**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

**FORM 10-QSB**

 

| ý | ** ** | **Quarterly report under  Section 13 or 15(d) of the Securities Exchange Act of 1934.** |
|--------|------------|---------------------------------------------------------------------------------------------------|

 

**For the quarterly period endedSeptember 30, 2005**

 

**OR**

 

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

 

**For the transition periodfrom            to           .**

 

**COMMISSIONFILE NUMBER 000-50733**

 

**UNITED WISCONSIN GRAIN PRODUCERS, LLC**

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

 
| **Wisconsin**                    | ** ** | **39-2032455**                        |
|----------------------------------|------------|---------------------------------------|
| (State or  other jurisdiction of |       | (I.R.S.  Employer Identification No.) |
| incorporation  or organization)  |       | ** **                            |

 

**W1231Tessmann Road, Cambria, Wisconsin 53923**

(Address ofprincipal executive offices)

 

**(920) 348-5016**

(Issuer’stelephone number)

 

Check whether the issuer:  (1) filedall reports required to be filed by Section 13 or 15(d) of theExchange Act during the past 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days.    ý Yes    o  No

 

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

o  Yes             ý  No

 

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

 

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

 

 

----

 

**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.****FINANCIALINFORMATION**

 

**Item 1.  Financial Statements**

 

**UNITEDWISCONSIN GRAIN PRODUCERS, LLC**

 

Condensed Balance Sheet

 
| ** **                                            | ** ** | **September 30,** | ** ** |
|-------------------------------------------------------|------------|------------------------|------------|
| ** **                                            | ** ** | **2005**               | ** ** |
| ** **                                            | ** ** | **(Unaudited)**        | ** ** |
| **ASSETS**                                            |       |                   |       |
| **Current  Assets**                                   |       |                   |       |
| Cash and cash equivalents                             |       | $                      | 5,090,097  |   |
| Restricted cash                                       |       | 79,214                 |       |
| Trade accounts receivable                             |       | 3,517,534              |       |
| CCC Bio-Energy program receivable                     |       | 1,316,230              |       |
| State of Wisconsin incentive program  receivable      |       | 475,000                |       |
| Grants receivable                                     |       | 40,750                 |       |
| Prepaid expenses                                      |       | 330,385                |       |
| Inventory                                             |       | 1,420,752              |       |
| Total current assets                                  |       | 12,269,962             |       |
|                                                  |       |                   |       |
| **Property,  Plant and Equipment**                    |       |                   |       |
| Land and land improvements                            |       | 5,448,368              |       |
| Office equipment                                      |       | 266,154                |       |
| Administration building                               |       | 412,945                |       |
| Plant and process equipment                           |       | 46,590,342             |       |
| Total property and equipment                          |       | 52,717,809             |       |
| Less accumulated depreciation                         |       | 1,832,772              |       |
| Net property, plant and equipment                     |       | 50,885,037             |       |
|                                                  |       |                   |       |
| **Other  Assets**                                     |       |                   |       |
| Debt issuance costs, net of accumulated  amortization |       | 561,422                |       |
| Total other assets                                    |       | 561,422                |       |
|                                                  |       |                   |       |
| **Total Assets**                                      |       | $                      | 63,716,421 |   |

 

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

 

3

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**UNITEDWISCONSIN GRAIN PRODUCERS, LLC**

 

CondensedBalance Sheet

 
| ** **                                                           | ** ** | **September 30,** | ** ** |
|----------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                           | ** ** | **2005**               | ** ** |
| ** **                                                           | ** ** | **(Unaudited)**        | ** ** |
| **LIABILITIES AND MEMBERS’ EQUITY**                             |       |                   |       |
| **Current Liabilities**                                              |       |                   |       |
| Current maturities of long-term debt                                 |       | $                      | 2,110,296  |   |
| Accounts payable                                                     |       | 2,421,332              |       |
| Derivative instruments                                               |       | 206,325                |       |
| Accrued liabilities                                                  |       | 509,855                |       |
| Total current liabilities                                            |       | 5,247,808              |       |
|                                                                 |       |                   |       |
| **Long-Term Debt, less current maturities**                          |       | 25,902,758             |       |
|                                                                 |       |                   |       |
| **Commitments and Contingencies**                                    |       |                   |       |
|                                                                 |       |                   |       |
| **Member’  Equity**                                             |       |                   |       |
| Member contributions, net of costs related  to capital contributions |       | 27,696,394             |       |
| Retained earnings                                                    |       | 4,869,461              |       |
| Total members’ equity                                           |       | 32,565,855             |       |
| **Total Liabilities and Members’ Equity**                       |       | $                      | 63,716,421 |   |

 

 

4

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**UNITEDWISCONSIN GRAIN PRODUCERS, LLC**

 

