**UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549**

**FORM 10-QSB**
|  x                                                                                       | **Quarterly  report under Section 13 or 15(d) of the Securities Exchange Act of 1934.** |
|-----------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------|
|                                                                                          |
| **For the quarter ended June 30,  2006**                                                      |
|                                                                                          |
| **OR**                                                                                        |
|                                                                                          |
| o                                                                                             | **Transition  report under Section 13 or 15(d) of the Exchange Act.**                   |
|                                                                                          |
| **For the transition period from   _______   to   _________  ** |
|                                                                                          |
| **Commission  file number 000-50733**                                                         |

** **
| **UNITED  WISCONSIN GRAIN PRODUCERS, LLC**                         |
|--------------------------------------------------------------------|
| (Exact name of small  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 Drive,  Friesland, Wisconsin 53935-0247** |
|-----------------------------------------------------------------|
| (Address of principal  executive offices)                       |

 
| **(920)  348-5016**               |
|-----------------------------------|
| (Issuer’s telephone  number) |

** **

Checkwhether the issuer:  (1) filed allreports required to be filed by Section 13 or 15(d) of the Exchange Act duringthe past 12 months (or for such shorter period that the registrant was requiredto file such reports), and (2) has been subject to such filing requirements forthe past 90 days.                 x  Yes                   o  No

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

o  Yes                            x  No

Statethe number of shares outstanding for each of the issuer’s classes of commonequity as of the latest practicable date: As of August 11, 2006 there were 28,780 membership unitsoutstanding.

Transitional SmallBusiness Disclosure Format (Check one):                      o  Yes                   x  No

 

 

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** **

**INDEX**

 
|                                                                              | ** ** | ** ** |
|------------------------------------------------------------------------------|------------|------------|
| **PART  I.     FINANCIAL INFORMATION**              |       | ** ** |
| ** **                                                                   |       | ** ** |
| **Item  1. Financial Statements.**                                           |       | ** ** |
| **Item 2.  Management’s Discussion and Analysis and Plan of Operation** |       | ** ** |
| **Item 3. Controls and  Procedures**                                         |       | ** ** |
| ** **                                                                   |       | ** ** |
| **PART  II. OTHER INFORMATION**                                              |       | ** ** |
| ** **                                                                   |       | ** ** |
| **Item  1. Legal Proceedings**                                               |       | ** ** |
| **Item 2. Unregistered Sales of Equity Securities and  Use of Proceeds**     |       | ** ** |
| **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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**PARTI.     FINANCIAL INFORMATION**

**Item 1.  Financial Statements.**

**UNITEDWISCONSIN GRAIN PRODUCERS, LLC**

**Condensed Balance Sheet**

 
| ** **                           | ** ** | **June 30,** | ** ** |
|--------------------------------------|------------|-------------------|------------|
| ** **                           | ** ** | **2006**          | ** ** |
| ** **                           | ** ** | **(Unaudited)**   | ** ** |
| **ASSETS**                           |       |              |       |
| **Current Assets**                   |       |              |       |
| Cash and cash  equivalents           |       | $                 | 9,476,079  |   |
| Restricted cash                      |       | 448,354           |       |
| Trade account  receivable            |       | 5,462,155         |       |
| Federal program  receivables         |       | 105,039           |       |
| Prepaid expenses  and other assets   |       | 553,293           |       |
| Inventory                            |       | 1,670,233         |       |
| Total current assets                 |       | 17,715,153        |       |
| ** **                           |       |              |       |
| **Property, Plant and Equipment**    |       |              |       |
| Land and land  improvements          |       | 5,747,366         |       |
| Office equipment                     |       | 399,365           |       |
| Administration  building             |       | 467,631           |       |
| Plant and  process equipment         |       | 46,916,988        |       |
| Total property,  plant and equipment |       | 53,531,350        |       |
| Less accumulated  depreciation       |       | 5,353,821         |       |
| Net property,  plant and equipment   |       | 48,177,529        |       |
|                                 |       |              |       |
| **Total Assets**                     |       | $                 | 65,892,682 |   |

 

Notesto Financial Statements are an integral part of this Statement.

3

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**UNITED WISCONSIN GRAIN PRODUCERS, LLC**

**Condensed Balance Sheet**
| ** **                                                                                      | ** ** | **June 30,** | ** ** |
|-------------------------------------------------------------------------------------------------|------------|-------------------|------------|
| ** **                                                                                      | ** ** | **2006**          | ** ** |
| ** **                                                                                      | ** ** | **(Unaudited)**   | ** ** |
| **LIABILITIES AND MEMBERS’ EQUITY**                                                        |       |              |       |
| **Current Liabilities**                                                                         |       |              |       |
| Current  maturities of long-term debt                                                           |       | $                 | 1,098,829  |   |
| Accounts payable                                                                                |       | 2,242,615         |       |
| Derivative  instruments                                                                         |       | 280,969           |       |
| Accrued  liabilities                                                                            |       | 175,377           |       |
| Total current  liabilities                                                                      |       | 3,797,790         |       |
|                                                                                            |       |              |       |
| **Long-Term Debt, less current  maturities**                                                    |       | 14,941,547        |       |
| ** **                                                                                      |       |              |       |
| **Commitments and Contingencies**                                                               |       |              |       |
| ** **                                                                                      |       |              |       |
| **Members’ Equity**                                                                        |       |              |       |
| Member  contributions, net of costs related to capital contributions, 28,780 units  outstanding |       | 47,153,345        |       |
|                                                                                            |       |              |       |
| **Total  Liabilities and Members’ Equity**                                                 |       | $                 | 65,892,682 |   |

 

Notesto Financial Statements are an integral part of this Statement.

4

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**UNITED WISCONSIN GRAIN PRODUCERS, LLC**

**Condensed Statement of Operations**
| ** **                                         | ** ** | **Quarter Ended** | ** ** | **Quarter Ended** | ** ** |
|----------------------------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                                         | ** ** | **June 30,**      | ** ** | **June 30,**      | ** ** |
| ** **                                         | ** ** | **2006**               | ** ** | **2005**               | ** ** |
| ** **                                         | ** ** | **(Unaudited)**        | ** ** | **(Unaudited)**        | ** ** |
|                                               |       |                   |       |                   |       |
| **Revenues**                                       | ** ** | $                      | 30,483,354 |                   | $          | 10,109,672 |   |
|                                               | ** ** |                   |       |                   |       |
| **Cost of  Goods Sold**                            | ** ** | 17,680,454             |       | 9,544,572              |       |
|                                               | ** ** |                   |       |                   |       |
| **Gross  Profit**                                  | ** ** | 12,802,900             |       | 565,100                |       |
|                                               | ** ** |                   |       |                   |       |
| **Operating  Expenses**                            | ** ** | 595,926                |       | 451,510                |       |
| ** **                                         | ** ** |                   |       |                   |       |
| **Operating  Income**                              | ** ** | 12,206,974             |       | 113,590                |       |
|                                               | ** ** |                   |       |                   |       |
| **Other  Income (Expense)**                        | ** ** |                   |       |                   |       |
| Grant income                                       | ** ** | —                 |       | 112,201                |       |
| Interest income                                    | ** ** | 30,561                 |       | —                 |       |
| CCC Bio-Energy income                              | ** ** | 85,008                 |       | 800,322                |       |
| Interest expense                                   | ** ** | (521,045               | )          | (283,358               | )          |
| Miscellaneous income (expense)                     | ** ** | (503,236               | )          | 7,296                  |       |
| Total other income (expense), net                  | ** ** | (908,712               | )          | 636,461                |       |
|                                               | ** ** |                   |       |                   |       |
| **Net  Income**                                    | ** ** | $                      | 11,298,262 |                   | $          | 750,051 |   |
| ** **                                         | ** ** |                   |       |                   |       |
| **Net  Income Per Unit**(28,780 units outstanding) | ** ** | $                      | 392.57     |                   | $          | 26.06 |   |

