**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

**FORM 10-QSB**

 

**ý****        ****Quarterly report under Section 13 or 15(d) of the SecuritiesExchange Act of 1934.**

 

**For thequarterly period ended June 30, 2005**

 

**OR**

 

**o****        ****Transition report under Section 13 or 15(d) of the Exchange Act.**

 

**For thetransition periodfrom            to            .**

 

**COMMISSIONFILE NUMBER 000-50733**

 

**UNITED WISCONSIN GRAINPRODUCERS, LLC**

(Exact name ofsmall business issuer as specified in its charter)

 
| **Wisconsin**                                                    | ** ** | **39-2032455**                        |
|------------------------------------------------------------------|------------|---------------------------------------|
| (State or  other jurisdiction of  incorporation or organization) |       | (I.R.S.  Employer Identification No.) |
|                                                             |
| **W1231  Tessmann Road, Cambria, Wisconsin 53923**               |
| (Address of  principal executive offices)                        |
|                                                             |
| **(920)  348-5016**                                              |
| (Issuer’s  telephone number)                                |

 

Check whether the issuer:  (1) filed allreports required to be filed by Section 13 or 15(d) of the Exchange Actduring the past 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.    ý Yes    o No

 

State the number of shares outstanding foreach of the issuer’s classes of common equity as of the latest practicabledate:  As of August 12, 2005, there were 28,780 membership unitsoutstanding.

 

Transitional Small Business Disclosure Format(Check one):    o Yes    ý No

 

 

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**INDEX**

 
| **PART I. FINANCIAL INFORMATION**                                           | ** ** | ** ** |
|-----------------------------------------------------------------------------|------------|------------|
| ** **                                                                  | ** ** | ** ** |
| **Item 1. Financial Statements**                                            | ** ** | ** ** |
| **Item 2. Management’s  Discussion and Analysis or Plan of Operation** | ** ** | ** ** |
| **Item 3. Controls and Procedures**                                         | ** ** | ** ** |
| ** **                                                                  | ** ** | ** ** |
| **PART II. OTHER INFORMATION**                                              | ** ** | ** ** |
| ** **                                                                  | ** ** | ** ** |
| **Item 1. Legal Proceedings**                                               | ** ** | ** ** |
| **Item 2. Changes in Securities**                                           | ** ** | ** ** |
| **Item 3. Defaults Upon Senior  Securities**                                | ** ** | ** ** |
| **Item 4. Submission of  Matters to a Vote of Security Holders**            | ** ** | ** ** |
| **Item 5. Other Information**                                               | ** ** | ** ** |
| **Item 6. Exhibits**                                                        | ** ** | ** ** |
| ** **                                                                  | ** ** | ** ** |
| **SIGNATURES**                                                              | ** ** | ** ** |

 

2

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**PART I.    FINANCIAL INFORMATION**

 

**Item 1.  Financial Statements**

 

**UNITEDWISCONSIN GRAIN PRODUCERS, LLC**

 

Condensed Balance Sheet

 
| ** **                                            | ** ** | **June 30,** | ** ** |
|-------------------------------------------------------|------------|-------------------|------------|
| ** **                                            | ** ** | **2005**          | ** ** |
| ** **                                            | ** ** | **(Unaudited)**   | ** ** |
| **ASSETS**                                            |       |              |       |
| **Current  Assets**                                   |       |              |       |
| Cash and  cash equivalents                            |       | $                 | 806,397    |   |
| Derivative  instruments                               |       | 52,575            |       |
| Trade  accounts receivable                            |       | 3,031,812         |       |
| CCC  Bio-Energy program receivable                    |       | 800,321           |       |
| Grants  receivable                                    |       | 200,750           |       |
| Prepaid  expenses                                     |       | 258,269           |       |
| Inventory                                             |       | 1,527,881         |       |
| Total  current assets                                 |       | 6,678,005         |       |
|                                                  |       |              |       |
| **Property,  Plant and Equipment**                    |       |              |       |
| Land and  land improvements                           |       | 5,206,215         |       |
| Office  equipment                                     |       | 191,483           |       |
| Administration  building                              |       | 412,945           |       |
| Plant and  process equipment                          |       | 46,544,000        |       |
| Total  property and equipment                         |       | 52,354,642        |       |
| Less  accumulated depreciation                        |       | 737,992           |       |
| Net  property, plant and equipment                    |       | 51,616,650        |       |
|                                                  |       |              |       |
| **Other  Assets**                                     |       |              |       |
| Debt  issuance costs, net of accumulated amortization |       | 534,395           |       |
| Total other  assets                                   |       | 534,395           |       |
|                                                  |       |              |       |
| **Total  Assets**                                     |       | $                 | 58,829,050 |   |

 

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

 

3

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**UNITEDWISCONSIN GRAIN PRODUCERS, LLC**

 

Condensed Balance Sheet

 
| ** **                                                           | ** ** | **June 30,** | ** ** |
|----------------------------------------------------------------------|------------|-------------------|------------|
| ** **                                                           | ** ** | **2005**          | ** ** |
| ** **                                                           | ** ** | **(Unaudited)**   | ** ** |
| **LIABILITIES  AND MEMBERS’ EQUITY**                            |       |              |       |
| **Current  Liabilities**                                             |       |              |       |
| Current  maturities of long-term debt                                |       | $                 | 1,904,586  |   |
| Accounts  payable                                                    |       | 2,101,381         |       |
| Revolving  loan payable                                              |       | 780,426           |       |
| Accrued  liabilities                                                 |       | 124,271           |       |
| Total  current liabilities                                           |       | 4,910,664         |       |
|                                                                 |       |              |       |
| **Long-Term  Debt, less current maturities**                         |       | 27,121,017        |       |
|                                                                 |       |              |       |
| **Commitments  and Contingencies**                                   |       |              |       |
|                                                                 |       |              |       |
| **Members’  Equity**                                            |       |              |       |
| Member  contributions, net of costs related to capital contributions |       | 27,696,394        |       |
| Retained  earnings                                                   |       | (899,025          | )          |
| Total  members’ equity                                          |       | 26,797,369        |       |
|                                                                 |       |              |       |
| **Total  Liabilities and Members’ Equity**                      |       | $                 | 58,829,050 |   |

 

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

 

4

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**UNITED WISCONSIN GRAIN PRODUCERS, LLC**

 

