##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the quarterly period ended June 30, 2011
 OR
 o
    
    Transition report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the transition period from  to
 Commission file number 000-52617
 WESTERN DUBUQUE BIODIESEL, LLC
  Iowa
    
    20-3857933(State or other jurisdiction of organization)
    
    (I.R.S. Employer Identification No.)
 904 Jamesmeier Rd.
P.O. Box 82
Farley, IA 52046
  (563) 744-3554
 þ o
 o o
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
    
    Smaller Reporting Company þ
 o þ




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##### 



INDEX
 Page No.PART I. FINANCIAL INFORMATION
    
    
    1Item 1. Financial Statements
    
    
    1Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures about Market Risks
    
    
    20Item 4. Controls and Procedures
    
    
    20PART II. OTHER INFORMATION
    
    
    20Item 1. Legal Proceedings
    
    
    20Item 1A. Risk Factors
    
    
    20Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    20Item 3. Defaults Upon Senior Securities
    
    
    21Item 4. (Removed and Reserved)
    
    
    21Item 5. Other Information
    
    
    21Item 6. Exhibits
    
    
    21SIGNATURES
    
    
    22EX-31.1EX-31.2EX-32.1EX-32.2
   ii




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements
 WESTERN DUBUQUE BIODIESEL, LLC
BALANCE SHEETS
 (UNAUDITED)June 30,
    
    
    December 31,2011
    
    
    2010ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    2,496,977
    
    
    $
    2,105,760Margin deposits
    
    
    33,494
    
    
    
    33,494Trade accounts receivable
    
    
    4,161
    
    
    
    Other receivables
    
    
    18,705
    
    
    
    12,904Inventory
    
    
    3,990,534
    
    
    
    417,963Utility deposits
    
    
    87,099
    
    
    
    87,099Prepaid feedstocks and expenses
    
    
    84,792
    
    
    
    113,615Total current assets
    
    
    6,715,760
    
    
    
    2,770,835PROPERTY, PLANT AND EQUIPMENTLand and land improvements
    
    
    3,091,093
    
    
    
    3,091,093Office building and equipment
    
    
    417,392
    
    
    
    417,392Plant and process equipment
    
    
    37,850,626
    
    
    
    37,850,626Vehicles
    
    
    42,537
    
    
    
    42,537Total, at cost
    
    
    41,401,648
    
    
    
    41,401,648Less accumulated depreciation
    
    
    8,578,105
    
    
    
    7,487,298Total property, plant and equipment
    
    
    32,823,543
    
    
    
    33,914,350OTHER ASSETSRestricted cash
    
    
    406,929
    
    
    
    406,929Loan origination fees, net of amortization
    
    
    142,739
    
    
    
    190,318Total other assets
    
    
    549,667
    
    
    
    597,247TOTAL ASSETS
    
    $
    40,088,970
    
    
    $
    37,282,432LIABILITIES AND MEMBERS EQUITYCURRENT LIABILITIESAccounts payable:Trade
    
    $
    3,903,259
    
    
    $
    51,378Related party
    
    
    
    
    
    
    11,113Current portion of long-term debt
    
    
    22,409,172
    
    
    
    24,067,852Accrued liabilities
    
    
    90,830
    
    
    
    73,527Deferred rent
    
    
    23,500
    
    
    
    24,800Total current liabilities
    
    
    26,426,761
    
    
    
    24,228,670MEMBERS EQUITYContributed capital
    
    
    26,230,096
    
    
    
    26,230,096Accumulated deficit
    
    
    (12,567,887
    )
    
    
    (13,176,334
    )Total members equity
    
    
    13,662,210
    
    
    
    13,053,762TOTAL LIABILITIES AND MEMBERS EQUITY
    
    $
    40,088,970
    
    
    $
    37,282,432
   1




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WESTERN DUBUQUE BIODIESEL, LLC
STATEMENTS OF OPERATIONS
 Three Months Ended
    