 

Notesto Financial Statements are an integral part of this Statement.

5

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**UNITED WISCONSIN GRAIN PRODUCERS, LLC**

**Condensed Statement of Operations**
| ** **                                         | ** ** | **Six Months Ended** | ** ** | **Six Months Ended** | ** ** |
|----------------------------------------------------|------------|--------------------------------|------------|--------------------------------|------------|
| ** **                                         | ** ** | **June 30,**              | ** ** | **June 30,**              | ** ** |
| ** **                                         | ** ** | **2006**                       | ** ** | **2005**                       | ** ** |
| ** **                                         | ** ** | **(Unaudited)**                | ** ** | **(Unaudited)**                | ** ** |
|                                               |       |                           |       |                           |       |
| **Revenues**                                       | ** ** | $                              | 53,209,909 |                           | $          | 10,109,672 |   |
|                                               | ** ** |                           |       |                           |       |
| **Cost of  Goods Sold**                            | ** ** | 35,109,422                     |       | 9,380,028                      |       |
|                                               | ** ** |                           |       |                           |       |
| **Gross  Profit**                                  | ** ** | 18,100,487                     |       | 729,644                        |       |
|                                               | ** ** |                           |       |                           |       |
| **Operating  Expenses**                            | ** ** | 1,166,137                      |       | 816,617                        |       |
| ** **                                         | ** ** |                           |       |                           |       |
| **Operating  Income (Loss)**                       | ** ** | 16,934,350                     |       | (86,973                        | )          |
|                                               | ** ** |                           |       |                           |       |
| **Other  Income (Expense)**                        | ** ** |                           |       |                           |       |
| Grant income                                       | ** ** | —                         |       | 187,852                        |       |
| Interest income                                    | ** ** | 98,017                         |       | —                         |       |
| CCC Bio-Energy income                              | ** ** | 372,092                        |       | 800,322                        |       |
| Interest expense                                   | ** ** | (916,855                       | )          | (283,396                       | )          |
| Miscellaneous income (expense)                     | ** ** | (485,922                       | )          | 7,296                          |       |
| Total other income (expense), net                  | ** ** | (932,668                       | )          | 712,074                        |       |
|                                               | ** ** |                           |       |                           |       |
| **Net  Income**                                    | ** ** | $                              | 16,001,682 |                           | $          | 625,101 |   |
| ** **                                         | ** ** |                           |       |                           |       |
| **Net  Income Per Unit**(28,780 units outstanding) | ** ** | $                              | 556.00     |                           | $          | 21.72 |   |

 

 

Notesto Financial Statements are an integral part of this Statement.

6

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**UNITED WISCONSIN GRAIN PRODUCERS, LLC**

**Condensed Statements of Cash Flows**

 
| ** **                                                                  | ** ** | **Six Months Ended** | ** ** | **Six Months Ended** | ** ** |
|-----------------------------------------------------------------------------|------------|--------------------------------|------------|--------------------------------|------------|
| ** **                                                                  | ** ** | **June 30,**              | ** ** | **June 30,**              | ** ** |
| ** **                                                                  | ** ** | **2006**                       | ** ** | **2005**                       | ** ** |
| ** **                                                                  | ** ** | **(Unaudited)**                | ** ** | **(Unaudited)**                | ** ** |
| **Cash  Flows from Operating Activities**                                   | ** ** | ** **                     |       | ** **                     |       |
| Net Income                                                                  | ** ** | $                              | 16,001,682 |                           | $          | 625,101 |   |
| Adjustments to reconcile net income (loss) to net cash  used in operations: | ** ** |                           |       |                           |       |
| Depreciation and  amortization                                              | ** ** | 2,406,427                      |       | 741,733                        |       |
| Write-off of debt  issuance costs                                           | ** ** | 519,406                        |       | —                         |       |
| (Gain)/loss on  derivative instruments                                      | ** ** | 855,526                        |       | (247,929                       | )          |
| Grant income                                                                | ** ** | —                         |       | (187,852                       | )          |
| Changes in assets and  liabilities:                                         | ** ** |                           |       |                           |       |
| Restricted Cash                                                             | ** ** | (368,074                       | )          | —                         |       |
| Derivative instruments                                                      | ** ** | (663,363                       | )          | 360,130                        |       |
| Accounts receivable                                                         | ** ** | (1,880,494                     | )          | (3,827,751                     | )          |
| Inventory                                                                   | ** ** | (259,486                       | )          | (1,527,881                     | )          |
| Prepaid expenses                                                            | ** ** | (41,353                        | )          | (244,244                       | )          |
| Accounts payable                                                            | ** ** | (837,506                       | )          | 1,981,771                      |       |
| Accrued liabilities                                                         | ** ** | (184,268                       | )          | 108,129                        |       |
| Net cash provided by (used in) operating activities                         | ** ** | 15,548,497                     |       | (2,218,793                     | )          |
| ** **                                                                  | ** ** | ** **                     |       |                           |       |
| **Cash  Flows from Investing Activities**                                   | ** ** | ** **                     |       |                           |       |
| Capital expenditures                                                        | ** ** | (663,614                       | )          | (55,770                        | )          |
| Payments for construction in process                                        | ** ** | —                         |       | (647,801                       | )          |
| Net cash used in investing activities                                       | ** ** | (663,614                       | )          | (703,571                       | )          |
| ** **                                                                  | ** ** |                           |       |                           |       |
| **Cash  Flows from Financing Activities**                                   | ** ** |                           |       |                           |       |
| Proceeds from grants for operating expenses                                 | ** ** | —                         |       | 218,637                        |       |
| Proceeds from grants for capital expenditures                               | ** ** | —                         |       | 283,905                        |       |
| Proceeds from revolving line of credit                                      | ** ** | —                         |       | 780,426                        |       |
| Proceeds from construction loan                                             | ** ** | —                         |       | 2,542,012                      |       |
| Payments for long term debt                                                 | ** ** | (8,439,281                     | )          | (86,894                        | )          |
| Payments for debt issuance costs                                            | ** ** | —                         |       | (18,393                        | )          |
| Payment of member distribution                                              | ** ** | (5,756,000                     | )          | —                         |       |
| Net cash provided by (used in) financing activities                         | ** ** | (14,195,281                    | )          | 3,719,693                      |       |
|                                                                             |            |                                |            |                                |            |  |  |

 

Notes to Financial Statements are an integral part ofthis Statement.