CondensedStatement of Operations

 
| ** **                                                                                          | ** ** | **Quarter Ended** | ** ** | **Quarter Ended** | ** ** |
|-----------------------------------------------------------------------------------------------------|------------|-------------------|------------|-------------------|------------|
| ** **                                                                                          | ** ** | **June 30,** | ** ** | **June 30,** | ** ** |
| ** **                                                                                          | ** ** | **2005**          | ** ** | **2004**          | ** ** |
| ** **                                                                                          | ** ** | **(Unaudited)**   | ** ** | **(Unaudited)**   | ** ** |
|                                                                                                |       |              |       |              |       |
| **Revenues**                                                                                        |       | $                 | 10,109,672 |              | $          | — |   |
|                                                                                                |       |              |       |              |       |
| **Cost of  Goods Sold**                                                                             |       | 9,544,572         |       | —            |       |
|                                                                                                |       |              |       |              |       |
| **Gross  Profit**                                                                                   |       | 565,100           |       | —            |       |
|                                                                                                |       |              |       |              |       |
| **Operating  Expenses**                                                                             |       | 451,510           |       | 194,390           |       |
|                                                                                                |       |              |       |              |       |
| **Operating  Income (Loss)**                                                                        |       | 113,590           |       | (194,390          | )          |
|                                                                                                |       |              |       |              |       |
| **Other  Income (Expense)**                                                                         |       |              |       |              |       |
| Grant income                                                                                        |       | 112,201           |       | 50,901            |       |
| Interest  income                                                                                    |       | —            |       | 19,577            |       |
| CCC  Bio-Energy income                                                                              |       | 800,322           |       | —            |       |
| Interest  expense                                                                                   |       | (283,358          | )          | (1,161            | )          |
| Unrealized  loss on derivative instruments                                                          |       | —            |       | (71,294           | )          |
| Miscellaneous  income                                                                               |       | 7,296             |       | 7,232             |       |
| Total other  income, net                                                                            |       | 636,461           |       | 5,255             |       |
|                                                                                                |       |              |       |              |       |
| **Net  Income (Loss)**                                                                              |       | $                 | 750,051    |              | $          | (189,135 | ) |
|                                                                                                |       |              |       |              |       |
| **Net Income (Loss) Per Unit**(28,780 and  28,683 weighted average units outstanding, respectively) |       | $                 | 26.06      |              | $          | (6.59 | ) |

 

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

 

5

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**UNITEDWISCONSIN GRAIN PRODUCERS, LLC**

 

Condensed Balance Sheet

 
| ** **                                                                                          | ** ** | **Six Months Ended** | ** ** | **Six Months Ended** | ** ** |
|-----------------------------------------------------------------------------------------------------|------------|----------------------|------------|----------------------|------------|
| ** **                                                                                          | ** ** | **June 30,**    | ** ** | **June 30,**    | ** ** |
| ** **                                                                                          | ** ** | **2005**             | ** ** | **2004**             | ** ** |
| ** **                                                                                          | ** ** | **(Unaudited)**      | ** ** | **(Unaudited)**      | ** ** |
|                                                                                                |       |                 |       |                 |       |
| **Revenues**                                                                                        |       | $                    | 10,109,672 |                 | $          | — |   |
|                                                                                                |       |                 |       |                 |       |
| **Cost of  Goods Sold**                                                                             |       | 9,380,028            |       | —               |       |
|                                                                                                |       |                 |       |                 |       |
| **Gross  Profit**                                                                                   |       | 729,644              |       | —               |       |
|                                                                                                |       |                 |       |                 |       |
| **Operating  Expenses**                                                                             |       | 816,617              |       | 367,089              |       |
|                                                                                                |       |                 |       |                 |       |
| **Operating  Loss**                                                                                 |       | (86,973              | )          | (367,089             | )          |
|                                                                                                |       |                 |       |                 |       |
| **Other  Income (Expense)**                                                                         |       |                 |       |                 |       |
| Grant income                                                                                        |       | 187,852              |       | 75,119               |       |
| Interest  income                                                                                    |       | —               |       | 57,480               |       |
| CCC  Bio-Energy income                                                                              |       | 800,322              |       | —               |       |
| Interest  expense                                                                                   |       | (283,396             | )          | (1,949               | )          |
| Unrealized  loss on derivative instruments                                                          |       |                 |       | (71,294              | )          |
| Miscellaneous  income                                                                               |       | 7,296                |       | 7,232                |       |
| Total other  income, net                                                                            |       | 712,074              |       | 66,588               |       |
|                                                                                                |       |                 |       |                 |       |
| **Net  Income (Loss)**                                                                              |       | $                    | 625,101    |                 | $          | (300,501 | ) |
|                                                                                                |       |                 |       |                 |       |
| **Net Income (Loss) Per Unit**(28,780 and  27,754 weighted average units outstanding, respectively) |       | $                    | 21.72      |                 | $          | (10.83 | ) |

 

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

 

6

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**UNITEDWISCONSIN GRAIN PRODUCERS, LLC**

 

Condensed Statements of CashFlows

 
| ** **                                                         | ** ** | **Six Months Ended** | ** ** | **Six Months Ended** | ** ** |
|--------------------------------------------------------------------|------------|----------------------|------------|----------------------|------------|
| ** **                                                         | ** ** | **June 30,**    | ** ** | **June 30,**    | ** ** |
| ** **                                                         | ** ** | **2005**             | ** ** | **2004**             | ** ** |
| ** **                                                         | ** ** | **(Unaudited)**      | ** ** | **(Unaudited)**      | ** ** |
| **Cash  Flows from Operating Activities**                          |       |                 |       |                 |       |
| Net income  (loss)                                                 |       | $                    | 625,101    |                 | $          | (300,501 | ) |
| Adjustments  to reconcile net loss to net cash used in operations: |       |                 |       |                 |       |
| Depreciation  and amortization                                     |       | 741,733              |       | 1,233                |       |
| (Gain)/unrealized  loss on hedging                                 |       | (247,929             | )          | 71,294               |       |
| Grant income                                                       |       | (187,852             | )          | (75,119              | )          |
| Deposits on  expired land options                                  |       | —               |       | 3,000                |       |
| Changes in  assets and liabilities:                                |       |                 |       |                 |       |
| Derivative  instruments                                            |       | 360,130              |       | (500,000             | )          |
| Accounts  receivable                                               |       | (3,827,751           | )          | (3,668               | )          |
| Inventory                                                          |       | (1,527,881           | )          | —               |       |
| Prepaid expenses                                                   |       | (244,244             | )          | (22,928              | )          |
| Accounts  payable                                                  |       | 1,981,771            |       | 42,321               |       |
| Accrued  liabilities                                               |       | 108,129              |       | (6,325               | )          |
| Net cash  used in operating activities                             |       | (2,218,793           | )          | (790,693             | )          |
|                                                               |       |                 |       |                 |       |
| **Cash  Flows from Investing Activities**                          |       |                 |       |                 |       |
| Land  acquisitions                                                 |       | —               |       | (300,061             | )          |
| Capital  expenditures                                              |       | (55,770              | )          | (18,578              | )          |
| Payments for  construction in process                              |       | (647,801             | )          | (13,637,641          | )          |
| Net cash  used in investing activities                             |       | (703,571             | )          | (13,956,280          | )          |
|                                                               |       |                 |       |                 |       |
| **Cash  Flows from Financing Activities**                          |       |                 |       |                 |       |
| Member  contributions                                              |       | —               |       | 3,175,000            |       |
| Proceeds  from grants for operating expenses                       |       | 218,637              |       | 32,168               |       |
| Proceeds  from grants for capital expenditures                     |       | 283,905              |       | —               |       |
| Proceeds  from revolving line of credit                            |       | 780,426              |       | —               |       |
| Proceeds  from long term debt                                      |       | 2,542,012            |       | —               |       |
| Payments on  short-term debt                                       |       | —               |       | (50,836              | )          |
| Payments for  long term debt                                       |       | (86,894              | )          | (835                 | )          |
| Payments for  debt issuance costs                                  |       | (18,393              | )          | (472,359             | )          |
| Payments for  costs of raising capital                             |       | —               |       | 4,851                |       |
| Payments for  membership unit redemption                           |       | —               |       | (15,000              | )          |
| Net cash provided  by financing activities                         |       | 3,719,693            |       | 2,672,989            |       |
|                                                                    |            |                      |            |                      |            |  |  |

