##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the quarter ended March 31, 2008
 OR
 o
    
    Transition report under Section 13 or 15(d) of the Exchange Act.
 For the transition period from  to
 Commission file number 000-52617
 WESTERN DUBUQUE BIODIESEL, LLC
  Iowa
(State or other jurisdiction of 
incorporation or organization)
    
    20-3857933
(I.R.S. Employer Identification No.)
 904 Jamesmeier Rd.
P.O. Box 82
Farley, IA 52046
 (563) 744-3554
 þ o
 o Yes þ No
   Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
    
    Smaller Reporting Company þ




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##### 



INDEX
 Page No.PART I. FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis or Plan of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosures about Market Risks
    
    
    23Item 4. Controls and Procedures
    
    
    23PART II. OTHER INFORMATION
    
    
    24Item 1. Legal Proceedings
    
    
    24Item 1A. Risk Factors
    
    
    24Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    24Item 3. Defaults Upon Senior Securities
    
    
    25Item 4. Submission of Matters to Security Holders
    
    
    25Item 5. Other Information
    
    
    25Item 6. Exhibits
    
    
    25SIGNATURES
    
    
    26Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 WESTERN DUBUQUE BIODIESEL, LLC
BALANCE SHEET
 March 31,
    
    
    December 31,2008
    
    
    2007(UNAUDITED)ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    4,340,486
    
    
    $
    2,011,841Margin deposits
    
    
    1,464,917
    
    
    
    3,024,770Accounts receivable  related party
    
    
    1,859,579
    
    
    
    2,874,915Other receivables
    
    
    1,360
    
    
    
    150,186Incentive receivables
    
    
    22,018
    
    
    
    694,825Inventory
    
    
    2,968,472
    
    
    
    4,439,977Prepaid expenses
    
    
    634,311
    
    
    
    319,726Total current assets
    
    
    11,291,143
    
    
    
    13,516,240PROPERTY, PLANT AND EQUIPMENTLand and land improvements
    
    
    3,091,093
    
    
    
    3,091,093Office building and equipment
    
    
    407,203
    
    
    
    407,203Plant and process equipment
    
    
    37,924,844
    
    
    
    37,907,414Vehicles
    
    
    42,537
    
    
    
    42,537Construction in progress
    
    
    
    
    
    
    1,391Total, at cost
    
    
    41,465,677
    
    
    
    41,449,638Less accumulated depreciation
    
    
    1,470,528
    
    
    
    922,368Total property, plant and equipment
    
    
    39,995,149
    
    
    
    40,527,270OTHER ASSETSLoan origination fees, net of amortization
    
    
    452,006
    
    
    
    475,796Restricted cash
    
    
    75,344
    
    
    
    Total other assets
    
    
    527,350
    
    
    
    475,796TOTAL ASSETS
    
    $
    51,813,642
    
    
    $
    54,519,306LIABILITIES AND MEMBERS EQUITYCURRENT LIABILITIESAccounts payable:Trade
    
    $
    263,829
    
    
    $
    942,768Related party
    
    
    199,460
    
    
    
    164,971Construction  related party
    
    
    
    
    
    
    2,519,733Derivative instruments
    
    
    1,240,515
    
    
    
    2,533,251Current portion of long-term debt
    
    
    2,326,621
    
    
    
    1,863,675Accrued liabilities
    
    
    189,319
    
    
    
    359,276Total current liabilities
    
    
    4,219,744
    
    
    
    8,383,674LONG-TERM LIABILITIESLong-term debt, less current portion above
    
    
    27,938,554
    
    
    
    27,766,964Total liabilities
    
    
    32,158,298
    
    
    
    36,150,638MEMBERS EQUITYContributed capital
    
    
    26,230,096
    
    
    
    26,230,096Less subscriptions receivable
    
    
    
    
    
    
    (2,500,000
    )Accumulated deficit
    
    
    (6,574,752
    )
    
    
    (5,361,428
    )Total members equity
    
    
    19,655,344
    
    
    
    18,368,668TOTAL LIABILITIES AND MEMBERS EQUITY
    
    $
    51,813,642
    
    
    $
    54,519,306
   3




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WESTERN DUBUQUE BIODIESEL, LLC
STATEMENTS OF OPERATIONS(UNAUDITED)
 Three Months Ended
    
    
    Three Months EndedMarch 31, 2008
    
    
    March 31, 2007REVENUESBiodiesel and by product sales  related party
    
    $
    4,535,877
    
    
    $
    Tolling services  related party
    
    
    24,843
    
    
    
    Incentive funds
    
    
    1,523,084
    
    
    
    Total revenues
    
    
    6,083,804
    
    
    
    COST OF SALESMaterials, labor and overhead
    
    
    6,278,277
    
    
    
