**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

**FORM10-QSB**

 
| **ý**                                                                                                                                                                        | **Quarterly report under Section  13 or 15(d) of the Securities Exchange Act of 1934.** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------|
|                                                                                                                                                                              |                                                                                    |
| **For the  quarterly period ended September 30, 2004**                                                                                                                            |
|                                                                                                                                                                              |                                                                                    |
| **OR**                                                                                                                                                                            |
|                                                                                                                                                                              |                                                                                    |
| **o**                                                                                                                                                                             | **Transition report under Section  13 or 15(d) of the Exchange Act.**                   |
|                                                                                                                                                                              |                                                                                    |
| **For the  transition period  from            to           .** |

 

**COMMISSION FILE NUMBER 333-92188**

 

**UNITEDWISCONSIN GRAIN PRODUCERS, LLC**

(Exact name of small business issuer asspecified in its charter)

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

** **

**W1231 Tessmann Road, Cambria, Wisconsin 53923**

(Address of principal executive offices)

 

**(920) 348-5016**

(Issuer’s telephone number)

** **

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

 

State the number of shares outstanding for each of the issuer’s classesof common equity as of the latest practicable date:  As of November 13, 2004, there were 28,780units outstanding.

 

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**                                               | ** ** |
| ** **                                                                  | ** ** |
| **SIGNATURES**                                                              | ** ** |

 

2

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**PART I****.      FINANCIAL INFORMATION**

 

**Item1.  Financial Statements**

 

**UNITED WISCONSIN GRAIN PRODUCERS, LLC**

(A Development Stage Company)

 

Condensed Balance Sheet

 
| **ASSETS**                    | ** ** | **September 30,  2004** | ** ** |
|-------------------------------|------------|-------------------------|------------|
| ** **                    | ** ** | **(Unaudited)**         | ** ** |
| **Current Assets**            |       |                    |       |
| Cash and cash equivalents     |       | $                       | 32,858     |   |
| Derivative instruments        |       | 97,809                  |       |
| Account receivable            |       | 2,106                   |       |
| Grants receivable             |       | 117,029                 |       |
| Prepaid expenses              |       | 22,903                  |       |
| Total current assets          |       | 272,705                 |       |
|                          |       |                    |       |
| **Equipment**                 |       |                    |       |
| Land                          |       | 1,019,809               |       |
| Office equipment              |       | 32,576                  |       |
| Construction in progress      |       | 32,253,644              |       |
| Total property and equipment  |       | 33,306,029              |       |
| Less accumulated depreciation |       | (3,730                  | )          |
| Net equipment                 |       | 33,302,299              |       |
|                          |       |                    |       |
| **Other Assets**              |       |                    |       |
| Debt issuance costs           |       | 510,791                 |       |
| Total other assets            |       | 510,791                 |       |
|                          |       |                    |       |
| **Total Assets**              |       | $                       | 34,085,795 |   |

 

 

Notes to Condensed Financial Statements are an integral part of thisStatement.

 

3

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**UNITED WISCONSIN GRAIN PRODUCERS, LLC**

(A Development Stage Company)

 

Condensed Balance Sheet

 
| **LIABILITIES  AND EQUITY**                                                                              | ** ** | **September 30,  2004** | ** ** |
|----------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|
| ** **                                                                                               | ** ** | **(Unaudited)**         | ** ** |
| **Current Liabilities**                                                                                  |       |                    |       |
| Current maturities of long-term debt                                                                     |       | $                       | 1,791      |   |
| Accounts payable                                                                                         |       | 112,650                 |       |
| Construction accounts payable                                                                            |       | 7,617,770               |       |
| Accrued liabilities                                                                                      |       | 12,212                  |       |
| Note payable                                                                                             |       | 10,469                  |       |
| Total current liabilities                                                                                |       | 7,754,892               |       |
|                                                                                                     |       |                    |       |
| **Commitments and Contingencies**                                                                        |       |                    |       |
|                                                                                                     |       |                    |       |
| **Long-Term Debt, less current maturities**                                                              |       | 943                     |       |
|                                                                                                     |       |                    |       |
| **Members’ Equity**                                                                                 |       |                    |       |
| Member contributions, net of costs related  to capital contributions, 28,780 units at September 30, 2004 |       | 27,696,394              |       |
| Deficit accumulated during development  stage                                                            |       | (1,366,434              | )          |
| Total members’ equity                                                                               |       | 26,329,960              |       |
|                                                                                                     |       |                    |       |
| **Total Liabilities and Members’ Equity**                                                           |       | $                       | 34,085,795 |   |

 

 

Notes to Condensed Financial Statements are an integral part of thisStatement.

 

4

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**UNITED WISCONSIN GRAIN PRODUCERS, LLC**

(A Development Stage Company)

 

Condensed Statements of Operations

 
| ** **                                                                                        | ** ** | **Quarter Ended  September 30,  2004** | ** **   | **Quarter Ended  September 30,  2003** | ** ** | **Date of  Inception to  September 30,  2004** | ** ** |
|---------------------------------------------------------------------------------------------------|------------|----------------------------------------|--------------|----------------------------------------|------------|------------------------------------------------|------------|
| ** **                                                                                        | ** ** | **(Unaudited)**                        | ** **   | **(Unaudited)**                        | ** ** | **(Unaudited)**                                | ** ** |
|                                                                                              |       |                                   | ** **   |                                   |       |                                           |       |
| **Revenues**                                                                                      | ** ** | **$**                                  | **—**   | ** **                             | $          | —                                         |       | $ | — |   |
|                                                                                              |       |                                   | ** **   |                                   |       |                                           |       |
| **Operating Expenses**                                                                            |       |                                   | ** **   |                                   |       |                                           |       |
| Project coordinator                                                                               | ** ** | **29,800**                             | ** **   | 24,855                                 |       | 206,773                                        |       |
| Organization costs                                                                                |       | —                                 | ** **   | 2,490                                  |       | 59,271                                         |       |
| Consulting and professional fees                                                                  | ** ** | **51,106**                             | ** **   | 68,792                                 |       | 547,160                                        |       |
| Administrative                                                                                    | ** ** | **103,800**                            | ** **   | 80,233                                 |       | 607,096                                        |       |
| Totals                                                                                            | ** ** | **184,706**                            | ** **   | 176,370                                |       | 1,420,300                                      |       |
|                                                                                              |       |                                   | ** **   |                                   |       |                                           |       |
| **Operating Loss**                                                                                | ** ** | **(184,706**                           | **)**        | (176,370                               | )          | (1,420,300                                     | )          |
|                                                                                              |       |                                   | ** **   |                                   |       |                                           |       |
| **Other Income (Expense)**                                                                        |       |                                   | ** **   |                                   |       |                                           |       |
| Grant income                                                                                      | ** ** | **39,954**                             | ** **   | —                                 |       | 124,823                                        |       |
| Interest income                                                                                   | ** ** | **6,650**                              | ** **   | —                                 |       | 110,000                                        |       |
| Interest expense                                                                                  | ** ** | **(608**                               | **)**        | (1,196                                 | )          | (5,561                                         | )          |
| Unrealized loss on derivative instruments                                                         | ** ** | **(130,897**                           | **)**        | —                                 |       | (202,191                                       | )          |
| Miscellaneous income                                                                              | ** ** | **7,638**                              | ** **   | —                                 |       | 26,795                                         |       |
| Total other income (expense), net                                                                 | ** ** | **(77,263**                            | **)**        | (1,196                                 | )          | 53,866                                         |       |
|                                                                                              |       |                                   | ** **   |                                   |       |                                           |       |
| **Net Loss**                                                                                      | ** ** | **$**                                  | **(261,969** | **)**                                  | $          | (177,566                                       | )          | $ | (1,366,434 | ) |
|                                                                                              |       |                                   | ** **   |                                   |       |                                           |       |
| **Net Loss Per Unit**(28,780,  1,280 and 10,183 weighted average units outstanding, respectively) |       | $                                      | (9.10        | )                                      | $          | (138.72                                        | )          | $ | (134.19 | ) |

 

 

Notes to Condensed Financial Statements arean integral part of this Statement.