 

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

 

7

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**UNITEDWISCONSIN GRAIN PRODUCERS, LLC**

 

Condensed Statements of CashFlows (continued)

 
| ** **                                                                 | ** ** | **Six Months Ended** | ** ** | **Six Months Ended** | ** ** |
|----------------------------------------------------------------------------|------------|----------------------|------------|----------------------|------------|
| ** **                                                                 | ** ** | **June 30,**    | ** ** | **June 30,**    | ** ** |
| ** **                                                                 | ** ** | **2005**             | ** ** | **2004**             | ** ** |
| ** **                                                                 | ** ** | **(Unaudited)**      | ** ** | **(Unaudited)**      | ** ** |
|                                                                       |       |                 |       |                 |       |
| **Net  Increase (Decrease) in Cash**                                       |       | 797,328              |       | (12,073,984          | )          |
|                                                                       |       |                 |       |                 |       |
| **Cash and  Cash Equivalents–**Beginning of Period Period             |       | 9,068                |       | 20,150,071           |       |
|                                                                       |       |                 |       |                 |       |
| **Cash and  Cash Equivalents–**End of Period                          |       | $                    | 806,396    |                 | $          | 8,076,087 |   |
|                                                                       |       |                 |       |                 |       |
| **Supplemental  Cash Flow Information**                                    |       |                 |       |                 |       |
|                                                                       |       |                 |       |                 |       |
| Cash paid  during the year for:                                            |       |                 |       |                 |       |
| Interest                                                                   |       | $                    | 97         |                 | $          | 1,949 |   |
|                                                                       |       |                 |       |                 |       |
| **Noncash  Investing and Financing Activities**                            |       |                 |       |                 |       |
|                                                                       |       |                 |       |                 |       |
| Capital  expenditures and construction in process funded by long-term debt |       | $                    | 8,368,571  |                 | $          | — |   |
|                                                                       |       |                 |       |                 |       |
| Construction  in process funded by notes payable                           |       | $                    | —     |                 | $          | 92,345 |   |
|                                                                       |       |                 |       |                 |       |
| Capital  expenditures purchased by accounts payable                        |       | $                    | —     |                 | $          | 7,127 |   |
|                                                                       |       |                 |       |                 |       |
| Operating  expenses funded by construction loan                            |       | $                    | 3,000      |                 | $          | — |   |
|                                                                       |       |                 |       |                 |       |
| Capital  Expenditures in Grants Receivable                                 |       | $                    | 200,750    |                 | $          | — |   |
|                                                                       |       |                 |       |                 |       |
| Construction  in process in accounts payable                               |       | $                    | —     |                 | $          | 2,109,435 |   |
|                                                                       |       |                 |       |                 |       |
| Debt  issuance costs in accounts payable                                   |       | $                    | —     |                 | $          | 8,967 |   |

 

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

 

8

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**UNITEDWISCONSIN GRAIN PRODUCERS, LLC**

 

Notesto Financial Statements

 

June 30,2005 and 2004

 

**1.  SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES**

 

The accompanying unaudited condensedfinancial statements have been prepared pursuant to the rules and regulationsof the Securities and Exchange Commission.  Certain information and footnotedisclosures normally included in annual financial statements prepared inaccordance with accounting principles generally accepted in the United Statesof America have been condensed or omitted as permitted by such rules andregulations.  These financial statements and related notes should be readin conjunction with the financial statements and notes thereto included in theCompany’s audited financial statements for the year ended December 31,2004, contained in the Company’s annual report on Form 10-KSB for 2004.

 

In the opinion of management, the interimcondensed financial statements reflect all adjustments considered necessary forfair presentation.  The adjustments made to these statements consist onlyof normal recurring adjustments.

 

*Nature ofBusiness*

 

The Company was organized to pool investors,some of whom provide a corn supply, for a 40 million gallon ethanol plantlocated near the town of Friesland in the township of Randolph, Wisconsin, withdistribution to upper Midwest states. In addition, the Company produces andsells distillers grains as a co-product of ethanol production throughout theUnited States. The Company began performance testing April 21,2005, and successfully completed performance testing of the plant in May2005.  Prior to commencing operations onMay 5, 2005, the Company was a developmental stage entity.

 

*AccountingEstimates*

 

Management uses estimates and assumptions inpreparing these financial statements in accordance with generally acceptedaccounting principles.  Those estimates and assumptions affect thereported amounts of assets and liabilities, the disclosure of contingent assetsand liabilities, and the reported revenues and expenses.  Commodity Credit CorporationBio-Energy Program incentives include significant estimates.  Actual results could differ from thoseestimates.

 

*RevenueRecognition*

 

The company recognizes revenue at the timetitle to the goods and all risks of ownership transfer to the customers, whichgenerally occurs upon shipment to the customer or when the customer picks upthe goods.  The Company recordsrevenue from federal and state incentive programs related to the production ofethanol when the Company has sold the ethanol and completed all therequirements of the applicable incentive program

 

*TradeAccounts Receivable*

 

Trade accounts receivable are recorded attheir estimated net realizable value, net of an allowance for doubtfulaccounts.  The company extends credit tocustomers for sales of ethanol and distillers grain in the normal course of business.  Credit is extended based on an on-goingevaluation of a customer’s financial conditions and generally no collateral isrequired.  If payment is not received ona timely basis in accordance with the company’s credit terms it is consideredpast due.  Management performs on-goingcredit evaluations of customers and maintains allowances for potential creditlosses when required.  At June

 

9

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30, 2005 and 2004, the company believes allreceivables are fully collectible and no allowance for doubtful accounts isdeemed necessary.

 

*Inventories*

 

Inventories, which consist primarily ofethanol and distillers grains, are stated at the lower of average cost ormarket.

 

*DerivativeInstruments*

 

The Company enters into derivative contractsto hedge the Company’s exposure to price risk related to forecasted corn andnatural gas purchases and forward corn purchase contracts.  The Companydoes not typically enter into derivative instruments other than for hedgingpurposes.  All derivative contracts are recognized on the June 30,2005 balance sheet at their fair market value. Although the Company believes its derivative positions are economichedges, none have been designated as a hedge for accounting purposes.

 

The Company has recorded an asset of $52,575as of June 30, 2005.  The Companyhas also recorded a combined realized and unrealized gain on derivativeinstruments of $247,929 related to its derivative contracts for the six monthsended June 30, 2005.  This includesa gain of $83,384 recorded during the three month period ended June 30,2005 and a gain of $164,545 recorded during the three month period ended March 31,2005.  As the Company had not commencedoperations as of March 31, 2005, the first quarter gains were included inother income and have been reclassed to cost of sales.   The unrealized loss of $71,294 for the sixmonth period ending June 30, 2004 was recognized as another income andexpense item.  The Company is required tomaintain cash balances at its broker related to derivative instrumentpositions.  At June 30, 2005,restricted cash was $ 46,675, and is included in cash and cash equivalents.

 

*Grants*

 

The Company recognizes grant income as otherincome for reimbursement of expenses incurred upon complying with theconditions of the grant.  For reimbursements of capital expenditures, thegrants are recognized as a reduction of the basis of the asset upon complyingwith the conditions of the grant.

