Board.  He is also a memberof the Wisconsin Farm Bureau Federation.

 

***Karl Lawfer*** — Karl operates a grain and livestock farmingenterprise near Kent, Illinois.  Agraduate of the University of Illinois with a BS in Animal Science, Karl hasbeen involved in numerous civic activities and organizations including hislocal school board and township boards. He currently serves as District 1 Director on the Illinois SoybeanAssociation Board of Directors, and he was previously honored as an IllinoisOutstanding Young Farmer, Jo Daviess County Outstanding Conservation Farmer,and Midwest Dairymen’s Milk Quality Award recipient.  He is also a graduate of the prestigiousIllinois Ag Leadership Foundation leadership development program.

 

***David Shockey*** — David is a partner and attorney with the firm ofShockey & Cox LLC based in Freeport, Illinois, where his practicedeals principally with real estate, estate planning, and businessplanning.  He has practiced in Freeportsince 1983 and was associated with Schmelzle & Kroeger Law Officesuntil 2002 when Shockey & Cox was formed.  Dave earned his B.S. in Agriculture and J.D.of Law from the University of Illinois in Champaign/Urbana.  He currently serves on the Highland CommunityCollege Board of Trustees, is a member of the board of the Freeport Area EconomicDevelopment Foundation and is involved in numerous civic organizationsincluding Rotary, Freeport Art Museum, Jane Addamsland Park Foundation, DakotaOpportunities in Education Foundation and First Baptist Church.

 

***Brad Smith*** — Brad resides near Milledgeville, Illinois.  He is a partner in Smith Farming Corporationwith his parents, where they raise corn and soybeans, finish feeder cattle andoperate a Dekalb & Asgrow seed dealership.  A 1994 graduate of the University of Illinoiswith a BS in Agriculture, Brad is also a 2004 graduate of the Illinois AgLeadership Program.  He currently servesas president of Blackhawk Farm Business Farm Management (FBFM) Association andalso serves on the Carroll County Farm Bureau board of directors.  Brad and his wife Sara were recognized aswinners of the Illinois Farm Bureau Young Leader Achievement Award in 2004.

 

***Dennis Wilke*** — Dennis lives near Durand, Illinois, where heoperates a cash grain farming operation and trucking business.  A graduate of Durand HS, Dennis is supervisorfor Harrison Township after serving as trustee for two years, and he alsoserves as a director of Durand State Bank. He was a board member for Durand School District #322 from 1985-93 and1997-2001, serving as president from 1991-93. Dennis also served on the Winnebago County Farm Bureau board ofdirectors from 1980-86 where he was president from 1983-86.  Dennis is

 

29

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a 1981 graduate of theIllinois Farm Bureau Agricultural Leaders of Tomorrow (ALOT) leadershipdevelopment program.

 

***Marvin Wurster*** — Owner and operator of M&W Feed Service Ltd. andM&W Grain Ltd., Marv also operates a seed dealership at his enterprise inElizabeth, Illinois.  He resides inStockton, Illinois.  Marv received his BSfrom the University of Wisconsin-Platteville and his MS and PhD from SouthDakota State University in Brookings.  Heserved as a nutritionist with Ralston Purina in St. Louis from 1969 until 1975,when he started M&W Feed Service.  Helater expanded his services by opening M&W Grain in 1994.  A member of the Council for AgricultureScience & Technology, Marv is a former president of the StocktonSchool Board.

 

**Committeesof the Board of Managers**

** **

We presently have an executive committee and an auditcommittee of our board of managers.

 

Our executive committee exercises delegatedresponsibilities of the board of managers between regular meetings of the boardof managers and as otherwise directed by the board.  Ronald Mapes (Chair), Jon Rosenstiel, RonaldFluegel and Quentin Davis are serving as the members of our executivecommittee.

 

The audit committee selects our independent auditors,reviews the scope of audit and other services by the independent auditors,reviews our accounting principles and auditing practices and procedures to beused for our financial statements and reviews the results of those audits.  Dennis Wilke (Chair), Brad Smith and MarvinWurster serve as the members of the audit committee.

 

Our board of managers has determined that we do nothave an audit committee financial expert serving on our audit committee.   We were organized and the development of ourcompany has been led by our current managers who did not include an individualwho would qualify as audit committee financial expert.  Our board of managers did not deem itappropriate to make any change in our board of managers during our developmentand financing phase.  Our board ofmanagers has determined to defer consideration of whether it is appropriate toadd an audit committee financial expert to our board of managers and auditcommittee until after our plant is constructed, we have commenced commercialoperations and our development phase is completed.  Our next election of managers will take placeat our annual meeting in 2009.

