**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10-Q**


(Mark
      One)




x QUARTERLY
      REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For
      the
      quarterly period ended September 30, 2008




o TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT





For
      the
      transition period from __________ to ____________.





Commission
      file number: 000-52614





**Show
      Me Ethanol, LLC**


(Exact
      name of small business issuer as specified in its charter)





Missouri
            
            20-4594551(State
                or other jurisdiction of
            
            (IRS
                Employerincorporation
                or organization)
            
            Identification
                No.)




P.
      O. Box
      9


26530
      Highway 24 East, Carrollton, Missouri 64633


(Address
      of principal executive offices)





(660)
      542-6493


(Issuer’s
      telephone number)





Check
      whether the small business issuer (1) filed all reports required to be filed
      by
      Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
      12 months (or for such shorter period that the small business issuer was
      required to file such reports), and (2) has been subject to such filing
      requirements for the past 90 days.





Yes o   No x




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      See
      definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of
      the Exchange Act. (Check one):




Large
      accelerated filer  ̈ Accelerated filer  ̈ Non-accelerated
      filer  ̈ Smaller
      reporting company x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).





Yes o   No x





As
      of
      September 30, 2008, the latest practicable date, 1,498 of the issuer’s Class A
      Membership Units, were issued and outstanding.








**TABLE
      OF CONTENTS**





PagePART
                I -FINANCIAL INFORMATION
            
            3Item
                1.
            Financial
                Statements (Unaudited)
            
            3Balance
                Sheet
            
            3Statements
                of Operations
            
            4Statements
                of Cash Flows
            
            5Notes
                to Unaudited Financial Statements
            
            6Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Result of
                Operations
            
            15Item
                3.
            Quantitative
                and Qualitative Discussion of Market Risks
            
            20Item
                4.
            Controls
                and Procedures
            
            20PART
                II - OTHER INFORMATION
            
            21Item
                1.
            Legal
                Proceedings
            
            21Item 1a.
            Risk
                Factors
            
            21Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            
            33Item
                3.
            Defaults
                Upon Senior Securities
            
            33Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            
            33Item
                5.
            Other
                Information
            
            33Item
                6.
            Exhibits
            
            34




2


**PART
      1 - FINANCIAL INFORMATION**





**ITEM
      1. FINANCIAL STATEMENTS (UNAUDITED)**





**SHOW
      ME ETHANOL, LLC**


**CONDENSED
      BALANCE SHEETS**


**September
      30, 2008 and December 31, 2007**





September 30,
            
            December 31,2008
            
            2007(Unaudited)**ASSETS**CURRENT
                ASSETSCash
            
            $
            5,195,394
            
            $
            4,652,087Accounts
                receivable
            
            
            3,309,381
            
            
            -Prepaid
                expenses
            
            
            50,136
            
            
            74,663Inventory
            
            
            3,128,829
            
            
            -Total
                current assets
            
            
            11,683,741
            
            
            4,726,750PROPERTY,
                PLANT AND EQUIPMENTConstruction
                in progress
            
            
            -
            
            
            57,418,703Operating
                equipment
            
            
            69,080,086
            
            
            -Land
                and buildings
            
            
            11,732,018
            
            
            -Accumulated
                depreciation
            
            
            (2,822,209
            )
            
            -Property,
                plant and equipment, net
            
            
            77,989,894
            
            
            57,418,703OTHER
                ASSETS
            
            
            541,461
            
            
            679,462Total
                assets
            
            $
            90,215,096
            
            $
            62,824,915**LIABILITIES
                AND MEMBERS' EQUITY**CURRENT
                LIABILITIESAccounts
                payable
            
            $
            796,065
            
            $
            7,590,914Accrued
                expenses
            
            
            543,196
            
            
            9,789Accrued
                loss on forward contracts
            
            
            10,728,188
            
            
            -Current
                portion of long term debt and revolving line of credit
            
            
            53,641,424
            
            
            19,238Total
                current liabilities
            
            
            65,708,872
            
            
            7,619,941LONG-TERM
                DEBT
            
            
            3,717,117
            
            
            22,240,221Total
                liabilities
            
            
            69,425,989
            
            
            29,860,162MEMBERS'
                EQUITYClass
                A capital units, 1,498 issued
            
            
            22,969,600
            
            
            22,969,600Class
                B capital units, 422 issued
            
            
            6,317,365
            
            
            6,317,365Class
                C capital units, 213 issued
            
            
            3,189,118
            
            
            3,189,118Retained
                earnings (deficit)
            
            
            (11,686,977
            )
            
            488,670Total
                members' equity
            
            
            20,789,106
            
            
            32,964,753Total
                liabilities and members' equity
            
            $
            90,215,096
            
            $
            62,824,915


See
      Notes
      to Financial Statements


3





**SHOW
      ME ETHANOL, LLC**





**CONDENSED
      STATEMENTS OF OPERATIONS**


**For
      the Quarter and Year To Date Ended September 30, 2008 and
      2007**


**(Unaudited)**





Quarter
            
            
            
            QuarterEnded
            
            Current
            
            Ended
            
            PriorSeptember 30,
            
            Year
            
            September 30,
            
            Year2008
            
            To Date
            
            2007
            
            To DateSALESEthanol
                Sales
            
            $
            29,984,160
            
            $
            36,847,154
            
            $
            -
            
            $
            -Distillers
                Sales to related parties
            
            
            5,156,481
            
            
            6,795,897
            
            
            -
            
            
            -Ethanol
                producer credit
            
            
            2,250,355
            
            
            3,120,529
            
            
            -
            
            
            -Total
                sales
            
            
            37,390,996
            
            
            46,763,580
            
            
            -
            
            
            -COST
                OF SALESCost
                of sales (Note 11)
            
            
            37,975,189
            
            
            46,041,956
            
            
            -
            
            
            -Unrealized
                loss on forward contracts
            
            
            10,728,188
            
            
            10,728,188
            
            
            -
            
            
            -Total
                cost of sales
            
            
            48,703,377
            
            
            56,770,144
            
            
            -
            
            
            -Gross
                profit (loss)
            
            
            (11,312,380
            )
            
            (10,006,564
            )
            
            -
            
            
            -GENERAL
                AND ADMINISTRATIVEEXPENSESGeneral
                and administrative expenses
            
            
            366,346
            
            
            1,171,755
            
            
            136,281
            
            
            360,663Total
                general and administrative expenses
            
            
            366,346
            
            
            1,171,755
            
            
            136,281
            
            
            360,663Operating
                income (loss)
            
            
            (11,678,727
            )
            
            (11,178,320
            )
            
            (136,281
            )
            
            (360,663
            )OTHER
                INCOME (EXPENSE)Interest
                expense
            
            
            (819,504
            )
            
            (1,060,292
            )
            
            -
            
            
            -Interest
                and other income
            
            
            26,527
            
            
            62,965
            
            
            124,575
            
            
            708,224Net
                other income (expense)
            
            
            (792,976
            )
            
            (997,327
            )
            
            124,575
            
            
            708,224Net
                income (loss)
            
            $
            (12,471,703
            )
            $
            (12,175,647
            )
            $
            (11,706
            )
            $
            347,561Net
                income (loss) per unit - basic and diluted
            
            $
            (5,847.02
            )
            $
            (5,708.23
            )
            $
            (5.49
            )
            $
            162.94Weighted
                average units outstanding - basic and diluted
            
            
            2,133
            
            
            2,133
            
            
            2,133
            
            
            2,133





See
      Notes
      to Financial Statements


4


**SHOW
      ME ETHANOL, LLC**





**CONDENSED
      STATEMENTS OF CASH FLOWS**


**For
      the Nine Months Ended September 30 , 2008 and 2007**


**(Unaudited)**





Nine Months
            
            Nine MonthsEnded
            
            EndedSeptember 30,
            
            September 30,2008
            
            2007CASH FLOWS FROM OPERATING ACTIVITIESNet
                income (loss)
            
            $
            (12,175,647
            )
            $
            347,561Adjustments
                to reconcile net income to net cash provided (used) by operating
                activities:Accounts
                receivable
            
            
            (3,309,381
            )
            
            -Prepaid
                expenses
            
            
            24,527
            
            
            (101,389
            )Accounts
                payable and accrued expenses
            
            
            1,290,760
            
            
            32,864Inventories
            
            
            (3,128,829
            )
            
            -Depreciation
                and amortization
            
            
            2,832,772
            
            
            1,772Accrued
                loss on forward contracts
            
            
            10,728,188
            
            
            -Other
                current assets and liabilities
            
            
            102,635
            
            
            -Net
                cash provided (used) by operating activities
            
            
            (3,634,974
            )
            
            280,808CASH
                FLOWS FROM INVESTING ACTIVITIESPurchases
                of property, plant and equipment
            
            
            (29,929,792
            )
            
            (25,521,117
            )Increase
                in restricted cash
            
            
            
            
            
            (3,287,770
            )Net
                cash used in investing activities
            
            
            (29,929,792
            )
            
            (28,808,887
            )CASH
                FLOWS FROM FINANCING ACTIVITIESProceeds
                from issuance of long-term debt and revolving line of
                credit
            
            
            34,142,288
            
            
            9,128,438Payments
                for financing costs
            
            
            -
            
            
            (544,703
            )Principal
                payments on long-term debt
            
            
            (34,214
            )
            
            (23,384
            )Net
                short-term borrowing from member
            
            
            -
            
            
            -Member
                units sold
            
            
            -
            
            
            -Subscription
                fees received
            
            
            -
            
            
            -Cost
                of raising capital
            
            
            -
            
            
            -Net
                cash provided by financing activities
            
            
            34,108,074
            
            
            8,560,351Net
                change in cash
            
            
            543,308
            
            
            (19,967,728
            )Cash,
                beginning of period
            
            
            4,652,087
            
            
            26,533,937Cash,
                end of period
            
            $
            5,195,395
            
            $
            6,566,209





See
      Notes
      to Financial Statements.


5


**SHOW
      ME ETHANOL, LLC**





**NOTES
      TO CONDENSED FINANCIAL STATEMENTS**


**September
      30, 2008**


( **Unaudited** )





**1.** **SIGNIFICANT
          ACCOUNTING POLICIES**





*Basis
      of presentation:* The
      accompanying condensed financial statements reflect all adjustments that are,
      in
      the opinion of the Company's management, necessary to fairly present the
      financial position, results of operations and cash flows of the Company. Those
      adjustments consist only of normal recurring adjustments. The condensed balance
      sheet as of December 31, 2007 has been derived from the audited balance sheet
      of
      the Company as of that date. Certain information and note disclosures normally
      included in the Company's annual financial statements prepared in accordance
      with accounting principles generally accepted in the United States of America
      have been condensed or omitted. These condensed financial statements should
      be
      read in conjunction with the financial statements and notes thereto in the
      Company's Form 10-KSB Annual Report for 2007 filed with the Securities and
      Exchange Commission.





*Description
      of business:* Show Me
      Ethanol, LLC is a limited liability company organized in the State of Missouri
      for the purpose of developing, owning and operating a 55 million gallon per
      year
      dry-mill ethanol plant and a related co-products processing facility in west
      central Missouri. Show Me Ethanol, LLC was organized on January 24, 2006 and
      began operations May 22, 2008 and ceased reporting as a development stage
      company as of that date. The total deficit accumulated during the development
      stage amounted to approximately $57,000. The financial statements are presented
      in accordance with generally accepted accounting principles in the United States
      of America.





*Fiscal
      reporting period:* The
      Company has adopted a fiscal year ending December 31 st for
      reporting financial operations.





*Management
      estimates:* Management
      uses estimates and assumptions in preparing these financial statements in
      accordance with U.S. generally accepted accounting principles. Those estimates
      and assumptions affect the reported amounts of assets and liabilities, the
      disclosures of contingent assets and liabilities, and the reported revenues
      and
      expenses. Actual results could vary from the estimates that were
      used.





*Cash:* Cash
      consists principally of a collateralized interest bearing repurchase account
      which provides the Company security on balances that exceed the FDIC insurance
      limit on demand deposit accounts.





*Land
      easement and engineering services:* Costs
      incurred for the purchase of the land easements are capitalized. Engineering
      costs that relate to future acquisition of property and equipment are
      capitalized. Depreciation or amortization of engineering costs is computed
      using
      the straight line method over the estimated useful life of the related assets
      when the assets are placed in service.





*Property,
      plant and equipment* :
      Property, plant and equipment is stated at cost. Depreciation is computed using
      the straight-line method over their estimated useful lives of three to twenty
      years.





*Accounts
      receivable:* Accounts
      receivable are stated at the amount billed to customers. The Company, if
      necessary, provides an allowance for doubtful accounts, which is based upon
      a
      review of outstanding receivables, historical collection information and
      existing economic conditions. Accounts receivable are ordinarily due in 15
      and 7
      days for distillers and ethanol products, respectively after the issuance of
      the
      invoice. Accounts past due more than 30 days are considered delinquent.
      Delinquent receivables are written off based on individual credit evaluation
      and
      specific circumstances of the customer.





*Capitalized
      interest:* Interest
      costs incurred on borrowings during the construction period were capitalized
      as
      part of the cost of the ethanol plant. Total interest and fees capitalized
      during the quarter ended and nine months ended September 30, 2008 was $0 and
      $967,847, respectively. Capitalized interest from inception through startup
      at
      May 22, 2008, was $1,532,303. Capitalized interest for the quarter and nine
      months ended September 30, 2007 was $43,146 and $45,218,
      respectively.