7

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**UNITED WISCONSIN GRAIN PRODUCERS, LLC**

**Condensed Statements of Cash Flows (continued)**
| ** **                                                                    | ** ** | **Six Months Ended** | ** ** | **Six Months Ended** | ** ** |
|-------------------------------------------------------------------------------|------------|--------------------------------|------------|--------------------------------|------------|
| ** **                                                                    | ** ** | **June 30,**              | ** ** | **June 30,**              | ** ** |
| ** **                                                                    | ** ** | **2006**                       | ** ** | **2005**                       | ** ** |
| ** **                                                                    | ** ** | **(Unaudited)**                | ** ** | **(Unaudited)**                | ** ** |
|                                                                          | ** ** | ** **                     |       |                           |       |
| **Net  Increase in Cash and Cash Equivalents**                                | ** ** | 689,602                        |       | 797,328                        |       |
| ** **                                                                    | ** ** |                           |       |                           |       |
| **Cash  and Cash Equivalents—**Beginning of Period                       | ** ** | 8,786,477                      |       | 9,068                          |       |
| ** **                                                                    | ** ** |                           |       |                           |       |
| **Cash  and Cash Equivalents—**End of Period                             | ** ** | $                              | 9,476,079  |                           | $          | 806,396 |   |
| ** **                                                                    | ** ** |                           |       |                           |       |
| **Supplemental  Cash Flow Information**                                       |       |                           |       | ** **                     |       |
| ** **                                                                    |       |                           |       | ** **                     |       |
| Cash paid during the period for:                                              |       |                           |       | ** **                     |       |
| Interest                                                                      |       | $                              | 916,855    |                           | $          | 97 |   |
|                                                                          |       |                           |       |                           |       |
| **Noncash  Investing and Financing Activities**                               |       | ** **                     | ** ** | ** **                     |       |
|                                                                          |       |                           |       |                           |       |
| Refinancing of  long-term debt                                                |       | $                              | 16,040,376 |                           | $          | — |   |
|                                                                          |       |                           |       |                           |       |
| Capital  expenditures and construction in process funded by construction loan |       | $                              | —     |                           | $          | 8,368,571 |   |
|                                                                          |       |                           |       |                           |       |
| Operating  expenses funded by construction loan                               |       | $                              | —     |                           | $          | 3,000 |   |
|                                                                          |       |                           |       |                           |       |
| Capital  Expenditures in Grants Receivable                                    |       | $                              | —     |                           | $          | 200,750 |   |

 

Notes to Financial Statements are an integral part ofthis Statement.

 

8

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**UNITED WISCONSIN GRAIN PRODUCERS, LLC**

**CondensedNotes to Unaudited Financial Statements**

**June 30, 2006 and 2005**

**1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

The accompanying unaudited condensed financialstatements have been prepared pursuant to the rules and regulations of theSecurities 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, 2005,contained in the Company’s annual report on Form 10-KSB for 2005.

In the opinion of management, the interim condensedfinancial statements reflect all adjustments considered necessary for fairpresentation.  The adjustments made to these statements consist only ofnormal recurring adjustments.

*Nature of Business*

United Wisconsin Grain Producers LLC (a Wisconsinlimited liability company) is a 40 million gallon ethanol plant located nearthe town of Friesland in the township of Randolph, Wisconsin.  The company sells its production of ethanoland distillers grains, a co-product of ethanol production, within the UnitedStates.

The Company was organized in November of 2001 to poolinvestors, some of whom provide a corn supply on a commercial basis.  The Company was a developmental stage entityprior to commencing operations on May 5, 2005.

*Accounting Estimates*

Management uses estimates and assumptions in preparingthese financial statements in accordance with generally accepted accountingprinciples.  Those estimates and assumptions affect the reported amountsof assets and liabilities, the disclosure of contingent assets and liabilities,and the reported revenues and expenses. Actual results could differ from those estimates.

*RevenueRecognition*

The Company recognizes revenue at the time title tothe goods and all risks of ownership transfer to the customer, which generallyoccurs upon shipment to the customer or when the customer picks up thegoods.  The Company records revenue fromfederal and state incentive programs related to the production of ethanol whenthe Company has sold the ethanol and completed all the known requirements ofthe applicable incentive program.

*RestrictedCash*

The Company is required to deposit cash into arestricted cash account by the Company’s broker as discussed below.

*DebtIssuance Costs*

Costs associated with the issuance of the constructionloan discussed in Note 3 were recorded as deferred loan costs, net ofaccumulated amortization.  Loan costswere amortized to operations over the life of the term note using the effectiveinterest method.

*Derivative Instruments*

The Company enters into derivative contracts to hedgethe Company’s exposure to price risk related to forecasted corn and natural gaspurchases and forward corn purchase contracts.  The Company does nottypically enter into derivative instruments other than for hedgingpurposes.  All derivative contracts are recognized as of June 30, 2006 

9

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at their fair market value.  Although the Company believes its derivativepositions are economic hedges, none have been designated as a hedge foraccounting purposes.

The Company has recorded a liability of $280,969 as ofJune 30, 2006.  The Company has alsorecorded a combined realized and unrealized loss on derivative instruments of$855,526 related to its derivative contracts for the six months ended June 30,2006 which includes a loss of $476,502 for the three month period ending June30, 2006.  The Company recorded acombined realized and unrealized gain on derivative instruments of $247,929related to its derivative contracts for the six months ended June 30, 2005which includes a gain of $83,384 for the three month period ending June 30,2005.  The Company is required tomaintain cash balances at its broker related to derivative instrumentpositions.  At June 30, 2006, restrictedcash totaled $448,354 and is not included in the cash and cash equivalents onthe balance sheet or the statements of cash flows.

*Government Incentive Payments*

For the quarter and six month period ended June 30,2006 the Company recorded as other income $85,008 and $372,092, respectively,from the Commodity Credit Corporation Bioenergy Program, a department of theUnited States Department of Agriculture.  For the quarter and six monthperiod ended June 30, 2005 the Company recorded as other income $800,322 fromthe Commodity Credit Corporation Bioenergy Program.  The Company was not eligible for BioenergyProgram payments prior to commencement of production in May 2005.

*Fair Value of Financial Instruments*

The carrying value of cash and cash equivalents andrestricted cash approximates their fair value.