    Net losses on derivative instruments
    
    
    292,118
    
    
    
    Total cost of sales
    
    
    6,570,395
    
    
    
    Gross loss
    
    
    (486,591
    )
    
    
    OPERATING EXPENSESConsulting and professional fees
    
    
    81,430
    
    
    
    54,251Office and administrative expenses
    
    
    134,784
    
    
    
    13,464Total operating expenses
    
    
    216,214
    
    
    
    67,715OTHER INCOME (EXPENSE)Interest income
    
    
    27,029
    
    
    
    874Interest expense
    
    
    (537,548
    )
    
    
    Total other income (expense)
    
    
    (510,519
    )
    
    
    874NET LOSS
    
    $
    (1,213,324
    )
    
    $
    (66,841
    )BASIC AND DILUTED LOSS PER UNIT
    
    $
    (40.86
    )
    
    $
    (2.47
    )WEIGHTED AVERAGE UNITS OUTSTANDING,
BASIC AND DILUTED
    
    
    29,697
    
    
    
    27,062
   4




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WESTERN DUBUQUE BIODIESEL, LLC
STATEMENTS OF CASH FLOWS(UNAUDITED)
 Three Months Ended
    
    
    Three Months EndedMarch 31, 2008
    
    
    March 31, 2007CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (1,213,324
    )
    
    $
    (66,841
    )Adjustments to reconcile net loss to net cash
provided by operating activitiesDepreciation
    
    
    548,160
    
    
    
    1,983Amortization
    
    
    23,790
    
    
    
    Effects of changes in operating assets and liabilitiesMargin deposits
    
    
    1,559,853
    
    
    
    Accounts receivable  related party
    
    
    1,015,336
    
    
    
    Other receivables
    
    
    148,826
    
    
    
    Incentive receivables
    
    
    672,807
    
    
    
    Inventory
    
    
    1,471,505
    
    
    
    Prepaid expenses
    
    
    (314,585
    )
    
    
    Derivative instruments
    
    
    (1,292,736
    )
    
    
    Accounts payable
    
    
    (664,183
    )
    
    
    84,509Accrued liabilities
    
    
    (169,957
    )
    
    
    Net cash provided by operating activities
    
    
    1,785,492
    
    
    
    19,651CASH FLOWS FROM INVESTING ACTIVITIESProceeds from the sale of property
    
    
    
    
    
    
    25,000Payments for property, plant and equipment,
including construction in progress
    
    
    (16,039
    )
    
    
    (5,407,252
    )Net cash used in investing activities
    
    
    (16,039
    )
    
    
    (5,382,252
    )CASH FLOWS FROM FINANCING ACTIVITIESIncrease in checks written in excess of bank balance
    
    
    
    
    
    
    1,851Proceeds from long-term debt
    
    
    939,540
    
    
    
    4,636,434Payments on long-term debt
    
    
    (380,348
    )
    
    
    (5,000
    )Capital contributions
    
    
    
    
    
    
    650,000Net cash provided by financing activities
    
    
    559,192
    
    
    
    5,283,285NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    2,328,645
    
    
    
    (79,316
    )CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    2,011,841
    
    
    
    79,316CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    4,340,486
    
    
    $
    
   5




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WESTERN DUBUQUE BIODIESEL, LLC
Farley, Iowa
 NOTES
TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2008
 NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Use of Estimates in Preparing Financial Statements
  Basis of Accounting
    Revenue Recognition
  Cash and Cash Equivalents
  Restricted Cash
  Accounts Receivable
    6




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WESTERN DUBUQUE BIODIESEL, LLC
Farley, Iowa
 NOTES
TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2008
 Derivative Instruments and Hedging Activities
     Inventories
  Property and Equipment
   YearsLand improvements
    
    20 - 40Office equipment
    
    5 - 10Office building
    
    30Plant and process equipment
    
    10 - 40Vehicles
    
    5 - 7
  7




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WESTERN DUBUQUE BIODIESEL, LLC
Farley, Iowa
 NOTES
TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2008
   Loan Origination Fees
  Stock-Based Compensation
 Share-Based
Payment Accounting for Stock Issued to Employees,
  Income Taxes
   8




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WESTERN DUBUQUE BIODIESEL, LLC
Farley, Iowa
 NOTES
TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2008
 Earnings (Loss) Per Unit
  Cost of Sales
  Shipping and Handling Costs
  Environmental Liabilities
  New Accounting Standards
 Fair Value Measurements
 Disclosures about Derivative Instruments and Hedging
Activities (SFAS No. 161)
 NOTE 2  INCENTIVE PAYMENTS AND RECEIVABLE
   9




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WESTERN DUBUQUE BIODIESEL, LLC
Farley, Iowa
 NOTES
TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2008
  NOTE 3  INVENTORY
  March 31,
    
