**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-QSB**

 

| **ý**                                                                                                                                                                                                         | **Quarterly  report under Section 13 or 15(d) of the Securities Exchange Act of 1934.** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------|
|                                                                                                                                                                                                               |                                                                                    |
| **For  the quarterly period ended June 30, 2003**                                                                                                                                                                  |
|                                                                                                                                                                                                               |                                                                                    |
| **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**                                                                                                                                                                              |

 

**UNITED WISCONSIN 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.) |
|                                                             |   |                                  |
| **PO  BOX 247 Richland Street, Friesland, Wisconsin 53935**      |
| (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 90days.                 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 June 30, 2003, there were 1,280 units outstanding.

 

Transitional Small Business Disclosure Format (Checkone):              o Yes              ý  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.** | **Changes in Securities** |
|                                  | **Item 3.** | **Defaults Upon Senior Securities** |
|                                  | **Item 4.** | **Submission of Matters to a Vote of Security  Holders** |
|                                  | **Item 5.** | **Other Information** |
|                                  | **Item 6.** | **Exhibits and Reports on Form 8-K** |
|                                  |
| **SIGNATURES**                        |

 

2

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

 

**Item 1.  Financial Statements**

 

**UNITED WISCONSIN GRAIN PRODUCERS, LLC**

 

Table of Contents

 
| **FINANCIAL STATEMENTS** |
|--------------------------|
|                     | Balance Sheet (Unaudited) |
|                     | Statements of Operations (Unaudited) |
|                     | Statements of Cash Flows (Unaudited) |
|                     | Notes to Unaudited Financial Statements |

 

3

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**UNITED WISCONSIN GRAIN PRODUCERS, LLC**

**(A DEVELOPMENT STAGE COMPANY)**

**BALANCESHEET**

 
|                                                                 |   | **June 30, 2003** |    | **December 31, 2002** |   |
|----------------------------------------------------------------------|--------|-------------------|---------|-----------------------|--------|
|                                                                 |   | **(Unaudited)**   |    | **(Audited)**         |   |
| **ASSETS**                                                           |   |              |    |                  |   |
| **Current Assets**                                                   |   |              |    |                  |   |
| Cash                                                                 |   | $                 | 19,975  |                  | $      | 163,779 |   |
| Accounts  receivable                                                 |   | 6,067             |    | —                |   |
| Prepaid expenses                                                     |   | 11,495            |    | 8,125                 |   |
| Total current  assets                                                |   | 37,537            |    | 171,904               |   |
|                                                                 |   |              |    |                  |   |
| **Equipment**                                                        |   |              |    |                  |   |
| Equipment                                                            |   | 6,871             |    | 1,240                 |   |
| Less accumulated  depreciation                                       |   | 440               |    | 41                    |   |
| Net equipment                                                        |   | 6,431             |    | 1,199                 |   |
|                                                                 |   |              |    |                  |   |
| **Other Assets**                                                     |   |              |    |                  |   |
| Deposits on land                                                     |   | 13,000            |    | 13,000                |   |
| Deferred offering  costs                                             |   | 231,438           |    | 165,134               |   |
| Total other assets                                                   |   | 244,438           |    | 178,134               |   |
|                                                                 |   |              |    |                  |   |
| **Total Assets**                                                     |   | $                 | 288,406 |                  | $      | 351,237 |   |
|                                                                 |   |              |    |                  |   |
| **LIABILITIES AND EQUITY**                                           |   |              |    |                  |   |
| **Current Liabilities**                                              |   |              |    |                  |   |
| Accounts payable                                                     |   | $                 | 234,374 |                  | $      | 74,171 |   |
| Other payables                                                       |   | 15,000            |    | 15,000                |   |
| Note payables                                                        |   | 82,000            |    | —                |   |
| Accrued  liabilities                                                 |   | 4,068             |    | —                |   |
| Current maturities  of long-term debt                                |   | 1,641             |    | —                |   |
| Total current  liabilities                                           |   | 337,083           |    | 89,171                |   |
|                                                                 |   |              |    |                  |   |
| **Commitments and Contingencies**                                    |   |              |    |                  |   |
|                                                                 |   |              |    |                  |   |
| **Long-Term Debt, less current  maturities**                         |   | 3,163             |    | —                |   |
|                                                                 |   |              |    |                  |   |
| **Members’ Equity (Deficit)**                                   |   |              |    |                  |   |
| Member  contributions, net of costs related to capital contributions |   | 543,905           |    | 543,905               |   |
| Deficit  accumulated during development stage                        |   | (595,745          | )       | (281,839              | )      |
| Total members’  equity (Deficit)                                |   | (51,840           | )  | 262,066               |   |
|                                                                 |   |              |    |                  |   |
| **Total Liabilities and  Members’ Equity (deficit)**            |   | $                 | 288,406 |                  | $      | 351,237 |   |