The Company believes the carrying amount of derivativeinstruments approximates fair value based on current market prices.

It is not currently practicable to estimate fair valueof the notes payable to the lending institution.  Because these agreements contain certainunique terms, covenants, and restrictions, as discussed in Note 3, there are noreadily determinable similar instruments on which to base an estimate of fairvalue.

*Income Taxes*

The Company is treated as a partnership for federaland state income tax purposes, and generally does not incur income taxes.  Instead its earnings and losses are includedin the income tax returns of its members. Therefore, no provision or liability for federal or state income taxeshas been included in these financial statements.

**2. INVENTORY**

Inventory consists of the following at June 30, 2006:

| Raw materials   |   | $       | 725,032   |   |
|-----------------|--------|---------|-----------|--------|
| Work in process |   | 206,825 |      |
| Finished Goods  |   | 738,376 |      |
| Total           |   | $       | 1,670,233 |   |

**3.****              BANK FINANCING**

On May 25, 2006 the Company closed on a mortgage inthe amount of $21,040,376, which included a revolving credit agreement in theamount of $5,000,000, and a term credit agreement in the amount of $16,040,376with Farmers & Merchants Union Bank to refinance the existing debt withAgStar Fiancial Services, PCA.  The termdebt consists of a five-year business note in the amount of $16,040,376 at afixed interest rate of 7.4% and requires monthly payments based on a ten-yearamortization beginning July 1, 2006.  As of June 30, 2006, the Company had outstanding debt of $16,040,376 onthe term debt and did not have any borrowings on the revolving credit 

10

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commitment.The Company has expensed the debt issuance costs associated with the initialdebt with AgStar.  This amount totaled$519,406 and is included within miscellaneous income and expense.

There isan annual service fee of $10,000 for the revolving credit agreement and anannual facility fee of $20,000 beginning on the closing date, May 25, 2006, andupon each anniversary until its maturity. If the revolving line of credit is terminated prior to its maturity, the$10,000 annual service fee will no longer be incurred.  No prepayment fees exist on either loan.

Theseloans are subject to protective covenants requiring the Company to maintainvarious financial ratios.  The Company has not violated any financial debtcovenants during the six months ending June 30, 2006 or in the year 2005 andthe Company believes the likelihood of default of the financial debt covenantsin the next quarter to be remote.  Theloan is secured by substantially all the Company’s assets.

Long term debt consistsof the following:

|                                    | ** ** | **June 30, 2006** | ** ** |
|------------------------------------|------------|-----------------------------|------------|
| Bank Financing                     |       | $                           | 16,040,376 |   |
| Less: amounts  due within one year |       | 1,098,829                   |       |
|                               |       |                        |       |
| Totals                             |       | $                           | 14,941,547 |   |

 

The estimated maturitiesof long term debt at March 31, 2006 are as follows:

| 2006       |   | $         | 1,098,829  |   |
|------------|--------|-----------|------------|--------|
| 2007       |   | 1,205,923 |       |
| 2008       |   | 1,302,541 |       |
| 2009       |   | 1,403,699 |       |
| 2010       |   | 1,444,892 |       |
| Thereafter |   | 9,584,492 |       |
| Total      |   | $         | 16,040,376 |   |

**4. MEMBERS’ EQUITY**

Asspecified in the Company’s operating agreement, the Company has one class ofmembership units.  The Company isauthorized to issue up to 28,000 membership units in addition to the 1,280 seedcapital units issued prior to the Company’s initial registered offering.

As ofJune 30, 2006 and June 30, 2005 the Company had 28,780 units outstanding.

**5. COMMITMENTS AND CONTINGENCIES**

*Corn andNatural Gas Contracts*

At June 30, 2006, the Company had forward cornpurchase contracts totaling approximately 13,000,000 bushels for variousdelivery periods from July 2006 to December 2008 of which approximately 40% arewith members.  The prices on thesecontracts range from $2.05 to $2.60 per bushel or have a basis levelestablished by the CBOT futures between $-0.16 and $-0.36.  At June 30, 2006, the Company had forwardcontracts to purchase approximately 541,650 million British thermal units(MMBTU) of natural gas during the months of July through December 2006 at anaverage price of approximately $7.51 per MMBTU.

**6. SUBSEQUENT EVENTS**

On July10, 2006 the Board of Directors of the Company approved a $200 per unitdistribution to all members of record as of June 30, 2006 pending lenderapproval.  If the distribution isapproved by the bank, the Company expects the distribution totaling $5,756,000to be made in August or September of 2006.

11

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**Item 2.Management’s Discussion and Analysis and Plan of Operation**

**Overview**

UnitedWisconsin Grain Producers, LLC was formed as a Wisconsin limited liabilitycompany on November 2, 2001, for the purpose of constructing and operating a 40million gallon per year ethanol plant near Friesland, Wisconsin.   Since May 2005, we have been engaged in theproduction of ethanol and distillers grains. Our revenues are derived from thesale and distribution of our ethanol and distillers grains throughout the continentalUnited States.

Weexpect to fund our operations during the next 12 months using cash flow fromcontinuing operations and our credit facilities.

Weare subject to industry-wide factors that affect our operating and financialperformance.  Our operating results arelargely driven by the prices at which we sell ethanol and distillers grain andthe costs related to their production. Historically, the price of ethanol tends to fluctuate in the samedirection as the price of unleaded gasoline and other petroleum products.  Surplus ethanol supplies also tend to putdownward price pressure on ethanol.  Inaddition, the price of ethanol is generally influenced by factors such asgeneral economic conditions, the weather, and government policies and programs.  The price of distillers grains is generallyinfluenced by supply and demand, the price of substitute livestock feed, suchas corn and soybean meal, and other animal feed proteins.  Surplus grain supplies also tend to putdownward price pressure on distillers grains. In addition, our revenues are also impacted by such factors as ourdependence on one or a few major customers who market and distribute ourproducts; the intensely competitive nature of our industry; possiblelegislation at the federal, state and/or local level; and changes in federalethanol tax incentives.

Ourtwo largest costs of production are corn and natural gas.  Both of these costs are affected by factorslargely out of our control.  The cost ofcorn is affected primarily by supply and demand factors such as cropproduction, carryout, exports, government policies and programs, riskmanagement and weather.  Natural gasprices fluctuate with the energy complex in general.  Over the last few years, natural gas priceshave trended higher than average and it appears prices will continue to trendhigher due to the high price of alternative fuels such as fuel oil.  Our costs of production are affected by thecost of complying with the extensive environmental laws that regulate ourindustry.