    
    Three Months Ended
    
    
    Six Months Ended
    
    
    Six Months EndedJune 30, 2011
    
    
    June 30, 2010
    
    
    June 30,2011
    
    
    June 30, 2010REVENUESBiodiesel and by product sales
    
    $
    21,032,641
    
    
    $
    214,913
    
    
    $
    24,995,126
    
    
    $
    214,913COST OF SALESMaterials, labor and overhead
    
    
    19,428,169
    
    
    
    656,583
    
    
    
    23,697,635
    
    
    
    1,519,850Net losses (gains) on derivative instruments
    
    
    
    
    
    
    (524,603
    )
    
    
    
    
    
    
    (355,692
    )Total cost of sales
    
    
    19,428,169
    
    
    
    131,980
    
    
    
    23,697,635
    
    
    
    1,164,158Gross profit (loss)
    
    
    1,604,472
    
    
    
    82,933
    
    
    
    1,297,491
    
    
    
    (949,245
    )OPERATING EXPENSESConsulting and professional fees
    
    
    113,175
    
    
    
    41,707
    
    
    
    205,111
    
    
    
    119,523Office and administrative expenses
    
    
    145,843
    
    
    
    80,976
    
    
    
    247,864
    
    
    
    143,959Total operating expenses
    
    
    259,018
    
    
    
    122,683
    
    
    
    452,975
    
    
    
    263,482OTHER INCOME (EXPENSE)Other income
    
    
    215,258
    
    
    
    650
    
    
    
    215,908
    
    
    
    1,300Interest income
    
    
    1,589
    
    
    
    7,496
    
    
    
    3,828
    
    
    
    17,514Interest expense
    
    
    (225,465
    )
    
    
    (369,014
    )
    
    
    (455,804
    )
    
    
    (615,708
    )Total other expense
    
    
    (8,618
    )
    
    
    (360,868
    )
    
    
    (236,068
    )
    
    
    (596,894
    )NET INCOME (LOSS)
    
    $
    1,336,836
    
    
    $
    (400,618
    )
    
    $
    608,447
    
    
    $
    (1,809,621
    )BASIC AND DILUTED INCOME (LOSS) PER UNIT
    
    $
    44.89
    
    
    $
    (13.45
    )
    
    $
    20.43
    
    
    $
    (60.77
    )WEIGHTED AVERAGE UNITS OUTSTANDING,
BASIC AND DILUTED
    
    $
    29,779
    
    
    
    29,779
    
    
    
    29,779
    
    
    
    29,779
   2




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WESTERN DUBUQUE BIODIESEL, LLC
STATEMENTS OF CASH FLOWS
 Six Months Ended
    
    
    Six Months EndedJune 30, 2011
    
    
    June 30, 2010CASH FLOWS FROM OPERATING ACTIVITIESNet income(loss)
    
    $
    608,447
    
    
    $
    (1,809,621
    )Adjustments to reconcile net income(loss) to net cash
used in operating activities:Depreciation
    
    
    1,090,808
    
    
    
    1,095,200Amortization
    
    
    47,580
    
    
    
    47,579Effects of changes in operating assets and liabilitiesMargin deposits
    
    
    
    
    
    
    (485,175
    )Accounts receivable
    
    
    (4,161
    )
    
    
    160,416Other receivables
    
    
    (5,800
    )
    
    
    (200,308
    )Incentive receivables
    
    
    
    
    
    
    3,494,322Inventory
    
    
    (3,572,571
    )
    
    
    (7,124,347
    )Deposits
    
    
    
    
    
    
    (87,099
    )Prepaid feedstocks and expenses
    
    
    28,824
    
    
    
    63,659Derivative instruments
    
    
    
    
    
    
    (75,516
    )Accounts payable
    
    
    3,840,769
    
    
    
    (1,351,299
    )Accrued liabilities
    
    
    17,301
    
    
    
    4,000Deferred rent
    
    
    (1,300
    )
    
    
    (1,300
    )Net cash provided by(used in) operating activities
    
    
    2,049,897
    
    
    
    (6,269,489
    )CASH FLOWS FROM FINANCING ACTIVITIESNet borrowings under short-term financing with related party
    
    
    
    
    
    
    5,658,500Payments on long-term debt
    
    
    (1,658,680
    )
    
    
    (494,581
    )Net cash provided by (used in) financing activities
    
    
    (1,658,680
    )
    