6





*Income
      taxes* :
      The
      Company is organized as a limited liability company under Missouri law. As
      a
      limited liability company that has elected to be taxed as a partnership, the
      Company’s earnings pass through to the members and are taxed at the member
      level. Accordingly, no income tax provision has been included in these financial
      statements. Differences between the financial statement basis of assets and the
      tax basis of assets is related to depreciation and the capitalization and
      amortization of organization and start-up costs for tax purposes, whereas these
      costs were expensed for financial statement purposes.





*Earnings
      per capital unit:* For
      purposes of calculating basic earnings per capital unit, capital units
      subscribed for and issued by the Company are considered outstanding on the
      effective date of issuance. For purposes of calculating diluted earnings per
      capital unit, subscribed units are included in the calculation of earnings
      per
      unit based on the treasury unit method. There were no differences between basic
      and diluted earnings per unit for any periods from inception through September
      30, 2008.





*Revenue
      recognition:* Revenue
      from the production of ethanol and related products is recorded at the time
      title to the goods and all risks of ownership transfers to the customers. This
      generally occurs upon shipment to customers. Interest income is recognized
      as
      earned. Income from government incentive programs is recognized as ethanol
      is
      produced and requests for reimbursement are filed by the Company.





*Fair
      value of financial instruments:* Fair
      value estimates discussed herein are based upon certain market assumptions
      and
      pertinent information available to management as of September 30, 2008. The
      respective carrying value of certain on-balance-sheet financial instruments
      approximated their fair values due primarily to their short-term nature or
      variable interest rate terms. These financial instruments include cash, accounts
      receivable, accounts payable, and long-term debt. Fair values were assumed
      to
      approximate carrying values for these financial instruments.





*Recently
      issued accounting pronouncements:* On March
      19, 2008, The FASB issued FASB Statement No. 161, Disclosures about *Derivative
      Instruments and Hedging Activities - an Amendment of FASB Statement
      133* .
      Statement 161 enhances required disclosures regarding derivatives and hedging
      activities, including enhanced disclosures regarding how: (a) an entity uses
      derivative instruments; (b) derivative instruments and related hedged items
      are
      accounted for under FASB Statement 133, *Accounting
      for Derivative Instruments and Hedging Activities* ;
      and (c)
      derivative instruments and related hedged items effect an entity’s financial
      position, financial performance, and cash flows. Specifically, Statement 161
      requires:





Disclosure
      of the objective for using derivative instruments be disclosed in terms of
      underlying risk and accounting designation;


Disclosure
      of the fair values of derivative instruments and their gains and losses in
      a
      tabular format;


Disclosure
      of information about credit-risk related contingent features; and


Cross-reference
      from the derivative footnote to other footnotes in which derivative-related
      information is disclosed.





Statement
      161 is effective for fiscal years and interim periods beginning after November
      15, 2008. Management is currently evaluating the impact of this Statement,
      if
      any, on the financial statements of the Company.





**2.**  **RELATED
      PARTIES**





On
      April
      30, 2007 the Company entered into an agreement of right of first purchase and
      right of first refusal with Ray-Carroll Grain Growers, Inc., an investor (the
      “buy-sell agreement”). Pursuant to the buy-sell agreement, the Company has
      granted a right of first purchase and a right of first refusal to purchase
      all
      or any part of the property comprising the ethanol plant. In exchange,
      Ray-Carroll Grain Growers, Inc. has granted the Company a right of first
      purchase and a right of first refusal to purchase all or any part of certain
      grain elevator property. The buy-sell agreement’s term is through April 30,
      2027.


7





The
      Company also has multiple agreements in place with Ray-Carroll County Grain
      Growers, Inc., as noted in Note 11 and has sold subordinated secured notes
      to
      investors as more fully described in Note 7.





**3.**  **INVENTORIES**





Inventories
      are physically counted at each month end and are valued using the lower of
      first-end, first-out (FIFO) cost or market. They consisted of the following
      at
      September 30, 2008:





Ethanol
            
            $
            1,044,372Corn
            
            
            393,020Distillers
                dried grains
            
            
            93,960Work
                in process
            
            
            1,117,414Production
                chemicals
            
            
            288,063Other
            
            
            192,000Total
            
            $
            3,128,829





**4.**
            **PROPERTY,
                PLANT AND EQUIPMENT**





Property,
      plant and equipment consist of the following:




September 30,
            
            December 31,2008
            
            2007Land and buildings
            
            $
            11,732,018
            
            $
            2,024,620Equipment
            
            
            69,080,086
            
            
            192,469Construction
                in progress
            
            
            -
            
            
            55,219,331Total
                property, plant and equipment
            
            
            80,812,104
            
            
            57,436,420Less
                accumulated depreciation
            
            
            2,822,209
            
            
            17,717Net
                property, plant and equipment
            
            $
            77,989,895
            
            $
            57,418,703




Depreciation
      expense during the construction period has been capitalized as part of the
      plant
      construction costs. Upon commencement of operations fixed assets depreciation
      is
      being estimated on the straight line method over useful lives ranging from
      three
      to twenty years.





Most
      of
      the construction was performed under contract agreements. As of September 30,
      2008, and December 31, 2007 total retainage payable of $0 and $2,420,021
      respectively, is included in accounts payable in these financial statements.





**5.** **Intangible
          Assets**





The
      carrying basis and accumulated amortization of recognized intangible assets
      recorded in other assets at September 30, 2008 and December 31, 2007,
      were:




**September 30, 2008**
            
            **December 31, 2007****Gross**
            
            
            
            **Gross****Carrying**
            
            **Accumulated**
            
            **Carrying**
            
            **Accumulated****Amortized intangible assets**
            
            **Amount**
            
            **Amortization**
            
            **Amount**
            
            **Amortization**Loan
                origination costs
            
            $
            483,217
            
            $
            35,366
            
            $
            423,774
            
            
            -Permits
            
            
            89,569
            
            
            -
            
            
            -Total
            
            $
            572,786
            
            $
            35,366
            
            $
            423,774
            
            
            -




8




Amortization
      expense for the three months and nine months ended September 30, 2008 was
      $23,587 and $35,366 respectively. There was no amortization in the year ended
      December 31, 2007. Estimated amortization expense for each of the following
      five
      years is:




2009
            
            $
            90,2412010
            
            
            78,8172011
            
            
            59,5822012
            
            
            51,3982013
            
            
            44,475




**6.
      REVOLVING CREDIT AGREEMENT**





On
      November 6, 2007, the Company entered into a revolving credit agreement with
      FCS
      for up to $5 million. Borrowings under the revolving credit agreement are
      subject to availability under a borrowing base calculation based on accounts
      receivable, inventory and accounts payable; however, up to $2 million may be
      requested without the requirement of a borrowing base. Each borrowing, at the
      option of the Company, can be a revolving base rate loan or a revolving LIBOR
      rate loan. The interest rates at December 31, 2007 and September 30, 2008 were
      7.5% and 5.5%, respectively. The revolving credit agreement includes a 0.50%
      closing fee, paid at closing on the entire amount of the revolving loan
      commitment and an unused commitment fee of 0.30% of the unused portion of the
      revolving loan commitment, payable monthly. The revolving credit agreement
      is
      secured by all of the Company’s real property and personal property now owned or
      hereafter acquired by the Company. On June 2, 2008 the Company amended its
      revolving credit agreement among the Company and the Senior Lender executed
      on
      November 6, 2007 (the “Revolving Loan”) to permit the issuance of the
      Subordinated Notes by the Company and to increase the amount available to the
      Company from $5 million to $8 million (the “Revolving Loan Amendment”) subject
      to borrowing base availability. The Revolving Loan Amendment also shortened
      the
      maturity date of the Revolving Loan to be due in full on June 2, 2009. As of
      September 30, 2008 the outstanding balance of the credit agreement was
      $5,591,177. There were no amounts outstanding under the revolving loan agreement
      as of December 31, 2007





In
      November, 2008 the revolving loan was amended reducing the amount available
      on
      the loan from $8,000,000 to $5,000,000. Additionally all advances must be
      supported by borrowing base certificate as defined. The amendment established
      a
      90 days forbearance on exiting financial covenants and imposed an interest
      rate
      of LIBOR plus 3.50%. The changes were effective December 2, 2008.





Under
      the
      terms of the revolving credit agreement, the Company may request that FCS issue
      one or more letters of credit, subject to borrowing availability. The Company
      agrees to pay FCS a fee of 2.5%, payable quarterly, on the face amount of each
      letter of credit issued. As of December 31, 2007 a $480,000 letter of credit
      was
      issued by FCS on behalf of the Company in favor of a contractor working on
      the
      ethanol project. The letter of credit had a one year term and was considered
      a
      portion of the revolving credit agreement. At September 30, 2008 there were
      no
      letters of credit outstanding.





As
      of
      September 30, 2008 the Revolving Line of Credit balance was $ 591,176 in excess
      of the amount permitted under the borrowing base calculation. This amount was
      repaid from available cash in October, 2008.





**7.
      FINANCING ARRANGEMENTS**





Construction
                note (A)
            
            $
            48,000,000Equipment
                term note (B)
            
            
            85,042Capital
                lease obligations (C)
            
            
            92,324Subordinated
                related party notes (D)
            
            
            3,590,000Total
                long term debt
            
            
            51,767,366Less
                current maturities
            
            
            48,050,249$
            3,717,117




9




(A)
      On
      March 1, 2007, the Company entered into a credit agreement with FCS Financial,
      PCA (FCS) under which FSC will perform agent and servicing responsibilities
      in
      the closing and funding of a $48 million construction and term loan agreement
      for the Company. Under the terms of the loan agreement, the Company is obligated
      to spend a minimum of $15,800,000 on the ethanol project using equity funds
      before requesting draws on the construction loan. The loan is secured by all
      of
      the Company’s real property and personal property now owned or hereafter
      acquired by the Company. The construction loan accrued interest at a variable
      rate of 8% as of December 31, 2007 and 5.25% at September 30, 2008. As of
      September 30, 2008 and December 31, 2007 the balance on this loan was
      $48,000,000 and $22,176,542 respectively.





The
      construction loan was converted to a term loan October 7, 2008 and is being
      repaid over ten years starting on the conversion date. The Company will make
      quarterly principal payments beginning February 1, 2009, with interest payable
      monthly at the prime rate (5% as of September 30, 2008) as defined in the loan
      agreement. The Company will also be required to pay fifty percent of its excess
      cash flow, as defined in the loan agreement, on an annual basis to repay the
      loan until such time as $15,000,000 of excess cash flow has been used to reduce
      the principal balance of the loan.





The
      revolving credit agreement and construction term note are subject to certain
      loan covenants which among other things, requires minimum levels of net worth.
      The Company was in violation of the loan covenant related to net worth as of
      September 30, 2008 (see Note 14).





The
      Company incurred $435,654 in financing costs to secure the above financing.
      This
      cost has been capitalized (and is included in other non-current assets on the
      balance sheet) and will be amortized over the life of the loan once permanent
      financing is in place. From commencement of operations through September 30,
      2008, the Company has amortized $35,366 of this deferred cost. Prior to
      commencement of operations no amortization was recorded on these capitalized
      financing costs.





In
      addition, the Company was required to pay an unused commitment fee on the
      average daily unused portion of the commitment by FCS, including the revolving
      credit agreement discussed above, at the rate of 0.30% per annum, payable
      monthly. During the year ended December 31, 2007 the Company capitalized as
      property plant and equipment $115,378 of unused commitment fees. During the
      three and nine month periods ended September 30, 2008, $69,278 and $93,925,
      respectively, of unused commitment fees were paid, of which, $29,647 was
      capitalized as property, plant and equipment prior to the plant becoming
      operational in May, 2008.





(B)
      In
      March 2007, the Company purchased a piece of equipment for $113,800 with
      $106,300 being financed by the equipment manufacturer. The Company is required
      to make five annual payments of $23,383, including interest at 5.0% with the
      last payment being due in March 2011. As of September 30, 2008, the outstanding
      balance on this loan is $63,666. The Company has an equipment note payable
      totaling $21,376. This note is due in 36 monthly installments of principal
      and
      interest of $701, with the final installment due July, 2011. The note accrues
      interest at a variable rate of Citibank, N. A. prime plus 0.60% (5.60% at
      September, 2008). These loans are collateralized by the equipment.





(C)
      The
      Company leases office equipment under a capital lease for a term of four years
      expiring in February 2012. The lease obligation is payable in monthly
      installments of $636 with a final installment of $2,891 at maturity. The Company
      also leases lab equipment under a capital lease for a term of four years
      expiring March, 2012. The lease obligation is payable in monthly installments
      of
      $1,507 with a final installment of $8,210 at maturity.