CondensedStatement of Operations

 
| ** **                                                                  | ** ** | **Quarter Ended**      | ** ** | **Quarter Ended**      | ** ** |
|-----------------------------------------------------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                                                                  | ** ** | **September 30,** | ** ** | **September 30,** | ** ** |
| ** **                                                                  | ** ** | **2005**               | ** ** | **2004**               | ** ** |
| ** **                                                                  | ** ** | **(Unaudited)**        | ** ** | **(Unaudited)**        | ** ** |
|                                                                        |       |                   |       |                   |       |
| **Revenues**                                                                |       | $                      | 21,893,544 |                   | $          | — |   |
|                                                                        |       |                   |       |                   |       |
| **Cost of  Goods Sold**                                                     |       | 16,890,315             |       | —                 |       |
|                                                                        |       |                   |       |                   |       |
| **Gross  Profit**                                                           |       | 5,003,229              |       | —                 |       |
|                                                                        |       |                   |       |                   |       |
| **Operating  Expenses**                                                     |       | 547,208                |       | 184,706                |       |
|                                                                        |       |                   |       |                   |       |
| **Operating  Income (Loss)**                                                |       | 4,456,021              |       | (184,706               | )          |
|                                                                        |       |                   |       |                   |       |
| **Other  Income (Expense)**                                                 |       |                   |       |                   |       |
| Grant income                                                                |       | —                 |       | 39,954                 |       |
| Interest income                                                             |       | 10,416                 |       | 6,650                  |       |
| CCC Bio-Energy income                                                       |       | 1,367,862              |       | —                 |       |
| State of Wisconsin incentive program income                                 |       | 475,000                |       | —                 |       |
| Interest expense                                                            |       | (550,305               | )          | (608                   | )          |
| Unrealized loss on derivative instruments                                   |       | —                 |       | (130,897               | )          |
| Miscellaneous income                                                        |       | 9,492                  |       | 7,638                  |       |
| Total other income (expense), net                                           |       | 1,312,465              |       | (77,263                | )          |
| ** **                                                                  |       |                   |       |                   |       |
| **Net  Income (Loss)**                                                      |       | $                      | 5,768,486  |                   | $          | (261,969 | ) |
|                                                                        |       |                   |       |                   |       |
| **Net  Income (Loss) Per Unit**(28,780 weighted average  units outstanding) |       | $                      | 200.43     |                   | $          | (9.10 | ) |

 

Notes to Financial Statementsare an integral part of this Statement.

 

5

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| ** **                                                                                          | ** ** | **Nine Months Ended**  | ** ** | **Nine Months Ended**  | ** ** |
|-----------------------------------------------------------------------------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                                                                                          | ** ** | **September 30,** | ** ** | **September 30,** | ** ** |
| ** **                                                                                          | ** ** | **2005**               | ** ** | **2004**               | ** ** |
| ** **                                                                                          | ** ** | **(Unaudited)**        | ** ** | **(Unaudited)**        | ** ** |
|                                                                                                |       |                   |       |                   |       |
| **Revenues**                                                                                        |       | $                      | 32,003,216 |                   | $          | — |   |
|                                                                                                |       |                   |       |                   |       |
| **Cost of  Goods Sold**                                                                             |       | 26,270,343             |       | —                 |       |
|                                                                                                |       |                   |       |                   |       |
| **Gross  Profit**                                                                                   |       | 5,732,873              |       | —                 |       |
|                                                                                                |       |                   |       |                   |       |
| **Operating  Expenses**                                                                             |       | 1,363,825              |       | 551,796                |       |
|                                                                                                |       |                   |       |                   |       |
| **Operating  Income (Loss)**                                                                        |       | 4,369,048              |       | (551,796               | )          |
|                                                                                                |       |                   |       |                   |       |
| **Other  Income (Expense)**                                                                         |       |                   |       |                   |       |
| Grant income                                                                                        |       | 187,852                |       | 115,073                |       |
| Interest income                                                                                     |       | 10,416                 |       | 64,130                 |       |
| CCC Bio-Energy income                                                                               |       | 2,168,184              |       | —                 |       |
| State of Wisconsin incentive program income                                                         |       | 475,000                |       | —                 |       |
| Interest expense                                                                                    |       | (833,701               | )          | (2,556                 | )          |
| Unrealized loss on derivative instruments                                                           |       | —                 |       | (202,191               | )          |
| Miscellaneous income                                                                                |       | 16,788                 |       | 14,870                 |       |
| Total other income (expense), net                                                                   |       | 2,024,539              |       | (10,674                | )          |
| ** **                                                                                          |       |                   |       |                   |       |
| **Net  Income (Loss)**                                                                              |       | $                      | 6,393,587  |                   | $          | (562,470 | ) |
|                                                                                                |       |                   |       |                   |       |
| **Net Income (Loss) Per Unit**(28,780  and 28,099 weighted average units outstanding, respectively) |       | $                      | 222.15     |                   | $          | (20.02 | ) |

 

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

 

6

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**UNITEDWISCONSIN GRAIN PRODUCERS, LLC**