    
    5,163,919NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    391,217
    
    
    
    (1,105,570
    )CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    2,105,760
    
    
    
    3,379,382CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    2,496,977
    
    
    $
    2,273,812
   3




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WESTERN DUBUQUE BIODIESEL, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2011
 NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Use of Estimates in Preparing Financial Statements
  Basis of Presentation
  Revenue Recognition
  Cash and Cash Equivalents
   Restricted Cash
  Accounts Receivable
   4




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WESTERN DUBUQUE BIODIESEL, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2011
  Derivative Instruments and Hedging Activities
 Derivatives and Hedging
 Inventories
  Property and Equipment
   YearsLand improvements
    
    
    20  40Office equipment
    
    
    5  10Office building
    
    
    30Plant and process equipment
    
    
    10  40Vehicles
    
    
    5  7
   Loan Origination Fees
  Income Taxes
   5




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WESTERN DUBUQUE BIODIESEL, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2011
 Income/Loss Per Unit
  Cost of Sales
    Shipping and Handling Costs
  Environmental Liabilities
  Fair Value of Financial Instruments
  Current assets and current liabilities The carrying value approximates fair value due to the
short maturity of these items.
 Long-term debt The carrying amount of long-term obligations approximated fair value based on
estimated interest rates for comparable debt.
 Insurance Proceeds
   6




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WESTERN DUBUQUE BIODIESEL, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2011
 New Accounting Standards
 Disclosures about the Credit Quality of Financing
Receivables and the Allowance for Credit Losses
  NOTE 2  INCENTIVE PAYMENTS AND RECEIVABLE
   NOTE 3  INVENTORY
  June 30,
    
    
    December 31,2011
    
    
    2010Raw material
    
    $
    1,291,031
    
    
    $
    185,481Work in progress
    
    
    2,626,166
    
    
    
    106,328Finished goods
    
    
    73,337
    
    
    
    126,154Total
    
    $
    3,990,534
    
    
    $
    417,963
  7




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WESTERN DUBUQUE BIODIESEL, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2011
 NOTE 4  LONG-TERM DEBT AND FINANCING
  June 30,
    
    
    December 31,2011
    
    
    2010Note payable to Beal Bank  see details below
    
    $
    22,259,172
    
    
    $
    23,887,852Note payable to the Iowa Department of Economic
Development  see details below
    
    
    150,000
    
    
    
    180,000Total
    
    
    22,409,172
    
    
    
    24,067,852Less current portion
    
    
    22,409,172
    
    
    
    24,067,852Long-term portion
    
    $
    
    
    
    $
    
      8




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WESTERN DUBUQUE BIODIESEL, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2011
   NOTE 5  MEMBERS EQUITY
  NOTE 6  CASH FLOW DISCLOSURES
  Three Months Ended
    
    
    Three Months EndedJune 30, 2011
    
    
    June 30, 2010Cash paid for interest
    
    $
    408,225
    
    
    $
    568,129
 NOTE 7  RELATED PARTY TRANSACTIONS
     9




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WESTERN DUBUQUE BIODIESEL, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2011
    NOTE 8  COMMITMENTS AND CONTINGENCIES
   2012
    
    $
    34,3452013
    
    
    36,5482014
    
    
    36,5482015
    
    
    36,5482016
    
    
    36,548Thereafter
    
    
    402,024Total
    
    $
    582,560
   NOTE 9  DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
 Derivatives and Hedging
 Objectives and Strategies for Holding Derivative Instruments
   10




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WESTERN DUBUQUE BIODIESEL, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2011
 Commodity Risk Management
  Accounting for Derivative Instruments and Hedging Activities
   Derivative (Gain) Loss
    
    
    Derivative (Gain) LossThree Months Ended
    
    
    Three Months EndedJune 30, 2011
    
    
    June 30, 2010Statement of
    
    
    
    
    