(D)
      On
      June 5, 2008, the Company entered into a purchase agreement whereby
      approximately 40 accredited investors named therein purchased approximately
      $3.6
      million worth of 9% subordinated secured notes issued by the Company. The
      Subordinated Notes bear interest at 9% per annum computed on the basis of a
      360-day year for the actual number of days elapsed and will mature on June
      4,
      2010. Interest will be payable annually, with the first installment being
      payable on June 5, 2009, and thereafter on the maturity date, at which time
      the
      entire outstanding principal balance, together with all accrued and unpaid
      interest, will be due at maturity. The Subordinated Notes are secured pursuant
      to a loan and security agreement among the Company as debtor, the State Bank
      of
      Slater as agent and the holders from time to time as a party thereto as lenders
      dated June 5, 2008, whereby the Company granted a second lien security interest
      over substantially all of Company’s personal property in support of the
      obligation to repay the Subordinated Notes. The Subordinated Notes are also
      secured by a leasehold deed of trust, assignment of rents and security
      agreement, among the Company as grantor, Thomas Kreamer as trustee and the
      Bank
      of Slater as grantee dated June 5, 2008. The Company also agreed that debt
      created by the issuance of the Subordinated Notes is subordinate to loans
      provided primarily by FCS Financial, PCA, as specified in the
      Intercreditor/Subordination Agreement executed on June 5, 2008 among the
      Company, the Senior Lender and the Investors. In connection with the issuance
      of
      Subordinated Notes, the Company amended its construction term loan agreement
      among the Company and the Senior Lender, as administrative agent and the other
      lenders thereto, executed on March 7, 2007. The Term Loan was amended on June
      2,
      2008 by the Company and the Senior Lender, as administrative agent and the other
      lenders thereto, to permit the issuance of Subordinated Notes by the Company.




10





The
      estimated maturities of long-term debt during the years ending September 30th
      are as follows:




Revolving  line
              of  credit  and
              Long  Term
            
            Capital  LeaseDebt
            
            Obligations2009
            
            $
            48,026,961
            
            $
            25,7192010
            
            
            3,618,995
            
            
            25,7192011
            
            
            29,087
            
            
            25,7192012
            
            
            4,081,287
            
            
            205452013
            
            
            
            
            
            -Thereafter
            
            
            
            
            
            -Total
                long-term debt
            
            $
            51,675,043
            
            
            97,702Less
                amount representing interest
            
            
            
            
            
            -5,379Present
                value of future minimum lease payments
            
            
            
            
            $
            92,323





Equipment
      under capital lease totaled $105,520. There was no equipment under capital
      lease
      as of December 31, 2007.





**8.
      GRANT REVENUE**





During
      2006, the Company received a value-added agricultural product market development
      grant from the Missouri Agriculture and Small Business Development Authority.
      The grant provides matching funds not to exceed $164,818 for working capital
      expenses. Since inception through June 30, 2007 the Company applied for and
      received $164,818 under this grant. Of this amount, $65,000 was recorded as
      grant revenue, $29,000 was netted against the costs of raising capital, and
      $70,818 was netted against construction in progress.





**9.
      CHAPTER 100 BONDS**





In
      September 2006, the Company entered into an Economic Development Agreement
      with
      the County of Carroll, Missouri to implement a tax abatement plan under Missouri
      Statutes Chapter 100. The plan provides for 100% abatement of real property
      taxes for twenty years (through December 2028 or twenty years from the
      construction and commercial operation of the plant, whichever is later) to
      improve the Company’s cash flow and savings of expenses. Under the plan, legal
      title of the Company’s real property will be transferred to the County. On April
      29 th ,
      2008
      the County issued bonds under Chapter 100 of the Missouri Revised Statutes
      in
      the aggregate amount of $88.5 million. The bonds were issued to the Company,
      so
      no cash exchanged hands. The County then leased the real estate back to the
      Company. The lease payments will be equal to the amount of the payments on
      the
      bonds. All of the Company’s right, title, and interest in the bonds are pledged
      to their finance company as additional security for the construction and term
      loan. At any time, the Company has the option to purchase the real property
      by
      paying off the bonds, paying the trustee fees, plus $1,000.


11





In
      return
      for the abatement of property taxes by the County, the Company has agreed to
      pay
      the County an issuance fee of $10,000 and an additional $10,000 on each
      anniversary date thereafter until the bonds are no longer outstanding. In
      addition, the Company has agreed to make annual grant payments in lieu of
      property taxes beginning in 2009 in the amount of $90,000 for twenty years,
      the
      expected term of the bonds. The Company also agrees to pay the fees of the
      bond
      counsel for the transaction and any financial advisor selected by the County.
      Due to the form of the transaction, the Company has not recorded the bond or
      the
      capital lease associated with sale lease-back transaction. The original cost
      of
      the Company’s property and equipment is being recorded on the balance sheet and
      will be depreciated accordingly. To correlate with the mortgaged debt, the
      bond
      has also been assigned to the senior lender as collateral.





**10.
      REGULATION**





The
      construction of the plant requires various state and local permits to comply
      with existing governmental regulations designed to protect the environment
      and
      worker safety. The Company is subject to regulation on emissions of the United
      States Environmental Protection Agency (EPA) which require the Company to obtain
      air, water and other permits or approvals in connection with the construction
      and operation of the Company’s business. State and federal rules can and do
      change and such changes could result in greater regulatory burdens on the
      Company.





The
      ethanol production will require the Company to emit a significant amount of
      carbon dioxide into the air. Current Missouri law regulating emission does
      not
      restrict or prevent the Company from emitting carbon dioxide in to the air,
      but
      this could change in the future.





The
      Company has obtained the necessary air and water permits to operate the plant,
      including a permit to discharge wastewater from the plant.





In
      addition to the foregoing regulations affecting air and water quality, the
      Company is subject to regulation for fuel storage tanks. If the Company is
      found
      to have violated federal, state or local environmental regulations in the
      future, the Company could incur liability for clean-up costs, damage claims
      from
      third parties and civil and criminal penalties that could adversely affect
      its
      business.





**11.
      COMMITMENTS, CONTINGENCIES AND SUBSEQUENT EVENTS**





The
      Company has taken assignment from Ray-Carroll County Grain Growers, Inc. of
      an
      agreement with U.S. Energy Services, Inc. for energy management and engineering
      services. The initial term of the agreement began on December 1, 2005 and will
      continue until May, 2009. Thereafter the agreement will be month-to-month.
      The
      agreement currently provides for fees of $3,137 per month with an annual
      increase of 4% each year on the anniversary date. Total fees for the nine months
      ended September 30, 2008 and 2007 were $28,233 and $27,144,
      respectively.





In
      March
      2006, the Company entered into a grain supply agreement with Ray-Carroll County
      Grain Growers, Inc. Under the agreement, the Company agrees to purchase all
      corn
      needed to operate a 50-65 million gallon per year ethanol facility, up to
      twenty-two million bushels per year. The Company agreed to pay $0.116 per bushel
      over Ray-Carroll County Grain Growers, Inc.’s posted bid at their Carrollton
      facility, with the rate increasing annually by 3.0%. At September 30, 2008
      the
      rate was $0.1231. The term of this agreement is twenty years from the first
      delivery of the product by the supplier to the Company. Corn costs included
      in
      cost of sales related to the agreement for the three and nine months ended
      September 30, 2008 were approximately $26,200,000 and $35,200,000, respectively.
      As of September 30, 2008, the Company has entered into forward purchase
      contracts under this agreement with Ray-Carroll County Grain Growers totaling
      3.8 million bushels for delivery October, 2008 through May, 2009 at prices
      ranging from $5.13 to $7.08 per bushel. These contracts were written down to
      the
      lower of cost or market which resulted in recording an unrealized loss on future
      contracts of $5,720,638. In order to manage the working capital required to
      settle the unrealized losses on forward contracts, management extended the
      settlement date on 1.9 million bushels to May, 2009. The Company was charged
      a
      fee of $0.41 per bushel totaling $749,800 payable at settlement. Additionally,
      the Company has executed accumulator forward purchase contracts with Ray-Carroll
      County Grain Growers that, based on the current market value of corn, will
      require the Company to purchase 2.1 million bushels of corn for delivery
      beginning in February at prices of $6.99 and $7.195 per bushel. At September
      30,
      2008, 795,000 bushels of the 2,100,000 bushel commitment had been finalized.
      These delivery obligations were written down to the lower of cost or market
      which resulted in recording an additional unrealized loss on future contracts
      of
      $4,257,750. No carrying charges are expected on the accumulator contracts.
      All
      of the Company’s forward purchase contracts are considered to be in the normal
      course of business and are intended to be settled in product. In October, 2008
      the company recognized additional unrealized losses on the above contracts
      totaling approximately $4,436,000 as a result of further declines in the market
      price for corn during October, 2008. Dependent on future corn prices, there
      could be additional losses.


12





On
      July
      14, 2006, the Company entered into a contract with ICM, Inc. to construct a
      dry-mill fuel-grade ethanol plant. The contract price is approximately $66.4
      million. Construction of the plant is completed with a total estimated project
      cost, including the above construction contract, of approximately $82 million.
      As of September 30, 2008, this contact has been settled in full.





The
      Company has entered into a marketing agreement with a marketing company for
      the
      exclusive rights to market, sell and distribute the entire ethanol inventory
      produced by the Company. The agreement extends for a period of five years from
      the time the Company originally ships ethanol. The Company pays the marketing
      company 1% per net gallon for each gallon of ethanol sold by the marketing
      company.





In
      August
      2007, the Company entered into a marketing agreement with Ray-Carroll Grain
      Growers, Inc. that specifies that Ray-Carroll will be the exclusive marketer
      of
      all distiller grain products produced by the Company. The Company agrees to
      pay
      a marketing fee to Ray-Carroll of 2.5% to 4.5% of the net price of the distiller
      grains, depending on type. This fee shall not be less than $1 per ton. The
      contract began May 22, 2008 and has an initial term of three years. Amounts
      totaling approximately $87,000 due the company for distiller grain marketed
      under this agreement are included in accounts receivables as of September 30,
      2008.





**12.
      SUPPLEMENTAL CASH FLOWS DISCLOSURES**





The
      following summarizes the supplemental statement of cash flows information for
      the years to date ended September 30, 2008 and 2007:





Year To
            
            Year ToDate Ended
            
            Date EndedSeptember 30,
            
            September 30,2008
            
            2007Interest
                paid, net of capitalized interest
            
            $
            718,512NON-CASH
                INVESTING AND FINANCING ACTIVITIESLand
                and easements received as settlement of subscriptions
                receivable
            
            
            
            
            $
            2,000,000Purchase
                of property and equipment through issuance of long-term
                debt
            
            
            23,160
            
            
            106,300Loan
                interest and fees capitalized in construction in progress
            
            
            967,847Construction
                in progress included in accounts payable
            
            
            
            
            
            5,291,951





**13.** **ETHANOL
      PRODUCER CREDIT**





The
      State
      of Missouri sponsors the Missouri Qualified Fuel Ethanol Producer Incentive
      Program that pays $0.20 per gallon produced for the first 12,500,000 gallons
      and
      then $0.05 per gallon produced for the next 12,500,000 gallons for a total
      incentive payment of $3,125,000 during a program year beginning July 1st. We
      expect our production will exceed the 25,000,000 gallon limit near January
      1,
      2009 and then we will receive no further payments until the new program begins
      on July 1, 2009. Generally, we will be qualified to participate in this program
      for a total of 60 months. Credits totaling approximately $1,436,000 are included
      in accounts receivable as of September 30, 2008.


13





**14.** **BREACH
      OF LOAN COVENANTS**




Show
      Me
      Ethanol, LLC (the “ Company ”)
      has
      determined that as of September 30, 2008, pursuant to its Construction Loan
      compliance calculations and the preparation of its third quarter financial
      statements, it was not in compliance with an affirmative covenant in its
      $48,000,000 construction loan (the “ Construction
      Loan ”).
      The
      breached covenants required an equity to total assets ratio in excess of 35%
      and
      total net worth in excess of $28,000,000. As of September 30, 2008 the equity
      to
      total assets ratio is 27% and net worth is approximately $24,379,000 (including
      subordinated debt). Such covenant breaches could be declared an event of default
      under the Construction Loan. Upon notice of an event of default by the
      administrative agent, the Company will have thirty (30) days to cure the breach.
      As of the date of this filing, the Company has not been notified of an event
      of
      default under the Construction Loan; consequently, the cure period has not
      commenced. The immediate cause of the covenant breach relates to a significant
      charge the Company has taken as of September 30, 2008 for its forward purchase
      corn contracts that are more expensive than current corn futures contracts
      for
      corn delivered at approximately the same time.




The
      Company is considering its options to cure the Construction Loan breach. The
      Company may conduct a capital call under its existing Operating Agreement to
      provide sufficient resources to cure the breach. Pursuant to the Company’s
      Operating Agreement, such a capital call would require the participation of
      members owning at least 81% of its equity. The Company believes that a capital
      call can be completed in the cure period afforded it under the Construction
      Loan.




**15.** **OTHER
      EVENTS**





On
      November 24, 2008, the Company terminated Gregory E. Thomas as the General
      Manager and Principal Executive Officer of the Company. On November 24, 2008,
      the Company hired Dennis M. Alt as the Chief Restructuring Officer and General
      Manager of the Company.




The
      Company has been notified by the State of Missouri that its application to
      participate in the Big Missouri Linked Deposit Program was rejected. The State
      of Missouri instituted the Big Missouri Linked Deposit Program to encourage
      development of certain industries, including ethanol plants. Under the program,
      the State of Missouri would have made deposits in local banks at reduced
      interest rates in return for those deposits being loaned to targeted businesses
      at below market rates. The Company applied for this program in 2006 and was
      officially rejected in September of 2008.