 

*Commodity Credit CorporationBioenergy Program*

 

During the second quarter of 2005, the Companyenrolled in the Commodity Credit Corporation Bioenergy Program (CCC), adepartment of the United States Department of Agriculture.  This programenables the Company to receive payments based on increases in production ofethanol over the previous year of up to $7,500,000 per year.  Newproduction is eligible and is considered increased production.  Paymentsunder the program are subject to pro rata reduction if aggregate payments toall producers in any fiscal year exceed the maximum annual funding of theprogram.  For the quarter ended June 30, 2005 the Company recorded$800,322 as other income from the CCC.  The company was not eligible forBioenergy Program payments prior to commencement of production in May 2005.

 

**2.  INVENTORY**

 

Inventory consists of the following at June 30,2005:

 
| Raw materials   |   | $       | 877,596   |   |
|-----------------|--------|---------|-----------|--------|
| Work in process |   | 174,233 |      |
| Finished Goods  |   | 476,052 |      |
| Total           |   | $       | 1,527,881 |   |

 

10

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**3.  BANK FINANCING**

 

On February 26, 2004 the Company closedon a construction loan from a financial institution.  The constructionloan for $33,024,200 was converted on July 15, 2005 into two loans withthe first loan a $4,000,000 revolving loan and the second with a $29,024,200term loan.  The term of the loans is five years with a ten-yearamortization.  The term loan was converted under the variable rate optionat an initial rate of 6.9%.  The funds ora portion thereof can be converted to a fixed rate at anytime as prescribed inthe loan agreement. The remaining $780,426 was drawn on the $4,000,000revolving line of credit until it was subsequently paid off.  The company pays 0.50% interest on the unusedportion of this instrument.  As of June 30,2005, the Company had borrowed $29,804,626, on this credit facility.

 

There is an annual facility fee of $40,000beginning at the conversion of the construction loan to the facility term noteand upon each anniversary for four years.  If any of the senior debt isprepaid in whole or in part, within three year following the date of the agreement;a prepayment penalty applies.  Prepaymentpenalties of 3%, 2% and 1% of the amount prepaid will apply in the first,second and third year, respectively.

 

These loans are subject to protectivecovenants requiring the Company to maintain various financial ratios, aresecured by all business assets, and require additional loan payments based onexcess cash flow and restrict distributions.  The loan is secured bysubstantially all the Company’s assets.

 

**4.  LONG TERM DEBT**

 

Long term debt consists of the following:

 
| ** **                                                                                                                                                                     | ** ** | **June 30, 2005** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------|------------|
| Bank  Financing (Note 3)                                                                                                                                                       |       | $                      | 29,024,200 |   |
| Capital  lease agreement for office equipment, due in thirty-six monthly installments  of $160 including interest at 7% beginning April 2003 and maturing March 2006 |       | 1,403                  |       |
|                                                                                                                                                                           |       |                   |       |
| Totals                                                                                                                                                                         |       | $                      | 29,025,603 |   |

 

Theestimated maturities of long term debt at June 30, 2005 are as follows:

 
| 2005       |   | $          | 1,904,586  |   |
|------------|--------|------------|------------|--------|
| 2006       |   | 2,219,048  |       |
| 2007       |   | 2,378,517  |       |
| 2008       |   | 2,549,447  |       |
| 2009       |   | 2,732,659  |       |
| Thereafter |   | 17,241,346 |       |
| Total      |   | $          | 29,025,603 |   |

 

**5.  RELATED PARTY TRANSACTIONS**

 

In the six months ending June 30, 2005,the Company had incurred $35,278 in director fees and related expense, of which$7,388 to ten members is included in accounts payable at June 30, 2005.

 

Through June 30, 2004, the Company had incurred$19,375 in project coordinator fees to three current members and one formermember.  At June 30, 2004, there was no accounts payable balancerelating to these costs.

 

Through June 30, 2004, the Company has alsoincurred $124,482 in director fees and related expense, of which $61,175 isincluded in accounts payable at June 30, 2004 to eight members.

 

11

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**6.  GRANTS**

 

In October 2003, the WisconsinDepartment of Commerce approved a grant for $271,000 in funds to reimburse theCompany for infrastructure costs.  At June 30, 2005, the Company hasincurred the $271,000 of costs eligible for reimbursement under this grant, ofwhich $40,750 is included in grants receivable. $268,525 of this amount is associated with capital expenditures and hasbeen recognized as a reduction of the basis of the asset and the remaining$2,475 of this amount is associated with expenses and is reflected in grantincome.

 

In January 2004, the Company wasapproved for a matching grant from the United States Department of Agriculturefor $450,000.  At June 30, 2005, the Company had incurred costs of$450,000 associated with this grant and has been reimbursed for the$450,000.  $351,227 of this amount isassociated with expenses and has been reflected in grant income and the remaining$98,773 is associated with capital expenditures and has been recognizedas a reduction of the basis of the asset.

 

In February 2004, the Companywas approved for a matching grant from the Transportation Facilities EconomicDevelopment Program (TEA) for $160,000. The proceeds of the grant will be used to fund a portion of a singlecontract with a contractor hired to do the rail spur development.  At June 30, 2005, the Company has incurredthe $160,000 of costs eligible for reimbursement under this grant.  The Company has accounted for this grant as areceivable and has reduced the basis of the capital expenditure.  The Company subsequently received payment inJuly 2005 for the $160,000 grant.

 

**7.  COMMITMENTS AND CONTINGENCIES**

 

In April and May 2005, the Companyentered into two long-term rental agreements for two wheel loaders for a periodof sixty months at approximately $1,600 per month per wheel loader.

 

In May 2005, the Company entered into a leaseagreement with a bank to lease a shuttle wagon for a period of sixty months atapproximately $3,300 per month.

 

*Corn andNatural Gas Contracts*

 

At June 30, 2005, the Company hadforward corn purchase contracts totaling 6,500,000 bushels for various deliveryperiods from July to November 2006. The prices on these contracts range from $2.05 to $2.55 per bushel.

 

At June 30, 2005, the Company hadforward contracts to purchase approximately 167,700 million British thermal units(MMBTU) of natural gas during the months of July through December 2005at an average price of approximately $7.18 per MMBTU.

 

*Marketing Agreement*

 

On April 1, 2005, the Company entered into amarketing agreement with a company for the purpose of developing and marketingour modified wet distillers grain product.  The initial term of thisagreement is one year and shall automatically renew for an additional one yearunless either party gives the other party not less than 120 days notice priorto the annual renewal date.

 

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**Item 2.   Management’s Discussion and Analysis and Planof Operations**

 

This reportcontains forward-looking statements that involve future events, our futureperformance and our expected future operations and actions.  In some casesyou can identify forward-looking statements by the use of words such as “may,” “should,”“anticipate,” “believe,” “expect,” “will,” “plan,” “future,” “intend,” “could,”“estimate,” “predict,” “hope,” “potential,” “continue,” or the negative ofthese terms or other similar expressions.  These forward-lookingstatements are only our predictions and involve numerous assumptions, risks anduncertainties.  Our actual results or actions may differ materially from theseforward-looking statements for many reasons, including the following factors:

 

•                  Changesin the availability and price of corn;

•                  Increasesor decreases in the supply and demand for ethanol;

•                  Changesin the environmental regulations that apply to our plant operations;

•                  Changesin interest rates or the availability of credit;

•                  Changesin our business strategy, capital improvement or development plans;

•                  Changesin plant production capacity or technical difficulties in operating the plant;

•                  Changesin general economic conditions or the occurrence of certain events causing aneconomic impact in the agriculture, oil or automobile industries;

•                  Changesin the availability and price of natural gas;

•                  Increasesor decreases in the supply and demand for distiller grains; and

•                  Changesand advances in ethanol production technology.