 

5

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**UNITED WISCONSIN GRAIN PRODUCERS, LLC**

(A Development Stage Company)

** **

Condensed Statements of Operations

 
| ** **                                                                                 | ** ** | **Nine Months Ended** | ** **   | **Nine Months Ended** | ** ** |
|--------------------------------------------------------------------------------------------|------------|-----------------------|--------------|-----------------------|------------|
| ** **                                                                                 | ** ** | **September 30,**     | ** **   | **September 30,**     | ** ** |
| ** **                                                                                 | ** ** | **2004**              | ** **   | **2003**              | ** ** |
| ** **                                                                                 | ** ** | **(Unaudited)**       | ** **   | **(Unaudited)**       | ** ** |
|                                                                                       |       |                  | ** **   |                  |       |
| **Revenues**                                                                               | ** ** | **$**                 | **—**   | ** **            | $          | — |   |
|                                                                                       |       |                  | ** **   |                  |       |
| **Operating Expenses**                                                                     |       |                  | ** **   |                  |       |
| Project coordinator                                                                        | ** ** | **95,550**            | ** **   | 40,856                |       |
| Organization costs                                                                         |       | —                | ** **   | 18,296                |       |
| Consulting and professional fees                                                           | ** ** | **209,983**           | ** **   | 129,939               |       |
| Administrative                                                                             | ** ** | **246,263**           | ** **   | 240,108               |       |
| Totals                                                                                     | ** ** | **551,796**           | ** **   | 429,199               |       |
|                                                                                       |       |                  | ** **   |                  |       |
| **Operating Loss**                                                                         | ** ** | **(551,796**          | **)**        | (429,199              | )          |
|                                                                                       |       |                  | ** **   |                  |       |
| **Other Income (Expense)**                                                                 |       |                  | ** **   |                  |       |
| Grant income                                                                               | ** ** | **115,073**           | ** **   | —                |       |
| Interest income                                                                            | ** ** | **64,130**            | ** **   | 177                   |       |
| Interest expense                                                                           | ** ** | **(2,556**            | **)**        | (1,417                | )          |
| Unrealized loss on derivative instruments                                                  | ** ** | **(202,191**          | **)**        | —                |       |
| Miscellaneous income                                                                       | ** ** | **14,870**            | ** **   | 4,900                 |       |
| Total other (Expense) income, net                                                          | ** ** | **(10,674**           | **)**        | 3,660                 |       |
|                                                                                       |       |                  | ** **   |                  |       |
| **Net Loss**                                                                               | ** ** | **$**                 | **(562,470** | **)**                 | $          | (425,539 | ) |
|                                                                                       |       |                  | ** **   |                  |       |
| **Net Loss Per Unit**(28,099,  and 1,280 weighted average units outstanding, respectively) |       | $                     | (20.02       | )                     | $          | (332.45 | ) |

 

Notes to Condensed Financial Statements are an integral part of thisStatement.

 

6

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**UNITED WISCONSIN GRAIN PRODUCERS, LLC**

(A Development Stage Company)

 

Condensed Statements of Cash Flows

 
| ** **                                                         | ** ** | ** **            | ** **   | ** **            | ** ** | **Date of**       | ** ** |
|--------------------------------------------------------------------|------------|-----------------------|--------------|-----------------------|------------|-------------------|------------|
| ** **                                                         | ** ** | **Nine Months Ended** | ** **   | **Nine Months Ended** | ** ** | **Inception to**  | ** ** |
| ** **                                                         | ** ** | **September 30,**     | ** **   | **September 30,**     | ** ** | **September 30,** | ** ** |
| ** **                                                         | ** ** | **2004**              | ** **   | **2003**              | ** ** | **2004**          | ** ** |
| ** **                                                         | ** ** | **(Unaudited)**       | ** **   | **(Unaudited)**       | ** ** | **(Unaudited)**   | ** ** |
| **Cash Flows from Operating Activities**                           |       |                  | ** **   |                  |       |              |       |
| Net loss                                                           | ** ** | **$**                 | **(562,470** | **)**                 | $          | (425,539          | )          | $ | (1,366,434 | ) |
| Adjustments to reconcile net loss to net  cash used in operations: | ** ** | ** **            | ** **   |                  |       |              |       |
| Depreciation                                                       | ** ** | **2,617**             | ** **   | 804                   |       | 3,730             |       |
| Unrealized loss on derivative instruments                          | ** ** | **202,191**           | ** **   | —                |       | 202,191           |       |
| Grant income                                                       | ** ** | **(115,073**          | **)**        | —                |       | (124,823          | )          |
| Deposits on expired land options                                   | ** ** | **3,000**             | ** **   | —                |       | 3,000             |       |
| Current assets:                                                    |       |                  | ** **   |                  |       |              |       |
| Derivative instruments                                             | ** ** | **(300,000**          | **)**        | —                |       | (300,000          | )          |
| Accounts receivable                                                | ** ** | **(2,106**            | **)**        | (6,068                | )          | (2,106            | )          |
| Prepaid expenses                                                   | ** ** | **(17,802**           | **)**        | 125                   |       | (22,903           | )          |
| Current liabilities:                                               |       |                  | ** **   |                  |       |              |       |
| Accounts payable                                                   | ** ** | **26,001**            | ** **   | 196,843               |       | 103,185           |       |
| Accrued liabilities                                                | ** ** | **3,003**             | ** **   | 3,080                 |       | 12,212            |       |
| Net cash used in operating activities                              | ** ** | **(760,639**          | **)**        | (230,755              | )          | (1,491,948        | )          |
|                                                               |       |                  | ** **   |                  |       |              |       |
| **Cash Flows from Investing Activities**                           |       |                  | ** **   |                  |       |              |       |
| Land                                                               | ** ** | **(300,061**          | **)**        | —                |       | (1,009,809        | )          |
| Capital expenditures                                               | ** ** | **(25,705**           | **)**        | —                |       | (26,945           | )          |
| Capital expenditures on construction in  progress                  | ** ** | **(21,631,397**       | **)**        | —                |       | (24,543,529       | )          |
| Deposits on land                                                   | ** ** | **—**            | ** **   | —                |       | (13,000           | )          |
| Net cash used in investing activities                              | ** ** | **(21,957,163**       | **)**        | —                |       | (25,593,283       | )          |
|                                                               |       |                  | ** **   |                  |       |              |       |
| **Cash Flows from Financing Activities**                           |       |                  | ** **   |                  |       |              |       |
| Proceeds from grant                                                | ** ** | **(1,956**            | **)**        | —                |       | 7,794             |       |
| Member contributions                                               | ** ** | **3,175,000**         | ** **   | —                |       | 28,102,500        |       |
| Refunds (Payments) for costs of raising  capital                   | ** ** | **7,011**             | ** **   | —                |       | (371,106          | )          |
| Payments on short-term notes                                       | ** ** | **(81,876**           | **)**        | —                |       | (81,876           | )          |
| Proceeds from notes payable                                        | ** ** | **—**            | ** **   | 221,500               |       | —            |       |
| Payments on long-term debt                                         | ** ** | **(1,264**            | **)**        | (1,227                | )          | (2,897            | )          |
| Payments for debt issuance costs                                   | ** ** | **(481,326**          | **)**        | (151,452              | )          | (501,326          | )          |
| Payments for membership unit redemption                            | ** ** | **(15,000**           | **)**        | —                |       | (35,000           | )          |
| Net cash from financing activities                                 | ** ** | **2,600,589**         | ** **   | 68,821                |       | 27,118,089        |       |
|                                                               |       |                  | ** **   |                  |       |              |       |
| **Net Increase (Decrease) in Cash and Cash  Equivalents**          | ** ** | **(20,117,213**       | **)**        | (161,934              | )          | 32,858            |       |
|                                                               |       |                  | ** **   |                  |       |              |       |
| **Cash and Cash Equivalents –**  Beginning of Period          | ** ** | **20,150,071**        | ** **   | 163,779               |       | —            |       |
|                                                               |       |                  | ** **   |                  |       |              |       |
| **Cash and Cash Equivalents –**  End of Period                | ** ** | **$**                 | **32,858**   | ** **            | $          | 1,845             |       | $ | 32,858 |   |