On
      September 10, 2008, an employee error caused a malfunction at the Company’s
      ethanol plant resulting in the loss of product and a continuing diminution
      in
      total plant production. As a result of this error, the Company’s ethanol plant
      did not operate at full capacity for eight (8) days. The Company believes that
      the third quarter financial results will reflect a one-time loss relating to
      the
      accident. As of the date of this filing the ethanol plant is operating near
      full
      capacity. Nonetheless, due to adverse economic conditions in the ethanol market
      the Company believes it would be operating at less than full capacity anyway
      and
      does not believe that the loss in production capability will have a material
      effect on the Company’s profit and loss going-forward. The Company anticipates
      making repairs in the fourth quarter of 2008 to bring the plant back up to
      its
      full production capabilities of 55 million gallons per year. ****




**16.** **MANAGEMENT’S
      CONSIDERATION OF GOING CONCERN MATTERS**




At
      September 30,  2008
      the
      Company failed to meet certain debt covenant requirements as described in Note
      14. As a result, the bank may demand payment of the entire loan balance so
      that
      amount has been reclassified as a current liability in these financial
      statements. The financial statements have been prepared assuming the Company
      will continue as a going concern, realizing assets and liquidating liabilities
      in the ordinary course of business. Although the Company is currently
      considering raising additional capital from a variety of sources, no commitments
      have been obtained. However, the Company believes it will be able to increase
      capital to an acceptable level soon enough to avoid being declared in default
      and is working to provide sufficient future cash flows to insure compliance
      with
      all the debt covenants and working capital requirements to fund settlement
      of
      unrealized losses on corn forward purchase contracts. Any requirement to realize
      assets in other than the ordinary course of business in order to provide
      liquidity could result in losses not reflected in these financial
      statements.


14


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




**Forward
      Looking Statements**




This
      Quarterly Report on Form 10-Q contains forward-looking statements within the
      meaning of Section 27A of the Securities Act of 1933, as amended, and Section
      21E of the Securities Exchange Act of 1934. This Quarterly Report includes
      statements regarding our plans, goals, strategies, intent, beliefs or current
      expectations. These statements are expressed in good faith and based upon a
      reasonable basis when made, but there can be no assurance that these
      expectations will be achieved or accomplished. These forward looking statements
      can be identified by the use of terms and phrases such as “believe,” “plan,”
“intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or
      future-tense or conditional constructions (“will,” “may,” “could,” “should,”
etc.). Items contemplating or making assumptions about, actual or potential
      future sales, market size, collaborations, and trends or operating results
      also
      constitute such forward-looking statements.





Although
      forward-looking statements in this Quarterly Report reflect the good faith
      judgment of management, forward-looking statements are inherently subject to
      known and unknown risks, business, economic and other risks and uncertainties
      that may cause actual results to be materially different from those discussed
      in
      these forward-looking statements. Readers are urged not to place undue reliance
      on these forward-looking statements, which speak only as of the date of this
      Quarterly Report. We assume no obligation to update any forward-looking
      statements in order to reflect any event or circumstance that may arise after
      the date of this Quarterly Report, other than as may be required by applicable
      law or regulation. Readers are urged to carefully review and consider the
      various disclosures made by us in the our reports filed with the Securities
      and
      Exchange Commission which attempt to advise interested parties of the risks
      and
      factors that may affect our business, financial condition, results of operation
      and cash flows. This discussion should be read in conjunction with the financial
      statements including the related footnotes. If one or more of these risks or
      uncertainties materialize, or if the underlying assumptions prove incorrect,
      our
      actual results may vary materially from those expected or projected. Such risks
      and factors include, but are not limited to, the risk factors set forth in
      the
      section below entitled “RISK FACTORS”.





The
      following discussion should be read in conjunction with the accompanying
      unaudited financial statements and footnotes and our December 31, 2007 audited
      financial statements included in the Company’s Form 10-KSB. Those financial
      statements include additional information about our significant accounting
      policies and practices and the events that underlie our financial results.
      Except for the historical information contained herein, the matters discussed
      below are forward-looking statements that involve certain risks and
      uncertainties.




***Overview***




Show
      Me
      Ethanol, LLC (the “ Company ”)
      is a
      Missouri limited liability company currently processing corn into fuel grade
      ethanol and distillers grains for sale. Our plant has an approximate production
      capacity of 55 million gallons per year (mgpy) and is located in Carroll County,
      Missouri (the “ Ethanol
      Plant ”).
      We
      began construction of the Ethanol Plant in June 2007 and began operations in
      late May 2008. The total cost of our Ethanol Plant was about $88.5 million
      and
      we currently employ thirty-six full time employees.




Since
      we
      only recently became operational, we do not yet have comparable income,
      production or sales data for the nine months ended September 30, 2008.
      Accordingly, we do not provide a comparison of our financial results between
      reporting periods in this report. If you undertake your own comparison of the
      first nine months of 2007 and the first nine months of 2008, it is important
      that you keep this in mind.


15


***Selected
      Financial Information***




The
      following table shows some results of our operations for the three months ended
      September 30, 2008:




***Quarter Ended***
              ***September 30, 2008***
              ***(Unaudited)***
            
            ***Percent***Sales
            
            $
            35,140,641
            
            
            94.0
            %Ethanol
                Producer Credit
            
            
            2,250,356
            
            
            6.0
            %Total
                Sales
            
            
            37,390,997
            
            
            100
            %Cost
                of Sales
            
            
            48,703,377
            
            
            130
            %General
                and Administrative Expenses
            
            
            366,346
            
            
            0.9
            %Interest
                Expense
            
            
            819,504
            
            
            2.2
            %Interest
                and other income
            
            
            26,527
            
            
            0.1
            %—
            
            
            —Net
                Loss
            
            $
            12,471,703
            
            
            33.3
            %




Sales




Our
      sales
      are divided into two categories: sales of fuel ethanol and sales of distillers
      grains. For the three months ended September 30, 2008, we received approximately
      80% of our sales from the sale of fuel ethanol and approximately 14% of our
      sales from the sale of distillers grains. We expect the sale price of our fuel
      ethanol to decrease from current levels based on information from our marketer
      and other factors, including the decrease in the price of gasoline and
      petroleum.




We
      are
      exploring, through our ethanol marketer, ways to expand into market areas in
      the
      southeastern United States. Should we be successful in selling our product
      into
      a new geographical region we believe we will attain higher margins for our
      product than we are currently getting. At this time, our efforts have only
      been
      preliminary and we cannot predict the likelihood of expanding our sales into
      the
      southeastern United States nor predict what profit levels we may be able to
      attain.




Ethanol
      Producer Credit




The
      State
      of Missouri sponsors the Missouri Qualified Fuel Ethanol Producer Incentive
      Program that pays $0.20 per gallon produced for the first 12,500,000 and then
      $0.05 per gallon produced for the next 12,500,000 gallons for a total incentive
      payment of $3,125,000 during a program year beginning July 1 st .
      We
      expect our production will exceed the 25,000,000 gallon limit near January
      1,
      2009 and then we will receive no further payments until the new program cycle
      begins on July 1, 2009. We expect that we will be qualified to participate
      in
      this program for a total of 60 months.




Cost
      of Sales




Our
      cost
      of sales as a percentage of total sales was 130% for the three months ended
      September 30, 2008. Costs of sales for the three months ended September 30,
      2008
      was unusually large due to the $10,728,188 loss recorded on future corn
      contracts held at that time. Our average cost paid for corn per bushel was
      $6.21
      for this period. Our two largest costs of production are corn and natural gas.
      Both of these costs are affected by factors largely out of our
      control.




We
      do not
      have any views as to the projected cost of natural gas.


16




Please
      see the analysis below under “Trends and Uncertainties Impacting the Corn and
      Natural Gas Markets and Our Future Cost of Goods Sold”.




General
      and Administrative Expenses




Our
      general and administrative expenses as a percentage of total sales was 0.9%
      for
      the three months ended September 30, 2008. We expect that general and
      administrative expenses will remain relatively constant for the rest of the
      fiscal year.




Interest
      Expense




Interest
      expense as a percentage of total sales was 2.2% for the three months ended
      September 30, 2008. On October 7, 2008 our construction loan, which we refer
      to
      below as the “Term Loan,” was converted to a variable rate loan based on the
      prime rate. The current rate applied to outstanding balances is 5%.




***Additional
      Operational Data***




For
      the
      quarter ended on September 30, 2008, our operating statistics are as
      follows:




Ethanol
                sold (gallons)
            
            
            12,371,725Dried
                distillers grains sold (tons)
            
            
            30,486Modified
                distillers grains sold (tons)
            
            
            5,362Ethanol
                average price per gallon
            
            $
            2.42Dried
                distillers grain average price per ton
            
            $
            149.61Modified
                distillers grain average price per ton
            
            $
            61.79Average
                corn cost per bushel
            
            $
            6.21




The
      average corn cost per bushel is determined by the cost of the corn that was
      used
      in the production of ethanol during the period reported and not a reflection
      of
      corn that was bought during the period of this report.




***Trends
      and Uncertainties Impacting the Ethanol Industry and Our Future
      Operations***




We
      continue to be subject to industry-wide factors, as well as factors affecting
      the economy at large, that affect our operating and financial performance.
      The
      industry-wide factors include, but are not limited to, the available supply
      and
      cost of corn from which our ethanol and distillers grains are processed; the
      cost of natural gas, which we will use in the production process; dependence
      on
      our ethanol marketer and distillers grains marketer to market and distribute
      our
      products; the cost of gasoline and petroleum; the intensely competitive nature
      of the ethanol industry, including ethanol imported from Caribbean basin
      countries and Brazil; possible legislation at the federal, state and/or local
      level; changes in federal ethanol tax incentives and the cost of complying
      with
      extensive environmental laws that regulate our industry.




We
      expect
      ethanol sales to constitute the bulk of our future revenues. We expect to
      benefit from federal ethanol supports and federal tax incentives. Changes to
      these supports or incentives could significantly impact demand for ethanol.




17




***Trends
      and Uncertainties Impacting the Corn and Natural Gas Markets and Our Future
      Cost
      of Goods Sold***




Our
      cost
      of goods sold consists primarily of costs relating to the corn and natural
      gas
      supplies and depreciation necessary to produce ethanol and distillers grains
      for
      sale. Variables such as planting dates, rainfall, and temperatures will likely
      cause market uncertainty and create corn price volatility throughout the year.




In
      March
      2006, the Company entered into a grain supply agreement with Ray-Carroll County
      Grain Growers, Inc. Under the agreement, the Company agrees to purchase all
      corn
      needed to operate a 50-65 million gallon per year ethanol facility, up to
      twenty-two million bushels per year. The Company agreed to pay $0.116 per bushel
      over Ray-Carroll County Grain Growers, Inc.’s posted bid at their Carrollton
      facility, with the rate increasing annually by 3.0%. At September 30, 2008
      the
      rate was $0.1231. The term of this agreement is twenty years from the first
      delivery of the product by the supplier to the Company. Corn costs included
      in
      cost of sales related to the agreement for the three and nine months ended
      September 30, 2008 were approximately $26,200,000 and $35,200,000, respectively.
      As of September 30, 2008, the Company has entered into forward purchase
      contracts under this agreement with Ray-Carroll County Grain Growers totaling
      3.8 million bushels for delivery October, 2008 through May, 2009 at prices
      ranging from $5.13 to $7.08 per bushel. These contracts were written down to
      the
      lower of cost or market which resulted in recording an unrealized loss on future
      contracts of $5,720,638. In order to manage the working capital required to
      settle the unrealized losses on forward contracts, management extended the
      settlement date on 1.9 million bushels to May, 2009. The Company was charged
      a
      fee of $0.41 per bushel totaling $749,800 payable at settlement. Additionally,
      the Company has executed accumulator forward purchase contracts with Ray-Carroll
      County Grain Growers that, based on the current market value of corn, will
      require the Company to purchase 2.1 million bushels of corn for delivery
      beginning in February at prices of $6.99 and $7.195 per bushel. At September
      30,
      2008, 795,000 bushels of the 2,100,000 bushel commitment had been finalized.
      These delivery obligations were written down to the lower of cost or market
      which resulted in recording an additional unrealized loss on future contracts
      of
      $4,257,750. No carrying charges are expected on the accumulator contracts.
      All
      of the Company’s forward purchase contracts are considered to be in the normal
      course of business and are intended to be settled in product. In October, 2008
      the company recognized additional unrealized losses on the above contracts
      totaling approximately $4,436,000 as a result of further declines in the market
      price for corn during October, 2008. Dependent on future corn prices, there
      could be additional losses.





Natural
      gas is also an important input commodity to our manufacturing process. We
      estimate that our natural gas usage will be approximately 10% to 15% of our
      annual total production cost. Recently, the price of natural gas has risen
      along
      with other energy sources. We look for continued volatility in the natural
      gas
      market. Any ongoing increases in the price of natural gas will increase our
      cost
      of production and may negatively impact our future profit margins.





***Liquidity
      and Capital Resources***




As
      of
      September 30, 2008, we had total assets of $90,215,096 consisting primarily
      of
      cash, prepaid expenses, inventories and property, plant and equipment. We had
      current liabilities of $65,708,872 **** resulting
      from classifying all of our Term Loan as current and our accounts payable and
      estimated payments on long-term debt. Total members’ equity as of September 30,
      2008, was $20,789,106.