 

We are notunder any duty to update the forward-looking statements contained in thisreport.  We cannot guarantee future results, levels of activity,performance or achievements.  We caution you not to put undue reliance onany forward-looking statements, which speak only as of the date of thisreport.  You should read this report and the documents that we referencein this report and have filed as exhibits, completely and with theunderstanding that our actual future results may be materially different fromwhat we currently expect.  We qualify all of our forward-lookingstatements by these cautionary statements.

 

**Overview**

 

United Wisconsin Grain Producers, LLC wasformed as a Wisconsin limited liability company on November 2, 2001, forthe purpose of constructing and operating a 40 million gallon per year ethanolplant near Friesland, Wisconsin.   On April 21,2005, we substantially completed construction of the ethanol plant.  In late April and early May 2005, wecompleted production testing and began plant operations.

 

Our total project cost is approximately $60,060,000,pending final completion of plant construction. Our project was funded by equity proceeds of $27,500,000 raised in apublic offering registered with the Securities and Exchange Commission onForm SB-2.  To complete financing of the project, we executed debtfinancing agreements securing a senior credit facility of $33,024,200 fromAgStar Financial Services, PCA.

 

We expect to fund our operations over thenext 12 months using cash flow from continuing operations, USDA CommodityCredit Corporation Bioenergy Program payments, revolving lines of credit, andour senior credit facility.

 

We are subject to industry-wide factors thataffect our operating and financial performance. These factors include, but arenot limited to, the available supply and cost of corn from which our ethanoland distillers grains are processed; the cost of natural gas, which we use inthe production process; dependence on our ethanol marketer and distillersgrains marketer to market and distribute our products; the intenselycompetitive nature of the ethanol industry; possible legislation at thefederal, state and/or local level; changes in federal ethanol tax incentivesand the cost of complying with extensive environmental laws that regulate ourindustry.

 

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During the quarter ended June 30, 2005,we transitioned from a development stage company to an operating companyproducing ethanol and distillers grains. Since we only recently became operational, we do not have comparableincome, production and sales data for the three months ended June 30, 2005or the six months ended June 30, 2005. Accordingly, we do not provide a comparison of our financial resultsbetween reporting periods in this report. If you undertake your own comparison of our second fiscal quarter of2004 and our second fiscal quarter of 2005, it is important that you keep thisin mind.

 

**Plan of Operations for the Next 12 Months**

 

We expect tospend the next 12 months operating the ethanol plant to produce and sellethanol and distillers grains.  We willfocus primarily on these three areas: (i) operating the plant and completing anyunfinished plant construction; (ii) maximizing our plant’s operationalefficiency to operate as competitively as possible; and (iii) purchasingimportant manufacturing inputs such as corn and natural gas as cost effectivelyas possible.

 

*PlantConstruction and Operations*

 

As of June 30,2005, plant construction was substantially complete and we were operating theplant and producing ethanol and distillers grains.  The project will reach final completion oncewe successfully pass emissions testing. We are currently conducting preliminary emissions testing and are workingwith our process design engineer to take any remedial action necessary toassist the plant in passing the final emissions testing.

 

As of June 30,2005, there was no outstanding balance on the plant design-build contract exceptfor retainage of $100,000.  We areholding retainage of $100,000 pending final completion of the project, which weanticipate will occur upon successful completion of final emissions testing.

 

Based upon theproject inspection report prepared for our senior lender, project constructionwas 98% complete as of June 30, 2005. As of June 30, 2005, construction costs under the design-buildcontract equaled 95% of their scheduled value. Our final project cost is approximately $60,060,000, pending finalcompletion of the project.

 

On April 21,2005, we substantially completed plant construction and commenced start-upoperations.  As of May 5, 2005, the plantpassed performance testing and became fully operational.  As owner of the project, we are responsiblefor the rail-yard, site development, landscaping, excavation, access roads,office building, fire protection, water supply and equipment.  As of June 30, 2005, those items areapproximately 98% complete.  We stillneed to complete the automated truck handling system, security fencing,rest-stop facility for drivers, maintenance software implementation, businesssignage and security systems.  We expectto complete these items over the next few months without interruption or delayof plant operations.  Incompleteconstruction items are estimated at $535,000.

 

During thenext 12 months, we expect to focus on producing ethanol and distillers grainsat our plant.  We have engaged an ethanolmarketing firm to market our ethanol and a distillers grains marketing firm tomarket our dried distillers grains.  We arealso independently marketing a portion of our dried distillers grains to locallivestock producers.  On April 1,2005, we entered into an agreement with Commodity Specialists Company to marketour modified wet distillers grains.  Theinitial term of this agreement is one year and it automatically renews forsuccessive one-year periods unless either party gives at least 120 days priorwritten notice.  Commodity Specialists Companyalso markets the dried distillers grains that we do not market independently.

 

*Trends andUncertainties Impacting the Ethanol Industry and Our Revenues*

 

Our revenues consist of sales of ethanol anddistillers grains.  Ethanol salesconstitute the bulk of our revenues.  Lastquarter, the demand for ethanol increased relative to supply causing upwardpressure on ethanol market prices.  It isuncertain whether the upward trend of ethanol market prices will be sustainablefor any significant period of time.  Basedupon the number of new ethanol plants scheduled to begin

 

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production and the expansion of current plants, it is possible thatmarket prices may stabilize or begin to trend downward.  However, increasing ethanol demand maybalance the increase in supply.  Areaswhere ethanol demand may increase are new markets in Atlanta, Nashville, BatonRouge and Houston.  Minnesota may alsogenerate additional demand due to recent legislation mandating a 20% ethanolblend in its gasoline.

 

On August 8, 2005, President George. W.Bush signed into law the Energy Policy Act of 2005.  The Act contains numerous provisions that areexpected to favorably impact the ethanol industry by enhancing both theproduction and use of ethanol.  Mostnotably, the Act created a 7.5 billion gallon renewable fuels standard(RFS).  The RFS will begin at 4 billiongallons in 2006, increasing to 7.5 billion gallons by 2012.  The RFS is a national renewable fuels mandateas to the total amount of national renewable fuels usage but allows flexibilityto refiners by allowing them to use renewable fuel blends in those areas whereit is most cost-effective rather than requiring renewable fuels to be used inany particular area or state.  Accordingto the Renewable Fuels Association, the Act is expected to lead to about $6billion in new investment in ethanol plants across the country.