 

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

 

7

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**UNITED WISCONSIN GRAIN PRODUCERS, LLC**

(A Development State Company)

 

Condensed Statements of Cash Flows

 
| ** **                                        | ** ** | ** **            | ** ** | ** **            | ** ** | **Date of**       | ** ** |
|---------------------------------------------------|------------|-----------------------|------------|-----------------------|------------|-------------------|------------|
| ** **                                        | ** ** | **Nine Months Ended** | ** ** | **Nine Months Ended** | ** ** | **Inception to**  | ** ** |
| ** **                                        | ** ** | **September 30,**     | ** ** | **September 30,**     | ** ** | **September 30,** | ** ** |
| ** **                                        | ** ** | **2004**              | ** ** | **2003**              | ** ** | **2004**          | ** ** |
| ** **                                        | ** ** | **(Unaudited)**       | ** ** | **(Unaudited)**       | ** ** | **(Unaudited)**   | ** ** |
| **Supplemental Cash Flow Information**            |       |                  |       |                  |       |              |       |
|                                              |       |                  |       |                  |       |              |       |
| Cash paid during the period for:                  |       |                  |       |                  |       |              |       |
| Interest                                          |       | $                     | 2,556      |                  | $          | —            |       | $ | 5,561 |   |
|                                              |       |                  |       |                  |       |              |       |
| **Noncash Investing and Financing Activities**    | ** ** | ** **            | ** ** | ** **            | ** ** | ** **        | ** ** |
|                                              |       |                  |       |                  |       |              |       |
| Costs of raising capital in accounts  payable     |       | $                     | —     |                  | $          | 27,508            |       | $ | — |   |
|                                              |       |                  |       |                  |       |              |       |
| Capital expenditures funded by long-term  debt    |       | $                     | —     |                  | $          | —            |       | $ | 5,631 |   |
|                                              |       |                  |       |                  |       |              |       |
| Construction in progress in accounts  payable     |       | $                     | 7,617,770  |                  | $          | —            |       | $ | 7,617,770 |   |
|                                              |       |                  |       |                  |       |              |       |
| Construction in progress funded by notes  payable |       | $                     | 92,345     |                  | $          | —            |       | $ | 92,345 |   |
|                                              |       |                  |       |                  |       |              |       |
| Debt issuance costs in accounts payable           |       | $                     | 9,465      |                  | $          | —            |       | $ | 9,465 |   |
|                                              |       |                  |       |                  |       |              |       |
| Deposits applied for the purchase of land         |       | $                     | —     |                  | $          | —            |       | $ | 10,000 |   |

 

Notes to Financial Statement are an integralpart of this Statement.

 

8

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**UNITED WISCONSIN GRAIN PRODUCERS, LLC**

(A Development Stage Company)

 

Notes to Financial Statements

 

September 30, 2004

 

**1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

 

The accompanying unauditedcondensed financial statements have been prepared pursuant to the rules andregulations of the Securities and Exchange Commission.  Certain information and footnote disclosuresnormally included in annual financial statements prepared in accordance withaccounting principles generally accepted in the United States of America havebeen condensed or omitted as permitted by such rules and regulations.  These financial statements and related notesshould be read in conjunction with the financial statements and notes theretoincluded in the Company’s audited financial statements for the year endedDecember 31, 2003, contained in the Company’s annual report on Form 10-KSB/Afor 2003.

 

In the opinion of management, the interim condensed financialstatements reflect all adjustments considered necessary for fairpresentation.  The adjustments made tothese statements consist only of normal recurring adjustments.

 

*Nature of Business*

 

The Company was organized to pool investors,some of whom intend to provide a corn supply, for a 40 million gallon ethanolplant to be located near the town of Friesland in the township of Randolph,Wisconsin, with distribution to upper Midwest states. In addition, the Companyintends to produce and sell distillers dried grains as a co-product of ethanolproduction. The Company began construction of its ethanol plant in November2003.  As of September 30, 2004, theCompany is in the development stage with its efforts principally devoted toconstruction activities.

 

*Accounting Estimates*

 

Management uses estimates and assumptions inpreparing these financial statements in accordance with generally acceptedaccounting principles.  Those estimatesand assumptions affect the reported amounts of assets and liabilities, thedisclosure of contingent assets and liabilities, and the reported revenues andexpenses.  Actual results could differfrom those estimates.

 

*Derivative Instruments*

 

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 30,2004 balance sheet at their fair market value.

 

At September 30, 2004, the Company’sderivative instruments include 400 December 2004 short corn calls for $3.70 perbushel.

 

On the date the derivative instrument isentered into, the Company will designate the derivative as either (1) a hedgeof the fair value of a recognized asset or liability or of an unrecognized firmcommitment (fair value hedge), (2) a hedge of a forecasted transaction or ofthe variability of cash flows to be received or paid related to a recognizedasset or liability (cash flow hedge) or (3) will not designate the derivativeas a hedge.  Changes in the fair value of a derivative that is designatedas and meets all the required criteria for a fair value hedge, along with thegain or loss on the hedged asset or liability that is attributable to thehedged risk, are recorded in current period earnings.  Changes in the fairvalue of a derivative that is designated as and meets all the required criteriafor a cash flow

 

9

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hedge are recorded in accumulated othercomprehensive income and reclassified into earnings as the underlying hedgeditem affects earnings.  Changes in the fair value of a derivative that isnot designated as a hedge are recorded in current period earnings.  Although the Company believes its derivativepositions are economic hedges, none have been designated as a hedge foraccounting purposes.

 

The Company has recorded a unrealized loss onderivative instruments for $202,191 related to its derivative contracts for thenine months ended September 30, 2004.