 

CondensedStatements of Cash Flows

 
| ** **                                                                  | ** ** | **Nine Months Ended**  | ** ** | **Nine Months Ended**  | ** ** |
|-----------------------------------------------------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                                                                  | ** ** | **September 30,** | ** ** | **September 30,** | ** ** |
| ** **                                                                  | ** ** | **2005**               | ** ** | **2004**               | ** ** |
| ** **                                                                  | ** ** | **(Unaudited)**        | ** ** | **(Unaudited)**        | ** ** |
| **Cash  Flows from Operating Activities**                                   |       |                   |       |                   |       |
| Net income (loss)                                                           |       | $                      | 6,393,587  |                   | $          | (562,470 | ) |
| Adjustments to reconcile net income (loss)  to net cash used in operations: |       |                   |       |                   |       |
| Depreciation and amortization                                               |       | 1,850,212              |       | 2,617                  |       |
| (Gain) loss on hedging                                                      |       | (62,010                | )          | 202,191                |       |
| Grant income                                                                |       | (187,852               | )          | (115,073               | )          |
| Deposits on expired land options                                            |       | —                 |       | 3,000                  |       |
| Changes in assets and liabilities:                                          |       |                   |       |                   |       |
| Restricted cash                                                             |       | (79,214                | )          |                   |       |
| Derivative instruments                                                      |       | 433,111                |       | (300,000               | )          |
| Accounts receivable                                                         |       | (5,304,381             | )          | (2,106                 | )          |
| Inventory                                                                   |       | (1,420,752             | )          | —                 |       |
| Prepaid expenses                                                            |       | (316,361               | )          | (17,802                | )          |
| Accounts payable                                                            |       | 2,301,722              |       | 26,001                 |       |
| Accrued liabilities                                                         |       | 493,713                |       | 3,003                  |       |
| Net cash provided by (used in) operating  activities                        |       | 4,101,775              |       | (760,639               | )          |
|                                                                        |       |                   |       |                   |       |
| **Cash  Flows from Investing Activities**                                   |       |                   |       |                   |       |
| Land acquisitions                                                           |       | —                 |       | (300,061               | )          |
| Capital expenditures                                                        |       | (1,066,738             | )          | (25,705                | )          |
| Payments for construction in process                                        |       | —                 |       | (21,631,397            | )          |
| Net cash used in investing activities                                       |       | (1,066,738             | )          | (21,957,163            | )          |
|                                                                        |       |                   |       |                   |       |
| **Cash  Flows from Financing Activities**                                   |       |                   |       |                   |       |
| Member contributions                                                        |       | —                 |       | 3,175,000              |       |
| Proceeds from grants for operating expenses                                 |       | 218,637                |       | (1,956                 | )          |
| Proceeds from grants for capital  expenditures                              |       | 443,905                |       | —                 |       |
| Proceeds from long term debt                                                |       | 2,542,012              |       | —                 |       |
| Payments on short-term debt                                                 |       | —                 |       | (81,876                | )          |
| Payments for long term debt                                                 |       | (1,099,443             | )          | (1,264                 | )          |
| Payments for debt issuance costs                                            |       | (59,119                | )          | (481,326               | )          |
| Refunds for costs of raising capital                                        |       | —                 |       | 7,011                  |       |
| Payments for membership unit redemption                                     |       | —                 |       | (15,000                | )          |
| Net cash provided by financing activities                                   |       | 2,045,992              |       | 2,600,589              |       |
|                                                                             |            |                        |            |                        |            |  |  |

 

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

 

7

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| ** **                                                                 | ** ** | **Nine Months Ended**  | ** ** | **Nine Months Ended**  | ** ** |
|----------------------------------------------------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                                                                 | ** ** | **September 30,** | ** ** | **September 30,** | ** ** |
| ** **                                                                 | ** ** | **2005**               | ** ** | **2004**               | ** ** |
| ** **                                                                 | ** ** | **(Unaudited)**        | ** ** | **(Unaudited)**        | ** ** |
|                                                                       |       |                   |       |                   |       |
| **Net  Increase (Decrease) in Cash**                                       |       | 5,081,029              |       | (20,117,213            | )          |
|                                                                       |       |                   |       |                   |       |
| **Cash and  Cash Equivalents–**Beginning of Period                    |       | 9,068                  |       | 20,150,071             |       |
|                                                                       |       |                   |       |                   |       |
| **Cash and  Cash Equivalents–** End of Period                         |       | $                      | 5,090,097  |                   | $          | 32,858 |   |
|                                                                       |       |                   |       |                   |       |
| **Supplemental  Cash Flow Information**                                    |       |                   |       |                   |       |
|                                                                       |       |                   |       |                   |       |
| Cash paid during the year for:                                             |       |                   |       |                   |       |
| Interest                                                                   |       | $                      | 662,582    |                   | $          | 2,556 |   |
|                                                                       |       |                   |       |                   |       |
| **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 |   |
|                                                                       |       |                   |       |                   |       |
| Operating  expenses funded by construction loan                            |       | $                      | 3,000      |                   | $          | — |   |
|                                                                       |       |                   |       |                   |       |
| Capital  expenditures in grants receivable                                 |       | $                      | 40,750     |                   | $          | — |   |
|                                                                       |       |                   |       |                   |       |
| Construction  in process in accounts payable                               |       | $                      | —     |                   | $          | 7,617,770 |   |
|                                                                       |       |                   |       |                   |       |
| Debt  issuance costs in accounts payable                                   |       | $                      | —     |                   | $          | 9,465 |   |

