**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 June
      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 x   No o




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
      June 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 INFORMATIONItem
                1.
            Financial
                Statements (Unaudited)
            
            3Balance
                Sheet
            
            3Statements
                of Operations
            
            4Statements
                of Cash Flows
            
            5Notes
                to Unaudited Financial Statements
            
            7Item
                2.
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            
            16Item
                3.
            Quantitative
              and
              Qualitative Disclosures about Market Risk
            
            21Item
                4.
            Controls
                and Procedures
            
            21PART
                II - OTHER INFORMATIONItem
                1.
            Legal
                Proceedings
            
            21Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            
            21Item
                3.
            Defaults
                Upon Senior Securities
            
            21Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            
            21Item
                5.
            Other
                Information
            
            21Item
                6.
            Exhibits
            
            23





2




**PART
      1 - FINANCIAL INFORMATION**





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


**SHOW
        ME ETHANOL, LLC**
 
 **CONDENSED
        BALANCE SHEETS**
 **June
        30, 2008 and December 31, 2007**
 
 June 30,
              
              December 31,2008
              
              2007(Unaudited)**ASSETS**CURRENT
                  ASSETSCash
              
              $
              5,691,591
              
              $
              4,652,087Accounts
                  receivable
              
              
              1,700,899
              
              
              -Prepaid
                  expenses
              
              
              159,580
              
              
              74,663Inventory
              
              
              6,548,210
              
              
              -Total
                  current assets
              
              
              14,100,280
              
              
              4,726,750PROPERTY,
                  PLANT AND EQUIPMENTConstruction
                  in progress
              
              
              -
              
              
              57,418,703Operating
                  equipment
              
              
              68,115,550
              
              
              -Land
                  and buildings
              
              
              11,818,866
              
              
              -Accumulated
                  depreciation
              
              
              (740,804
              )
              
              -Property,
                  plant and equipment, net
              
              
              79,193,613
              
              
              57,418,703OTHER
                  ASSETS
              
              
              563,611
              
              
              679,462Total
                  assets
              
              $
              93,857,503
              
              $
              62,824,915**LIABILITIES
                  AND MEMBERS' EQUITY**CURRENT
                  LIABILITIESAccounts
                  payable
              
              $
              4,535,761
              
              $
              7,590,914Accrued
                  expenses
              
              
              257,365
              
              
              9,789Current
                  portion of long term debt and revolving line of credit
              
              
              9,004,481
              
              
              19,238Total
                  current liabilities
              
              
              13,797,607
              
              
              7,619,941LONG-TERM
                  DEBT
              
              
              46,799,087
              
              
              22,240,221Total
                  liabilities
              
              
              60,596,694
              
              
              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
              
              
              784,726
              
              
              488,670Total
                  members' equity
              
              
              33,260,809
              
              
              32,964,753Total
                  liabilities and members' equity
              
              $
              93,857,503
              
              $
              62,824,915
 
 See
        Notes
        to Financial Statements.
  3
 
 **SHOW
        ME ETHANOL, LLC**
 
 **CONDENSED
        STATEMENTS OF INCOME**
 **For
        the Quarter and Year To Date Ended June 30, 2008 and 2007**
 **(Unaudited)**
 
 Quarter
              
              
              
              QuarterEnded
              
              Current
              
              Ended
              
              PriorJune 30,
              
              Year
              
              June 30,
              
              Year2008
              
              To Date
              
              2007
              
              To DateSALESSales
              
              $
              6,862,994
              
              $
              6,862,994
              
              $
              -
              
              $
              -Sales
                  to related parties
              
              
              1,639,417
              
              
              1,639,417
              
              
              -
              
              
              -Ethanol
                  producer credit
              
              
              870,173
              
              
              870,173
              
              
              -
              
              
              -Total
                  sales
              
              
              9,372,584
              
              
              9,372,584
              
              
              -
              
              
              -COST
                  OF SALESCost
                  of sales (Note 11)
              
              
              8,066,768
              
              
              8,066,768
              
              
              -
              
              
              -Total
                  cost of sales
              
              
              8,066,768
              
              
              8,066,768
              
              
              -
              
              
              -Gross
                  profit
              
              
              1,305,816
              
              
              1,305,816
              
              
              -
              
              
              -GENERAL
                  AND ADMINISTRATIVE EXPENSESGeneral
                  and administrative expenses
              