At
      September 30, 2008 the Company failed to meet certain covenant requirements
      of
      its Term Loan as described below and in footnote number 14 to the financial
      statements in Item 1 above. As a result, the lenders may demand payment of
      the
      entire loan balance so the amount of the loan has been reclassified as a current
      liability in the Company’s financial statements. The financial statements have
      been prepared assuming the Company will continue as a going concern, realizing
      assets and liquidating liabilities in the ordinary course of business. Although
      the Company is currently considering raising additional capital from a variety
      of sources, no commitments have been obtained. Any requirement to realize assets
      in other than the ordinary course of business in order to provide liquidity
      could result in losses not reflected in these financial statements.


18




Term
      Loan




On
      March
      7, 2007, entered into a $48,000,000 construction loan (the “ Term
      Loan ”)
      pursuant to a Construction and Term Loan Agreement (the “ Term
      Loan Agreement ”)
      with
      FCS Financial, PCA serving as the administrative agent for the transaction.
      The
      participating banks in the Term Loan include FCS Financial, PCA, AgriBank,
      FCB,
      Southwest Bank, CoBank, ACB, 1 st Farm
      Credit Services, FLCA, Bank Midwest, N.A. and Progressive FCS (collectively,
      the
“ Banks ”). The
      Term
      Loan was converted to permanent financing on October 7, 2008 having a
      maturity date that is 10 years from the conversion date .
      The
      Term Loan offers several alternatives concerning fixed or variable rates, the
      underlying index, proportion of fixed versus variable balances, conversion
      from
      variable to fixed and prepayment requirements. The
      Term
      Loan is secured by a first priority security interest in our real and personal
      property, including our interest in the Ethanol Project. Under the terms of
      the
      Term Loan Agreement, 50% of our Excess Cash Flow, as defined in the Term Loan
      Agreement, is to be applied on an annual basis to prepay the Term Loan until
      such time as $15,000,000 of our Excess Cash Flow has been used to prepay the
      Term Loan. The Term Loan was amended on June 2, 2008 by the Company and the
      Senior Lender, as administrative agent and the other lenders thereto, to permit
      the issuance of debentures by the Company (described below).




The
      Company has determined that as of September 30, 2008, pursuant to its Term
      Loan
      compliance calculations and the preparation of its third quarter financial
      statements, it was not in compliance with two (2) affirmative covenants in
      its
      Term Loan. The breached covenants required an equity to total assets ratio
      in
      excess of 35% and for total equity to be greater than $28 million. As of
      September 30, 2008 the Company believes the equity (including the subordinated
      notes) to total assets ratio to be 27% or the total equity to be $24,379,106.
      Such covenant breaches could be declared an event of default under the Term
      Loan. Upon notice of an event of default by the administrative agent, the
      Company will have thirty (30) days to cure the breach. The immediate cause
      of
      the covenant breach relates to a significant charge the Company has taken as
      of
      September 30, 2008 for its forward purchase corn contracts that are more
      expensive than current corn futures contracts for corn delivered at
      approximately the same time.




Revolving
      Loan




On
      November 6, 2007, the Company as borrower entered into a revolving credit
      agreement with FCS Financial, PCA (“ FCS ”)
      as
      lender for a total borrowing up to $5 million (the “ Revolving
      Credit Agreement ”).
      The
      purposes of the Revolving Credit Agreement are to (i) fund proper corporate
      business purposes of the Company, (ii) fund the Company’s maintenance capital
      expenditures and (iii) to finance letters of credit. Borrowings under the
      Revolving Credit Agreement are subject to availability under a borrowing base
      calculation based on accounts receivable, inventory and accounts payable;
      however, up to $2 million may be requested without the requirement of a
      borrowing base. Each borrowing, at the option of the Company, can be either
      a
      revolving base rate loan or a revolving LIBOR rate loan (in either case, a
      “ Revolving
      Loan ”).
      The
      Company may select interest periods of one, two, three or six months for LIBOR
      loans. The Revolving Loan is secured by all of the Company’s real property and
      personal property now owned or hereafter acquired by the Company, secured
      equally and ratably with the Term Loan on the same lien priority basis. The
      Revolving Loan was amended on June 2, 2008 by the Company and FCS to permit
      the
      issuance of debentures by Company (described below) and to increase the amount
      available to the Company from $5 million to $8 million (the “ Revolving
      Loan Amendment ”).
      The
      Revolving Loan Amendment also shortened the maturity date of the Revolving
      Loan
      to be due in full on June 2, 2009.




In
      November, 2008 the Revolving Loan was further amended reducing the amount
      available on the Revolving Loan from $8,000,000 to $5,000,000. Additionally
      all
      advances must be supported by borrowing base certificate as defined. This new
      amendment established a 90 days forbearance on exiting financial covenants
      and
      imposed an interest rate of LIBOR plus 3.50%. The changes were effective
      December 2, 2008.





As
      of
      September 30, 2008 the Company had a borrowed a total of $5,591,176 of the
      $8
      million possible under the Revolving Credit Agreement, which was $591,176 in
      excess of the amount permitted under the borrowing base calculation. Management
      corrected this by repaying the excess from available operating cash in October,
      2008.


19




The
      2010 Notes




On
      June
      5, 2008, the Company entered into a purchase agreement whereby approximately
      40
      accredited investors named therein purchased approximately $3.6 million worth
      of
      9% subordinated secured notes (the “ Notes ”)
      issued
      by the Company. The Notes bear interest at 9% per annum computed on the basis
      of
      a 360-day year for the actual number of days elapsed and will mature on June
      4,
      2010 (the “ Maturity
      Date ”).
      Interest will be payable annually, with the first installment being payable
      on
      June 5, 2009, and thereafter on the Maturity Date, at which time the entire
      outstanding principal balance, together with all accrued and unpaid interest,
      will be immediately due and payable in full. The Notes are secured pursuant
      to a
      loan and security agreement among the Company as debtor, the State Bank of
      Slater as agent and the holders from time to time as a party thereto as lenders
      dated June 5, 2008, whereby the Company granted a second lien security interest
      over substantially all of Company’s personal property in support of the
      obligation to repay the Notes. The Notes are also secured by a leasehold deed
      of
      trust, assignment of rents and security agreement, among the Company as grantor,
      Thomas Kreamer as trustee and the Bank of Slater as grantee dated June 5, 2008,
      whereby the Company granted a second lien security interest over substantially
      all of Company’s personal property in support of the obligation to repay the
      Notes. The Company also agreed that debt created by the issuance of the Notes
      is
      subordinate to loans provided primarily by FCS.




Chapter
      100 Bonds




In
      September 2006, the Company entered into an Economic Development Agreement
      with
      the County of Carroll, Missouri to implement a tax abatement plan under Missouri
      law. The plan provides for 100% abatement of real property taxes for
      approximately twenty years. On April 29, 2008, the County issued bonds under
      Chapter 100 of the Missouri Revised Statutes in a maximum amount of $88,500,000.
      Legal title of our real and personal property was transferred to the County
      and
      the County then leased the property back to us. The bonds were issued to the
      Company so no cash was exchanged. The lease payments are equal to the amount
      of
      the debt service payments on these bonds. The Banks, and agents under the Term
      Loan Agreement received an assignment of the Chapter 100 Bonds and retained
      their first priority position against the real property over the Chapter 100
      Bonds. We have an option to purchase the real property by paying off these
      bonds, paying the trustee fees, plus $1,000. In return for the abatement of
      property taxes by the County, we have agreed to pay the County $10,000 on each
      anniversary date of the Chapter 100 Bonds issuance until the bonds are no longer
      outstanding. In addition and commencing in 2009, we have agreed to make annual
      grant payments in lieu of property taxes in the amount of $90,000 for the period
      during which the bonds are outstanding.




**Off-Balance
      Sheet Arrangements**




We
      have
      no off-balance sheet arrangements.




**ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK**




The
      Company is not required to provide information under this item as it is a small
      reporting company, pursuant
      to the exclusion provided in S-K Item 305(e).




**ITEM
      4. CONTROLS AND PROCEDURES**




**Disclosures
      Controls and Procedures**




We
      have
      adopted and maintain disclosure controls and procedures (as such term is defined
      in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934,
      as
      amended (the “ Exchange
      Act ”))
      that
      are designed to ensure that information required to be disclosed in our reports
      under the Exchange Act, is recorded, processed, summarized and reported within
      the time periods required under the SEC’s rules and forms and that the
      information is gathered and communicated to our management, including our
      General Manager (Principal Executive Officer) and Chief Financial Officer
      (Principal Financial Officer), as appropriate, to allow for timely decisions
      regarding required disclosure.


20




As
      required by SEC Rule 15d-15(b), our Principal Executive Officer and Chief
      Financial Officer carried out an evaluation of the effectiveness of the design
      and operation of our disclosure controls and procedures pursuant to Exchange
      Act
      Rule 15d-14 as of the end of the period covered by this report. Based on the
      foregoing evaluation, our Principal Executive Officer and Chief Financial
      Officer have found significant deficiencies and material weaknesses in
      our internal controls as they relate to our design or operation of
      internal control over financial reporting that is reasonably likely to adversely
      affect our ability to initiate, authorize, record, process and report financial
      data reliably in accordance with generally accepted accounting principles. 
We have made the necessary alterations to our financial statements prior to
      filing our financial statements with the Securities and Exchange Commission
      or
      disclosing them to outside investors.




Our
      Principal Executive Officer and Chief Financial Officer evaluated the
      effectiveness of the design and operation of our disclosure controls and
      procedures as of the end of the period covered by this report as required by
      Rule 13a-15 of the Exchange Act.  Based on their evaluation of our
      disclosure controls and procedures (including internal controls over financial
      reporting), they have concluded that as of the end of the period covered by
      this
      report our disclosure controls and procedures are not effective in ensuring
      that
      material information required to be disclosed by us in the report that we file
      or submit under the Exchange Act is recorded, processed, summarized, and
      reported within the time periods specified in the rules and forms of the SEC
      and
      that such information is accumulated and communicated to management as
      appropriate to allow timely decisions regarding required
      disclosure.




Management
      is developing a plan to remedy the material weaknesses and significant
      deficiencies.




**PART
      II - OTHER INFORMATION**




**ITEM
      1.**  **LEGAL
      PROCEEDINGS**




None.




**ITEM
      1A.**  **RISK
      FACTORS**




Our
      business is subject to a number of risks and uncertainties. If any of the events
      contemplated by the following risks actually occur, then our business, financial
      condition or results of operations could be materially and adversely affected.
      Additional risks and uncertainties not currently known to us or that we
      currently deem to be immaterial may also materially and adversely affect our
      business, financial condition and results of operations.





**Risk
      Factors Related to The Industry**





**Overcapacity
      in the industry may result in a decrease in the price of ethanol and dried
      distiller’s grains with solubles (“DDGS”).** ******





Excess
      capacity in the ethanol industry would have an adverse impact on our results
      of
      operations, cash flows and general financial condition. Excess capacity
      may also result or intensify from increases in production capacity coupled
      with insufficient demand. If the demand for ethanol does not grow at the same
      pace as the supply increase, we expect the price for ethanol to decline. If
      excess capacity in the ethanol industry occurs, the market price of ethanol
      may decline to a level that is inadequate to generate sufficient cash flow
      to cover our costs. In addition, because ethanol production produces DDGS as
      a
      co-product, increased ethanol production may lead to increased supplies of
      DDGS.
      An increase in the supply of DDGS, without corresponding increases in demand,
      could lead to lower prices for, or an inability to sell, our DDGS. Any decline
      in the price of DDGS or in the demand for DDGS generally could have a material
      adverse effect on our business and financial condition.




21





**The
      United States ethanol industry is highly dependent upon a myriad of federal
      and
      state legislation and regulation and any changes in such legislation or
      regulation could have a material adverse effect on our results of operations
      and
      financial condition.**





*The
      elimination or significant reduction in the Federal Excise Tax Credit could
      have
      a material adverse effect on our results of operations.*




The
      production of ethanol is made significantly more profitable by federal tax
      incentives. The federal excise tax incentive program, which is scheduled to
      expire on December 31, 2010, allows gasoline distributors who blend ethanol
      with
      gasoline to receive a federal excise tax rate reduction for each blended gallon
      they sell regardless of the blend rate. The current federal excise tax on
      gasoline is $0.184 per gallon, and is paid at the terminal by refiners and
      marketers. If the fuel is blended with ethanol, the blender may claim a $0.51
      per gallon tax credit for each gallon of ethanol used in the mixture. The
      federal excise tax incentive program may not be renewed prior to its expiration
      in 2010, or if renewed, it may be renewed on terms significantly less favorable
      than current tax incentives. The elimination or significant reduction in the
      federal excise tax incentive program could have a material adverse effect on
      our
      results of operations.





*Waivers
      or repeal of the national Renewable Fuel Standards (RFS) minimum levels of
      renewable fuels included in gasoline could have a material adverse affect on
      our
      results of operations and financial condition.*





Shortly
      after passage of the Energy Independence and Security Act of 2007, which
      increased the minimum mandated required usage of ethanol, a Congressional
      sub-committee held hearings on the potential impact of the new national RFS
      on
      commodity prices. While no action was taken by the sub-committee towards repeal
      of the new national RFS, any attempt by Congress to re-visit, repeal or grant
      waivers of the new national RFS could adversely affect demand for ethanol and
      could have a material adverse effect on our results of operations and financial
      condition.