 

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

 

8

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**UNITED WISCONSIN GRAIN PRODUCERS, LLC**

 

Notes to Unaudited Financial Statements

 

September 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 andfootnote disclosures normally included in annual financial statements preparedin accordance with accounting principles generally accepted in the UnitedStates of 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 on a commercial basis, for a 40 milliongallon ethanol plant located near the town of Friesland in the township ofRandolph, Wisconsin, with distribution within the United States.  In addition, the Company produces and sellsdistillers grains as a co-product of ethanol production throughout the UnitedStates. The Company began performance testing April 21, 2005, andsuccessfully completed performance testing of the plant in May 2005.  Prior to commencing operations on May 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 and the State of Wisconsin Producer SubsidyPayment 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 customer, 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 the knownrequirements of the applicable incentive program.

 

*TradeAccounts Receivable*

 

Trade accounts receivable arerecorded at their estimated net realizable value, net of an allowance fordoubtful accounts.  The Company extendscredit to customers for sales of ethanol and distillers grain in the normalcourse of business.  Credit is extendedbased on an on-going evaluation of a customer’s financial conditions andgenerally no collateral is required.  Ifpayment is not received on a timely basis in accordance with the Company’scredit terms it is considered past due. Management performs on-going credit evaluations of customers and maintainsallowances for potential credit losses when required.  At September 30, 2005 and 2004, theCompany believes all receivables are fully collectible and no allowance fordoubtful accounts is deemed necessary.

 

9

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*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 September 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 a liability of$206,325 as of September 30, 2005. The Company has also recorded a combined realized and unrealized gain onderivative instruments of $62,010 related to its derivative contracts for thenine months ended September 30, 2005. This includes a loss of $185,919 recorded during the three month periodended September 30, 2005, a gain of $83,384 recorded during the threemonth period ended June 30, 2005 and a gain of $164,545 recorded duringthe three month period ended March 31, 2005.  As the Company had not commenced operationsas of March 31, 2005, the first quarter gains were included in otherincome and have been reclassed to cost of sales.  The unrealized loss of $202,191 for the ninemonth period ending September 30, 2004 was recognized as an other incomeand expense item.  The Company isrequired to maintain cash balances at its broker related to derivativeinstrument positions.  At September 30,2005, restricted cash totaled $79,214 and is not included in the cash and cashequivalents on the balance sheet or the statements of cash flows.

 

*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.

 

*Government Incentive Payments*

 

For the quarter and nine month period ended September 30,2005 the Company recorded as other income $1,367,862 and $2,168,184,respectively, from the Commodity Credit Corporation Bioenergy Program, adepartment of the United States Department of Agriculture.  The Companywas not eligible for Bioenergy Program payments prior to commencement ofproduction in May 2005.

 

The Company has recorded revenue of $475,000 for thequarter ended September 30, 2005, related to the State of WisconsinProducer Subsidy Payment program.  Due tomaximum annual funding of the program for 2005 and a designated sunset date of June 30,2006, the Company does not anticipate recording any more revenue from thisprogram.

 

**2.  INVENTORY**

 

Inventory consists of the following at September 30,2005:

 
| Raw materials    |   | $       | 1,082,300 |   |
|------------------|--------|---------|-----------|--------|
| Work in  process |   | 184,744 |      |
| Finished  Goods  |   | 153,708 |      |
| Total            |   | $       | 1,420,752 |   |

 

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 6.96% and increased to 7.1% on August 1, 2005 and to7.32% on September 1, 2005.  Thefunds or a portion thereof can be converted to a fixed rate at anytime asprescribed in the loan agreement.  As of September 30,2005, the Company had outstanding debt of $28,012,111, on these creditfacilities.  The Company pays 0.50%interest on the unused portion of the revolving loan instrument.  As of September 30, 2005, the Companydid not have any borrowings on the revolving loan.

 

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 years following the date of theagreement; a prepayment penalty applies. Prepayment penalties of 3%, 2% and 1% of the amount prepaid will applyin 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, restrict distributions and require additionalloan payments based on excess cash flow.  The Company has not violated anyfinancial debt covenants during the nine months ending September 30, 2005or in the year 2004 and the Company believes the likelihood of default of thefinancial debt covenants in the next quarter to be remote.  The loan is secured by substantially all theCompany’s assets.