              
              593,269
              
              
              805,409
              
              
              102,532
              
              
              224,382Total
                  general and administrative expenses
              
              
              593,269
              
              
              805,409
              
              
              102,532
              
              
              224,382Operating
                  income
              
              
              712,547
              
              
              500,407
              
              
              (102,532
              )
              
              (224,382
              )OTHER
                  INCOME (EXPENSE)Interest
                  expense
              
              
              (236,595
              )
              
              (240,789
              )
              
              -
              
              
              -Interest
                  and other income
              
              
              9,704
              
              
              36,438
              
              
              277,923
              
              
              583,649Net
                  other income (expense)
              
              
              (226,890
              )
              
              (204,351
              )
              
              277,923
              
              
              583,649Net
                  income
              
              $
              485,657
              
              $
              296,056
              
              $
              175,391
              
              $
              359,267Net
                  income per unit - basic and diluted
              
              $
              227.69
              
              $
              138.80
              
              $
              82.23
              
              $
              168.43Weighted
                  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 Six Months Ended June 30 , 2008 and 2007**
 **(Unaudited)**
 
 Six Months
              
              Six MonthsEnded
              
              EndedJune 30,
              
              June 30,2008
              
              2007CASH
                  FLOWS FROM OPERATING ACTIVITIESNet
                  income
              
              $
              296,056
              
              $
              359,267Adjustments
                  to reconcile net income to net cash provided (used) by operating
                  activities:Accounts
                  receivable
              
              
              (1,700,899
              )
              
              -Prepaid
                  expenses
              
              
              (84,917
              )
              
              (136,714
              )Accounts
                  payable and accrued expenses
              
              
              1,230,626
              
              
              34,430Inventories
              
              
              (6,548,210
              )
              
              -Depreciation
                  and amortization
              
              
              727,779
              
              
              1,772Other
                  current assets and liabilities
              
              
              104,072
              
              
              -Net
                  cash provided (used) by operating activities
              
              
              (5,975,493
              )
              
              258,755CASH
                  FLOWS FROM INVESTING ACTIVITIESPurchases
                  of property, plant and equipment
              
              
              (25,561,266
              )
              
              (4,855,576
              )Net
                  cash used in investing activities
              
              
              (25,561,266
              )
              
              (4,855,576
              )CASH
                  FLOWS FROM FINANCING ACTIVITIESProceeds
                  from issuance of long-term debt
              
              
              32,602,962
              
              
              -Payments
                  for financing costs
              
              
              -
              
              
              (497,485
              )Principal
                  payments on long-term debt
              
              
              (26,700
              )
              
              (23,384
              )Net
                  cash provided (used) by financing activities
              
              
              32,576,262
              
              
              (520,869
              )Net
                  change in cash
              
              
              1,039,503
              
              
              (5,117,690
              )Cash,
                  beginning of period
              
              
              4,652,087
              
              
              26,533,937Cash,
                  end of period
              
              $
              5,691,590
              
              $
              21,416,247
  See
        Notes
        to Financial Statements.




5


**REPORT OF**
 
 **SHOW
        ME ETHANOL, LLC**
 
 **June
        30, 2008**
  6
  **SHOW
        ME ETHANOL, LLC**
 
 **NOTES
        TO CONDENSED FINANCIAL STATEMENTS**
 **June
        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. The results of operations for the three and six month
        periods are not necessarily indicative of the results to be expected for
        the
        full year *.*
 
 *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,
        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.
  7
  *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 six months ended June 30, 2008 was $408,049
        and
        $967,847, respectively. Capitalized interest from inception through startup
        at
        May 22, 2008, was $1,532,303. There was no capitalized interest for the quarter
        and six months ended June 30, 2007.
 
 *Restricted
        cash:* Cash
        that is restricted or reserved for purposes other than funding operations
        is
        classified as restricted cash on the balance sheet.
 
 *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 June
        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 June 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.
  8
  **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.
 
 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 6.
 
 **3.**  **INVENTORIES**
 
 Inventories
        are physically counted at each month end and are valued using the lower of
        first-in, first-out (FIFO) cost or market. They consisted of the following
        at
        June 30, 2008:
 Ethanol
                