    
    December 31,2008
    
    
    2007UNAUDITEDRaw material
    
    $
    1,280,418
    
    
    $
    1,758,762Work in process
    
    
    1,303,243
    
    
    
    1,150,688Finished goods
    
    
    384,811
    
    
    
    1,530,527Total
    
    $
    2,968,472
    
    
    $
    4,439,977
 NOTE 4  LONG-TERM DEBT AND FINANCING
  March 31,
    
    
    December 31,2008
    
    
    2007UNAUDITEDNote payable to Marshall BankFirst  see details below
    
    $
    29,899,983
    
    
    $
    29,248,708Note payable to the Iowa Department of Economic
Development  see details below
    
    
    345,000
    
    
    
    360,000Note payable to Hodge Material Handling  see
details below
    
    
    20,192
    
    
    
    21,931Total
    
    
    30,265,175
    
    
    
    29,630,639Less current portion
    
    
    2,326,621
    
    
    
    1,863,675Long-term portion
    
    $
    27,938,554
    
    
    $
    27,766,964
  2009
    
    $
    2,326,6212010
    
    
    2,684,5542011
    
    
    2,871,2122012
    
    
    2,980,8452013
    
    
    19,401,943Total
    
    $
    30,265,175
   10




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WESTERN DUBUQUE BIODIESEL, LLC
Farley, Iowa
 NOTES
TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2008
     NOTE 5    MEMBERS EQUITY
    11




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WESTERN DUBUQUE BIODIESEL, LLC
Farley, Iowa
 NOTES
TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2008
  NOTE 6  CONCENTRATION OF CREDIT RISK
  NOTE 7  CASH FLOW DISCLOSURES
  2008
    
    
    2007Cash paid for interest
    
    $
    513,758
    
    
    $
    
  2008
    
    
    2007Construction in progress in
accounts payable and accrued
interest
    
    $
    
    
    
    $
    8,785,685Loan proceeds transferred to
debt service reserve fund
(restricted cash)
    
    $
    75,344
    
    
    $
    Units issued in exchange for
reduction in construction
payable
    
    $
    2,500,000
    
    
    $
    
 NOTE 8  RELATED PARTY TRANSACTIONS
    12




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WESTERN DUBUQUE BIODIESEL, LLC
Farley, Iowa
 NOTES
TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2008
    NOTE 9  COMMITMENTS AND CONTINGENCIES
  NOTE 10  FAIR VALUE OF FINANCIAL INSTRUMENTS
  
    
    Level 1Unadjusted quoted prices for identical assets and liabilities in active
markets;
    
    Level 2Quoted prices for similar assets and liabilities in active markets (other
than those included in Level 1) which are observable for the asset or liability, either
directly or indirectly; and
    
    Level 3Valuations derived from valuation techniques in which one or more significant
inputs or significant value drivers are unobservable.
  SignificantQuoted Prices in
    
    
    Other
    
    
    SignificantActive Markets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    InputsMarch 31, 2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Financial assets:Cash equivalents
    
    $
    3,693,017
    
    
    $
    3,693,017
    
    
    $
    
    
    
    $
    Financial liabilities:Commodity derivatives
    
    $
    1,240,515
    
    
    $
    
    
    
    $
    1,240,515
    
    
    $
    
  13




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WESTERN DUBUQUE BIODIESEL, LLC
Farley, Iowa
 NOTES
TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2008
  NOTE 11  UNCERTAINTY
     14




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Item 2. Managements Discussion and Analysis or Plan of Operations
  Cautionary Statements Regarding Forward-Looking Statements
  
    
    Changes in interest rates or the availability of credit needed to continue our
operations in the event that income from operations is insufficient for us to continue
biodiesel production;
 
    
    Our ability to generate free cash flow to invest in our business and service our debt;
 
    
    Continued higher than average prices of vegetable oils, particularly soybean oil and/or
increases in the prices of other feedstock;
 
    
    Overcapacity within the biodiesel industry resulting in increased competition and costs
for feedstock and/or decreased prices for our biodiesel and glycerin;
 
    
    Decreased availability of soybean oil or other feedstock for any reason, including
reduction in soybean production due to increased corn production to service the ethanol
industry;
 
    
    Our ability to locate alternative feedstock to replace soybean oil (such as refined
animal fats) if desirable or necessary, particularly since we lack pretreatment
capabilities to enable us to process raw animal fats at our plant.
 