 

We may establish additional committees in thefuture.  Additional committees mayinclude a compensation committee, a nominating committee and other committeesin the discretion of the board of managers.

 

**ChiefExecutive and Chief Financial Officers**

 

We do not currently have a chief executive officer butexpect to have an experienced person to serve in that capacity prior to thecompletion of construction and commencement of operations of our plant.  Our chief executive officer would beresponsible for the administration of our company and oversight of plantmanagement.  We also may hire a chieffinancial officer to oversee our financial affairs, monitor the operation ofour plant from a financial standpoint and be responsible for financial reportsto our members and governmental authorities. We anticipate that the chief executive officer and chief financialofficer will be employees of our company and will report directly to our boardof managers.

 

**PlantManagement**

 

The members of our board of managers and executiveofficers do not have the background and expertise to manage the day to dayactivities of our plant as it commences operations.  We will require general management experiencein all areas of biodiesel production. The biodiesel industry is currently growing at a rapid pace and thedemand for management personnel with experience in operations and financialmanagement are in short supply. Therefore, we have signed an agreement with REG to provide generalmanagement for our plant and operations. REG has the resources necessary to locate qualified personnel, assurethat qualified personnel are always in place and to provide for temporaryreplacements if needed.

 

30

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We expect that the general manager supplied by REGwill begin employment 4 to 6 months before we complete construction of theplant.  We will also require experiencedoperations personnel for our plant.  Thiswill include a plant manager who will be primarily responsible for the day-to-dayoperations of our plant.  The plantmanager will begin employment before we complete construction of theplant.  The balance of our employees willalso be hired and trained before we commence operations of the plant.  REG will provide training for operationspersonnel and on-site, start-up assistance as we commence operations.

 

**Code of Ethics**

 

Our board of managers has adopted a code of ethicsthat applies to persons including our principal executive officer, ourprincipal financial officer, our principal accounting officer or controller,and persons performing similar functions. A copy of our code of ethics has been filed with the Securities andExchange Commission and there has been no change since the date of filing.

 

## **Item 10. EXECUTIVE COMPENSATION**

## ** **

**ExecutiveCompensation**

** **

Our executive officers who are also members of ourboard of managers serve on a part-time basis as required by theirresponsibilities to us.  We presentlyhave no other executive officers.  Nocash compensation has been paid by us to the persons serving as our executiveofficers, in their capacity as executive officers or as managers.  Warrants for the purchase of Class AUnits have been  issued to our executiveofficers in their capacity as managers during the year ended December 31,2006.  See “Compensation of Managers”below for complete information regarding the issuance and terms of suchwarrants.

 

Thefollowing table set forth all compensation paid or payable by us during thelast three years to our Chair who presently serves as our chief executive officer.

 

**Summary Compensation Table**

 
| ** **                              | ** ** | ** ** | ** **              | ** ** | ** ** | ** ** | ** **  | **Long Term Compensation**    | ** ** |
|-----------------------------------------|------------|------------|-------------------------|------------|------------|------------|-------------|-------------------------------|------------|
| ** **                              | ** ** | ** ** | **Annual Compensation** | ** ** | **Awards** | ** ** | **Payouts** | ** **                    |
| **Name & Principal  Position** | ** ** | **Year**   | ** **              | **Salary** | ** ** | **Bonus**  | ** **  | **Units Underlying Warrants** | ** ** | **LTIP Payouts** | ** ** |
| Ronald Mapes, Chair                     |       | 2006       |                    | $          | 0          |       | $           | 0                             |       | $ | 50,000 |   | $ | 0 |   |
| (chief executive  officer)              |       | 2005       |                    | $          | 0          |       | $           | 0                             |       | $ | 0 |   | $ | 0 |   |
|                                    |       | 2004       |                    | $          | 0          |       | $           | 0                             |       | $ | 0 |   | $ | 0 |   |

 

**Compensationof Managers**

** **

Other than for per diem and expense reimbursement, wedo not pay our managers any cash compensation for acting in their capacity asmanagers, although we may do so in the future. Managers may be reimbursed for reasonable expenses incurred in carryingout their duties as managers, including mileage reimbursement for travel tomeetings.