 

*Grants*

 

The Company will recognize grant income as other income forreimbursement of expenses incurred upon complying with the conditions of thegrant.  For reimbursements of capitalexpenditures, the grants are recognized as a reduction of the basis of theasset upon complying with the conditions of the grant.

 

**2.****              BANK FINANCING**

 

On February 26, 2004 the Company closed on a construction loan from afinancial institution.  The constructionloan for $33,024,200 converts, within sixty days post construction uponcertification of completion and attainment of the engineer’s productionguarantee, into two loans with the first loan a $4,000,000 revolving loan andthe second with a $29,024,200 term loan. The term of the loans is five years with a ten-year amortization.  The loan commitment offers a variable andfixed interest rate option.  The variableinterest rate option has a variable base rate determined by the percentage ofmembers’ equity at a range from 275 to 375 basis points.  The construction period is 16 months fromloan closing not to exceed 60 days from initial plant start-up.  The fixed rate quote option is subject tochange weekly and is available at the conversion of the construction loan tothe term loan.  The final term facilitycan be segmented between a fixed portion and a variable portion.

 

The loan fees consist of underwriting fees, participation fee, andannual facility fee.  The underwritingfees are $100,000 of which $20,000 was due and was paid upon acceptance of theterm sheet and $80,000 was due and paid at loan closing.  There was a 75 basis point participation feeon the entire credit facility paid at loan closing totaling $247,682.  This fee will be shared pro rata with thesenior debt participants.  There is anannual facility fee of $40,000 beginning at the conversion of the constructionloan to the facility term note and upon each anniversary for four years.  If any of the senior debt is prepaid,prepayment penalties of 3%, 2% and 1% of the prepaid principal will apply inthe first, second and third year, respectively.

 

These loans are subject to protective covenants requiring the Companyto maintain various financial ratios, are secured by all business assets, andrequire additional loan payments based on excess cash flow.  The loan is secured by substantially all theCompany’s assets.  As of September 30,2004, the Company has not borrowed on this credit facility.

 

**3. NOTE PAYABLE**

 

In February 2004, the Company executed a note with an insurancebroker.  The new agreement permits theCompany to finance the annual builders risk premiums in nine installmentpayments of $10,531 including interest at 7.11%.  The line is secured by certain assets of theCompany.  As of September 30, 2004, thebalance outstanding is $10,469.

 

**4. LONG TERM DEBT**

 

In April 2003, the Company entered into a capital lease agreement foroffice equipment for $5,631 with accumulated depreciation at September 30, 2004of $1,667.  The lease calls forthirty-six monthly payments of $160 including interest at 7%, maturing March2006 and secured by equipment.

 

10

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Long term debt maturities are as follows:

 
| **Periods  Ending June 30,** |   |   |   |
|------------------------------|--------|--------|--------|
| 2005                         |   | $      | 1,791  |   |
| 2006                         |   | 943    |   |
|                         |   | $      | 2,734  |   |

 

**5. MEMBERS’ EQUITY**

 

As specified in the Company’s operatingagreement, the Company will have one class of membership units.  The Company is authorized to issue up to28,000 membership units in addition to the seed capital units issued prior tothe registered offering.

 

The Company prepared and filed, on Form SB-2,a Registration Statement with the Securities and Exchange Commission(SEC).  The Offering was for up to 27,500 membership units at $1,000 perunit.  As of May 14, 2003, the RegistrationStatement was declared effective.  In October 2003, the Company had raisedthe minimum of $19,250,000 through the Offering and obtained and accepted awritten debt financing commitment through a lender as discussed in Note 2.  The Company reached their maximum Offeringand the Offering was closed on April 9, 2004.

 

Income and losses are allocated to allmembers based upon their respective percentage units held.

 

**6. RELATED PARTY TRANSACTIONS**

 

Through September 30, 2004, theCompany had incurred $19,375 in project coordinator fees to three currentmembers and one former member.  AtSeptember 30, 2004, there was no accounts payable balance relating to thesecosts.

 

Through September 30, 2004, the Company has also incurred $141,283 indirector fees and related expense, of which $45,343 is included in accountspayable at September 30, 2004 to eight members.

 

**7. GRANTS**

 

In October 2003, the Wisconsin Department of Commerce approved a grantfor $271,000 in funds to reimburse the Company for infrastructure costs.  At September 30, 2004, the Company hasincurred $93,729 of costs eligible for reimbursement under this grant, of whichall is included in grants receivable.

 

In January 2004, the Company was approved for a matching grant from theUnited States Department of Agriculture for $450,000.  Grant revenue for inception to date totals$115,073 of which $23,300 is in grants receivable at September 30, 2004.

 

In February 2004, the Company was approved for a matching grant fromthe Transportation Facilities Economic Development Program (TEA) for $160,000.  At September 30, 2004, the Company has notincurred any costs eligible for reimbursement under this grant.

 

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**8. COMMITMENTS AND CONTINGENCIES**

 

The Company estimates of total costs of the project to be $60,207,103.  The Company anticipates funding thedevelopment of the ethanol plant by using approximately $881,000 of grants, theproceeds it raises through the close of the Offering, and utilizing debtfinancing for the remainder of the costs.

 

The Company entered an agreement in March 2002, with a railroadengineering firm to complete a Preliminary Rail Design and the requireddocumentation covering a Transportation Economic Assistance grant. The TEAgrant may fund up to twenty five percent of the rail contract costs relating totransportation improvements.  Theestimated commitment for this agreement is approximately $64,400.  As of September 30, 2004, the Company hasincurred $29,915 of this cost of which $1,125 is included in accounts payable.

 

In October 2003, the Company entered into an agreement with an electriccooperative to provide electrical service. The Company is required to make a non-refundable payment in aid ofconstruction for the facilities the electrical cooperative will install for thebenefit of the Company.  The amount ofthis aid of construction shall be $183,000, unless there are changes in thescope of the facilities and the amount may be adjusted accordingly.  As of September 30, 2004, the Company hasmade an aid of construction of $60,000. The Company has entered into an agreement with Adams Columbia to financeall or a portion of the balance of the aid of construction.

 

In October 2003, the Company entered into an agreement with acontractor for work site grading.  Worksite grade work began in October 2003. The total amount to be paid for the work as originally engagedapproximated $570,710.  The contractorhas been approved for additional services above the original contract amountand at September 30, 2004, $775,483 of cost has been incurred of which $35,395is included in construction accounts payable.

 

On October 8, 2003, the Company entered into an agreement with arelated party, Fagen, Inc., to perform all design and construction services,provide all material, equipment, tools and labor, necessary to build a 40million gallon dry grind ethanol plant for $45,575,000, subsequently amended to$45,695,000.  The design-build contractprovides that the Company may be entitled to receive either consequentialdamages for losses such as loss of use, profits, business, reputation orfinancing, or liquidated damages in the event Fagen, Inc. fails tosubstantially complete the plant by the scheduled completion date.  These liquidated damages are in lieu ofconsequential damages for any losses we may incur, such as loss of use,profits, business, reputation, or financing. If Fagen, Inc. does not complete within specified dates, they will paythe Company for each day that substantial completion remains outstanding.  If the plant is substantially completed 1 to90 days prior to substantial completion date, the Company will pay the Fagen,Inc. an early performance bonus for each day that substantial completion isachieved prior to the substantial completion date.  If the contract is terminated by the Companywithout cause or by Fagen, Inc. for cause, the Company is required to pay theFagen, Inc. a fee of $1,000,000 if the Company resumes construction of theplant through their own employees or third parties.  As of September 30, 2004, the Company hasincurred $29,625,898 in costs related to this contract and $6,976,106 isincluded in construction accounts payable.