                $
                3,565,463Corn
                
                
                1,017,841Distillers
                    dried grains
                
                
                117,622Work
                    in process
                
                
                1,259,861Production
                    chemicals
                
                
                395,423Other
                
                
                192,000Total
                
                $
                6,548,210
  9
 
 **4.**
              **PROPERTY,
                  PLANT AND EQUIPMENT**
 
 Property,
        plant and equipment consist of the following:
 June 30,
                
                December 31,2008
                
                2007Land
                    and buildings
                
                $
                11,818,866
                
                $
                2,024,620Equipment
                
                
                68,115,550
                
                
                192,469Construction
                    in progress
                
                
                -
                
                
                55,219,331Total
                    property, plant and equipment
                
                
                79,934,416
                
                
                57,436,420Less
                    accumulated depreciation
                
                
                740,804
                
                
                17,717Net
                    property, plant and equipment
                
                $
                79,193,613
                
                $
                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. The Company is currently undergoing a cost segregation study
        to
        accurately determine classification of fixed assets and their useful lives.
        The
        results of this study may change the estimates used for depreciation amounts
        recorded for the period from commencement of operations through June,
        2008.
 
 Most
        of
        the construction was performed under contract agreements. As of June 30,
        2008,
        and December 31, 2007 total retainage payable of $3,349,402 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 June 30, 2008 and December 31, 2007,
        were:
 **June 30, 2008**
                
                **December 31, 2007****Gross**
                
                
                
                **Gross****Carrying**
                
                **Accumulated**
                
                **Carrying**
                
                **Accumulated****Amortized intangible assets**
                
                **Amount**
                
                **Amortization**
                
                **Amount**
                
                **Amortization**Loan
                    origination costs
                
                $
                483,217
                
                $
                11,779
                
                $
                423,774
                
                
                -Permits
                
                
                87,653Total
                
                $
                570,866
                
                $
                11,779
                
                $
                423,774
                
                
                -
  Amortization
        expense for the six months ended June 30, 2008 was $11,779. There was no
        amortization in the year ended December 31, 2007. Estimated amortization
        expense
        for each of the following five years is:
  2009
              
              $
              92,1472010
              
              
              86,1212011
              
              
              79,7722012
              
              
              73,0832013
              
              
              66,037
  10
  **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 June 30, 2008 were
        7.5%
        and 5.0%, 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
        Company 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. As of June 30, 2008 outstanding balance of the credit agreement was
        $6,129,481. There were no amounts outstanding under the revolving loan agreement
        as of December 31, 2007.
 
 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 June 30, 2008 there were no
        letters of credit outstanding.
 
 As
        of
        June 30, 2008 the Revolving Line of Credit balance was $ 1,129,008 in excess
        of
        the amount permitted under the borrowing base calculation. Management expects
        to
        correct this by repaying the excess from available operating cash.
  **7.
        FINANCING ARRANGEMENTS**
 Construction
                    note (A)
                
                $
                45,922,368Equipment
                    term note (B)
                
                
                63,666Capital
                    lease obligations (C)
                
                
                98,053Subordinated
                    related party notes (D)
                
                
                3,590,000Total
                    long term debt
                
                
                49,674,087Less
                    current maturities
                
                
                2,875,000$
                46,799,087
  (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 5.5% and 8% as of June 30, 2008 and December 31, 2007, respectively.
        As
        of June 30, 2008 and December 31, 2007 the balance on this loan was $45,922,368
        and $22,176,542 respectively.
  11
  Once
        the
        construction loan is converted to a term loan, the term loan shall be repaid
        over ten years starting on the conversion date. The Company will make quarterly
        principal payments, with interest payable monthly at either fixed or variable
        rates, to be determined by the Company at the conversion date. 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
        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 June 30, 2008,
        the Company has amortized $11,779 of this deferred cost. Prior to commencement
        of operations no amortization was recorded on these capitalized financing
        costs.
 
 In
        addition, the Company is required to pay an unused commitment fee on the
        average
        daily unused portion of the commitment by FCS, including the revolving credit
        agreement discussed below, at the rate of 0.30% per annum, payable monthly.
        During the year ended December 31, 2007 the Company has paid $115,378 and
        during
        the six month period ended June 30 2008, $29,647 in unused commitment fees
        which
        were capitalized as property, plant and equipment in these financial statements.
 
 (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 June 30, 2008, the outstanding
        balance on this loan is $63,666. The loan is collateralized by the piece
        of
        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.
 