 

On June 30, 2006, each member of our board ofmanagers was granted warrants for the purchase of 50,000 of our Class AUnits, amounting to an aggregate of 650,000 Units.  The warrants are exercisable at an exerciseprice of $1.00 per Unit.  The warrantswill become exercisable upon the commencement of operations of our plant andwill remain exercisable for a period of one year.  We may in the future issue Class A Unitsor Units of another class, or options or additional warrants to purchase suchUnits, to managers as compensation.  Wehave not adopted any plan or policy for such compensation.  We may compensate our managers for servicesprovided in a capacity other than as a manager, provided that the disinterestedmanagers on our Board shall establish this compensation.

 

**OutstandingEquity Awards at December 31, 2007**

 
| ** **   | ** ** | **Warrants**                                        | ** ** |
|--------------|------------|-----------------------------------------------------|------------|
| ** **   | ** ** | **Number of Units Underlying Unexercised Warrants** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Name**     | ** ** | **Exercisable**                                     | ** ** | **Unexercisable** | ** ** | **Percent of Total** | ** ** | **Exercise Price  Per Unit** | ** ** | **Warrant  Expiration Date** | ** ** |
| Ronald Mapes |       | 0                                                   |       | 50,000 |   | 7.7 | % | $ | 1.00 |   | (1) |   |
|              |            |                                                     |            |  |  |  |  |  |  |  |  |  |

----

(1)           The warrants will become exercisableupon the commencement of operations of our plant and will remain exercisablefor a period of one year.

 

31

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## ** **

## **Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ANDRELATED MEMBER MATTERS**

## ** **

The following table setsforth certain information regarding the beneficial ownership of our Units as ofMarch 28, 2008 by each person or entity known by us to be the beneficialowner of more than 5% of our issued and outstanding Class A Units, each ofour managers and executive officers, and all of our managers and executiveofficers as a group.

 
| **Name and Address (if required)  of Beneficial Owner** | ** ** | **Amount and Nature of  Beneficial Ownership (1) (2) (3)** | ** ** | **Percentage  of  Outstanding  Units  (2)** | ** ** |
|---------------------------------------------------------|------------|----------------------------------------------------------------------|------------|---------------------------------------------|------------|
| Ronald Mapes(4)                                         |       | 40,000                                                               |       | .25                                         | %          |
| Jon Rosenstiel                                          |       | 25,000                                                               |       | .16                                         | %          |
| Ronald Fluegel(4)                                       |       | 50,000                                                               |       | .31                                         | %          |
| Quentin Davis(5)                                        |       | 30,000                                                               |       | .19                                         | %          |
| Karl Lawfer                                             |       | 25,000                                                               |       | .16                                         | %          |
| Gary Bocker(5)                                          |       | 100,000                                                              |       | .62                                         | %          |
| Criss Davis(4)                                          |       | 50,000                                                               |       | .31                                         | %          |
| David Shockey                                           |       | 25,000                                                               |       | .16                                         | %          |
| Brad Smith                                              |       | 30,000                                                               |       | .19                                         | %          |
| Dennis Wilke(4)                                         |       | 30,000                                                               |       | .19                                         | %          |
| Marvin Wurster(4)                                       |       | 50,000                                                               |       | .31                                         | %          |
| All managers and executive officers as a group          |       | 455,000                                                              |       | 2.83                                        | %          |

----

(1)          Unless otherwise noted, each person orgroup identified possesses sole voting and investment power with respect to theUnits.

 

(2)          Units not outstanding but deemedbeneficially owned by virtue of the right of a person to acquire them within 60days are treated as outstanding only when determining the amount and percentowned by such person.

 

(3)          Does not include Units issuable upon theexercise of warrants issued to each manager for the purchase of 50,000 Units at$1.00 per Unit because the Units will not be exercisable until the commencementof operations of our plant.

 

(4)          Includes Units owned in joint tenancywith spouse.

 

(5)          Includes Units owned by a trust overwhich he exercises sole voting and investment control.

 

32

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## **Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORINDEPENDENCE**

## ** **

Conflicts of interest exist and may arise in thefuture because of the relationships between and among our officers, managers,their affiliates and us, and the fact that we may from time to time enter intotransactions with our officers, managers and their affiliates.  Conflicts of interest could cause ourofficers and managers to put their own personal interests ahead of ours.  We cannot assure you that transactions we enterinto with related parties will be on terms as favorable to us as those thatcould have been obtained in an arm’s-length transaction.  Disputes may arise concerning transactions weenter into with related parties, and it is possible that our officers andmanagers may receive more favorable treatment than an unaffiliated third partywould receive.