    
    Statement ofOperations Location
    
    
    (Gain) Loss
    
    
    Operations Location
    
    
    (Gain) LossCommodity contracts -
Heat oil swaps
    
    Cost of sales
    
    $
    -0-
    
    
    Cost of sales
    
    $
    (524,603
    )
 Derivative (Gain) Loss
    
    
    Derivative (Gain) LossSix Months Ended
    
    
    Six Months EndedJune 30, 2011
    
    
    June 30, 2010Statement of
    
    
    
    
    
    
    Statement ofOperations Location
    
    
    (Gain) Loss
    
    
    Operations Location
    
    
    (Gain) LossCommodity contracts -
Heat oil swaps
    
    Cost of sales
    
    $
    -0-
    
    
    Cost of sales
    
    $
    (355,692
    )
 NOTE 10  LIQUIDITY, BASIS OF PRESENTATION AND MANAGEMENTS PLANS
   11




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WESTERN DUBUQUE BIODIESEL, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2011
   NOTE 11  SUBSEQUENT EVENTS
   12




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Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  Cautionary Statements Regarding Forward-Looking Statements
  
    
    The status of the $1.00 per gallon blenders credit and other federal biodiesel
supports;
 
    
    Our ability to enter into or retain toll manufacturing agreements or other
arrangements that shift responsibility for feedstock procurement and costs to other
parties;
 
    
    Our ability to secure and retain service providers to procure feedstock for us and
to market our products;
 
    
    The availability and terms of credit or equity financing needed to continue
operations if our income from operations is insufficient for us to continue producing
biodiesel;
 
    
    Our ability to generate free cash flow to invest in our business and service our
debt;
 
    
    Our ability to negotiate reduced loan payments with our lender;
 
    
    Our ability to comply with our loan covenants and our lenders response to our
noncompliance with such covenants;
 
    
    Our ability to market our products and our reliance on others to market our
products;
 
    
    Fuel prices, diesel and biodiesel consumption and consumer attitudes regarding
biodiesel use;
 
    
    Prices of vegetable oils (particularly soybean oil), animal fats and other
feedstock;
 
    
    The continued imposition of tariffs or other duties on biodiesel exported to Europe;
 
    
    Overcapacity within the biodiesel industry resulting in increased competition and
costs for feedstock and/or decreased prices for our biodiesel and glycerin;
 
    
    Changes in soy-based biodiesels qualification under the Renewable Fuels Standard
(RFS and RFS2) and similar legislation;
 
    
    The availability of soybean oil, refined animal fat or other feedstock that we can
process at our plant;
 
    
    Our ability to locate alternative feedstock to respond to market conditions,
particularly since we lack the capability to pre-treat and process raw animal fats and
certain crude vegetable oils at our plant;
 
    
    Laws, tariffs, trade or other controls or enforcement practices such as: national,
state and local energy policy; federal biodiesel tax incentives; and environmental laws
and regulations;
    
    The biodiesel industrys ability to successfully lobby for legislation beneficial to
the biodiesel industry;
 
    
    Changes in plant production capacity or technical difficulties in operating the
plant, including changes due to events beyond our control or due to intentional
reductions or shutdowns;
  13




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
    
    Changes and advances in biodiesel production technology, including our competitors
ability to process raw animal fats or other feedstock which we cannot process;
 
    
    Competition from alternative fuels; and
 
    
    Other factors described in this report.
  Overview
      14




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Results of Operations for the Three Months Ended June 30, 2011
  Three Months Ended
    
    
    Three Months EndedJun 30, 2011
    
    
    June 30, 2010(Unaudited)
    
    
    (Unaudited)Income Statement Data
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentRevenues
    
    $
    21,032,641
    
    
    
    100.00
    %
    
    $
    214,913
    
    
    
    100.00
    %Cost of Sales
    
    
    19,428,169
    
    
    
    92.37
    %
    
    
    131,980
    
    
    
    61.41
    %Gross Profit (loss)
    
    
    1,604,472
    
    
    
    7.63
    %
    
    
    82,933
    
    
    
    38.59
    %Operating Expenses
    
    
    259,018
    
    
    
    1.23
    %
    
    
    122,683
    
    
    
    57.08
    %Other Income (Expense)
    
    
    (8,618
    )
    
    
    (0.00
    )%
    
    
    (360,868
    )
    
    
    167.91
    %Net Income (Loss)
    