*While
      the Energy Independence and Security Act of 2007 imposes the national RFS,
      it
      does not mandate only the use of ethanol.*





The
      Energy Independence and Security Act of 2007 imposes the national RFS, but
      does
      not mandate only the use of ethanol.  While the Renewable Fuels
      Association (“ RFA ”)
      expects that ethanol should account for the largest share of renewable fuels
      produced and consumed under the national RFS, the national RFS is not limited
      to
      ethanol and also includes biodiesel and any other liquid fuel produced from
      biomass or biogas. An increase in the availability of alternative sources of
      renewable fuels meeting federal standards may adversely affect demand for
      ethanol and could have a material adverse effect on our results of operations
      and financial conditions.





*The
      elimination or significant reduction in the Missouri Qualified Fuel Ethanol
      Producer Incentive Program could have a material adverse effect on our results
      of operations.*





The
      State
      of Missouri sponsors the Missouri Qualified Fuel Ethanol Producer Incentive
      Program that pays $0.20 per gallon produced for the first 12,500,000 gallons
      and
      then $0.05 per gallon produced for the next 12,500,000 gallons for a total
      incentive payment of $3,125,000 during a program year beginning July 1st. We
      expect our production will exceed the 25,000,000 gallon limit on or about
      January 1, 2009 and then we will receive no further payments until the new
      program begins on July 1, 2009. Generally, we will be qualified to participate
      in this program for a total of 60 months. The elimination or significant
      reduction in this Program could have a material adverse effect on our results
      of
      operations. Further, once the 60 months allowed by the program lapses, our
      profitability may be impacted. Also, because we will produce more than the
      25,000,000 gallons of ethanol eligible for this credit in any one calendar
      year,
      our profit margin on each gallon produced over 25,000,000 gallons will decrease.





**The
      market price of ethanol is dependent on many factors, including the price of
      gasoline, which is in turn dependent on the price of petroleum. Fluctuations
      in
      these prices may cause our results of operations to fluctuate significantly.**





Petroleum
      prices are highly volatile and difficult to forecast due to frequent changes
      in
      global politics and the world economy. The distribution of petroleum throughout
      the world is affected by incidents in unstable political environments, such
      as
      Iraq, Iran, Kuwait, Saudi Arabia, the Russian Federation, Venezuela and other
      countries and regions. The industrialized world depends on oil from these areas
      and any disruption or other reduction in oil supply can cause significant
      fluctuations in the prices of oil and gasoline. The unpredictability of the
      future price of oil or wholesale gasoline may lead to fluctuations in the market
      price of ethanol, causing our profitability to fluctuate significantly.




22




The
      current weakened global economy has placed added downward pressures on the
      price
      of oil due to a lessened demand therefor. The decreased demand and price of
      oil
      may continue to result in a substantial decrease in the demand for, or price
      of,
      ethanol, which would significantly and adversely affect our sales and
      profitability.





**Ethanol
      industry growth is dependent on the changes to and expansion of related
      infrastructure which may not occur on a timely basis, if at all.**





Substantial
      development of infrastructure will be required by persons and entities outside
      of our control for the ethanol industry to grow. Areas requiring expansion
      include, but are not limited to:


•
              additional
                  rail capacity;
 •
              additional
                  storage facilities for ethanol;
 •
              increases
                  in truck fleets capable of transporting ethanol within localized
                  markets;
 •
              expansion
                  of refining and blending facilities to handle ethanol;
 •
              growth
                  in service stations equipped to handle ethanol fuels; and
 •
              growth
                  in the fleet of flexible fuel
                  vehicles.




The
      lack
      of infrastructure prevents the use of ethanol in certain areas where there
      might
      otherwise be demand and results in excess ethanol supply in areas with more
      established ethanol infrastructure, depressing ethanol prices in those areas.




Substantial
      investments required for the development and expansion of infrastructure may
      not
      be made or they may not be made on a timely basis. Any delay or failure in
      the
      development or expansion of infrastructure could hurt the demand or prices
      for
      products, impede delivery of products, impose additional costs or otherwise
      have
      a material adverse effect on results of operations or financial position. Our
      business is dependent on the continuing availability of infrastructure and
      any
      infrastructure disruptions could have a material adverse effect on our business.




**Ethanol
      competes with other existing products and other alternative products could
      be
      developed for use as fuel additives** .





Our
      revenue is derived primarily from the sale of ethanol. Ethanol competes with
      MTBE (methyl tertiary butyl ether) as an oxygenate in gasoline to meet both
      oxy-fuel and reformulated gasoline requirements. Historically, MTBE has been
      the
      most widely used oxygenate to meet the requirements of the Clean Air Act
      Amendments of 1990. However, MTBE has shown significant adverse environmental
      and health safety characteristics that have led to the decision by several
      key
      States to ban its use.





We
      expect
      to be completely focused on the production of ethanol and its co-products for
      the foreseeable future. We may be unable to shift our business focus away from
      the production of ethanol to other renewable fuels or competing products.
      Accordingly, an industry shift away from ethanol or the emergence of new
      competing products may reduce the demand for ethanol. A downturn in the demand
      for ethanol would significantly and adversely affect our sales and
      profitability.





**The
      spread between ethanol and corn prices can vary
      significantly** **.**





Corn
      costs significantly impact our cost of goods sold. The spread between the price
      of ethanol and the price we pay per bushel of corn has fluctuated significantly
      in the past and may fluctuate significantly in the future leading to volatility
      in our net income. Any reduction in the spread between ethanol and corn prices,
      whether as a result of an increase in corn prices or a reduction in ethanol
      prices, would adversely affect our results of operations and financial
      condition.




23





**The
      price of ethanol is not necessarily correlated to gasoline prices and/or
      corn.**





The
      relative immaturity of the ethanol market, coupled with its recent volatility,
      make predicting the future price of ethanol nearly impossible. While some
      industry experts suggest that the main factor affecting the market price of
      ethanol is corn, others suggest it is gasoline. However, neither factor seems
      to
      have a perfect correlative effect. Thus, because the factors affecting the
      price
      of ethanol are indeterminable, we cannot predict or protect ourselves from
      drastic fluctuations in the market price. Fluctuations in the market price
      of
      ethanol may cause our profitability to fluctuate significantly.





**Ethanol
      imported from Caribbean basin countries and Brazil may be a less expensive
      alternative to our ethanol** .





Ethanol
      produced or processed in certain countries in Central America and the Caribbean
      region is eligible for tariff reduction or elimination upon importation to
      the
      United States under a program known as the Caribbean Basin Initiative. Large
      ethanol producers, such as Cargill, have built dehydration plants in
      participating Caribbean Basin countries, such as El Salvador, which convert
      ethanol into fuel-grade ethanol for shipment to the United States. Ethanol
      imported from Caribbean Basin countries may be a less expensive alternative
      to
      domestically produced ethanol. Competition from ethanol imported from Caribbean
      Basin countries may affect our ability to sell our ethanol profitably, adversely
      affecting our results of operations and financial condition.





Brazil
      is
      currently the world’s largest exporter of ethanol and, until recently, was
      also the world’s largest producer of ethanol.  In Brazil, ethanol is
      produced primarily from sugarcane, which is also used to produce food-grade
      sugar.  Ethanol imported from Brazil may be a less expensive alternative to
      domestically produced ethanol, which is primarily made from corn. Tariffs
      presently protecting U.S. ethanol producers may be reduced or eliminated.
      Competition from ethanol imported from Brazil may affect our ability to sell
      our
      ethanol profitably, adversely affecting our results of operations and financial
      condition.





**Corn-based
      ethanol may compete with cellulose-based ethanol in the future, which could
      make
      it more difficult for us to produce ethanol on a cost-effective
      basis.** **





Most
      ethanol is currently produced from corn and other raw grains, such as milo
      or
      sorghum-especially in the Midwest. The current trend in ethanol production
      research is to develop an efficient method of producing ethanol from
      cellulose-based biomass, such as agricultural waste, forest residue, municipal
      solid waste, and energy crops. This trend is driven by the fact that
      cellulose-based biomass is generally cheaper than corn, and producing ethanol
      from cellulose-based biomass would create opportunities to produce ethanol
      in
      areas which are unable to grow corn. Although current technology is not
      sufficiently efficient to be competitive, new conversion technologies may be
      developed in the future. If an efficient method of producing ethanol from
      cellulose-based biomass is developed, we may not be able to compete effectively.
      If we are unable to produce ethanol as cost-effectively as cellulose-based
      producers, our ability to generate revenue will be negatively impacted.





**Carbon
      dioxide may be regulated in the future by the EPA as an air pollutant requiring
      us to obtain additional permits and install additional environmental mitigation
      equipment, which could adversely affect our financial performance.**





In
      an
      April 2007 decision, the United States Supreme Court ruled that carbon
      dioxide is an air pollutant under the Clean Air Act for the purposes of motor
      vehicle emissions.  The lawsuit sought to require the Environmental
      Protection Agency (the “ EPA ”)
      to
      regulate carbon dioxide in vehicle emissions.  Similar lawsuits have been
      filed seeking to require the EPA to regulate carbon dioxide emissions from
      stationary sources such as our ethanol plant under the Clean Air Act. Our plant
      produces a significant amount of carbon dioxide. While there are currently
      no
      regulations applicable to us concerning our carbon dioxide emissions, if the
      EPA
      or the State of Missouri elects to regulate carbon dioxide emissions by plants
      such as ours, we may have to apply for additional permits or we may be required
      to install carbon dioxide mitigation equipment or take other steps to comply
      with these potential regulations.  Compliance with any future regulation of
      carbon dioxide emissions could be costly and may prevent us from operating
      our
      ethanol plant profitably which could decrease or eliminate the value of our
      units.




24





**In
      addition to selling ethanol, we also intend to sell carbon dioxide, a co-product
      of ethanol production, and the markets for this product may decrease in the
      future.**





Carbon
      dioxide is produced during the fermentation stage of the ethanol production
      process. This excess gas is captured and sold to carbon dioxide resellers.
      The
      carbon dioxide market is well established and consists of three major segments:
      the beverage market (27%), the food market (43%), and the industrial market
      (30%). The market is cyclical in that demand increases during the summer as
      beverage and food demands create shortages and higher spot prices.
      Transportation is a limiting factor when sourcing carbon dioxide. On average,
      transportation costs account for 50% of the delivered cost of carbon dioxide.
      For that reason, customers generally must be located within 200 miles of the
      plant. As increasing volumes of ethanol production come on-line, it is possible
      that the market prices for carbon dioxide will soften due to a finite amount
      of
      demand and an increasing supply.




**The
      price of DDGS is affected by the price of other commodity products, such as
      soybeans, and decreases in the price of these commodities could decrease the
      price of DDGS.**





DDGS
      compete with other protein-based animal feed products. The price of DDGS may
      decrease when the price of competing feed products decrease. The prices of
      competing animal feed products are based in part on the prices of the
      commodities from which they are derived. Downward pressure on commodity prices,
      such as soybeans, will generally cause the price of competing animal feed
      products to decline, resulting in downward pressure on the price of DDGS.
      Because the price of DDGS is not tied to production costs, decreases in the
      price of DDGS will result in less revenue generated and lower profit margins.





**The
      price of corn is affected by the price of other commodity products, such as
      soybeans.**





The
      market price for other commodities will affect the price we pay for corn. If
      the
      price of soybeans or other commodities rises, decisions to plant soybeans or
      other commodities in lieu of corn will ensue, resulting in a decreased supply
      of
      corn and thus, upward pressure on the price for corn. Any change in corn price
      would have an effect on our profit margin and could adversely affect our results
      of operations and financial condition.





**New
      technology may lessen the demand for ethanol and negatively impact our
      profitability.** ****





Alternative
      fuels, gasoline oxygenates and ethanol production methods are continually under
      development. A number of automotive, industrial and power generation
      manufacturers are developing more efficient engines, hybrid engines and
      alternative clean power systems using fuel cells or clean burning gaseous fuels.
      Vehicle manufacturers are working to develop vehicles that are more fuel
      efficient and have reduced emissions using conventional gasoline. Vehicle
      manufacturers have developed and continue to work to improve hybrid technology,
      which powers vehicles by engines that utilize both electric and conventional
      gasoline fuel sources. If the fuel cell and hydrogen industries continue to
      expand and gain broad acceptance, and hydrogen becomes readily available to
      consumers for motor vehicle use, the demand for ethanol may decrease. Likewise,
      further development and use of vehicles running on electricity may lessen the
      demand for ethanol. This resulting decrease in the demand for ethanol may
      negatively impact our financial condition.





**Consumer
      resistance to the use of ethanol based on the belief that ethanol is expensive,
      adds to air pollution, harms engines and takes more energy to produce than
      it
      contributes, may affect the demand for ethanol which could affect our ability
      to
      market our product.**





Certain
      individuals believe that use of ethanol will have a negative impact on retail
      prices.  Many also believe that ethanol adds to air pollution and harms car
      and truck engines.  Still other consumers believe that the process of
      producing ethanol actually uses more fossil fuels than the amount of ethanol
      that is produced.  If consumers choose not to buy ethanol, it would affect
      the demand for the ethanol that we produce and negatively affect our
      profitability.





25





**Risk
      Factors Related to Our Operations**





**We
      have a limited operating history and our business may not be successful.**





Our
      operating facility began producing ethanol in May, 2008. Accordingly, we have
      a
      limited operating history from which you can evaluate our business and
      prospects. In addition, our prospects must be considered in light of the risks
      and uncertainties encountered by a company with limited operating history in
      a
      rapidly evolving market, such as the ethanol market, where supply and demand
      may
      change significantly in a short amount of time.