 

In April 2004, the Company entered into two natural gas relatedagreements.  The natural gas salesagreement commits the Company to purchase specified quantities of natural gasat a then prevailing market prices once the ethanol plant becomesoperational.  The second agreement, thenatural gas transportation service agreement, provides transportation of thenatural gas to the ethanol plant at specific transportation rates.

 

In May 2004, the Company entered into an agreement for theadministration building for $379,214, subsequently amended to $392,320.  As of September 30, 2004, the Company hasincurred $233,411 of these costs of which $32,315 is in accounts payable.

 

In June 2004, the Company entered into an agreement for water treatmentchemicals and service program for a period of three years from the startup ofthe plant.  The agreement includes$10,000 for integration software, $15,590 for start up costs and an annualoperating cost of $71,784.  Thisagreement may be terminated by either party with 30 day written notice.

 

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In August 2004, the Company entered into an agreement with a companyfor road widening services for $52,690. The Company also entered into another agreement with the same companyfor paving services at their facility for $29,190.  No costs have been incurred at September 30,2004.

 

In August 2004, the Company entered into amarketing agreement with a company to market, sell and distribute the entireethanol produced at this facility.  Theagreement shall commence on the first day of the month that the Companyinitially ships ethanol and shall continue for a period of 12 months.

 

In August2004, the Company entered into a marketing agreement with a company for thepurpose of marketing and selling all the distillers grains the Company electsto ship by rail out of state.  Theinitial term of the agreement is one year, and shall remain in effect untilterminated by either party at its unqualified option, by providing writtennotice of not less than 90 days to the other party.

 

OnAugust 31, 2004 we entered into a ten-year lease agreement with GreenbrierLeasing Corporation for eighty-five covered hopper cars. We will pay GreenbrierLeasing Corporation $460.00 per car /per month.

 

In September 2004, the Company entered into anagreement for concrete services for $43,500 minus $66.60/yd for work on thefire building walls and the ROA and fire water tank foundations.  No funds have been expended under thisagreement.

 

In September 2004, the Company entered into anagreement for underground piping for $20,620.

 

**9. SUBSEQUENT EVENTS**

 

In October 2004, the Company entered into anagreement with a company for the rail yard construction for $815,539.  The contract will commence on October 16,2004 and be completed by May 20, 2005.

 

InOctober 2004, the Company entered into an agreement to purchase approximatelyone acre of land for $10,000.  The landwas purchased to allow better access to the rail spur line.  The Company has paid a down payment of$5,000.  The closing is expected to occurin January 2005.

 

**Item 2****.****           Management’sDiscussion and Analysis and Plan of Operations**

 

This report contains forward-looking statements that involve futureevents, our future performance and our expected future operations andactions.  In some cases you can identifyforward-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 of these terms or othersimilar expressions.  Theseforward-looking statements are only our predictions and involve numerousassumptions, risks and uncertainties. Our actual results or actions may differ materially from theseforward-looking statements for many reasons, including the factors described inthis report.  We are not under any dutyto update the forward-looking statements contained in this report.  We cannot guarantee future results, levels ofactivity, performance or achievements. We caution you not to put undue reliance on any forward-lookingstatements, which speak only as of the date of this report.  You should read this report and the documentsthat we reference in this report and have filed as exhibits, completely andwith the understanding that our actual future results may be materiallydifferent from what we currently expect. We qualify all of our forward-looking statements by these cautionarystatements.

 

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**Overview**

 

United Wisconsin Grain Producers, LLC wasformed as a Wisconsin limited liability company on November 2, 2001 for thepurpose of constructing and operating a 40-million gallon per year ethanolplant near Friesland, Wisconsin.  Weexpect the total project cost to be approximately $60,207,103, which includesapproximately $45,695,000  to build theplant.

 

We raised equity by a public offeringregistered with the Securities and Exchange Commission on Form SB-2, which wasdeclared effective on May 14, 2003 and closed on April 9, 2004.  We raised $27,500,000 in our offering.  In February 2004, we executed debt financingagreements for a construction loan of $33,024,200.  Upon completion of the project, theconstruction loan converts into a term loan of $29,024,200 and a revolving loanof $4,000,000.  Based upon our offeringproceeds, senior credit facility and grant financing, we will have approximately$61,405,200 of capital available for the project.  On April 30, 2004, we filed a Form 8-ARegistration Statement with the Securities Exchange Commission indicating thatwe have total assets exceeding $10 million and more than 500 unit holders.

 

Construction of the project is progressing onschedule and we anticipate the plant will be substantially complete by themiddle of March 2005.  Start-upoperations are expected to begin shortly after substantial completion.

 

**Plan of Operations to Start-up of the EthanolPlant**

 

*ConstructionSchedule and Project Budget*

 

We expect to spend the next 12 months continuing the construction ofthe ethanol plant and commencing start-up operations.  As of the date of this report, constructionof the ethanol facility is progressing according to schedule.  We anticipate plant construction will besubstantially complete by the middle of March 2005 and expect start-upoperations to begin shortly thereafter. These dates are only estimates and we may experience construction delaysor delays in testing and start-up operations that would cause substantialcompletion and start-up operations to occur later than we currently expect.

 

Phase I “dirt work” (site grading andpreparation) is approximately 97% complete. Phase II dirt work is approximately 68% complete.  Phase I work is the responsibility of UnitedWisconsin Grain Producers LLC, and Phase II is the responsibility of Fagen Inc.

 

**Grain Receiving andStorage Area** – The outer walls of the two concretestorage silos have been poured.  The roofand internal floors are scheduled to be poured over the next two weeks.  The foundation for the corn receivingbuilding has been poured with electrical crews scheduled to move inpromptly.  The corn handling equipmenthas been received and crews are busy assembling this equipment.

 

**DDG Storage Building–**Structural steel and siding on walls and roofs iscomplete.  Mechanical equipment is beinginstalled.

 

**Fermentation Area**– The structural steel has been erected along with pipe racks.  Piping crews have started the installation ofthe piping systems while electrical crews install cable trays.  All of the mixers have been installed on thefermentation tanks.

 

**Process Building**– The steel erection has been completed as well as stairs and handrails to thesecond levels.  Piping crews have startedthe main system piping including installation of instrumentation.  The electrical crews are installing cabletrays and conduit

 

**Distillation andEvaporation** – Piping is the primary focus, with tie-insto pumps and heat exchangers.  Theevaporator pumps have been set with piping crews working on the dischargepiping.

 

**Stillage and SyrupStorage Areas** – All five field erected tanks have beencompleted.  Several of the pumps havebeen set; however, piping is still under way.

 

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**Centrifuges, DDGDryers and Thermal Oxidizer** – Dryers are in place andboiler and thermal oxidizer are to be delivered in November.  Centrifuges are on site.