**Results of Operations**

***Financial Summary and Analysis ofthe three month period ended June 30, 2006 and 2005***

The following table shows the results of ouroperations and the percentage of revenues, cost of goods sold, operatingexpenses and other items to total revenues in our statement of operations forthe three months ended June 30, 2006 and 2005:
| ** **                 | ** ** | **Quarter Ended  June 30, 2006** | ** ** | **Quarter Ended  June 30, 2005** | ** ** |
|----------------------------|------------|-------------------------------------------------|------------|-------------------------------------------------|------------|
| ** **                 | ** ** | **(Unaudited)**                                 | ** ** | **(Unaudited)**                                 | ** ** |
| **Income  Statement Data** | ** ** | **Amount**                                      | ** ** | **%**                                           | ** ** | **Amount** | ** ** | **%** | ** ** |
| Revenues                   |       | $                                               | 30,483,354 |                                            | 100.0      |   | $ | 10,109,672 |   | 100.0 |   |
|                       |       |                                            |       |                                            |       |   |   |   |   |
| Cost of Goods  Sold        |       | $                                               | 17,680,454 |                                            | 58.0       |   | $ | 9,544,572 |   | 94.4 |   |
|                       |       |                                            |       |                                            |       |   |   |   |   |
| Gross Profit               |       | $                                               | 12,802,900 |                                            | 42.0       |   | $ | 565,100 |   | 5.6 |   |
|                       |       |                                            |       |                                            |       |   |   |   |   |
| Operating  Expenses        |       | $                                               | 595,926    |                                            | 2.0        |   | $ | 451,510 |   | 4.5 |   |
|                       |       |                                            |       |                                            |       |   |   |   |   |
| Operating Income           |       | $                                               | 12,206,974 |                                            | 40.0       |   | $ | 113,590 |   | 1.1 |   |
|                       |       |                                            |       |                                            |       |   |   |   |   |
| Other Income  (Expense)    |       | $                                               | (908,712   | )                                               | (3.0       | ) | $ | 636,461 |   | 6.3 |   |
|                       |       |                                            |       |                                            |       |   |   |   |   |
| **Net Income**             |       | $                                               | 11,298,262 |                                            | 37.0       |   | $ | 750,051 |   | 7.4 |   |

 

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*Revenues*.  Revenues from operations for the three monthperiod ended June 30, 2006 totaled $30,483,354. In the three month period ended June 30, 2006 ethanol comprised 91% ofour sales and DDGS comprised 9% of our sales. Revenues from operations for the three month period ended June 30, 2005totaled $10,109,672 of which ethanol comprised 87% of our sales and DDGScomprised 13%.  The increase in revenuesfrom operations for the three month period ended June 30, 2006 compared to thethree month period ended June 30, 2005 is substantially a result of a 74%increase in the gallons of ethanol sold and an 81% increase in the price per gallonof ethanol.  The increase in the gallonssold is due primarily to the fact that we began operations in May of 2005,therefore our quarter ended June 30,2005 reflected two months of revenue from operations.

Ethanolprices have continued to steadily rise from the average price for 2005 sincethe beginning of the year and through the three month period ending June 30,2006.  Management currently expectsshort-term ethanol prices to remain higher in the short-term than historicalaverages.  However, management believesthe industry will need to continue to grow demand in order to sustain thesehigher price levels.  According to theRenewable Fuels Association, as of July 26, 2006 there were 101 ethanol plantsin operation nationwide with the capacity to produce more than 4.8 billiongallons annually, with an additional 36 new plants and seven expansions underconstruction expected to add an additional estimated 2.43 billion gallons ofannual production capacity.  Unless thenew supply is equally met with demand, downward pressure on ethanol pricescould occur.  If ethanol prices start todecline, our earnings will decline in the process, especially if corn costsfail to remain low and stable.  Areaswhere demand for ethanol may increase are new markets in New Jersey,Pennsylvania, Massachusetts, North Carolina, South Carolina, Michigan,Tennessee, Louisiana and Texas.

Ourrevenues and profits are impacted by federal ethanol supports and taxincentives.  Changes to these supports orincentives could significantly impact demand for ethanol.  The passage of the Volumetric Ethanol ExciseTax Credit (“VEETC”) is expected to provide the flexibility necessary to expandethanol blending into higher blends of ethanol such as E85, E diesel and fuelcell markets.  In addition, the EnergyPolicy Act of 2005 creates a Renewable Fuels Standard (“RFS”) which is expectedto favorably impact the ethanol industry by enhancing both the production anduse of ethanol.  The RFS allows refinersto use renewable fuel blends in those areas where it is mostcost-effective.  The RFS requiresrefiners to use 4 billion gallons of renewable fuels in 2006, increasing to 7.5billion gallons by 2012.

On December 28, 2005, theEPA released interim rules governing the implementation of the 2006 RFSrequirement.  The EPA’s interim ruleimposes a collective compliance approach, which means the requirement for 2006fuel use is determined in the aggregate rather than on a refiner-by-refinerbasis.  The EPA adopted this approach for2006 because current uncertainties regarding the RFS might result inunnecessarily high costs of compliance if each party was required toindependently comply.  Although there isnot a requirement for individual parties to demonstrate compliance in 2006, theEPA found that increases in ethanol production and projections for futuredemand indicate that the 2006 volume is likely to be met.  However, in the unlikely event that the RFSis not met in 2006, the EPA expects to adjust the volume requirement in 2007 tocover the deficit.  There are no otherconsequences for failure to collectively meet the 2006 standard.  On June 16, 2006, the EPA implemented adirect final rule stating the default standard of 2.78% provided in the Actapplies exclusively to calendar year 2006, and the collective complianceapproach will likewise apply only to 2006. For 2007 and beyond the EPA will determine and publish the applicablerenewable fuel standard for each year and develop a renewable fuel standardcredit trading program per statutory direction. This rule will specificallyidentify liable parties, lay out the compliance program including recordkeepingand reporting requirements, and delineate all elements of the credit tradingprogram.  All these and many other issuesimpacting the full RFS program will be addressed in a subsequent EPA rulemakingand are not discussed in the direct final rule.

Sincethe current national ethanol production capacity exceeds the 2006 RFSrequirement, it is management’s belief that other market factors are primarilyresponsible for current ethanol prices.  Accordingly, it is possible thatthe RFS requirements may not significantly impact ethanol prices in theshort-term.  The majority of the ethanol produced is blended with gasolineat 10% or less, and is utilized as an oxygenate to make the fuel burn 

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cleaner for theenvironment.  This fuel is required inmany areas throughout the US, where air quality standards are difficult tomaintain.  Methyl Tertiary Butyl Ether(M.T.B.E.) has been a more economical oxygenate source in the past, however,many M.T.B.E. producers and blenders have chosen to discontinue production oruse of the product due to recent elimination of liability protection in therecent RFS requirement.  The rapid phaseout of M.T.B.E. as an oxygenate has caused a sharp increase in demand forethanol to supply the much larger oxygenate market.  For this reason, we are seeing ethanoltrading at a premium to gasoline, when the ethanol is sold as blending stock.   At this time, approximately 50% of the M.T.B.E.market has been replaced with ethanol with the balance expected to be replacedin the near future.  A large portion ofthe rapid increase in the supply of ethanol is presently being absorbed in theoxygenate market, however, when we have met the demand of this market, theprice of ethanol may be dictated by the alternative fuel prices.   If the supply of ethanol continues toincrease due to the addition of plants and capacity and the demand is not ableto maintain the same pace, there may be a negative impact on the price ofethanol and our earnings.