Some
      of
      these risks relate to our potential inability to:




•
              effectively
                  manage business and operations;
 •
              adequately
                  establish policies, procedures and oversight related to corporate
                  governance, risk management and finance;
 •
              successfully
                  execute plans to sell ethanol;
 •
              recruit
                  and retain key personnel;
 •
              successfully
                  maintain a low-cost structure;
 •
              manage
                  rapid growth in personnel and operations;
 •
              develop
                  new products that complement existing business; and
 •
              successfully
                  address the other risks to the business.




If
      we
      cannot successfully address these risks, our business, future results of
      operations and financial position may be materially adversely affected, and
      we
      may experience operating losses in the future.





**We
      have a significant amount of debt, and our existing debt financing agreements
      contain, and our future debt financing agreements may contain, restrictive
      covenants that limit distributions and impose restrictions on the operation
      of
      our business. Our debt level and our failure to comply with applicable debt
      financing covenants and agreements could have a material adverse effect on
      our
      business, results of operations and financial condition.**





The
      use
      of debt financing makes it more difficult for us to operate because we must
      make
      principal and interest payments on the indebtedness and abide by covenants
      contained in our debt financing agreements. The level of our debt may have
      important implications on our operations, including, among other things:




•
              limiting
                  our ability to obtain additional debt or equity financing;
 •
              making
                  us vulnerable to increases in prevailing interest rates;
 •
              placing
                  us at a competitive disadvantage because we may be substantially
                  more
                  leveraged than some of our competitors;
 •
              subjecting
                  all or substantially all of our assets to liens, which means that
                  there
                  may be no assets left for shareholders in the event of a liquidation;
 •
              limiting
                  our ability to adjust to changing market conditions, which could
                  make us
                  more vulnerable to a downturn in the general economic condition
                  of our
                  business; and
  26
  •
              limiting
                  our ability to make business and operational decisions regarding
                  our
                  business, including, among other things, limiting our ability to
                  pay
                  dividends, make capital improvements, sell or purchase assets or
                  engage in
                  transactions we deem to be appropriate and in our best interest.




The
      terms
      of our existing debt financing agreements contain, and any future debt financing
      agreement we enter into may contain, financial, maintenance, organizational,
      operational and other restrictive covenants. If we are unable to comply with
      these covenants or service our debt, we may lose control of our business and
      be
      forced to reduce or delay planned capital expenditures, sell assets, restructure
      our indebtedness or submit to foreclosure proceedings, all of which could result
      in a material adverse effect upon our business, results of operations and
      financial condition and thus, you could lose your entire investment. Our debt
      arrangements may also include subordinated debt, which may contain even more
      restrictions and be on less favorable terms than our senior debt. If we issue
      subordinated debt, we may have to give the lender the right to take control
      of
      our business in the event of a default or other rights and benefits as the
      lender may require, which may impose onerous financial restrictions on our
      business. The foregoing risks and hindrances are further exacerbated by the
      current global economic debt market conditions and may significantly impede
      or
      completely eliminate our access to capital markets.





**We
      have incurred significant losses and negative operating cash flow in the past
      and we may incur significant losses and negative operating cash flow in the
      future. Continued losses and negative operating cash flow may negatively affect
      our operations and prevent us from expanding, or continuing to operate, our
      business.**





We
      have
      incurred significant losses and negative operating cash flow in the past. We
      expect to rely on cash on hand, cash, if any, generated from our operations
      and
      cash, if any, generated from our future financing activities to fund all of
      the
      cash requirements of our business. Continued losses and negative operating
      cash
      flow may negatively affect our operations and prevent us from expanding our
      business or may prevent us from continuing the business as a going concern.
      Continued losses and negative operating cash flow are also likely to make our
      capital raising needs more acute while limiting our ability to raise additional
      financing on satisfactory terms.





**We
      currently lack adequate working capital and various factors could result in
      further deterioration of working capital which would not allow us to fund our
      operations or meet our capital expenditure requirements, or both.**





We
      are
      currently lacking the working capital necessary to effectively run our business.
      Additionally, if ethanol production margins continue to deteriorate from current
      levels, if our capital requirements or cash flows otherwise vary materially
      and
      adversely from our current projections, or if other adverse unforeseen
      circumstances occur, our working capital will be wholly inadequate to fully
      fund
      our operations or meet our capital expenditure requirements, or both, which
      would have a material adverse effect on our results of operations, liquidity
      and
      cash flows and further restrict or eliminate our ability to compete.





**The
      raw materials and energy necessary to produce ethanol may be unavailable or
      may
      increase in price, adversely affecting our business, results of operations
      and
      financial condition.**





The
      principal raw material we use to produce ethanol and its co-products is corn.
      Changes in the price of corn can significantly affect our business. In general,
      rising corn prices result in lower profit margins and, therefore, represent
      unfavorable market conditions. This is especially true since market conditions
      generally do not allow us to pass along increased corn prices to our customers
      because the price of ethanol is determined by many factors, including the supply
      of ethanol and the price of oil and gasoline. At certain levels, corn prices
      may
      even make ethanol production uneconomical depending on the prevailing price
      of
      ethanol.





The
      price
      of corn is influenced by general economic, market and regulatory factors. These
      factors include weather conditions, crop conditions and yields, farmer planting
      decisions, government policies and subsidies with respect to agriculture and
      international trade and global supply and demand. The significance and relative
      impact of these factors on the price of corn is difficult to predict. Any event
      that tends to negatively impact the supply of corn will tend to increase prices
      and potentially harm our business. Likewise, events that increase the supply
      of
      corn may cause the price of corn to decrease; however, the price of corn may
      not
      decrease fast enough to off-set the resulting decrease in the price of
      ethanol.




27





The
      production of ethanol also requires a significant and uninterrupted supply
      of
      other raw materials and energy, primarily water, electricity and natural gas.
      The prices of electricity and natural gas have fluctuated significantly in
      the
      past and may fluctuate significantly in the future. Local water, electricity
      and
      gas utilities may not be able to reliably supply the water, electricity and
      natural gas that our facility needs or may not be able to supply those resources
      on acceptable terms. Any disruptions in the ethanol production infrastructure
      network, whether caused by labor difficulties, earthquakes, storms, other
      natural disasters or human error or malfeasance or other reasons, could prevent
      timely deliveries of corn or other raw materials and energy and may require
      us
      to halt production which could have a material adverse effect on our business,
      results of operations and financial condition.





**The
      crisis in the financial markets, considerable volatility in the commodities
      markets and sustained weakening of the economy could further significantly
      impact our business and financial condition and may limit our ability to raise
      additional capital.**





As
      widely
      reported, financial markets in the United States and the rest of the world
      are
      experiencing extreme disruption, including, among other things, extreme
      volatility in securities and commodities prices, as well as severely diminished
      liquidity and credit availability. As a result, our ability to access the
      capital markets and raise funds required for our operations may be severely
      restricted at a time when we would like, or need, to do so, which could have
      an
      adverse effect on our ability to meet our current and future funding
      requirements and on our flexibility to react to changing economic and business
      conditions. Current economic and market conditions, and particularly, the
      significant decline in the price of crude oil, could also result in reduced
      demand for all of our products. We are not able to predict the duration or
      severity of the current disruption in financial markets, fluctuations in the
      price of crude oil or other adverse economic conditions in the United States.
      However, if economic conditions continue to worsen, it is likely that these
      factors would have an adverse effect on our results of operations and future
      prospects.





**Our
      business is limited to the production and sale of fuel-grade ethanol and
      DDGS.**





Our
      business is not well diversified; rather, it is principally limited to the
      production and sale of fuel-grade ethanol produced from corn and the sale of
      the
      related co-product, DDGS. The lack of diversification of our business may limit
      our ability to adapt to changing business and market conditions.





**We
      will are dependent on Ray-Carroll Country Grain Growers Inc. for various
      services including our grain sourcing.**





We
      depend
      on Ray-Carroll, a holder of our Class B Units, for our grain feedstock sourcing.
      If Ray-Carroll defaults on its agreement to timely provide us grain feedstock
      sourcing in sufficient quantities for our operation, we would be materially
      adversely affected as it would be very difficult to replace this feedstock
      source.





**We
      are dependent on Eco-Energy for all distribution of our
      ethanol.**





We
      depend
      on Eco-Energy for distribution and sales of all of our Ethanol. If Eco-Energy
      defaults on its agreement, fails to perform adequately, or is otherwise
      negligent in its duties owed to us, we would be materially adversely affected
      as
      it would be very difficult to, quickly, adequately, or otherwise, replace this
      service.





**Our
      lack of long-term ethanol orders and commitments by our customers could lead
      to
      a rapid decline in our sales and profitability.**





We
      cannot
      rely on long-term ethanol orders or commitments by our customers for protection
      from the negative financial effects of a decline in the demand for ethanol
      or a
      decline in the demand for our marketing services. The limited certainty of
      ethanol orders can make it difficult for us to forecast our sales and allocate
      our resources in a manner consistent with our actual sales. Moreover, our
      expense levels are based in part on our expectations of future sales and, if
      our
      expectations regarding future sales are inaccurate, we may be unable to reduce
      costs in a timely manner to adjust for sales shortfalls. Furthermore, because
      of
      the relatively small number of customers for our ethanol, the magnitude of
      the
      ramifications of these risks is greater than if our sales were less
      concentrated. As a result of our lack of long-term ethanol orders and
      commitments, we may experience a rapid decline in our sales and profitability.




28





**We
      lack an effective hedging program.** ******





Due
      to
      the relative immaturity of our business operations, we have not enacted a
      hedging program in the corn or ethanol futures markets. We intend to implement
      a
      hedging program to the extent possible, but due to the limited market for sales
      of ethanol with a future delivery date, such a program may be impossible to
      implement.  The effectiveness of such hedging activities is dependent,
      among other things, upon the cost of corn and natural gas and our ability to
      sell sufficient products to utilize all of the corn and natural gas subject
      to
      the futures contracts.  There is no assurance that our hedging activities
      will reduce the risk caused by price fluctuation which may leave us vulnerable
      to high corn and natural gas prices.  In addition, we may choose not to
      take hedging positions in the future, which may adversely affect our financial
      condition if corn and natural gas prices increase. Our hedging activities can
      also result in increased costs because price movements in corn and natural
      gas
      are highly volatile and are influenced by many factors that are beyond our
      control.





**We
      compete with other established ethanol production companies who have greater
      experience and resources than we currently have** .





We
      have
      several significant competitors in the ethanol production industry. These
      companies are presently producing ethanol in substantial volume, have greater
      financial resources and have more experienced personnel than we presently do.
      Those competitors who are presently producing ethanol have greater capital
      resources than we currently do. As a result, this is a significant obstacle
      that
      we will need to overcome. In addition, our lack of experience in our chosen
      industry relative to many of our significant competitors may cause us to fail
      to
      anticipate or respond adequately to new developments and other competitive
      pressures. This failure could reduce our competitiveness and cause a decline
      in
      our market share, sales and profitability.





**We
      may be adversely affected by environmental, health and safety laws, regulations
      and liabilities.**





We
      are
      subject to various federal, state and local environmental laws and regulations,
      including those relating to the discharge of materials into the air, water
      and
      ground, the generation, storage, handling, use, transportation and disposal
      of
      hazardous materials, and the health and safety of our employees. In addition,
      some of these laws and regulations require our facilities to operate under
      permits that are subject to renewal or modification. These laws, regulations
      and
      permits can often require expensive pollution control equipment or operational
      changes to limit actual or potential impacts to the environment. A violation
      of
      these laws and regulations or permit conditions can result in substantial fines,
      natural resource damages, criminal sanctions, permit revocations and/or facility
      shutdowns.





We
      may be
      liable for the investigation and cleanup of environmental contamination at
      each
      of the properties that we own or operate and at off-site locations where we
      arrange for the disposal of hazardous substances. If these substances have
      been
      or are disposed of or released at sites that undergo investigation and/or
      remediation by regulatory agencies, we may be responsible under the
      Comprehensive Environmental Response, Compensation and Liability Act of 1980,
      or
      other environmental laws for all or part of the costs of investigation and/or
      remediation, and for damages to natural resources. We may also be subject to
      related claims by private parties alleging property damage and personal injury
      due to exposure to hazardous or other materials at or from those properties.
      Some of these matters may require us to expend significant amounts for
      investigation, cleanup or other costs.





In
      addition, new laws, new interpretations of existing laws, increased governmental
      enforcement of environmental laws or other developments could require us to
      make
      additional significant expenditures. Continued government and public emphasis
      on
      environmental issues can be expected to result in increased future investments
      for environmental controls at our production facilities. Present and future
      environmental laws and regulations (and interpretations thereof) applicable
      to
      our operations, more vigorous enforcement policies and discovery of currently
      unknown conditions may require substantial expenditures that could have a
      material adverse effect on our results of operations and financial condition.




29





The
      hazards and risks associated with producing and transporting our products (such
      as fires, natural disasters, explosions and abnormal pressures and blowouts)
      may
      also result in personal injury claims or damage to property and third parties.
      As protection against operating hazards, we maintain insurance coverage against
      some, but not all, potential losses. However, we could sustain losses for
      uninsurable or uninsured risks, or in amounts in excess of existing insurance
      coverage. Events that result in significant personal injury or damage to our
      property or third parties or other losses that are not fully covered by
      insurance could have a material adverse effect on our results of operations
      and
      financial condition.