 

Although we intend to examine all conflicts that mayarise from time to time, we cannot assure you that conflicts of interest willnot harm our business or reduce the value of our Units.  We currently have not established any formalprocedures to evaluate or resolve any conflicts of interest.

 

Except as stated below, there have been notransactions during the past two years, and there are no proposed transactions,to which we were or are to be a party, in which any manager, executive officer,nominee to be a manager, holder of 5% or more of our outstanding Units ormember of the immediate family of any of the foregoing had or is to have adirect or indirect material interest.

 

On June 30, 2006 our board of managers approvedexecution of an option agreement with the Freeport Area Economic DevelopmentFoundation, an Illinois not-for-profit corporation, giving us the option topurchase a proposed plant site in the Mill Race Industrial Park in Freeport,Illinois.  The option allowed us toacquire that site at a purchase price of $347,100. The option was signed on June 20,2006 and provided for option payments of $825 per month commencing August 1,2006.  Three of our managers at the time,Quentin Davis, Dennis Hamilton and David Shockey, were also members of theboard of directors of the Foundation.  Asa consequence of that relationship, on October 27, 2006, our board ofmanagers ratified the execution of the option agreement following disclosure bythe three managers of their relationship with the Foundation and a finding bythe remaining members of our board that the terms of the transaction were fairand reasonable to us.  The threeconflicted managers abstained from voting on the ratification motion and theratification was approved by a unanimous vote of the remaining members of ourboard of managers.  Thereafter, on sixoccasions, our board of managers approved amendments to the option agreementextending the expiration date of the option. In each case, the three conflicted managers abstained from voting on themotions to approve the amendments and the amendments were approved by aunanimous vote of the remaining members of our board of managers voting on themotion.  Messrs Davis, Hamilton andShockey had no personal financial interest in the Foundation or thetransaction.  Because we no longer haveany intention to locate our plant at the site covered by the option, we haveallowed the option to lapse.

 

The occupations of our managers and officers may giverise to transactions involving a conflict of interest.  Although it is unlikely that any of ourcurrent managers or officers, or their affiliates, would supply feedstock to ourbiodiesel plant or purchase biodiesel or glycerin from us, we may find itdesirable in the future to have representatives of our suppliers, customers orother key contractors serve on our board of managers.  In addition, members of our board of managersmay provide supplies or services to us on terms similar to those available fromdisinterested providers.

 

Our managers may be considered promoters with respectto our company.  Each manager haspurchased Units from us on the same terms as other members and has alsoreceived warrants for the purchase of 50,000 Units at an exercise price of$1.00 per Unit.  We do not consider anyconsultants or suppliers to us to be promoters.

 

We have not determined that any of our managers areindependent by reference to NASDAQ Rule 4200(a)(15) or would be independentby reference to NASDAQ audit committee standards.

 

## **Item 13. EXHIBITS**

## ** **

The following exhibits are filed as part of, or areincorporated by reference into, this report:

 