 

**Ethanol Tank Farm**– Work on the field erected tanks is approximately 80% complete and will bepainted in the spring.

 

**Cooling Tower**–The sump has been poured and excavation on the tower foundation has begun.

 

**AdministrationBuilding** – Construction on the administration buildingis continuing with siding installed and only the brickwork remaining tocomplete the exterior.  Crews have beenpainting the interior.

 

**Rail Yard**– Construction on the rail yard and rail spur began in October 2004.  Due to a delay with the Union PacificRailroad, our rail siding may not be completebefore the plant is operational.  If the rail siding is not complete whenour plant begins operations, we will be forced to transport a greater thanplanned percentage of our ethanol by truck.  Transporting all of ourethanol production by truck may be more expensive and may have a materialadverse impact on our earnings, during the first three months of operations.

 

**Utility Supply andOffsite Connections** – Construction on the primaryelectrical substation is on track for the March start-up date.

 

The risingprice of steel could affect the final cost of construction of the ethanolplant.  Although we are locked into aguaranteed maximum price under our Design Build Agreement with Fagen, Inc., anychange orders involving the use of steel could inflate the price of the projectabove the guaranteed maximum price.

 

We anticipatehaving sufficient capital available to meet our costs and obligations over thenext 12 months.  The following is ourestimate of our costs and expenditures for the next 12 months. Theseestimates are based upon our design-builder and prime subcontractor’sexperience with other ethanol plants.  Itis only an estimate and our actual expenses could be much higher due to avariety of factors described elsewhere in our report and in our Form 10-KSB/A.

 

| PLANT CONSTRUCTION COST(1)           |   | $      | 45,695,000 |   |
|--------------------------------------|--------|--------|------------|--------|
| ADMINISTRATIVE BUILDING AND FIXTURES |   | $      | 630,000    |   |
| RAILROAD                             |   | $      | 1,441,930  |   |
| OTHER PLANT EQUIPMENT                |   | $      | 362,000    |   |
| ROLLING STOCK                        |   | $      | 93,000     |   |
| LAND AND SITE DEVELOPMENT            |   | $      | 3,422,000  |   |
| OTHER BUILDING COSTS                 |   |   |       |
| Insurance-Builders Risk (14 months)  |   | $      | 138,000    |   |
| Construction Bond                    |   | $      | 308,895    |   |
| INVENTORY-WORKING CAPITAL            |   |   |       |
| Inventory-corn                       |   | $      | 2,500,000  |   |
| Inventory-ethanol and DDGS           |   | $      | 1,505,000  |   |
| Inventory-process supplies/chemicals |   | $      | 97,000     |   |
| Corn Hedging                         |   | $      | 500,000    |   |
| Spare Parts                          |   | $      | 200,000    |   |
| ENTITY ORGANIZATION                  |   | $      | 58,771     |   |
| FINANCING COSTS                      |   | $      | 970,300    |   |
| COST OF RAISING CAPITAL              |   | $      | 390,351    |   |
| EQUITY CLOSING                       |   | $      | 540,310    |   |
| PRE-OPERATING COSTS                  |   | $      | 1,354,548  |   |
| TOTAL                                |   | $      | 60,207,103 |   |

 

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(1)Changeorders are not included in our current estimate of costs.  If we execute change orders that materiallyimpact our estimated plant construction cost, the budget will be revised toreflect such impact.

 

Our currentbudget estimates a total project cost of $60,207,103, which includes$45,695,000 to build the plant and $14,512,103 for other project costsincluding land and site development, railroad costs, inventory, entity organization,equity closing, pre-operating costs and working capital.  The total project cost has increased$882,103.  The increase is attributed tohigher pre-operations costs, increased site leveling and excavation costs,additional plant construction, and higher than anticipated administrationbuilding construction costs.

 

The numbers inthe table of costs and expenditures are only estimates and our actual expensesand costs could be much higher due to a variety of factors outside our control,such as:

 

•                  Changes in theavailability and price of corn;

•                  Changes in theprice of steel;

•                  Changes in theenvironmental regulations that apply to our plant operations;

•                  Increasedcompetition in the ethanol industry;

•                  Changes ininterest rates or the availability of credit;

•                  Changes in ourbusiness strategy, capital improvements or development plans;

•                  Changes in plantproduction capacity or technical difficulties in operating the plant;

•                  Changes ingeneral economic conditions or the occurrence of certain events causing aneconomic impact in the agriculture, oil or automobile industries; and

•                  Changes in theavailability and price of natural gas and the market for wet and modified wetdistillers grains.

 

*Market Trends and Uncertainties*

 

The continuing volatility in the corn futures market and variances incrop conditions in Wisconsin present uncertainties as to our anticipated costof corn per bushel.  Variances in theprice of corn increase or decrease the breakeven cost per gallon of producingethanol.  Wisconsin is experiencing avery large corn crop.  This large crophas decreased the price of corn over the last few months.  However, this favorable trend is somewhatoffset by below average crop conditions in our corn supply area.  We anticipate procuring corn at or near ourforecast estimates during the start-up and early operations period of theplant.  We intend to minimize ourexposure to corn price volatility by using price risk management strategiessuch as forward contracting and price hedging.  We have engaged the firm of R.J. O’Brien to assist us with thedevelopment and implementation of these price risk strategies.

 

We may also be subject to ethanol price risk as Brazil and othercountries have developed a process for producing ethanol from sugar cane at alower cost of production than corn-based ethanol production.  With up to 7% of the United States productiontariff free under the rules of the Caribbean Basin, this foreign ethanolproduction

 

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could increase the supply ofethanol in the United States thereby reducing the price of domestic ethanol anddecreasing our revenues.

 

The prices ofnatural gas, electricity and gasoline have been trending at a higher up-trendline than anticipated.  This will causeus to pay more for electricity and natural gas. Natural gas will be an important input to our manufacturingprocess.  We expect to use natural gas todry our distillers grains products to moisture contents at which they can bestored for long periods and transported greater distances, so that we canmarket them to broader livestock markets, including poultry and swine marketsin the continental United States.  Weexpect the increased costs will be offset by higher selling prices for ourethanol and dried distillers grains.  Weintend to minimize our exposure to such natural gas price volatility by usingprice risk management strategies such as forward contracting and pricehedging.   We have engaged the firm ofR.J. O’Brien to assist us with the development and implementation of theseprice risk strategies.

 

  Some of the risk from foreign ethanolproduction may be offset by a continued growth in demand.  One reason for the increased demand forethanol is the continued phase out legislation for MTBE.  MTBE is a commonly used oxygenate used infuels for compliance with Federal Clean Air Act mandates, and is a majorcompetitor of ethanol.  New York andConnecticut have banned the use of MTBE. Sixteen states, including California, have passed phase out legislationfor MTBE.  In January 2005, Atlanta,Georgia will begin ethanol blending, which is expected to create an estimatedannual demand of 250 million gallons of ethanol. The price of unleaded gasolineis also trading at historically high prices, causing the price of ethanol toremain favorable and helping to offset the high price of corn.