**Operational
      difficulties at our production facilities could negatively impact our sales
      volumes and could cause us to incur substantial losses.**





Our
      operations are subject to labor disruptions, unscheduled downtime and other
      operational hazards inherent in our industry, such as equipment failures, fires,
      explosions, abnormal pressures, blowouts, pipeline ruptures, transportation
      accidents and natural disasters. Some of these operational hazards may cause
      personal injury or loss of life, severe damage to or destruction of property
      and
      equipment or environmental damage, and may result in suspension of operations
      and the imposition of civil or criminal penalties. Our insurance may not be
      adequate to fully cover the potential operational hazards described above or
      we
      may not be able to renew this insurance on commercially reasonable terms or
      at
      all.





Moreover,
      our plant may not operate as planned or expected. Our plant is designed to
      operate at or above a certain production capacity. The operation of our plant
      is
      and will be, however, subject to various uncertainties. As a result, our plant
      may not produce ethanol and DDGS at the levels we expect. In the event our
      plant
      does not run at its expected capacity level, our business, results of operations
      and financial condition may be materially and adversely affected.





**The
      slowing economy may decrease the consumer demand for animal protein and our
      DDGS.**





The
      continued deterioration of the economy may decrease the demand for animal
      protein, which would decrease the demand for animal feedstock and thus would
      decrease the demand for our DDGS and negatively affect the price. Any decline
      in
      the price of DDGS or the DDGS market generally could have a material adverse
      effect on our business and financial condition.





**We
      depend on a small number of customers for the majority of our sales. A reduction
      in business from any of these customers could cause a significant decline in
      our
      overall sales and profitability.**





The
      majority of our sales are generated from a small number of customers. We expect
      that we will continue to depend for the foreseeable future upon a small number
      of customers for a significant portion of our sales. Our agreements with these
      customers generally do not require them to purchase any specified amount of
      ethanol or dollar amount of sales or to make any purchases whatsoever.
      Therefore, in any future period, our sales generated from these customers,
      individually or in the aggregate, may not equal or exceed historical levels.
      If
      sales to any of these customers cease or decline, we may be unable to replace
      these sales with sales to either existing or new customers in a timely manner,
      or at all. A cessation or reduction of sales to one or more of these customers
      could cause a significant decline in our overall sales and profitability.





**We
      are subject to financial reporting and other requirements, and we will become
      subject to additional financial reporting and other requirements, in each case
      for which our accounting, internal audit and other management systems and
      resources may not be adequately prepared. We have experienced material
      weaknesses in our internal controls.**





We
      are
      subject to reporting and other obligations under the Securities Exchange Act
      of
      1934, as amended, including the requirements of Section 404 of Sarbanes-Oxley
      Act of 2002 (“ SOX ”).
      Section 404 of SOX requires annual management assessment of the effectiveness
      of
      a company’s internal controls over financial reporting and a report by its
      independent registered public accounting firm addressing the effectiveness
      of
      our internal controls over financial reporting. These reporting and other
      obligations place significant demands on our management, administrative,
      operational, internal audit and accounting resources. If we are unable to meet
      these demands in a timely and effective fashion, our ability to comply with
      our
      financial reporting requirements and other rules that apply to us could be
      impaired. Any failure to maintain effective internal controls could have a
      material adverse effect on our business, results of operations and financial
      condition.




30




In
      connection with the report of our financial statements for the quarter ended
      September 30, 2007, we identified several significant deficiencies that in
      the aggregate amounted to a material weakness in our internal controls over
      financial reporting. A “material weakness” is a deficiency, or a combination of
      deficiencies, in internal control over financial reporting, such that there
      is a
      reasonable possibility that a material misstatement of the company’s annual or
      interim financial statements will not be prevented or detected on a timely
      basis. A “significant deficiency” is a deficiency, or a combination of
      deficiencies, in internal control over financial reporting that is less severe
      than a material weakness yet important enough to merit attention by those
      responsible for oversight of the company’s financial reporting. We believe that
      we have remediated this weakness, but we cannot assure you that we will have
      no
      future deficiencies or weaknesses in our internal controls over financial
      reporting.




In
      connection with the report of our financial statement for the quarter ended
      September 30, 2008, we identified several material weaknesses and significant
      deficiencies in our internal controls over financial reporting. Management
      is
      currently developing a plan to remediate these weaknesses and deficiencies,
      but
      we cannot assure you that we will adequately remediate these weaknesses and
      deficiencies or that we will have no future deficiencies or weaknesses in our
      internal controls over financial reporting.




Any
      failure to remediate any material weaknesses that we may identify or to
      implement new or improved controls, or difficulties encountered in their
      implementation, could cause us to fail to meet our reporting obligations and
      subsequently impair our ability to raise money or operate the business.





**We
      may be exposed to potential risks relating to our internal controls over
      financial reporting and our ability to have those controls attested to by our
      independent auditors** **.**





As
      directed by Section 404 of SOX, the Securities and Exchange Commission adopted
      rules requiring public companies to include a report of management on the
      company’s internal controls over financial reporting in their annual reports,
      including Form 10-K.





While
      we
      have expended resources in identifying financial reporting risks, and controls
      that address them as required by Section 404 of SOX, there can be no positive
      assurance that we will receive a positive attestation from our independent
      auditors. In the event we are unable to receive a positive attestation from
      our
      independent auditors with respect to our internal controls, investors and others
      may lose confidence in the reliability of our financial statements and our
      ability to obtain equity or debt financing could suffer.




**We
      are dependent upon our officers for management and direction, and the loss
      of
      any of these persons could adversely affect our operations and results.**




We
      are
      dependent upon our officers for implementation of our business strategy and
      execution of our business plan. The loss of any of these officers could have
      a
      material adverse effect upon our results of operations and our financial
      position. We do not have employment agreements with our officers or other key
      personnel. In addition, we do not maintain “key person” life insurance for any
      of our respective officers. The loss of any of these officers could delay or
      prevent the achievement of our business objectives.


31




**Competition
      for qualified personnel in the ethanol industry is intense and we may not be
      able to hire and retain qualified personnel to operate our ethanol plants.**




Our
      success depends, in part, on our ability to attract and retain competent
      personnel. Qualified managers, engineers, operations and other personnel must
      be
      hired, which can be challenging in a rural community. Competition for both
      managers and plant employees in the ethanol industry is intense, and we may
      not
      be able to attract and retain qualified personnel. If we are unable to hire
      and
      retain productive and competent personnel, our strategy may be adversely
      affected, the amount of ethanol we produce may decrease and we may not be able
      to efficiently operate our ethanol plant and execute our business
      strategy.





**Risk
      Factors Related to Our Units**





**There
      is no public market for the Class A Units.**





There
      is
      currently no market for the Class A Units. We do not intend to apply for listing
      of the Class A Units on any stock exchange or quotation system. Our Articles
      of
      Organization and Operating Agreement contain restrictions on the transfer of
      Class A Units. In addition, federal and state law restricts transferability
      of
      the Class A Units. It may be difficult or impossible for you to liquidate your
      investment when you desire to do so. Therefore, you may be required to bear
      the
      economic risks of the investment for an indefinite period of time.





**Holders
      of our Units may suffer significant dilution in the future** .





We
      may
      not have sufficient capital available to allow us to operate our business as
      a
      going concern. As a result, it is possible that we may elect to raise additional
      equity capital by selling additional units or other securities in the future
      to
      raise the funds necessary to allow us to implement our business plan. We may
      also conduct a capital call in the future that may result in current members
      being diluted. If we do any of the foregoing, investors may suffer significant
      dilution.





**We
      do not anticipate payment of dividends, and investors will be wholly dependent
      upon the value of their units to realize economic benefit from their
      investment** .





As
      holders of our units, you will only be entitled to receive those dividends
      that
      are declared by our board of managers out of retained earnings. We do not expect
      to have retained earnings available for declaration of dividends in the
      foreseeable future. There is no assurance that such retained earnings will
      ever
      materialize to permit payment of dividends to you. Our board of managers will
      determine future dividend policy based upon our results of operations, financial
      condition, capital requirements, reserve needs and other circumstances.





**The
      value of our units may fluctuate significantly in the
      future.** ****





The
      value
      of our units may fluctuate in response to one or more of the following factors,
      many of which are beyond our control:





**•**
            the
                volume and timing of the receipt of orders for ethanol from major
                customers;**•**
            competitive
                pricing pressures;**•**
            our
                ability to produce, sell and deliver ethanol on a cost-effective
                and
                timely basis;**•**
            our
                inability to obtain construction, acquisition, capital equipment
                and/or
                working capital financing;**•**
            the
                introduction and announcement of one or more new alternatives to
                ethanol
                by our competitors;**•**
            changing
                conditions in the ethanol and fuel markets;**•**
            changes
                in market valuations of similar companies;**•**
            regulatory
                developments;




32





**•**
            future
                sales of our units or other securities; and**•**
            various
                other risks as articulated in our risk
                factors.





**We
      do not have significant financial reporting experience, which may lead to delays
      in filing required reports with the Securities and Exchange
      Commission.**





Because
      we do not have significant financial reporting experience, we may experience
      delays in filing required reports with the Securities and Exchange Commission.
      Delays may cause us to have additional difficulty in raising capital or growing
      our business. Such reports may also distract management from focusing on growing
      the operation and the business.





**We
      cannot predict whether we will successfully effectuate our current business
      plan. Each investor is encouraged to carefully analyze the risks and merits
      of
      an investment in our units and should take into consideration when making such
      analysis, among others, the Risk Factors discussed above.**





**ITEM
      2.**  **UNREGISTERED
      SALES OF EQUITY SECURITIES & USE OF PROCEEDS**




None.




**ITEM
      3.**  **DEFAULTS
      ON SENIOR SECURITIES**




None.




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




None.




**ITEM
      5.**  **OTHER
      INFORMATION**




On
      November 24, 2008, the Company terminated Gregory E. Thomas as the General
      Manager and Principal Executive Officer of the Company. On November 24, 2008,
      the Company hired Dennis M. Alt as the Chief Restructuring Officer (which serves
      as the Principal Executive Officer of the Company) and General Manager of the
      Company. Prior to Mr. Alt joining the Company, he had been employed as Counsel
      with Bryan Cave, LLP in Kansas City, Missouri since 2004. Mr. Alt served as
      the
      Vice President for Strategic Projects for Farmland Industries, Inc. in Kansas
      City, Missouri from 2000 through 2003. There is no employment agreement between
      Mr. Alt and the Company. Mr. Alt will receive an annual salary of $185,000
      plus
      amounts above his normal contribution for benefits with Bryan Cave LLP. During
      Mr. Alt’s employment at Bryan Cave LLP, the Company retained Bryan Cave LLP for
      legal services. The Company has paid Bryan Cave LLP the following amounts for
      legal services: $170,032 in 2006, $106,499 in 2007, and $155,591 in
      2008.




The
      Company has been notified by the State of Missouri that its application to
      participate in the Big Missouri Linked Deposit Program was rejected. The State
      of Missouri instituted the Big Missouri Linked Deposit Program to encourage
      development of certain industries, including ethanol plants. Under the program,
      the State of Missouri would have made deposits in local banks at reduced
      interest rates in return for those deposits being loaned to targeted businesses
      at below market rates. The Company applied for this program in 2006 and was
      officially rejected in September of 2008.




On
      September 10, 2008, an employee error caused a malfunction at the Company’s
      ethanol plant resulting in the loss of product and a continuing diminution
      in
      total plant production. As a result of this error, the Company’s ethanol plant
      did not operate at full capacity on eight (8) days. The Company believes that
      the third quarter financial results will reflect a one-time loss relating to
      the
      accident. As of the date of this filing the ethanol plant is operating near
      full
      capacity. Nonetheless, due to adverse economic conditions in the ethanol market
      the Company believes it would be operating at less than full capacity anyway
      and
      does not believe that the loss in production capability will have a material
      effect on the Company’s profit and loss going-forward. The Company anticipates
      making repairs in the fourth quarter of 2008 to bring the plant back up to
      its
      full production capabilities of 55 million gallons per year.


33


**ITEM
      6.**  **EXHIBITS**





The
      following exhibits are filed with or incorporated as part of this report as
      required by Item 601 of Regulation S-K:





**Exhibit**
              **No.**
            
            **Description**
            
            **Reference**31.1
            
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                302 of
                the Sarbanes-Oxley Act of 2002. *31.2
            
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                302 of
                the Sarbanes-Oxley Act of 2002. *32
            
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002.*





*
            Filed
                herewith.


34


**SIGNATURES**





In
      accordance with the requirements of the Exchange Act, the registrant has caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.


**SHOW
                  ME ETHANOL, LLC**Date:
                  December 5, 2008By:
              /s/
                  Michael R. CouncilName:
                  Michael R. Council
                Title:  
                  Chief Financial Officer




35


**EXHIBIT
        INDEX**
 
 **Exhibit**
                **No.**
              
              **Description**
              
              **Reference**31.1
              
              Certification
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                  302 of
                  the Sarbanes-Oxley Act of 2002. *31.2
              
              Certification
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                  302 of
                  the Sarbanes-Oxley Act of 2002. *32
              
              Certification
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of 2002.*
 
 *
              Filed
                  herewith.
  36