33

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| **Exhibit No.** | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                         |
|----------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |       |                                                                                                                                                                                                                                                                                                                                                    |
| 3.1                  |       | Certificate  of Formation. (Incorporated  by reference to Exhibit No. 3.1 to our Registration Statement on  Form SB-2, File No. 333-136353.)                                                                                                                                                                                        |
|                 |       |                                                                                                                                                                                                                                                                                                                                                    |
| 3.2                  |       | Amended  and Restated Limited Liability Company Agreement. (Incorporated by reference to Exhibit No. 3.2  to our Registration Statement on Form SB-2, File No. 333-136353.)                                                                                                                                                         |
|                 |       |                                                                                                                                                                                                                                                                                                                                                    |
| 10.1                 |       | Agreement for  Pre-Construction Services between the Registrant and Renewable Energy Group,  LLC dated April 26, 2006. (Incorporated by reference to  Exhibit No. 10.2 to our Registration Statement on Form SB-2,  File No. 333-136353.)                                                                                      |
|                 |       |                                                                                                                                                                                                                                                                                                                                                    |
| 10.2                 |       | Consent to  Assignment dated August 7, 2006 of Agreement for Pre-Construction  Services between the Registrant and Renewable Energy Group, LLC dated  April 26, 2006 to Renewable Energy Group. Inc. (Incorporated by  reference to Exhibit No. 10.9 to our Registration Statement on  Form SB-2, File No. 333-136353.)   |
|                 |       |                                                                                                                                                                                                                                                                                                                                                    |
| 10.3                 |       | Agreement  between the Registrant and Ebenezer Mgmt, LLC dated February 2, 2006.  (Incorporated by reference to Exhibit No. 10.4 to our Registration  Statement on Form SB-2, File No. 333-136353.)                                                                                                                            |
|                 |       |                                                                                                                                                                                                                                                                                                                                                    |
| 10.4                 |       | Agreement  between the Registrant and Ebenezer Mgmt, LLC dated May 10, 2006.  (Incorporated by reference to Exhibit No. 10.5 to our Registration  Statement on Form SB-2, File No. 333-136353.)                                                                                                                                |
|                 |       |                                                                                                                                                                                                                                                                                                                                                    |
| 10.5                 |       | Agreement  between the Registrant and Ebenezer Mgmt, LLC dated February 15, 2007.  (Incorporated by reference to Exhibit No. 10.13 to our Annual  Report on Form 10-KSB for the fiscal year ended December 31, 2006.)                                                                                                          |
|                 |       |                                                                                                                                                                                                                                                                                                                                                    |
| 10.6                 |       | Form of Warrant  issued to members of the board of managers and executive officers of the  Registrant. (Incorporated by reference to Exhibit No. 10.6 to our  Registration Statement on Form SB-2, File No. 333-136353.)                                                                                                       |
|                 |       |                                                                                                                                                                                                                                                                                                                                                    |
| 10.7                 |       | Memorandum of  Understanding between the Registrant and Freeport Area Economic Development  Foundation dated September 1, 2006. (Incorporated by reference to  Exhibit No. 10.8 to our Registration Statement on Form SB-2,  File No. 333-136353.)                                                                             |
|                 |       |                                                                                                                                                                                                                                                                                                                                                    |
| 10.8                 |       | Asset Purchase  Agreement among the Registrant, LLC, Renewable Energy Group, Inc.,  Biofuels Company of America, LLC, Biodiesel Investment Group, LLC and Bunge  North America, Inc., dated March 14, 2008. (Incorporated by  reference to Exhibit No. 2.1 to our Current Report on Form 8-K  dated March 14, 2008.) |
|                 |       |                                                                                                                                                                                                                                                                                                                                                    |
| *10.9                |       | Management and  Operational Services Agreement between the Registrant and REG Services Group,  LLC and REG Marketing and Logistics Group, LLC dated March 14, 2008.                                                                                                                                                                                |
|                 |       |                                                                                                                                                                                                                                                                                                                                                    |
| 14.1                 |       | Code of Ethics  and Business Conduct. (Incorporated by reference to Exhibit No. 14.1  to our Annual Report on Form 10-KSB for the fiscal year ended  December 31, 2006.)                                                                                                                                                            |
|                 |       |                                                                                                                                                                                                                                                                                                                                                    |
| *31.1                |       | Certificate  pursuant to 17 CFR 240 15d-14(a).                                                                                                                                                                                                                                                                                                          |

 

34

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| *31.2  |   | Certificate  pursuant to 17 CFR 240 15d-14(a).        |
|--------|--------|-------------------------------------------------------|
|   |   |                                                  |
| *32.1  |   | Certificate  pursuant to 18 U.S.C. Section 1350. |

 

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*     Filed or amended herewith

 

## **Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**

## ** **

Theaggregate fees billed by Boulay, Heutmaker, Zibell & Co. P.L.L.P., asour independent registered public accountants for the year ended December 31,2007 and year ended December 31, 2006, are as follows:

 
| **Category**  | ** ** | ** ** | **Fiscal Year** | ** ** | **Fees** | ** ** |
|---------------|------------|------------|-----------------|------------|----------|------------|
| Audit Fees(1) |       | 2007       |            | $          | 70,695   |       |
|          |       | 2006       |            | $          | 60,513   |       |

 

----

        (1) Audit fees includeaudit of our financial statements, reviews of our quarterly financialstatements, reviews of our registration statement filed on Form SB-2 andrelated amendments, other services related to SEC matters, and discussions withour management and audit committee.