 

**4.  LONG TERM DEBT**

 

Long term debt consists of thefollowing:

 
| ** **                                                                                                                                                                     | ** ** | **September 30, 2005** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------|------------|
|                                                                                                                                                                           |       |                        |       |
| Bank  Financing (Note 3)                                                                                                                                                       |       | $                           | 28,012,111 |   |
|                                                                                                                                                                           |       |                        |       |
| 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 |       | 943                         |       |
|                                                                                                                                                                           |       |                        |       |
| Totals                                                                                                                                                                         |       | $                           | 28,013,054 |   |

 

Theestimated maturities of long term debt at September 30, 2005 are asfollows:

 

| 2006       |   | $          | 2,110,296  |   |
|------------|--------|------------|------------|--------|
| 2007       |   | 2,270,411  |       |
| 2008       |   | 2,441,319  |       |
| 2009       |   | 2,635,088  |       |
| 2010       |   | 2,839,039  |       |
| Thereafter |   | 15,716,901 |       |
| Total      |   | $          | 28,013,054 |   |

 

**5.  RELATED PARTY TRANSACTIONS**

 

In the nine months ending September 30,2005, the Company had incurred $48,119 in director fees and related expense, ofwhich $1,338 to two members is included in accounts payable at September 30,2005.

 

11

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Through September 30, 2004, the Company hadincurred $141,283 in director fees and related expense, of which $45,343 toeight members is included in accounts payable at September 30, 2004.

 

Through September 30, 2004, the Company hadincurred $19,375 in project coordinator fees to three current members and oneformer member.  At September 30, 2004, there was no accounts payablebalance relating to these costs.

 

**6.  GRANTS**

 

In October 2003, the WisconsinDepartment of Commerce approved a grant for $271,000 in funds to reimburse theCompany for infrastructure costs.  At September 30, 2005, the Companyhas incurred the $271,000 of costs eligible for reimbursement under this grant,of which $40,750 is included in grants receivable.  $268,525 of this amount is associated withcapital expenditures and has been recognized as a reduction of the basis of theasset and the remaining $2,475 of this amount is associated with expenses andis reflected in grant income.

 

**7.  COMMITMENTS AND CONTINGENCIES**

 

*Corn andNatural Gas Contracts*

 

At September 30, 2005, the Company hadforward corn purchase contracts totaling 11,500,000 bushels for variousdelivery periods from October 2005 to July 2007.  The prices on these contracts range from$1.79 to $2.62 per bushel.

 

At September 30, 2005, the Company hadforward contracts to purchase approximately 129,000 million British thermalunits (MMBTU) of natural gas during the months of October through December 2005at an average price of approximately $10.46 per MMBTU.

 

12

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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 fromthese forward-looking statements for many reasons, including the followingfactors:

 

•                  Changesin the availability and price of corn;

•                  Increasesor decreases in the supply and demand for ethanol, as the ethanol industrycontinues to expand at a rapid pace;

•                  Changesin the availability and price of natural gas; including the impact of recenthurricanes as well as anticipated increased demand over the winter months;

•                  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;

•                  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.  We havebeen engaged in the production of ethanol and distillers grains since May 2005.  Our revenue is derived from the sale anddistribution of ethanol and distillers grains throughout the continental UnitedStates. We expect to fund our operations over the next 12 months using cashflow from continuing operations, USDA Commodity Credit Corporation BioenergyProgram payments, revolving lines of credit, and our 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.

 

Since we only became operational in May ofthis year, there is no valid comparison of our financial results from the likeperiods of the previous year, accordingly we do not provide comparable income,production and sales data for the three months ended September 30, 2005 orthe nine months ended September 30, 2005. If you undertake your own comparison of our third fiscal quarter of 2004and our third fiscal quarter of 2005, it is important to keep this in mind.

 

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Unaudited Results of Operations for Quarterending September 30, 2005

 
| ** **          | ** ** | **Amount** | ** ** | **%**  | ** ** |
|---------------------|------------|------------|------------|--------|------------|
| Revenues            |       | $          | 21,778,843 |   | 100.0      | % |
| Cost of  Goods Sold |       | 16,775,614 |       | 77.0   | %          |
| Gross Profit        |       | 5,003,229  |       | 23.0   | %          |
| Operating  Expenses |       | 547,208    |       | 2.5    | %          |
| Operating  Income   |       | 4,456,021  |       | 20.5   | %          |
| Other Income        |       | 1,312,465  |       | 6.2    | %          |
| Net Income          |       | 5,768,486  |       | 26.7   | %          |
|                     |            |            |            |        |            |  |

 