 

*Operating Contracts*

 

In August 2004, we entered into a marketingagreement with Renewable Products Marketing Group, LLC to market, sell anddistribute all the ethanol produced at our facility.  Under thisagreement, we will elect to have our ethanol marketed under either a pooling ornon-pooling arrangement.  If we elect to use the pooling arrangement, wewill pay RPMG a pooling fee of 3⁄4 of a cent ($.0075) per gallon.  RPMG willpay us a netback price per gallon that is based upon the difference between thepooled average delivered ethanol selling price and the pooled averageddistribution expense.  These averages are calculated based upon each poolparticipant’s selling price and expense averaged in direct proportion to thevolume of ethanol supplied to the pool.  If we use the non-poolingarrangement, RPMG will pay us the net proceeds of sale based upon the price pergallon of ethanol paid by third party customers to RPMG less freightcosts.  This agreement begins on the first day of the month we shipethanol for the first time and continues thereafter for a period of 12months.  If neither party terminates the agreement after the initial 12months or at the end of any renewal period, the agreement automatically renewsfor successive terms of one year.

 

On August 31, 2004, we entered into adistillers grains marketing agreement with Commodity Specialists Company (“CSC”)for the sale of all the distillers grains we produce and ship by rail from theplant.  Depending on how much of ourdistillers grains we market locally, our agreement with CSC permits us to useCSC to market any amount of distillers grains that we produce and ship by truck.  CSC will pay us 98% of the actual sale priceless the freight costs incurred by CSC, if any. The initial term of theagreement is for one year commencing upon start-up of production. The agreementshall remain in effect until it is terminated by either party.

 

On August 25, 2004, we hired Northeast Asphalt, Inc., to furnish labor,material and equipment necessary to perform road-widening services for thecontract price of $52,690.   On August31, 2004 we entered into a ten-year lease agreement with Greenbrier LeasingCorporation for eighty-five covered hopper cars. We will pay Greenbrier LeasingCorporation $460 per car /per month.

 

In September 2004, pursuant to aTransportation Economic Assistance Agreement-Rail between the Town of Randolphand the Wisconsin Department of Transportation we entered into an agreementgranting the Town of Randolph a perpetual track easement for the right toconstruct and operate a railroad spur. The railroad spur will provide us accessto and from the railroad track owned by Union Pacific Railroad Company. In addition,we entered into a facility use agreement with the Town of Randolph providing usthe right to use the track and railroad spur for shipping and receivingmaterials. We have the responsibility to perform or arrange all maintenance andrepairs of the spur, the roadbed, drainage ways and structures necessary forthe safe operation of the railroad service.

 

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On September 1, 2004, we entered into an agreement with Jensen PouredWalls, Inc. for concrete services for $43,500 minus $67 per yard of concretepurchased/supplied. The concrete work is used for the fire building walls andthe ROA and fire water tank foundations.

 

On September 13, 2004, we entered into an agreement with KrauseExcavating Inc., for the laying of underground piping. The total contract priceis $20,620.

 

Subsequentto the period of this report we entered into a contract for the purchase of oneacre of property for $10,000 to accommodate better access to the railway. Wepaid $5,000 in earnest money with closing occurring no later than January 7,2005.

 

Upon start-up of plant operations, we will be applying for a grant fromthe USDA’s Commodity Credit Corporation Bioenergy Program. Under the grantprogram, the Commodity Credit Corporation will reimburse eligible ethanolproducers of less than 65 million gallons of bioenergy 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 annuallyunder the program. Because we expect to be an eligible producer and to annuallyutilize 15 million bushels of corn in the increased production of ethanol,we expect to potentially receive the maximum award of $7.5 million.However, the Commodity Credit Corporation may award only $150 millionannually fiscal years 2003 through 2006, and any award we received may bereduced based upon the volume of applications from other eligibleproducers.   As more plants are built andcurrent plants increase production, we expect there will be more eligibleproducers applying for grant proceeds. The CCC has reduced its 2004 Bioenergy Program payments by approximately65% to 70% based upon the volume of applications from eligible producers.  A similar or greater pro rata reduction maybe made to any grant award we receive. In addition, payments under the program in any one fiscal year may beless if Congress does not fully fund the program for that fiscal year (fundingfor the program is subject to an annual appropriation).  We expect to be eligible to receive an awardunder the program only once during the life of our project.  However, to the extent that our start-upperiod covers more than one fiscal year of the U.S. government, we may applytwice and receive more than one award under the program.  The Commodity Credit Corporation BioenergyProgram is scheduled to expire on September 30, 2006.  The grants available under the CCC programmay not continue beyond their scheduled expiration date or if they do continue,the grants may not be at the same level. If our ethanol plant is not operational by the expiration of the CCCprogram or has not had substantial operations, we may not be eligible for thegrants or may receive a reduced amount.

 

**Liquidity and Capital Resources**

 

As ofSeptember 30, 2004, we had cash of $32,858 and total assets of$34,085,795, including construction-in-process of $32,253,644.  As of September 30, 2004, we had currentliabilities of $7,754,892, which consists primarily of our construction accountspayable.  Since our inception throughSeptember 30, 2004, we have an accumulated deficit of $1,366,434.  Total members’ equity as of September 30,2004 was $26,329,960.  Since ourinception, we have generated no revenue from operations.

 

As of September30, 2004, we have sold a total of 27,500 units in the offering and collectedthe maximum offering proceeds of $27,500,000. Our current total outstanding units are 28,780 which represents the27,500 units sold in the offering plus 1,280 seed capital units.

 

We haveentered into a senior credit facility consisting of a $33,024,200 singleconstruction loan with AgStar Financial Services, PCA.  The credit facility is secured bysubstantially all of our assets. During construction, which is expected to befor a period of up to 16 months, we will make interest only payments on theprincipal balance of $33,024,200 at an interest rate equal to the one-monthLIBOR (the London Interbank Offered Rate) plus 3.75%.  This interest rate may be adjusted downwarddepending on the level of owners’ equity as reported in our monthly financialstatements.  If owners’ equity is between50% and 54.99%, the interest rate will be at the monthly LIBOR plus 3.25%.  If owners’ equity exceeds 55%, the interestrate will be equal to the monthly LIBOR plus 2.75%.

 

In connectionwith the senior credit facility, we paid loan fees of approximately$347,682.  In addition we will pay anannual facility fee of $40,000 beginning at the conversion of the constructionloan to the term note and

 

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continuing for four years.  Wewill have to pay prepayment penalties if we prepay any portion of the loanprincipal within the first three years.

 

When the ethanol plant is complete andoperating, the construction loan will be converted into two loans.  The first will be a term loan equal to thelesser of $29,024,200 or 55% of the total project cost. The second will be a$4,000,000 revolving loan.  The term loanof $29,024,200 or 55% of total project cost is for five years with a ten-yearamortization.  Payments on the convertedterm loan will be paid in monthly installments including principal andinterest.  Interest on the converted termloan will be at a rate equal to the monthly LIBOR plus 3.75%.  This interest rate may be adjusted downwardin exactly the manner as the interest rate on our construction loan, dependingon our level of owners’ equity as reported in our monthly financialstatements.  Interest on the revolvingloan will accrue at a rate equal to the monthly LIBOR plus 3.75%.  However, this interest rate may be adjusteddownward in exactly the same manner as the interest rate on our constructionloan, depending on our level of owners’ equity.

 

The construction loan, converted term loanand line of credit agreements contain restrictions and financial covenants towhich we will be subject during the term of the agreements.  If the project suffers delays, we may not beable to timely repay the loan.  Ifinterest rates increase, we will have higher interest payments, which couldadversely affect our business.