 As
        of
        June 30, 2008 the construction note had not been converted to term debt.
        The
        estimated maturities of long-term debt during the years ending June 30, assuming
        the current construction note balance with the first installment on
        approximately November 1, 2008, are as follows:
  12
 
 Revolving
                  Lineof
                  Credit andLong Term
              
              Capital LeaseDebt
              
              Obligations2009
              
              $
              8,978,761
              
              $
              25,7202010
              
              
              7,554,889
              
              
              25,7202011
              
              
              4,166,861
              
              
              25,7202012
              
              
              4,355,739
              
              
              26,9742013
              
              
              4,577,644
              
              
              -Thereafter
              
              
              26,071,620
              
              
              -Total
                  long-term debt
              
              $
              55,705,514
              
              
              104,134Less
                  amount representing interest
              
              
              
              
              
              -6,080Present
                  value of future minimum lease payments
              
              
              
              
              $
              98,054
 
 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 will exchange 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.
 
 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.
  13
  **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 twelve months after the plant’s completion date. After the
        initial term, the agreement will be month-to-month. The agreement provides
        for
        fees of $2,900 per month through December 1, 2006. There is an annual increase
        of 4% each year on the anniversary date. Total fees of $9,411 and $9,048
        were
        paid under this agreement during the quarters ended June 30, 2008 and 2007,
        respectively. Total fees for the six months ended June 30, 2008 and 2007
        were
        $18,822 and $18,096, 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 June 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. As of June 30, 2008, the Company
        has entered into forward purchase contracts under this agreement totaling
        8.43
        million bushels for delivery July through December 2008 at prices ranging
        from
        $4.34 to $7.65 per bushel. These forward purchase contracts are considered
        to be
        in the normal course of business and are intended to be settled in product.
        Corn
        purchases under the agreement for the three months ended June 30, 2008 totaled
        approximately $9,012,000.
 
 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 June 30, 2008, the Company has incurred costs under this contract of
        approximately $66.3 million. Of that amount, approximately $3.3 million is
        being
        held as retainage and is included in accounts payable in the balance
        sheet.
  14
  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. At June 30, 2008 the Company had contracts to sell approximately
        4
        million gallons of ethanol at prices ranging from $2.38 to $2.79 per
        gallon.
 
 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 $528,000 due the company for distiller grain marketed
        under this agreement are included in accounts receivables as of June 30,
        2008.
 
 **12.
        SUPPLEMENTAL CASH FLOWS DISCLOSURES**
 
 The
        following summarizes the supplemental statement of cash flows information
        for
        the years to date ended June 30, 2008 and 2007:
 Year To
                
                Year ToDate Ended
                
                Date EndedJune 30,
                
                June 30,2008
                
                2007Interest
                    paid, net of capitalized interest
                
                $
                240,789NON-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
                
                
                
                
                
                106,300Loan
                    financing costs included in accounts payable
                
                
                
                
                
                12,000Loan
                    interest and fees capitalized in construction in progress
                
                
                967,847Construction
                    in progress included in accounts payable
                
                
                3,513,999
                
                
                4,884,336
  **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 $745,000 are included
        in accounts receivable as of June 30, 2008.
  15




**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.




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 six months ended June 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 six months
      of
      2007 and the first six months of 2008, it is important that you keep this in
      mind.




***Selected
      Financial Information***




During
      the fiscal quarter ended June 30, 2008, we transitioned from a development
      stage
      company to an operational company. The following table shows some results of
      our
      operations for the three months ended June 30, 2008:




16


***Quarter Ended***
                ***June 30, 2008***
                ***(Unaudited)***
              
              ***Percent***Sales
              
              $
              8,502,411
              
              
              90.7%Ethanol
                  Producer Credit
              
              
              870,173
              
              
              9.3%Total
                  Sales
              
              
              9,372,584
              
              
              100%Cost
                  of Sales
              
              
              8,066,768
              
              
              86.1%General
                  and Administrative Expenses
              
              
              593,269
              
              
              6.3%Interest
                  Expense
              
              
              236,595
              
              
              2.5%Interest
                  and other income
              
              
              9,704
              
              
              0.1%—
              
              
              —Net
                  Income
              
              
              485,657
              
              
              5.2%




Sales




Our
      sales
      are divided into two categories: sales of fuel ethanol and sales of distillers
      grains. For the three months ended June 30, 2008, we received approximately
      73%
      of our sales from the sale of fuel ethanol and approximately 17% 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. As a result, we expect the percentage of our sales from the sale of
      ethanol to decrease. We expect the percentage of sales from the sale of
      distillers grains to increase due to the decrease in the price of ethanol we
      expect will occur.




We
      believe that the price of ethanol will increase steadily in late 2008 due to
      a
      variety of factors. Such factors we expect will drive a higher price of ethanol
      in late 2008 include (a) the lower than usual amount of forward ethanol
      purchases, largely as a result of the volatility of the ethanol market in 2008,
      (b) an expected decline in imported ethanol and (c) the refusal of the EPA
      to
      allow any kind of reduction in the use of ethanol in the Renewable Fuel
      Standard.