Demandfor ethanol may remain strong as a result of increased consumption of E85 fuel.E85 fuel is a blend of 70% to 85% ethanol and gasoline. According to the EnergyInformation Administration, E85 consumption is projected to increase from anational total of 11 million gallons in 2003 to 47 million gallons in 2025. E85can be used as an aviation fuel, as reported by the National Corn GrowersAssociation, and as a hydrogen source for fuel cells. According to theRenewable Fuels Association, there are currently more than 5 million flexiblefuel vehicles capable of operating on E85 in the United States and automakerssuch as Ford and General Motors have indicated plans to produce several millionmore flexible fuel vehicles per year. The American Coalition for Ethanol reports that there are currentlyapproximately 600 retail gasoline stations supplying E85.  However, this remains a relatively smallpercentage of the total number of U.S. retail gasoline stations, which isapproximately 170,000.

Thesales price for our distillers grains has remained relatively unchanged in thethree month period ended June 30, 2006. The low price of distillers grains was largely due to an increase inlocal supplies of DDGS, and an increase in availability of other competingprotein products, such as soybean meal and gluten feed.  Less local demand has increased ourtransportation costs associated with shipping DDGS longer distances, thus resultingin lower net back prices to the plant. Distillers grains prices are expected to remain low in the foreseeablefuture as more plants come on line and additional product is available, unlessthe price of commodities increase substantially increasing the price ofsubstitutes.

*Cost of Goods Sold*.  Our cost of goods sold from the production ofethanol and distillers grains is primarily made up of raw grains expenses(corn) and energy expenses (natural gas and electricity).  Cost of goods sold for the three month periodended June 30, 2006 totaled approximately $17,680,454.  Cost of good sold for the three month periodended June 30, 2005 totaled approximately $9,544,572.  Westarted ethanol production in May 2005. Therefore our three month period endingJune 30, 2005 only reflected two months of operations.

Increased emphasis on alternative fuel sources and useof corn in the production of ethanol has put upward pressure on cornprices.  This resulted in higher cornprices as reflected in our cost of goods sold for the three month period endedJune 30, 2006.   An increase in cornexports as well as sustained domestic usage may increase total demand for cornand result in upward pressure on corn prices. High natural gas prices increased fertilizer prices, which resulted inlower US corn acreage this year.  LowerUS corn acreage has the potential to reduce supply and tighten stocks of cornmoving forward.  Reduced planted acres ofcorn puts a higher responsibility on the average yield component in theproduction equation.  The weather is thesingle most important component in yield and could create substantial pricevolatility to corn prices throughout 2006. Although carryout supplies for2006 marketing year appear adequate, any production shortfall during the 2006growing season will create volatility and may increase our cost of corn.  Should supplies of corn tighten, the marketwill react with higher prices to encourage producers to plant more acres tocorn, and these higher prices will have a negative impact to our costs of goodssold.

Natural gas is also an important input to ourmanufacturing process.  We estimate that our natural gas usage isapproximately 122,000 million British thermal units (“MMBTU”) per month. We use natural gas to dry our distillers grains products to moisture contents atwhich they can be stored for long periods and transported greater distances, sothat we can market them to broader livestock markets, including poultry andswine markets in the continental UnitedStates.  Natural gas has recently been available only at pricesexceeding historical averages. The prices are increasing our costs ofproduction.  Although natural gas prices trended lower in the three monthperiod ended June 30, 2006, we expect natural gas prices to remain high orincrease given the unpredictable market 

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situation.  This could increase our gas costssubstantially, which will adversely impact our cost of goods sold.  We have secured a marketing firm and energyconsultant for our natural gas and will work with them on an on-going basis tomitigate our exposure to volatile gas prices.

Costof goods sold includes a loss of $476,502 for the three month period endingJune 30, 2006 related to our corn derivative instruments.  We recognizethe gains or losses that result from the changes in the value of our derivativeinstruments in cost of goods sold as the changes occur.  As corn pricesfluctuate, the value of our derivative instruments are impacted, which affectsour financial performance.  We anticipate continued volatility in our costof goods sold due to the timing of the changes in value of the derivativeinstruments relative to the cost and use of the commodity being hedged.

*Operating Expenses*.  Operating expenses for the three month periodended June 30, 2006 totaled approximately $595,926.  Operatingexpenses for the three month period ended June 30, 2005, totaled$451,510.  The increase in operating expenses from the three month periodended June 30, 2006 to the three month period ended June 30, 2005 was primarilydue to the fact that we began operations in May of 2005 therefore the threemonth period ended June 30, 2005 reflected two months of operating expenses.

*Operating Income*. Operating income for the three month period ended June 30, 2005 totaledapproximately $12,206,974.  Operatingincome for the three month period ended June 30, 2005 totaled approximately$113,590.  The increase inoperating income for the three month period ended June 30, 2006 compared to thethree month period ended June 30, 2005 is substantially a result of a 74% increasein the gallons of ethanol sold and an 81% increase in the price per gallon ofethanol.  The increase in the gallonssold is due primarily to the fact that we began operations in May of 2005,therefore our quarter ended June 30,2005 reflected two months of operating revenue.

*Other Income (Expense)*.  Ourother income and expense for the three month period ended June 30, 2006 was anexpense of $908,712.  Other income andexpense for the three month period ended June 30, 2005 was income of$636,461.  Our other income and expenseitems consist of USDA Commodity Credit Corporation (CCC) Bioenergy programpayments, interest expense and the write-off of debt issuance costs.  The reason for the decline of other income andexpense items in this second quarter of 2006 was the reduction in CCC Bioenergyprogram payments and the write-off of debt issuance costs.

Our USDA Commodity Credit Corporation BioenergyProgram payments were $85,008 for the three month period ended June 30,2006.  Payments under the Bioenergy Program are based upon increases inethanol production relative to the previous year.  Since we began operations in May of 2005, the increase in gallons as webegin our second year of operations is significantly less than our first yearoperations thus reducing the number of gallons eligible for payment.  The CCC recently announced that itsfunds would be exhausted in the third quarter of the government fiscal year andthat the program would terminate as of June 30, 2006.    ***“See Bioenergy ProgramPayments”*** below.