 

The Act also expands who qualifies as a smallethanol producer for purposes of the small ethanol producer tax credit.  Historically, small ethanol producers wereallowed a 10-cent per gallon production income tax credit on up to 15 milliongallons of production annually.  The sizeof the plant eligible for the tax credit was limited to 30 milliongallons.  Under the Act, the sizelimitation on the production capacity for small ethanol producers increasesfrom 30 million gallons per year to 60 million gallons per year.  The credit can be taken on the first 15million gallons of production.  The taxcredit is capped at $1.5 million per year per producer.  The credit is effective for taxable yearsending after the date of enactment through 2008.  Since we expect to now qualify as a smallethanol producer under the Act, we will be eligible for this tax credit this taxableyear.

 

Demand for ethanol may also increase as aresult of increased consumption of E85 fuel. E85 fuel is a blend of 70% to 85% ethanol and gasoline.  According to the Energy InformationAdministration, E85 consumption is projected to increase from a national totalof 11 million gallons in 2003 to 47 million gallons in 2025.  E85 is used as an aviation fuel and as ahydrogen source for fuel cells.  In theU.S., there are currently about 3 million flexible fuel vehicles capable ofoperating on E85 and 400 retail stations supplying it.  Automakers have indicated plans to produce anestimated 2 million more flexible fuel vehicles per year.

 

Ethanol production continues to grow asadditional plants become operational. According to the Renewable Fuels Association,there are currently 88 ethanol plants nationwide that have the capacity toannually produce 3.9 billion gallons.  Inaddition, there are 16 ethanol plants and two major expansions underconstruction constituting another 1.0 billion gallons of annual capacity.  A greater supply of ethanol on the marketfrom these additional plants and plant expansions could reduce the price we areable to charge for our ethanol.  Thiswould have a negative impact on our revenues.

 

Demand for ethanol has historically beensupported by higher oil prices and its refined components and by clean airstandards mandated by federal agencies have required highly populated areas toblend ethanol into their gasoline supplies as an oxygenate. The intent of theair standards is to reduce harmful emissions into the atmosphere. Thesemandates have been challenged in several metropolitan areas, and are currentlybeing reviewed by the courts.  In thefuture, the combination of additional supply, successful challenges to theclean air standards and stagnant or reduced demand may adversely affect ourrevenues, profit margin and ability to maintain positive cash flows.

 

*TechnologyDevelopments*

 

A new technology has recently been introducedby Vortex Dehydration Technology of Hanover, Maryland, to remove corn oil fromconcentrated thin stillage (a byproduct of “dry milling” ethanol processingfacilities) which would be used as an animal feed supplement or possibly as aninput for bio-diesel production. Although the recovery of oil from the thin stillage may be economicallyfeasible, it fails to produce the advantages of removing the oil prior to thefermentation process.  The FWS Group of

 

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Companies, headquartered out of Canada with offices in the UnitedStates, is currently working on a starch separation technology that wouldeconomically separate a corn kernel into its main components. The processremoves the germ, pericarp and tip of the kernel leaving only the endosperm ofkernel for the production of ethanol. This technology has the capability to reduce drying costs and theloading of volatile organic compounds. The separated germ would also be available through this process forother uses such as high oil feeds or bio-diesel production.  Each of these new technologies is currentlyin its early stages of development. There is no guarantee that either technology will be successful or thatwe will be able to implement the technology in our ethanol plant.

 

*Employees*

 

Our ethanolplant is fully staffed.  We employ 33full-time employees. Approximately ten of our employees will be involvedprimarily in management and administration. The remainder will be involved primarily in plant operations.  We do not expect any significant change to thenumber of employees necessary to operate our plant.

 

The following table represents the currentpositions within the plant and the number of individuals we currently employfor each position:

 
| **Position**                | ** ** | **# Employed** |
|-----------------------------|------------|----------------|
| Chief  Executive Officer    |       | 1              |
| Chief Financial  Officer    |       | 1              |
| Commodities  Manager        |       | 1              |
| Plant  Manager              |       | 1              |
| Safety &  Enviro Manger |       | 1              |
| Lab Manager                 |       | 1              |
| Lab  Technician             |       | 1              |
| Secretary/Clerical          |       | 3              |
| Maintenance  Manager        |       | 1              |
| Maintenance  Craftsmen      |       | 5              |
| Shift  Supervisors          |       | 4              |
| Plant  Operators            |       | 8              |
| Shipping and  Receiving     |       | 5              |
| **TOTAL**                   | ** ** | **33**         |

 

*Trends andUncertainties Impacting the Corn and Natural Gas Markets and Our Cost of GoodsSold*

 

Our cost of goods sold consists primarily ofcosts relating to the corn and natural gas supplies necessary to produceethanol and distillers grains for sale.  Projectionsfor the 2005 corn crop have been reduced by very dry growing conditions in muchof the Corn Belt, with portions of Illinois being the hardest hit.  Corn prices have been very volatile as the nationalcorn market attempts to estimate the damage done to the 2005 corn crop andsubsequent reductions in yield.  Previousprojections for the corn carry-out were pegged at 2.0 billion bushels.  Those projections have been reduced to 1.5billion bushels.  Continued hot and dryweather could further decrease yields or additional demand could send cornprices considerably higher. Alternatively, we would expect normal weather or a lack of demand tokeep corn prices stagnant.  We currentlyanticipate corn prices to range between $2.25 and $2.75.  We have purchased 100% of our September cornsupply, 90% of our October corn supply and 25-50% of our monthly cornsupplies for November 2005 through November 2006.  Increases in corn prices negatively impactour profitability by increasing our cost of goods and reducing our netoperating income.  Although we attempt touse hedging strategies to minimize our exposure to corn price movements, thereis no guarantee or assurance that our hedging strategies will be effective.

 

As of June 30, 2005, we have forwardcorn purchase contracts totaling 6,500,000 bushels for various deliveryperiods, July 2005 through November 2006.  The prices on these contracts range from $2.05to $2.55 per bushel.  We also have priceprotection in place in the form of long corn futures positions on the ChicagoBoard of Trade for approximately 13% of our corn needs through December 2005.  Our

 

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combined forward contracts and futures coverage represents priceprotection for approximately 43% of our corn needs through December 2005.  As we move forward, we will continue tomonitor our risk in the corn market.  Wemay determine that additional protection is necessary.  As corn prices move in reaction to markettrends and information, our income statement will be affected depending on theimpact such market movements have on the value of our forward contracts andfutures positions.  Our forward contractsand futures positions are classified as derivative instruments in our financialstatements.  Depending on marketmovements, crop prospects and weather, these price protection positions maylose value in the short-term but are expected to produce long-term positivegrowth for us.

 

Natural gas is also an important inputcommodity to our manufacturing process. We estimate that our natural gas usage will be approximately 122,000million British thermal units (MMBTU) per month.  We use natural gas to dry our distillersgrain products to moisture contents at which they can be stored for long periodsof time, and can be transported greater distances.  Dried distillers grains have a much broadermarket base, including the western cattle feedlots, and the dairies ofCalifornia and Florida.  Recently, theprice of natural gas has risen along with other energy sources.  Current natural gas prices are considerablyhigher than the 10-year average.  Weexpect natural gas prices to remain higher than average in the short to midterm.  Increases in the price of naturalgas increases our cost of production and negatively impacts our profitmargins.  We have secured a marketingfirm and an energy consultant for our natural gas, and will work with them onan ongoing basis to mitigate our exposure to volatile gas prices.  As of June 30, 2005, we have price protectionin place for approximately 23% of our projected natural gas usage for July 2005through December 2005.  We havetarget prices in place at which we will forward purchase additional volumes ofnatural gas.