    
    Our ability to market our products and our reliance on our marketer to market our
products;
 
    
    Our ability to enter into toll manufacturing agreements or other arrangements that shift
responsibility for feedstock procurement and costs to other parties;
 
    
    Changes in or elimination of governmental laws, tariffs, trade or other controls or
enforcement practices such as national, state or local energy policy; federal biodiesel tax
incentives; or environmental laws and regulations that apply to our plant operations and
their enforcement; and the ability of the biodiesel industry to successfully lobby for
mandates or other legislation beneficial to the biodiesel industry;
 
    
    Total U.S. consumption of diesel and biodiesel and consumer attitudes regarding the use
of biodiesel;
 
    
    Changes in plant production capacity or technical difficulties in operating the plant
for any reason, including changes due to events beyond our control or as a result of
intentional reductions in production or plant shutdowns;
 
    
    Changes and advances in biodiesel production technology, including the ability of our
competitors to process raw animal fats or other feedstock which we are unable to process;
 
    
    Competition from alternative fuels; and
 
    
    Other factors described elsewhere in this report.
  15




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Overview
      16




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Results of Operations for the Three Months Ended March 31, 2008
  Quarter EndedMarch 31, 2008Income Statement Data
    
    Amount
    
    
    PercentRevenues
    
    $
    6,083,804
    
    
    
    100.00
    %Cost of Sales
    
    $
    6,570,395
    
    
    
    108.00
    %Gross Profit (Loss)
    
    $
    (486,591
    )
    
    
    (8.00
    )%Operating Expenses
    
    $
    216,214
    
    
    
    3.60
    %Other Income (Expense)
    
    $
    (510,519
    )
    
    
    (8.40
    )%Net Income (Loss)
    
    $
    (1,213,324
    )
    
    
    (19.90
    )%
 Revenues
  Total RevenueRevenue Sources
    
    Amount
    
    
    PercentBiodiesel and Glycerin Sales
    
    $
    4,535,877
    
    
    
    74.6
    %Tolling Services
    
    $
    24,843
    
    
    
    0.4
    %Incentive funds
    
    $
    1,523,084
    
    
    
    25.0
    %Total Revenues
    
    $
    6,083,804
    
    
    
    100.00
    %
    17




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Cost of Sales
      Operating Expenses
   18




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Other Income (Expenses)
  Cash Flows
 Cash Flow from Operating Activities.
 Cash Flow from Investing Activities.
 Cash Flow from Financing Activities.
 Changes in Financial Condition for the Three Months Ended March 31, 2008
  March 31, 2008
    
    
    December 31, 2007Current Assets
    
    $
    11,291,143
    
    
    $
    13,516,240Current Liabilities
    
    $
    4,219,744
    
    
    $
    8,383,674Long Term Liabilities
    
    $
    27,938,554
    
    
    $
    27,766,964Total Members Equity
    
    $
    19,655,344
    
    
    $
    18,368,668
 Current Assets.
 Current Liabilities.
 Long-Term Debt.
 Members Equity.
 Plan of Operations for the Next 12 Months
   19




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Plant Operations
    Operating Budget and Financing of Plant Operations
  Critical Accounting Estimates
  Liquidity and Capital Resources
   20




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Sources of Funds
 Equity Financing
  Debt Financing
     21




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Government Programs and Grants
 Off-Balance Sheet Arrangements
  Commodity Price Risk Protection
      22




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Item 3. Quantitative and Qualitative Disclosures about Market Risks
  
 Item 4. Controls and Procedures
    23




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PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  There are doubts about our ability to continue as a going concern and if we are unable to
continue our business, our units may have little or no value.
 Doubts about our ability to continue as a going concern may make it difficult to obtain
additional funds in the future.
 We are experiencing liquidity issues which could require us to cease operations.
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   24




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Item 3. Defaults upon Senior Securities
  
 Item 4. Submission of Matters to Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
  Exhibit 
No.
    
    Description
    
    Method of 
Filing31.1
    
    
    Certificate pursuant to 17 CFR 240 13a-14(a)
    
    *31.2
    
    
    Certificate pursuant to 17 CFR 240 13a-14(a)
    
    *32.1
    
    
    Certificate pursuant to 18 U.S.C. Section 1350
    
    *32.2
    
    
    Certificate pursuant to 18 U.S.C. Section 1350
    
    *
 
 (*)  Filed herewith.  25




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SIGNATURES
  WESTERN DUBUQUE BIODIESEL, LLCDate: May 12, 2008
    
    /s/ Bruce Klostermann

Bruce KlostermannVice Chairman and Director(Principal Executive Officer)Date: May 12, 2008
    
    /s/ George Davis

George DavisTreasurer and Director(Principal Financial and Accounting Officer)
  26




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EXHIBIT INDEX
 ExhibitNo.
    
    Description31.1
    
    
    Certificate pursuant to 17 CFR 240 13a-14(a)31.2
    
    
    Certificate pursuant to 17 CFR 240 13a-14(a)32.1
    
    
    Certificate pursuant to 18 U.S.C. Section 135032.2
    
    
    Certificate pursuant to 18 U.S.C. Section 1350
  27