***Financial Summary and Analysis ofthe six month period ended June 30, 2006 and 2005***

The following table shows the results of ouroperations and the percentage of revenues, cost of goods sold, operatingexpenses and other items to total revenues in our statement of operations forthe six months ended June 30, 2006 and 2005:
| ** **                 | ** ** | **Six months Ended  June 30, 2006** | ** ** | **Six months Ended  June 30, 2005** | ** ** |
|----------------------------|------------|---------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                 | ** ** | **(Unaudited)**                                         | ** ** | **(Unaudited)**                                         | ** ** |
| **Income  Statement Data** | ** ** | **Amount**                                              | ** ** | **%**                                                   |       | **Amount** |   | **%** |   |
| Revenues                   |       | $                                                       | 53,209,909 |                                                    | 100.0      |   | $ | 10,109,672 |   | 100.0 |   |
|                       |       |                                                    |       |                                                    |       |   |   |   |   |
| Cost of Goods  Sold        |       | $                                                       | 35,109,422 |                                                    | 66.0       |   | $ | 9,380,028 |   | 92.8 |   |
|                       |       |                                                    |       |                                                    |       |   |   |   |   |
| Gross Profit               |       | $                                                       | 18,100,487 |                                                    | 34.0       |   | $ | 729,644 |   | 7.2 |   |
|                       |       |                                                    |       |                                                    |       |   |   |   |   |
| Operating  Expenses        |       | $                                                       | 1,166,137  |                                                    | 2.2        |   | $ | 816,617 |   | 8.0 |   |
|                       |       |                                                    |       |                                                    |       |   |   |   |   |
| Operating Income  (Loss)   |       | $                                                       | 16,934,350 |                                                    | 31.8       |   | $ | (86,937 | ) | (0.8 | ) |
|                       |       |                                                    |       |                                                    |       |   |   |   |   |
| Other Income  (Expense)    |       | $                                                       | (932,668   | )                                                       | (1.7       | ) | $ | 712,074 |   | 7.0 |   |
|                       |       |                                                    |       |                                                    |       |   |   |   |   |
| **Net Income**             |       | $                                                       | 16,001,682 |                                                    | 30.1       |   | $ | 625,101 |   | 6.2 |   |

 

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*Revenues*.  Revenues from operations for the six monthperiod ended June 30, 2006 and 2005 totaled $53,209,909 and $10,109,672,respectively.  The increase in revenuesfrom the six months ended June 30, 2006 compared to the six months ended June30, 2005 was primarily due to a strengthening in ethanol prices coupled withincreased production levels.

*Cost of Goods Sold*.  Our cost of goods sold as a percentage ofrevenues were 66% and 92.8% for the six months ended June 30, 2006 and 2005,respectively.  The decrease in our costof goods sold percentage is directly correlated to the increase in revenues.

*Operating Expenses*.  Our operating expenses as a percentage ofrevenues decreased to 2.2% from 8% for the six months ended June 30, 2006 and2005.  Because the majority of ouroperating expenses are fixed, the percentage decrease is caused by the increasein total revenues from 2005 to 2006.

*Operating Income*.  Ourincome from operations increased from (0.8%) to 31.8% for the six months endedJune 30, 2006 compared to the six months ended June 30, 2005.  Strong ethanol prices combined with increasedproduction has caused our operating income to represent a larger percentage ofrevenues.

*Other Income (Expense)*.  Ourother income (expense) as a percentage of revenues was (1.7%) and 7.0% for thesix months ended June 30, 2006 and 2005, respectively.  The change from income to expense is due inlarge part to the reduction in Bioenergy program payments we received in 2005compared to 2006 as well as the write-off of debt issuance costs during thesecond quarter of 2006.  ***See “Bioenergy Program Payments”***below.

**Changes in Financial Condition for the Six MonthsEnded June 30, 2006.**

Assets totaled $65,892,682 on June 30, 2006.  Current assets totaled $17,715,153 on June30, 2006.  Current liabilities totaled$3,797,790 on June 30, 2006.  Long term debt,net of current maturities, totaled $14,941,547 on June 30, 2006.

**Liquidity and Capital Resources**

The following table showscash flows for the six months ended June 30, 2006 and 2005:

|                                                      | ** ** | **Six Months Ended June 30** | ** **  |
|------------------------------------------------------|------------|--------------------------------------------------|-------------|
| ** **                                           | ** ** | **2006**                                         | ** **  | **2005** | ** ** |
| Net cash  provided by (used in) operating activities |       | $                                                | 15,548,497  |   | $ | (2,218,793 | ) |
| Net cash (used  in) investing activities             |       | $                                                | (663,614    | ) | $ | (703,571 | ) |
| Net cash provided by  (used in) financing activities |       | $                                                | (14,195,281 | ) | $ | 3,719,693 |   |

* *

*Cash Flow From Operations*

The increase in net cashflow provided from operating activities for the six months ended June 30, 2006compared to six months ended June 30, 2005 was primarily due to our plant beingoperational for the entire six months in 2006 as compared to only two of thesix months in 2005.  Our capital needs are being adequately met throughcash from our operating activities and our current credit facilities.

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*CashFlow Used In Investing Activities*

There was little change in our cash flow used ininvesting activities for the six months ended June 30, 2006 compared to sameperiod in 2005.

Management estimates that approximately $2,000,000 incapital expenditures will be made in the next twelve months for generalimprovements, and an additional $35,000,000 for the fractionation and plantexpansion project (see ***“Plant Expansion andFractionation”*** below) all of which are expected to be financedfrom a portion of cash flows from operations and additional debt financing.

On June 19, 2006, the Board of Directors approved $6.7million to proceed with Phase I of the plant expansion.  On July 10, 2006, the Board of Directorsapproved $11.4 million for the fractionation project. Both projects will befunded using cash generated from operations and additional debt financing. Utilizing cash generated from operations may impact the ability to distributefuture member distributions.  Ourprojections are based upon our historical operating costs and historicalrevenues and there is no guarantee or assurance that our past financialperformance can accurately predict future results.  We currently estimatethe plant expansion and the fractionation projects to be complete by December2007, however, there is no assurance or guarantee that construction will stayon schedule or that we will be able to operate at the expanded productionlevels by the end of 2007.

*Cash FlowUsed In Financing Activities.*

We used cash to pay down our debt by $8,439,281 duringthe six months ended June 30, 2006 compared to $86,894 debt payment for thesame period in 2005.  During the sixmonths ended June 30, 2006 we made a member distribution in the amount of$5,756,000.

### *Short-Term and Long-Term Debt Sources*

On May 25, 2006, wesigned credit agreements with Farmers & Merchants Union Bank of Friesland,Wisconsin and refinanced our existing term debt and revolving loancommitment.  The credit facility issecured by substantially all of our assets.  The term loan of $16,040,376 is for five yearswith a ten-year amortization.  Paymentson the term loan are paid in monthly installments including principal andinterest.  The interest rate is fixed at7.4% for both the term and revolving loan for 5 years.  Interest is due monthly on the revolving loancommitment.

As of June 30, 2006, wehad outstanding debt of $16,040,376 on the term debt and did not have anyborrowings on the revolving loan.