 

**Application of Critical Accounting Policies**

 

Management uses estimatesand assumptions in preparing our financial statements in accordance withgenerally accepted accounting principles. These estimates and assumptions affect the reported amounts of assetsand liabilities, the disclosure of contingent assets and liabilities, and thereported revenues and expenses.  Of thesignificant accounting policies described in the notes to our financialstatements, we believe that the following are the most critical:

 

Commodity Credit CorporationBioenergy Program 

 

Commodity Credit BioenergyProgram incentives include significant estimates.  Actual results could differ from thoseestimates.

 

Derivative Instruments

 

We enter into derivative instruments to hedge ourexposure to price risk related to forecasted corn and natural gas purchases andforward corn purchase contracts.  We donot typically enter into derivative instruments other than for hedgingpurposes.  All derivative instruments arerecognized on the June 30, 2005 balance sheet at their fair market value.  Currently, none of our derivative instrumentsis classified as cash-flow hedges for accounting purposes.  On the date the derivative instrument isentered into, we will designate the derivative as either a hedge of thevariability of cash flows of a forecasted transaction or will not designate thederivative as a hedge.  Changes in thefair value of a derivative that is designated as, and meets all of the requiredcriteria for, a cash flow hedge are recorded in accumulated other comprehensiveincome and reclassified into earnings as the hedged items affect earnings.  Changes in the fair value of a derivativethat is not designated as a hedge are recorded in current period earnings.  Although certain derivative instruments maynot be designated as, and accounted for, as a cash flow hedge, we believe ourderivative instruments are effective economic hedges of specified risks.

 

We have recorded a combined realized and unrealizedloss for derivatives of $71,294 for the six months ended June 30,2005.  Since we transitioned from adevelopment-stage company to an operating company during the second quarterended June 30, 2005, we now record changes in the fair value of ourderivative instruments not designated as cash flow hedges in cost of goodssold.

 

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**Liquidity and Capital Resources**

 

As of June 30,2005, we had cash and cash equivalents of $806,397, current assets of $6,678,005and total assets of $58,829,050.  As of June 30,2005, we had current liabilities of $1,904,586 and long term liabilities of $27,121,017.

 

The members’contributions, net of costs related to capital contributions, are $27,696,394.  Retained earnings, net of the deficitaccumulated during development stage, are $899,025.  Total members’ equity as of June 30,2005, is $26,797,369.

 

*Short-Term and Long-Term Debt Sources*

 

We haveentered into a senior credit facility consisting of a $33,024,200 singleconstruction loan with AgStar Financial Services, PCA.   The credit facility is secured bysubstantially all of our assets. During construction we have made interest onlypayments on the principal balance at an interest rate equal to the one-monthLIBOR (the London Interbank Offered Rate) plus 3.75%.

 

Subsequent tothe quarter ended June 30, 2005, we converted our construction loan intotwo loans.  The first loan is a term loanof $29,024,200. The second loan is a $4,000,000 revolving loan.  The term loan of $29,024,200 is for fiveyears with a ten-year amortization. Payments on the converted term loan will be paid in monthly installmentsincluding principal and interest.  Thevariable interest rate on the converted term loan is equal to the monthly LIBORplus 3.75%.  This variable interest ratemay be adjusted downward depending on our level of owners’ equity as reportedin our monthly financial statements.  Ata level of ownership equity equal to 50%, the interest rate will decrease by0.50%.  At a level of ownership equityequal to 55%, the interest rate will decrease by 1.0%.  At a future date, we can elect to allocate aportion of the term loan to a fixed interest rate.  Depending on the anticipated movements ininterest rates and overall credit environment, we may elect to make thatallocation.  Interest on the revolvingloan of $4,000,000 accrues at a rate equal to the monthly LIBOR plus3.75%.  However, this interest rate may beadjusted downward in the same manner as the term loan depending on our level ofowners’ equity.

 

As of June 30,2005, the principal balance on the construction loan is $29,804,626.  As of June 30, 2005, we expected toconvert the construction loan into two loans consisting of a term loan and arevolving loan.  Accordingly, theprincipal balance of $29,804,626 is presented in our financial statements as anoutstanding balance of $29,024,200 on the term loan and an outstanding balanceof $780,426 on the revolving loan.

 

The convertedterm loan and line of credit agreements contain restrictions and financialcovenants to which we will be subject during the term of the agreements.  If, for any reason, our revenuessignificantly decrease and/or our cost of goods significantly increases, we maynot be able to timely repay the loan.  Ifinterest rates increase, we will have higher interest payments, which couldadversely affect our business.

 

*Bioenergy Program Payments*

 

We have enrolled in the USDA Commodity CreditCorporation’s Bioenergy program. Under the USDA CCC Bioenergy program, theCommodity Credit Corporation will reimburse eligible ethanol producers of lessthan 65 million gallons of bioenergy in the amount of one bushel of cornfor every two and one-half bushels of corn used for the increased production ofethanol. No eligible producer may receive more than $7.5 million under theprogram. Because we expect to be an eligible producer and to annually utilize15 million bushels of corn in the increased production of ethanol, we couldpotentially receive the maximum award of $7.5 million. However, theCommodity Credit Corporation may award only $100 million annually fiscalyears 2005 through 2006, and any award we received may be reduced based uponthe volume of applications from other eligible producers.  In addition, payments under the program in

 

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any one fiscal year may be less if Congress does not fully fund theprogram for that fiscal year (funding for the program is subject to an annualappropriation).

 

Based upon the recent increase in nationalethanol production, we anticipate a pro rata reduction in aggregate payments toall eligible producers.  We anticipatethe pro rata reduction to be in the range of 55% to 60%.  Therefore, we may not receive the maximumaward of $7.5 million.  Given the lowertotal payout and the number of gallons of new production being reported weestimate our total funds out of the program in our fiscal year 2005 to beapproximately $3.0 million.  In addition,the Commodity Credit Corporation Bioenergy Program is scheduled to expire on September 30,2006.  The grants available under the CCCprogram may not continue beyond their scheduled expiration date or if they docontinue, the grants may not be at the same level.

 

Ethanol production for our second quarter(commencing with our start-up date of April 21 through June 30, 2005)was eligible for Bioenergy program payments and we filed our application forBioenergy program payments in July 2005. As of June 30, 2005, we have accrued income of $800,321 attributableto Bioenergy program payments.  We expectto receive the second quarter production payments sometime during our thirdquarter.

 

*Operating Budget and Financing of PlantOperations*

 

As of June 30,2005, we have incurred approximately $59,525,000 of construction costs.  The construction costs incurred as of June 30,2005 include approximately $45,447,045 paid to Fagen, Inc. under thedesign-build agreement.  Now that we arean operating company, we expect that outgoing cash flows will be directedtowards funding plant operations and paying off debt.