 

        Prior to engagement of theprincipal independent registered public accountants to perform audit servicesfor the Company, the principal accountant was pre-approved by our auditcommittee pursuant to Company policy requiring such approval.

 

35

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**SIGNATURES**

 

In accordance with Section 13or 15(d) of the Exchange Act, the registrant caused this report to besigned on its behalf by the undersigned, thereunto duly authorized.

 
|                       | BLACKHAWK BIOFUELS, LLC        |
|----------------------------|--------------------------------|
|                       |                           |
|                       |                           |
| Date: March 31,  2008 | /s/ RONALD MAPES               |
|                       | Ronald Mapes                   |
|                       | Chair  and Manager             |
|                       | (Principal  Executive Officer) |

 

 
| Date: March 31,  2008 | /s/ RONALD FLUEGEL                            |
|----------------------------|-----------------------------------------------|
|                       | Ronald Fluegel                                |
|                       | Treasurer  and Manager                        |
|                       | (Principal  Financial and Accounting Officer) |

 

 

**POWER OFATTORNEY**

 

Each person whose signature appears below herebyconstitutes and appoints Ronald Mapes, Jon Rosenstiel and Quentin Davis, andeach of them, such person’s true and lawful attorney-in-fact and agent, withfull power of substitution and resubstitution, for such person and in suchperson’s name, place and stead, in any and all capacities, to sign this AnnualReport on Form 10-KSB of Blackhawk Biofuels, LLC and any and allamendments thereto, and to file the same, with all exhibits thereto and otherdocuments in connection therewith, with the Securities and Exchange Commission,granting unto said attorneys-in-fact and agents, and each of them and theirsubstitute or substitutes, full power and authority to do and perform each andevery act and thing requisite and necessary to be done in connection therewith,as fully to all intents and purposes as such person might or could do inperson, hereby ratifying and confirming all that said attorneys-in-fact andagents, and each of them and their substitute or substitutes, may lawfully door cause to be done by virtue hereof.

 

In accordance with the Exchange Act, this report hasbeen signed below by the following persons on behalf of the registrant and inthe capacities and on the dates indicated.

 
|  Date: March 31, 2008 | /s/ RONALD MAPES                              |
|---------------------------------|-----------------------------------------------|
|                            | Ronald Mapes                                  |
|                            | Chair  and Manager                            |
|                            | (Principal  Executive Officer)                |
|                            |                                          |
|                            |                                          |
| Date: March 31,  2008      | /s/ RONALD FLUEGEL                            |
|                            | Ronald Fluegel                                |
|                            | Treasurer  and Manager                        |
|                            | (Principal  Financial and Accounting Officer) |
|                            |                                          |
|                            |                                          |
|  Date: March 31, 2008 | /s/ JON ROSENSTIEL                            |
|                            | Jon Rosenstiel                                |
|                            | Manager                                       |

 

36

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|                       |               |
|----------------------------|--------------------|
| Date: March 31,  2008 | /s/ QUENTIN DAVIS  |
|                       | Quentin Davis      |
|                       | Manager            |
|                       |               |
|                       |               |
|                       |               |
| Date: March 31,  2008 | /s/ GARY BOCKER    |
|                       | Gary  Bocker       |
|                       | Manager            |
|                       |               |
|                       |               |
| Date: March 31,  2008 | /s/ CRISS DAVIS    |
|                       | Criss  Davis       |
|                       | Manager            |
|                       |               |
|                       |               |
| Date: March 31,  2008 | /s/ KARL LAWFER    |
|                       | Karl  Lawfer       |
|                       | Manager            |
|                       |               |
|                       |               |
| Date: March 31,  2008 | /s/ DAVID SHOCKEY  |
|                       | David  Shockey     |
|                       | Manager            |
|                       |               |
|                       |               |
| Date: March 31,  2008 | /s/ BRAD SMITH     |
|                       | Brad  Smith        |
|                       | Manager            |
|                       |               |
|                       |               |
| Date: March 31,  2008 | /s/ DENNIS WILKE   |
|                       | Dennis Wilke       |
|                       | Manager            |
|                       |               |
|                       |               |
| Date: March 31,  2008 | /s/ MARVIN WURSTER |
|                       | Marvin Wurster     |
|                       | Manager            |

 

37

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**Supplemental information to beFurnished With Reports Filed Pursuant to Section 15(d) of the ExchangeAct by Non-Reporting Issuers**

 

The registrant has not sent an annual report or proxymaterial to its security holders.  Ifsuch report or proxy material is sent to security holders subsequent to thefiling of this report, copies of such material will be furnished to theCommission.