There is an annualfacility fee of $20,000 beginning on the closing date, May 25, 2006, and uponeach anniversary until its maturity. There is an additional $10,000 annual service fee for the revolvingcredit agreement which can be terminated prior to its maturity and discontinuethe service fee.  No prepayment feesexist on either loan.

These loans are subjectto protective covenants requiring us to maintain various financial ratios. Weare required to maintain a minimum tangible net worth of $24,000,000 and toincrease our tangible net worth annually by the lesser of $500,000 or an amountequal to retained earnings.  Our ownersequity is to be at least 45% and maintain a working capital position of atleast $4,000,000.  We must receivewritten approval from our lender to exceed $1,000,000 in annual capitalexpenditures and we must obtain consent prior to making membershipdistributions in excess of 65% of the previous year’s net income, excludingstate and federal incentive payments.  On June 25, 2006, Farmers & Merchants Union Bank approved our August2006 membership distribution totaling $5,756,000.  We have not violated any financial debtcovenants during the six month period ended June 30, 2006.  The loan is secured by substantially all ofthe Company’s assets.

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*Bioenergy Program Payments*

We have enrolled in the USDA Commodity CreditCorporation’s Bioenergy program.  Underthe USDA CCC Bioenergy program, the Commodity Credit Corporation will reimburseeligible ethanol producers of less than 65 million gallons of bioenergy in theamount of one bushel of corn for every two and one-half bushels of corn usedfor the increased production of ethanol. No eligible producer may receive more than $7.5 million under theprogram. Because we qualified as an eligible producer and annually utilize atleast 15 million bushels of corn in the increased production of ethanol, wecould have potentially received the maximum award of $7.5 million.  However, the Commodity Credit Corporationawarded only $100 million annually for fiscal years 2005 through 2006, and anyaward applied by us may be reduced based upon the volume of applications fromother eligible producers.

For the three months ended June 30, 2006, we recordedBioenergy Program income of $85,008.  TheBioenergy Program was scheduled to expire on September 30, 2006.  However, the CCC recently announced that its fundswould be exhausted in the third quarter of the government fiscal year and thatthe program would terminate as of June 30, 2006 therefore we do not anticipateany more revenue from the program.

*PlantExpansion and Fractionation Project*

Wehave engaged an engineering firm to develop a plan to increase the designcapacity to 80 million gallons of production annually.  The plant is currently producing at an annualrate of 50 million gallons after its first year of operations.  The scope of the project being studied willinclude shipping and receiving capacity increases, the first of which isalready under construction, plant processing capacity increases, additionalproduct storage, and logistics improvements. If the feasibility study and engineering study come back positive, weplan to expand production capacity to 60 million gallons per year by the end of2006, and 80 million gallons by the end of 2007.  However, there is no assurance or guaranteethat construction will stay on schedule or that we will be able to operate atexpanded production levels by these dates.

OnJune 19, 2006, the board approved $6,700,000 for Phase I of the expansion.  Phase I entails increasing the cook andfermentation systems by 8 to 10 million gallon per year capacity.  Phase II involves down stream capacityexpansion and will increase production capacity by 20 million gallons.  The estimated cost of Phase II isapproximately $8.3 million.  We are inthe process of applying with the Wisconsin Department of Natural Resources (DNR)for our construction permit which must be issued before we begin construction.  There is no guarantee the Wisconsin DNR willissue our construction permit.

OnJuly 10, 2006 the board approved $11,400,000 for the Fractionationproject.  Fractionation is a process thatseparates the corn kernel into separate components prior to fermentation,allowing a purer stream of starch for fermentation, requiring less water andenergy, and producing a higher throughput of ethanol.  This specific process of fractionation usesnew technology and there is no guarantee we will be able to increase ourthroughput or reduce our energy costs.

Weexpect to finance the plant expansion and fractionation through a combinationof earnings from operation and additional debt financing.  This could change our ability to make memberdistributions as they have occurred in the past.  There is no assurance or guarantee that wewill be able to finance the projects as anticipated.

**Distributionto Unit Holders**

OnJuly 10, 2006, our directors declared a cash distribution of $200 permembership unit of record at the close of business on June 30, 2006.  The distribution totals $5,756,000 and willbe distributed to our members in August 2006.

**OffBalance Sheet Arrangements.**

Wecurrently do not have any off-balance sheet arrangements.

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** **

**Item 3.    Controls and Procedures**

Ourmanagement, including our Chief Executive Officer (the principal executiveofficer), J.F. Robertson, along with our Chief Financial Officer, (theprincipal financial officer), Barb Bontrager, have reviewed and evaluated theeffectiveness of our disclosure controls and procedures as of June 30,2006.  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.

Ourmanagement, consisting of our principal executive officer and principalfinancial officer, have reviewed and evaluated any changes in our internalcontrol over financial reporting that occurred as of June 30, 2006 and therehas been no change that has materially affected or is reasonably likely tomaterially affect our internal control over financial reporting.

**PART II.   OTHER INFORMATION**

**Item 1.    Legal Proceedings**

None.

**Item 2.    Unregistered Sales of Equity Securities andUse of Proceeds**

None.

**Item 3.    Defaults Upon Senior Securities**

None.

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

The Company’s annual meeting of members was held onApril 22, 2006 for the purpose of electing ten (10) directors.  Votes were solicited in person and byproxy.  For the matter on which voteswere entitled to be cast, there were no broker non-votes.  The inspector of elections inspected andcounted the ballots and announced that the current directors were re-electedfor their prospective terms and the existing board of directors was re-elected.

**Item 5.    Other Information**

None.

**Item 6.    Exhibits**

(a)           The following exhibits are filed aspart of this report:
| 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. Section 1350. |
|        |       |                                            |
| 32.2        |       | Certificate pursuant to 18 U.S.C. Section 1350. |

 

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** **

**SIGNATURES**

In accordance withthe requirements of the Exchange Act, the registrant caused this report to besigned on its behalf by the undersigned, thereunto duly authorized.
|            | ** ** | ** **      | ** ** | **UNITED WISCONSIN GRAIN PRODUCERS, LLC**                             |
|------------|------------|-----------------|------------|-----------------------------------------------------------------------|
| ** ** | ** ** | ** **      | ** ** | ** **                                                            |
| ** ** | ** ** | ** **      | ** ** | ** **                                                            |
| Date:      |       | August 14, 2006 |       | /s/ J.F. Robertson                                                    |
|       |       |            |       | J.F. Robertson                                                        |
|       |       |            |       | Chief Executive Officer   (Principal Executive Officer)               |
|       |       |            |       |                                                                  |
|       |       |            |       |                                                                  |
| Date:      |       | August 14, 2006 |       | /s/ Barb Bontrager                                                    |
|       |       |            |       | Barb Bontrager                                                        |
|       |       |            |       | Chief Financial Officer  (Principal Financial and Accounting Officer) |

 

 

20

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