Unaudited Results of Operations for Ninemonths ending September 30, 2005

 
| ** **          | ** ** | **Amount** | ** ** | **%**  | ** ** |
|---------------------|------------|------------|------------|--------|------------|
| Revenues            |       | $          | 31,888,515 |   | 100.0      | % |
| Cost of  Goods Sold |       | 26,155,642 |       | 82.0   | %          |
| Gross Profit        |       | 5,732,873  |       | 18.0   | %          |
| Operating  Expenses |       | 1,363,825  |       | 4.3    | %          |
| Operating  Income   |       | 4,368,048  |       | 13.7   | %          |
| Other Income        |       | 2,024,539  |       | 6.3    | %          |
| Net Income          |       | 6,393,587  |       | 20.0   | %          |
|                     |            |            |            |        |            |  |

 

**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 andcompleting any unfinished plant construction; (ii) maximizing our plant’soperational efficiency to operate as competitively as possible, including theevaluation of new technology; and (iii) purchasing important manufacturinginputs such as corn and natural gas as cost effectively as possible.

 

*PlantOperations*

 

As of September 30, 2005, plantconstruction was substantially complete and we were operating the plant andproducing ethanol and distillers grains.

 

The projectwill reach final completion once we successfully pass emissions testing.  We are currently conducting preliminaryemissions testing and are working with our process design engineer to take anyremedial action necessary to assist the plant in preparing for the finalemissions testing.  Final emissionstesting is currently scheduled for December 2005.

 

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As of September 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 all of the design builder’sobligations, most notably but not exclusively the successful completion of ouremissions testing.  We have substantiallycompleted the owner’s obligations of the project.

 

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 modified wet distillers grains and a portion of our dried distillersgrains.  We are independently marketing aportion of our dried distillers grains to local livestock producers.

 

*Trends andUncertainties Impacting the Ethanol Industry and Our Revenues*

 

Our revenues consist of sales of ethanol anddistillers grains.  Ethanol sales constitutethe bulk of our revenues.  Last quarterand continuing through the first two thirds of this quarter, the demand forethanol increased relative to supply causing upward pressure on ethanol marketprices.  In the last month of the quartersome of those gains have been reduced, but prices remain historicallystrong.  Increased demand, firm crude oiland gas markets, public acceptance, and positive political signals have all contributedto a strengthening of ethanol prices.  Inorder to sustain these higher price levels however, management believes theindustry will need to continue to grow demand to offset the increased supplybrought to the market place by additional production.

 

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.  Most notably,the Act created a 7.5 billion gallon renewable fuels standard (RFS).  The RFS will begin at 4 billion gallons in2006, 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 thistaxable year.

 

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 FuelsAssociation, there are currently 83 ethanol plants nationwide that have thecapacity to annually produce 4.2 billion gallons.  In addition, there are 29 ethanol plants andtwo major expansions under construction constituting another 1.2 billiongallons of annual capacity.  Since ourcurrent national ethanol production capacity exceeds the 2006 RFS requirement, itis management’s belief that other market factors are primarily responsible forcurrent ethanol prices.  Accordingly, itis possible that the RFS requirements may not be significantly impact ethanolprices in the short-term.  However, the increased

 

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requirement of 7.5 billion by2012 is expected to support ethanol prices in the long term.  In addition, management believes that the RFSrequirements are primarily responsible for the rapid expansion currently takingplace in new plant construction and expansion. ADM’s recent announcement of its plan to add 500 million gallons ofethanol production clearly indicates its desire to maintain a significant shareof the ethanol market.  A greater supplyof ethanol on the market from these additional plants and plant expansionscould reduce the price we are able to charge for our ethanol.  This would have a negative impact on ourrevenues.

 

Demand for ethanol has historically beensupported by higher oil prices and its refined components and by clean airstandards mandated by federal agencies, which have required highly populatedareas to blend ethanol into their gasoline supplies as an oxygenate. The intentof the air 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 ofCompanies,of Winnepeg, Canada with offices in the United States, is currentlyworking on a starch separation technology that would economically separate acorn kernel into its main components. The process removes the germ, pericarpand tip of the kernel leaving only the endosperm of kernel for the productionof ethanol.  This technology has thecapability to reduce drying costs and the loading of volatile organiccompounds.  The separated germ would alsobe available through this process for other uses such as human consumption,bio-feeds, or bio-diesel production. Each of these new technologies is currently in its early stages ofdevelopment. Other research and development firms are also working on thesesame processes.  There is no guaranteethat either technology will be successful or that we will be able to implementthe technology in our ethanol plant

 

*Employees*

 

We currently employ33 full-time employees and 4 part-time employees. Twelve of our employees areinvolved primarily in management and administration.  The remainder are involved primarily in plantoperations.  We do not expect anysignificant change to the number of employees necessary to operate ourplant.  The following table representsthe current positions within the plant and the number of individuals wecurrently employ for 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              |       | 5              |       |
| Maintenance Manager             |       | 1              |       |
| Maintenance Craftsmen           |       | 5              |       |
| Shift Supervisors               |       | 4              |       |
| Plant Operators                 |       | 10             |       |
| Shipping and Receiving          |       | 5              |       |
| **TOTAL**                       | ** ** | **37**         | ** ** |