    $
    1,336,836
    
    
    
    6.36
    %
    
    $
    (400,618
    )
    
    
    186.41
    %
 Revenues
    Cost of Sales
    15




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Operating Expenses
  Other Income (Expenses)
  Results of Operations for the Six Months Ended June 30, 2011
  Six Months Ended June 30, 2011
    
    
    Six Months Ended June 30, 2010(Unaudited)
    
    
    (Unaudited)Income Statement Data
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentRevenues
    
    $
    24,995,126
    
    
    
    100.00
    %
    
    $
    214,913
    
    
    
    100.00
    %Cost of Sales
    
    
    23,697,635
    
    
    
    94.81
    %
    
    
    1,164,158
    
    
    
    541.69
    %Gross Profit (Loss)
    
    
    1,297,491
    
    
    
    5.19
    %
    
    
    (949,245
    )
    
    
    (441.69
    )%Operating Expenses
    
    
    452,975
    
    
    
    1.81
    %
    
    
    263,482
    
    
    
    122.60
    %Other Income (Expense)
    
    
    (236,068
    )
    
    
    (0.94
    )%
    
    
    (596,894
    )
    
    
    (277.74
    )%Net Income (Loss)
    
    $
    608,447
    
    
    
    2.43
    %
    
    $
    (1,809,621
    )
    
    
    (842.02
    )%
 Revenues
  Cost of Sales
   16




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Operating Expenses
  Other Income (Expenses)
  Changes in Financial Condition for the Three Months Ended June 30, 2011
  June 30, 2011
    
    
    December 31, 2010Current Assets
    
    $
    6,715,760
    
    
    $
    2,770,835Current Liabilities
    
    $
    26,426,761
    
    
    $
    24,228,670Total Members Equity
    
    $
    13,662,210
    
    
    $
    13,053,762
 Current Assets
  Current Liabilities
   Members Equity
  Plan of Operations for the Next 12 Months
 Plant Operations
   17




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Operating Budget and Financing of Plant Operations
   Critical Accounting Estimates
  Revenue Recognition
  Derivative Instruments and Hedging Activities
  Liquidity and Capital Resources
 Cash Flows
 Cash Flow from Operating Activities.
 Cash Flow from Financing Activities.
  18




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Sources of Funds
 Equity Financing.
 Debt Financing
     Government Programs and Grants
  19




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Distribution to Unit Holders
  Off-Balance Sheet Arrangements
  
 Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risks
  
 Item 4.
    
    Controls and Procedures
   
 PART II. OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
  
 Item 1A.
    
    Risk Factors
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
   20




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Item 3.
    
    Defaults upon Senior Securities
  
 Item 4.
    
    (Removed and Reserved)
 
 Item 5.
    
    Other Information
     
 Item 6.
    
    Exhibits
  ExhibitNo.
    
    Description
    
    Method of Filing31.1
    
    
    Certificate pursuant to 17 CFR 240 13a-14(a)
    
    *31.2
    
    
    Certificate pursuant to 17 CFR 240 13a-14(a)
    
    *32.1
    
    
    Certificate pursuant to 18 U.S.C. Section 1350
    
    *32.2
    
    
    Certificate pursuant to 18 U.S.C. Section 1350
    
    *101
    
    
    The following financial information from
Western Dubuque Biodiesel, LLCs Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2011, formatted in XBRL (eXtensible
Business Reporting Language): (i) Balance
Sheets as of June 30, 2011 and December 31,
2010, (ii) Statements of Operations for the
three and six months ended June 30, 2011 and
2010, (iii) Statements of Cash Flows for the
six months ended June 30, 2011 and 2010, and
(iv) the Notes to Financial Statements.
    
    **
 
 (*)
    
    Filed herewith.(**)
    
    To be filed by amendment.  21




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SIGNATURES
  WESTERN DUBUQUE BIODIESEL, LLCDate: August 15, 2011
    /s/ Bruce KlostermannBruce KlostermannVice Chairman and Director
(Principal Executive Officer)Date: August 15, 2011
    /s/ George DavisGeorge DavisTreasurer and Director
(Principal Financial and Accounting Officer)  22