We
      are
      exploring, through our ethanol marketer, 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.




17




Cost
      of Sales




Our
      cost
      of sales as a percentage of total sales was 86.1% for the three months ended
      June 30, 2008. Our average cost for corn per bushel was $5.91 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
      have
      approximately a two month supply of corn purchased at a price that is higher
      than the current spot market price of corn. Due to fluctuations in the
      market price for ethanol and distiller grains, we cannot accurately predict
      if
      using such corn in our refinery will result in a profit or loss if used later
      this fiscal year. If such high priced corn is not used in subsequent quarters
      of
      this fiscal year, and ethanol prices decline, we may accrue a loss from such
      corn, even prior to its use in the refinery.




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




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 6.3%
      for
      the three months ended June 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 2.5% for the three months ended
      June
      30, 2008. We expect this percentage will increase because during the course
      of
      the second quarter the Company issued 9% subordinated notes due in 2010,
      described below. The third quarter will be the first full quarter where we
      will
      be impacted by those additional interest expenses. At this time, we have not
      selected among the various conversion options for our construction loan that
      must convert into a term loan by September 1, 2008. The choice among variable
      or
      fixed interest rates will affect our interest expense
      going-forward.




***Additional
      Operational Data***




From
      commencing operations on May 22, 2008 to the end of the fiscal quarter on
      June 30, 2008, our operating statistics are as follows:


Ethanol
                  sold (gallons)
              
              
              3,068,032Dried
                  distillers grains sold (tons)
              
              
              14,383Modified
                  distillers grains sold (tons)
              
              
              1,900Ethanol
                  average price per gallon
              
              
              $2.24Dried
                  distillers grain average price per ton
              
              
              $105.24Modified
                  distillers grain average price per ton
              
              
              $51.13Average
                  corn cost per bushel
              
              
              $5.91




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.




18




***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 intensely competitive nature of the ethanol industry; 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.
      An
      increase in the number of new plants will bring an increase in the supply of
      ethanol. Thus future supply could outweigh the demand for ethanol in the future.
      This would have a negative impact on our earnings in the long term.




***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.




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
      June 30, 2008, we had total assets of $93,857,503 consisting primarily of cash,
      prepaid expenses, inventories and property, plant and equipment. We had current
      liabilities of $13,797,607 consisting primarily of our accounts payable and
      estimated payments on long-term debt. Total members’ equity as of June 30, 2008,
      was $33,260,809.




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 is required to be converted to permanent financing no later than September
      1, 2008 having a
      maturity date that is 10 years from the conversion date .
      The
      Term Loan offer several alternatives concerning fixed or variable rates, the
      underlying index, proportion of fixed versus variable balances, conversion
      from
      variable to fixed and prepayment requirements. Management is currently
      evaluating the alternatives in order to meet the loan 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).




19




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.




As
      of
      June 30, 2008 the Company had a borrowed a total of $6,129,481 of the $8 million
      possible under the Revolving Credit Agreement, which was $1,129,008 in excess
      of
      the amount permitted under the borrowing base calculation. Management expects
      to
      correct this by repaying the excess from available operating cash.




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 will 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 such 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.




20




**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.




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 concluded that our disclosure controls and procedures are effective
      in timely alerting them to material information required to be included in
      our
      periodic SEC filings and to ensure that information required to be disclosed
      in
      our periodic SEC filings is accumulated and communicated to our management,
      including our Principal Executive Officer and Chief Financial Officer, to allow
      timely decisions regarding required disclosure as a result of the deficiency
      in
      our internal control over financial reporting discussed below.




No
      change
      in our internal control over financial reporting (as defined in Rules 13a-15(f)
      and 15d-15(f) under the Exchange Act) occurred during the period covered by
      this
      report that has materially affected, or is reasonably likely to materially
      affect, our internal control over financial reporting.




**PART
      II - OTHER INFORMATION**




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




None.




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




The
      Company is not required to provide information under this item as it is a small
      reporting company.




**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.




21




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




None.




22




**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:


**ExhibitNo.**
              
              **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.




23




**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:
                  August 14, 2008By:
              /s/
                  Michael R. CouncilName:  
                  Michael R. CouncilTitle:    
                  Chief Financial Officer




24




**EXHIBIT
      INDEX**




**ExhibitNo.**
              
              **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.
  25