 

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*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.  Cornyields nationwide have been much better than expected.  Timely rains in most areas of the countryhave facilitated excellent corn yields, which will lead to excess supply and lowcorn prices for the time being.  Excesssupply projections have again been increased to nearly 2.5 billion bushels.  We currently anticipate corn prices to rangebetween $1.95 and $2.40 over the next 3 months. We have purchased 100% of our corn supply for October through December 2005,and 2.5% to 85% of our corn supply for 2006. Management believes that the nextmajor signal for corn prices will come in the spring, when the expected numberof corn acres for next year’s crop is reported. Increased cost of fuel and fertilizer may reduce the amount of acres ofcorn planted next season, thus increasing the potential for price volatility incorn.  On the contrary, should acreageremain relatively unchanged, management believes the additional supplies currentlyon hand will limit corn price increases.  Increases in corn prices negatively impact ourprofitability by increasing our cost of goods and reducing our net operatingincome.  Although we attempt to usehedging strategies to minimize our exposure to corn price movements, there isno guarantee or assurance that our hedging strategies will be effective.

 

As of September 30, 2005, we haveforward corn purchase contracts totaling 11,500,000 bushels for variousdelivery periods from October 2005 through July 2007.  Approximately 52% of these contracts arefixed price contracts ranging from $1.79 to $2.62 per bushel, and the balance arebasis contracts.  We also have priceprotection in place in the form of long corn futures positions on the ChicagoBoard of Trade for 1,285,000 bushel through March of 2006, and 275,000bushel of short corn futures positions hedging deferred cash ownership.  Approximately 70% of our corn needs have beenprocured through August 2006  ofwhich approximately 36% is priced. 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 is approximately 122,000 millionBritish thermal units (MMBTU) per month. We use natural gas to dry our distillers grain products to moisturecontents at which they can be stored for long periods of time, and can be transportedgreater distances.  Dried distillersgrains have a much broader market base, including the western cattle feedlots,and the dairies of California and Florida. Recently, the price of natural gas has followed other energy commoditiesto historically high levels.

 

Current natural gas prices are considerablyhigher than the 10-year average.  In August andSeptember 2005, Hurricanes Katrina and Rita caused considerable damage tonatural gas production areas in the Gulf of Mexico, contributing to the currentvolatility of natural gas prices.  Globaldemand for natural gas is expected to continue to increase, which may furtherdrive up prices.  As a result, we expectnatural gas prices to remain higher than average in the short to mid term.  Increases in the price of natural gasincreases 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 September 30, 2005, we have priceprotection in place for approximately 26% of our projected natural gas usagefor October 2005 through December 2005 leaving the balance to beprocured immediately preceding and during the winter season, which could resultin higher than average costs for our natural gas supplies.

 

**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

 

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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 

 

Our financial statementreflects an estimate of the incentive earned from the Commodity Credit Corporation(CCC) Bioenergy Program The incentive administered by the U.S. Department ofAgriculture must be approved by the Office of Management and Budget (OMB).  At September 30, 2005, the incentive hadbeen approved by the OMB and we had filed all applicable applications for theincentive.  Our estimate of incomegenerated from the CCC Bioenergy program is determined by multiplying theincrease in gallons of pre-denatured ethanol produced during the quarter by thelowest historical rate per gallon published on the CCC website.  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 September 30, 2005 balance sheet at their fair marketvalue. The market value is determined by applying the Chicago Board of Trade orNew York Mercantile Exchange market price for each open derivative instrumenton the financial statement date. 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 unrealized gainon derivatives of $62,010 for the nine months ended September 30,2005.  We record changes in the fairvalue of our derivative instruments not designated as cash flow hedges in costof goods sold.

 

**Liquidity and Capital Resources**

 

As of September 30,2005, we had cash and cash equivalents of $5,090,097, current assets of $12,269,962and total assets of $63,716,421.  As of September 30,2005, we had current liabilities of $5,247,808 and long term liabilities of $25,902,758.

 

The members’contributions, net of costs related to capital contributions, are $27,696,394.  Retained earnings, net of the deficitaccumulated during development stage, are $4,869,461.  Total members’ equity as of September 30,2005, is $32,565,855.

 

*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.

 

In July 2005we converted our construction loan into two loans.  The first loan is a term loan of $29,024,200.The second loan is a $4,000,000 revolving loan. The term loan of $29,024,200 is for five years with a ten-yearamortization.  Payments on the convertedterm loan are paid in monthly installments including principal andinterest.  The variable interest rate onthe converted term loan is equal to the monthly LIBOR plus 3.75%.  This variable interest rate may be adjusteddownward depending on our level of owners’ equity as reported in our monthlyfinancial statements.  At a level ofownership equity equal to 50%, the interest rate will decrease by 0.50%.  At a level of ownership equity equal to 55%,the interest rate

 

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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 that allocation.  Interest on the revolving loan of $4,000,000accrues at a rate equal to the monthly LIBOR plus 3.75%.  However, this interest rate may be adjusteddownward in the same manner as the term loan depending on our level of owners’equity.