 

We estimate that we will need approximately$45,695,000 to construct the plant and a total of approximately $60,207,103 tocover all expenditures necessary to complete the project, make the plantoperational and produce revenue.  Basedupon the offering proceeds of $27,500,000, the senior credit facility of$33,024,200, and grant financing of approximately $881,000, we expect to haveapproximately $61,405,200 of capital available. This means that we expect to have sufficient cash on hand to coverconstruction and related start-up costs necessary to make the plantoperational.

 

**Administration**

 

We currently have an office staff comprisedof one full-time employee, one part-time employee, one project consultantserving as an independent contractor and two term contract employees.  We are also dependent on our board ofdirectors to maintain our books and records. These individuals are ultimately responsible for complying with therules and regulations promulgated under the Securities and Exchange Act of 1934concerning the maintenance of accurate books and records, and the timelysubmission of periodic reports and other requirements with the Securities andExchange Commission.

 

**Operating Expenses**

 

When the ethanol plant nears completion, weexpect to incur various operating expenses, such as supplies, utilities andsalaries for administration and production personnel.  Along with operating expenses, we anticipatethat we will have significant expenses relating to financing and interest.  We have allocated funds in our capitalstructure for these expenses, but cannot assure you that the funds allocatedwill be sufficient to cover these expenses. We may need additional funding to cover these costs if sufficient fundsare not available or if costs are higher than expected.

 

**Employees**

 

Upon completion of the ethanol plant, we intend to hire approximately34 additional employees. Approximately eleven of our employees will be involvedprimarily in management and administration and the remainder will be involvedprimarily in plant operations.  InNovember 2004, we anticipate hiring our controller.  Additionally, in December 2004 we anticipatehiring our maintenance supervisor and our plant manager.

 

The following table represents some of the anticipated positions withinthe plant and the minimum number of individuals we intend to employ for eachposition:

 

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| **Position**               | ** ** | **# Employed** | ** ** |
|----------------------------|------------|----------------|------------|
| General Manager            |       | 1              |       |
| Plant Manager              |       | 1              |       |
| Commodities Manager        |       | 1              |       |
| Controller                 |       | 1              |       |
| Lab Manager                |       | 1              |       |
| Lab Technician             |       | 2              |       |
| Secretary/Clerical         |       | 3              |       |
| Shift Supervisors          |       | 4              |       |
| Materials Handling Manager |       | 1              |       |
| Maintenance Supervisor     |       | 1              |       |
| Maintenance Craftsmen      |       | 4              |       |
| Plant Operators            |       | 14             |       |
| **TOTAL**                  | ** ** | **34**         | ** ** |

 

**Item 3****.****           Controls and Procedures**

 

Ourmanagement, including our President (the principal executive officer), Kevin M.Roche, and our Treasurer (the principal financial officer), Robert J. Miller,have reviewed and evaluated the effectiveness of our disclosure controls andprocedures as of the end of the period covered by this report.  Based upon this review and evaluation, theseofficers believe that our disclosure controls and procedures are effective inensuring that material information related to us is recorded, processed,summarized and reported within the time periods required by the forms and rulesof the Securities and Exchange Commission.

 

Our management, including our principal executive officer and principalfinancial officer, have reviewed and evaluated any changes in our internalcontrol over financial reporting that occurred as of the end of the periodcovered by this report and there has been no change that has materiallyaffected or is reasonably likely to materially affect our internal control overfinancial reporting.

 

**PART II.  OTHER INFORMATION**

 

**Item1.****           Legal Proceedings**

 

None.

 

**Item2.****           Changes in Securities**

 

The Securities and Exchange Commissiondeclared our Registration Statement on Form SB-2 (SEC Registration No. 333-92188)effective on May 14, 2003.  We commencedour initial public offering of our units shortly thereafter.  The following is a breakdown of the unitsregistered and the units sold in the offering:

 
| **Amount  Registered** | ** ** | **Aggregate price of the  amount registered** | ** ** | **Amount Sold** | ** ** | **Aggregate price of the  amount sold to date** | ** ** |
|------------------------|------------|-----------------------------------------------|------------|-----------------|------------|-------------------------------------------------|------------|
| 27,500                 |       | $                                             | 27,500,000 |            | 27,500     |                                            | $          | 27,500,000 |   |
|                        |            |                                               |            |                 |            |                                                 |            |  |  |

 

On October 15, 2003, we released funds from escrow and issued 23,275units to our members.  On April 9, 2004,we closed the offering and stopped selling units registered under ourregistration statement.  During theoffering we sold 27,500 units and received aggregate offering proceeds of$27,500,000.  We sold the units withoutthe assistance of an underwriter to local investors in the community.  When we released funds from escrow, we nettedour offering expenses against the aggregate subscription proceeds.  No offering expenses were paid to relatedparties.

 

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The following table describes our use of ournet offering proceeds as of September 30, 2004:

 

| TOTAL PLANT CONSTRUCTION COST: |   | $      | 22,927,030 |   |
|--------------------------------|--------|--------|------------|--------|
|                           |   |   |       |   |
| LAND AND SITE DEVELOPMENT:     |   | $      | 2,508,067  |   |
|                           |   |   |       |   |
| ADMINISTRATION BUILDING        |   | $      | 201,098    |   |
|                           |   |   |       |   |
| OTHER COSTS(1):                |   | $      | 964,829    |   |
|                           |   |   |       |   |
| CORN HEDGING:                  |   | $      | 300,000    |   |
|                           |   |   |       |   |
| FINANCING COSTS:               |   | $      | 492,359    |   |
|                           |   |   |       |   |
| BUILDER’S RISK:           |   | $      | 106,617    |   |
|                           |   |   |       |   |
| TOTAL:                         |   | $      | 27,500,000 |   |

 

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(1)  Other costs consist of board fees, projectmanager fees, investor unit redemptions, line of credit payoff, professionalfees and other general and administrative costs.  No single expenditure in any of the foregoingcost categories exceeded $100,000.

 

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

 

None.

 

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

 

None.

 

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

 

None.

 

**Item 6.****           Exhibits          **Thefollowing exhibits are included herein:

 
| **Exhibit  No.** | ** ** | **Exhibit**                                    |
|------------------|------------|------------------------------------------------|
| 10.1             |       | Ethanol Fuel Marketing Agreement               |
|             |       |                                           |
| 10.2             |       | Distiller’s Grain Marketing Agreement     |
|             |       |                                           |
| 10.3             |       | Facility Use Agreement                         |
|             |       |                                           |
| 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. |

 

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**SIGNATURES**

 

In accordance with the requirements of theExchange Act, the registrant caused this report to be signed on its behalf bythe undersigned, thereunto duly authorized.

 

 
|   |              | UNITED WISCONSIN GRAIN PRODUCERS, LLC                   |
|--------|-------------------|---------------------------------------------------------|
|   |              |                                                    |
|   |              |                                                    |
| Date:  | November 15, 2004 |                                                    | /s/ Kevin M. Roche |
|   |              |                                                    | Kevin M. Roche |
|   |              |                                                    | President  (Principal Executive Officer) |
|   |              |                                                    |   |
|   |              |                                                    |   |
| Date:  | November 15, 2004 |                                                    | /s/ Robert J. Miller |
|   |              | Robert J. Miller                                        |
|   |              | Treasurer  (Principal Financial and Accounting Officer) |

 

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