 

We expect to have sufficient cash from cashflow generated by plant operations, our senior credit facility and Bioenergyprogram payments to cover our operating costs over the next 12 months,including the cost of corn and natural gas supplies, other production costs,staffing, office audit, legal compliance and working capital costs.  The following is our estimate of ouroperating costs and expenditures for the next 12 months:

 
| **Operating Costs:**              | ** ** | ** ** | ** ** |
|-----------------------------------|------------|------------|------------|
| Cost of Corn                      |       | 35,408,760 |       |
| Cost of  Utilities                |       | 12,433,030 |       |
| Other Costs  of Production        |       | 11,486,673 |       |
| General and  Administrative Costs |       | 3,133,862  |       |
|                              |       |       |       |
| Total  Operating Costs            |       | $          | 62,462,325 |   |
|                                   |            |            |            |  |

 

The estimates in the table set forth aboveare based upon management’s compilation of data gathered from other ethanolplants similar to ours.  We have no operatingexperience or history on which to base our estimate of operating costs andexpenditures.  Accordingly, theseoperating costs are only estimates and our actual expenses and costs could bemuch higher due to a variety of factors discussed throughout this report.

 

**Off-Balance Sheet Arrangements**

 

We do not haveany off-balance sheet arrangements.  Wehave commitments and contingencies as described in Note 7 to our FinancialStatements.

 

**Item 3.   Controls andProcedures**

 

Our management, including our Chief ExecutiveOfficer (the principal executive officer), Jeff Robertson, along with our ChiefFinancial Officer (the principal financial officer), Barb Bontrager, have

 

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reviewed and evaluated the effectiveness of our disclosure controls andprocedures as of June 30, 2005.  Based upon this review andevaluation, these officers believe that our disclosure controls and proceduresare effective in ensuring that material information related to us is recorded,processed, summarized and reported within the time periods required by theforms and rules of the Securities and Exchange Commission.

 

Our management, including our principalexecutive officer and principal financial officer, have reviewed and evaluatedany changes in our internal control over financial reporting that occurred asof June 30, 2005 and there has been no change that has materially affectedor is reasonably likely to materially affect our internal control overfinancial reporting.

 

**PARTII.  OTHER INFORMATION**

 

**Item 1.   Legal Proceedings**

 

None.

 

**Item 2.   Changes inSecurities**

 

None.

 

**Item 3.   Defaults Upon SeniorSecurities**

 

None.

 

**Item 4.   Submission ofMatters to a Vote of Security Holders**

 

The Company’s 2005 annual meeting of memberswas held on April 9, 2005 for the purpose of approving several amendmentsto the Company’s Operating Agreement and ratifying the directors’ compensationpolicy and compensation payable to the board of directors for the 2004 fiscalyear.  Votes were solicited in person andby proxy.  For each matter on which voteswere entitled to be cast, there were no broker non-votes.

 

*Proposal #1:  Amendment to theOperating Agreement to allow a majority of the membership units present at anannual or special meeting of the members to take action on certain matters.*

 

This amendment to the Operating Agreement was passed by the followingvote of the members:

 
| **For** | ** ** | **Against** | ** ** | **Abstain** |
|---------|------------|-------------|------------|-------------|
| 20,579  |       | 494         |       | 388         |

 

 

*Proposal #2:  Amendment to theOperating Agreement to recognize a transfer of membership units as taking placeon the first day of the month following the transfer for purposes of allocatingprofit or loss distributions to the units.*

 

This amendment to the Operating Agreement was passed by the followingvote of the members:

 
| **For** | ** ** | **Against** | ** ** | **Abstain** |
|---------|------------|-------------|------------|-------------|
| 21,053  |       | 30          |       | 378         |

 

*Proposal #3:  Amendment to theOperating Agreement to provide for the election of directors through the use ofplurality (straight) voting whereby the nominee receiving the greatest numberof votes relative to the votes cast for other candidates shall be elected as adirector.*

 

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This amendment to the Operating Agreement was passed by the followingvote of the members:

 
| **For** | ** ** | **Against** | ** ** | **Abstain** |
|---------|------------|-------------|------------|-------------|
| 21,033  |       | 50          |       | 378         |

 

 

*Proposal #4: Amendment to the Operating Agreement to combine the offices of Chairmanand President, combine the offices of Vice Chairman and Vice President andseparate the office of Chief Executive Officer.*

 

This amendment to the Operating Agreement waspassed by the following vote of the members:

 
| **For** | ** ** | **Against** | ** ** | **Abstain** |
|---------|------------|-------------|------------|-------------|
| 20,683  |       | 335         |       | 443         |

 

*Proposal #5:  Amendment to theOperating Agreement to increase the minimum number of days prior to an annualmeeting of the members in which the members must submit nominations for opendirector positions from 30 days to 60 days.*

 

This amendment to the Operating Agreement was passedby the following vote of the members:

 
| **For** | ** ** | **Against** | ** ** | **Abstain** |
|---------|------------|-------------|------------|-------------|
| 20,726  |       | 347         |       | 388         |

 

*Proposal #6:  Amendment to theOperating Agreement to allow for delivery of notice and other communication viaelectronic transmission.*

 

This amendment to the Operating Agreement was passedby the following vote of the members:

 
| **For** | ** ** | **Against** | ** ** | **Abstain** |
|---------|------------|-------------|------------|-------------|
| 20,533  |       | 495         |       | 433         |

 

*Proposal #7:  Amendment to theOperating Agreement to correct a cross-reference in Section 6.3 of theOperating Agreement.*

 

This amendment to the Operating Agreement was passedby the following vote of the members:

 
| **For** | ** ** | **Against** | ** ** | **Abstain** |
|---------|------------|-------------|------------|-------------|
| 20,953  |       | 70          |       | 438         |

 

*Proposal #8:  Proposal to ratifyboth the board of directors’ approval of their compensation for the 2004 fiscalyear and their adoption of a director compensation policy.*

 

This proposal was ratified by the following vote ofthe members:

 
| **For** | ** ** | **Against** | ** ** | **Abstain** |
|---------|------------|-------------|------------|-------------|
| 18,492  |       | 2,206       |       | 763         |

 

**Item 5.   Other Information**

 

None.

 

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**Item6.   Exhibits     **Thefollowing exhibits are included herein:

 
| **Exhibit No.** | ** ** | **Exhibit**                                                                       |
|-----------------|------------|-----------------------------------------------------------------------------------|
| 3.2             |       | Amended and Restated Operating Agreement of the  Company dated April 9, 2005 |
|            |       |                                                                              |
| 31.1            |       | 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. § 1350.                               |
|            |       |                                                                              |
| 32.2            |       | Certificate Pursuant to 18 U.S.C. § 1350.                               |

 

 

**SIGNATURES**

 

In accordancewith the requirements of the Exchange Act, the registrant caused this report tobe signed on its behalf by the undersigned, thereunto duly authorized.

 

 
| ** **                 | ** ** | **UNITED  WISCONSIN GRAIN  PRODUCERS, LLC** |
|----------------------------|------------|---------------------------------------------|
| ** **                 | ** ** | ** **                                  |
| ** **                 | ** ** | ** **                                  |
| Date: August 15, 2005 |       |                                        | /s/ J.F. Robertson |   |
|                       |       |                                        | J.F. Robertson |
|                       |       |                                        | Chief Executive Officer |
|                       |       |                                        | (Principal Executive Officer) |
|                       |       |                                        |   |
|                       |       |                                        |   |
| Date: August 15, 2005 |       |                                        | /s/ Barb Bontrager |   |
|                       |       |                                        | Barb Bontrager |
|                       |       |                                        | Chief Financial Officer |
|                       |       |                                        | (Principal Accounting Officer) |

 

22

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