 

As of September 30,2005, the principal balance on the converted term loan is $28,012,111 and theinterest rate is 7.32%.

 

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 qualify as an eligible producer and annually utilize atleast 15 million bushels of corn in the increased production of ethanol,we could potentially receive the maximum award of $7.5 million. However,the Commodity Credit Corporation may award only $100 million annuallyfiscal years 2005 through 2006, and any award we received may be reduced basedupon the volume of applications from other eligible producers.  In addition, payments under the program inany one fiscal year may be less if Congress does not fully fund the program forthat 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 65%.  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 $3.5 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 third quarter waseligible for Bioenergy program payments and we filed our application forBioenergy program payments in October 2005.  As of September 30, 2005, we haveaccrued income of $1,316,230 attributable to Bioenergy program payments and weexpect to receive payment sometime during our fourth quarter.

 

*Wisconsin Department of Agriculture, Tradeand Consumer Protection Ethanol Payment*

 

We have recorded revenue of $475,000 for thequarter ended September 30, 2005 related to an ethanol producer incentiveprogram administered by the Wisconsin Department of Agriculture, Trade andConsumer Protection.  The program awardseach eligible applicant a payment of up to 20 cents per gallon on the first 15million gallons of ethanol produced in the State of Wisconsin, however, thetotal award is subject to program funding and the number of eligibleapplicants.  We anticipate receiving anaward in 2006 based upon our satisfaction of the eligible requirements as ofthe date of this report.  Currently,there is estimated to be a total of $1.9 million available under the programwhich must be allocated among four qualified producers.  Our recorded revenue of $475,000 reflects theamount we anticipate receiving based upon current funding levels and the numberof eligible producers.  The program’ssunset date is June 30, 2006. Therefore, we do not anticipated recording any additional revenue fromthis program.

 

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*Operating Budget and Financing of PlantOperations*

 

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                      |   | $          | 38,231,546 |   |
| Cost of  Utilities                |   | 17,309,942 |       |
| Other Costs  of Production        |   | 11,483,541 |       |
| General and  Administrative Costs |   | 3,708,639  |       |
|                              |   |       |       |
| Total  Operating Costs            |   | $          | 70,733,668 |   |

 

The estimates in the table set forth aboveare based upon management’s compilation of data gathered from other ethanolplants similar to ours and our own limited past performance.  Accordingly, these operating costs are onlyestimates and our actual expenses and costs could be much higher due to avariety 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.****    Controlsand Procedures**

 

Our management, including our Chief ExecutiveOfficer (the principal executive officer), Jeff Robertson, along with our ChiefFinancial Officer (the principal financial officer), Barb Bontrager, havereviewed and evaluated the effectiveness of our disclosure controls andprocedures (as defined in Rule 13a-15(e) under the SecuritiesExchange Act of 1934, as amended) as of September 30, 2005.  Basedupon this review and evaluation, these officers have concluded that our disclosurecontrols and procedures are effective to ensure that information required to bedisclosed in the reports that we file or submit under the Exchange Act isrecorded, processed, summarized and reported within the time periods requiredby the forms and rules of the Securities and Exchange Commission; and toensure that the information required to be disclosed by an issuer in thereports that it files or submits under the Exchange Act is accumulated andcommunicated to our management including our principal executive and principalfinancial officers, or persons performing similar functions, as appropriate toallow timely decisions regarding required disclosure.

 

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 September 30, 2005 and there has been no change that has materiallyaffected or is reasonably likely to materially affect our internal control overfinancial reporting.

 

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**PART II. OTHER INFORMATION**

 

**Item 1.****    LegalProceedings**

 

None.

 

**Item 2.****    Changesin Securities**

 

None.

 

**Item 3.****    DefaultsUpon Senior Securities**

 

None.

 

**Item 4.****    Submissionof Matters to a Vote of Security Holders**

 

None.

 

**Item 5.****    OtherInformation**

 

None.

 

**Item 6.****    Exhibits**            The following exhibits are includedherein:

 
| **Exhibit No.** | ** ** | **Exhibit**                                          |
|----------------------|------------|------------------------------------------------------|
|                 |       |                                                 |
| 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:   November 14, 2005 | /s/ J.F. Robertson                          |   |
|                                | J.F. Robertson                              |
|                                | Chief Executive Officer                     |
|                                | (Principal Executive Officer)               |
|                                     |                                             |  |  |

 

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| Date:   November 14, 2005 | /s/ Barb Bontrager             |   |
|-------------------------------------|--------------------------------|--------|
|                                | Barb Bontrager                 |
|                                | Chief Financial Officer        |
|                                | (Principal Accounting Officer) |

 

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