 

**EXHIBIT INDEX**

 

The following exhibits are filed as part of, or areincorporated by reference into, this report:

 
| **Exhibit No.** | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                         |
|----------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |       |                                                                                                                                                                                                                                                                                                                                                                    |
| 3.1                  |       | Certificate  of Formation. (Incorporated  by reference to Exhibit No. 3.1 to the Registrant’s Registration  Statement on Form SB-2, File No. 333-136353.)                                                                                                                                                                                      |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                    |
| 3.2                  |       | Amended  and Restated Limited Liability Company Agreement. (Incorporated by reference to  Exhibit No. 3.2 to the Registrant’s Registration Statement on  Form SB-2, File No. 333-136353.)                                                                                                                                                      |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                    |
| 10.1                 |       | Agreement for  Pre-Construction Services between the Registrant and Renewable Energy Group,  LLC dated April 26, 2006. (Incorporated by reference to  Exhibit No. 10.2 to the Registrant’s Registration Statement on  Form SB-2, File No. 333-136353.)                                                                                    |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                    |
| 10.2                 |       | Consent to  Assignment dated August 7, 2006 of Agreement for Pre-Construction  Services between the Registrant and Renewable Energy Group, LLC dated  April 26, 2006 to Renewable Energy Group. Inc. (Incorporated by  reference to Exhibit No. 10.9 to the Registrant’s Registration  Statement on Form SB-2, File No. 333-136353.) |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                    |
| 10.3                 |       | Agreement  between the Registrant and Ebenezer Mgmt, LLC dated February 2, 2006.  (Incorporated by reference to Exhibit No. 10.4 to the Registrant’s  Registration Statement on Form SB-2, File No. 333-136353.)                                                                                                                          |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                    |
| 10.4                 |       | Agreement  between the Registrant and Ebenezer Mgmt, LLC dated May 10, 2006.  (Incorporated by reference to Exhibit No. 10.5 to the Registrant’s  Registration Statement on Form SB-2, File No. 333-136353.)                                                                                                                              |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                    |
| 10.5                 |       | Agreement  between the Registrant and Ebenezer Mgmt, LLC dated February 15, 2007.  (Incorporated by reference to Exhibit No. 10.13 to the Registrant’s  Annual Report on Form 10-KSB for the fiscal year ended December 31,  2006.)                                                                                                       |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                    |
| 10.6                 |       | Form of Warrant  issued to members of the board of managers and executive officers of the  Registrant. (Incorporated by reference to Exhibit No. 10.6 to the  Registrant’s Registration Statement on Form SB-2, File  No. 333-136353.)                                                                                                    |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                    |
| 10.7                 |       | Memorandum of  Understanding between the Registrant and Freeport Area Economic Development  Foundation dated September 1, 2006. (Incorporated by reference to  Exhibit No. 10.8 to the Registrant’s Registration Statement on  Form SB-2, File No. 333-136353.)                                                                           |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                    |
| 10.8                 |       | Asset Purchase  Agreement among the Registrant, LLC, Renewable Energy Group, Inc.,                                                                                                                                                                                                                                                                                 |

 

38

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|   |   | Biofuels Company  of America, LLC, Biodiesel Investment Group, LLC and Bunge North  America, Inc., dated March 14, 2008. (Incorporated by reference to  Exhibit No. 2.1 to the Registrant’s Current Report on Form 8-K  dated March 14, 2008.) |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                              |
| *10.9  |   | Management and  Operational Services Agreement between the Registrant and REG Services Group,  LLC and REG Marketing and Logistics Group, LLC dated March 14, 2008.                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                              |
| 14.1   |   | Code of Ethics  and Business Conduct. (Incorporated by reference to  Exhibit No. 14.1 to the Registrant’s Annual Report on  Form 10-KSB for the fiscal year ended December 31, 2006.)                                                                    |
|   |   |                                                                                                                                                                                                                                                                              |
| *31.1  |   | Certificate  pursuant to 17 CFR 240 15d-14(a).                                                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                              |
| *31.2  |   | Certificate  pursuant to 17 CFR 240 15d-14(a).                                                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                              |
| *32.1  |   | Certificate  pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                                             |

 

----

*     Filed or amended herewith

 

39

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