 

Notes to Financial Statements are an integralpart of this Statement

 

4

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**UNITEDWISCONSIN GRAIN PRODUCERS, LLC**

**(A DEVELOPMENT STAGE COMPANY)**

**STATEMENTS OF OPERATIONS**

 
|                                                                             |         | **Quarter Ended  June 30,  2003** |        | **Quarter Ended  June 30,  2002** |       | **From  Inception (November 2, 2001) to  June 30, 2003** |    |
|----------------------------------------------------------------------------------|--------------|-----------------------------------|-------------|-----------------------------------|------------|----------------------------------------------------------|---------|
|                                                                             |         | **(Unaudited)**                   |        | **(Unaudited)**                   |       | **(Unaudited)**                                          |    |
|                                                                             |         |                              | ** **  |                              |       |                                                     |    |
| **Revenues**                                                                     |         | **$**                             | **—**  | ** **                        | $          | —                                                   |    | $ | — |   |
|                                                                             |         |                              | ** **  |                              |       |                                                     |    |
| **Operating Expenses**                                                           |         |                              | ** **  |                              |       |                                                     |    |
| Project  coordinator                                                             |         | **9,011**                         | ** **  | 1,707                             |       | 62.252                                                   |    |
| Organization costs                                                               |         | **5,965**                         | ** **  | 8,600                             |       | 54,530                                                   |    |
| Consulting and  professional fees                                                |         | **39,017**                        | ** **  | 51,856                            |       | 238,308                                                  |    |
| Administrative                                                                   |         | **147,722**                       | ** **  | 5,740                             |       | 266,486                                                  |    |
| Totals                                                                           |         | **201,715**                       | ** **  | 67,903                            |       | 621,576                                                  |    |
|                                                                             |         |                              | ** **  |                              |       |                                                     |    |
| **Operating Loss**                                                               |         | **(201,715**                      | **)**       | (67,903                           | )          | (621,576                                                 | )       |
|                                                                             |         |                              | ** **  |                              |       |                                                     |    |
| **Other Income (Expense)**                                                       |         |                              | ** **  |                              |       |                                                     |    |
| Interest income                                                                  |         | —                            |        | 1,146                             | ** ** | 4,377                                                    |    |
| Interest expense                                                                 |         | **(221**                          | **)**       | —                            |       | (221                                                     | )       |
| Miscellaneous                                                                    |         | **4,650**                         | ** **  | 1,000                             |       | 21,675                                                   |    |
| Total other income                                                               |         | **4,429**                         | ** **  | 2,146                             |       | 25,831                                                   |    |
|                                                                             |         |                              | ** **  |                              |       |                                                     |    |
|                                                                             | **Net Loss** |                              | **$**       | **(197,286**                      | **)**      | $                                                        | (65,757 | ) | $ | (595,745 | ) |
|                                                                             |         |                              | ** **  |                              |       |                                                     |    |
| **Net Loss Per Unit**                                                            |         |                              | ** **  |                              |       |                                                     |    |
| (1,280,  1,440 and 1,316 weighted average units  outstanding, respectively) |         | **$**                             | **(154.13** | **)**                             | $          | (45.66                                                   | )       | $ | (452.69 | ) |
|                                                                                  |              |                                   |             |                                   |            |                                                          |         |  |  |  |  |

 

Notes to Financial Statements are an integralpart of this Statement

 

5

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**UNITED WISCONSIN GRAIN PRODUCERS, LLC**

**(A DEVELOPMENT STAGE COMPANY)**

**STATEMENTS OF OPERATIONS**

 
|                                                              |   | **Six Months Ended  June 30,  2003** |         | **Six Months Ended  June 30,  2002** |   |
|-------------------------------------------------------------------|--------|--------------------------------------|--------------|--------------------------------------|--------|
|                                                              |   | **(Unaudited)**                      |         | **(Unaudited)**                      |   |
|                                                              |   |                                 | ** **   |                                 |   |
| **Revenues**                                                      |   | **$**                                | **—**   | ** **                           | $      | — |   |
|                                                              |   |                                 | ** **   |                                 |   |
| **Operating Expenses**                                            |   |                                 | ** **   |                                 |   |
| Project coordinator                                               |   | **16,001**                           | ** **   | 16,707                               |   |
| Organization costs                                                |   | **15,806**                           | ** **   | 17,970                               |   |
| Consulting and  professional fees                                 |   | **61,147**                           | ** **   | 88,679                               |   |
| Administrative                                                    |   | **225,808**                          | ** **   | 16,909                               |   |
| Totals                                                            |   | **318,762**                          | ** **   | 140,265                              |   |
|                                                              |   |                                 | ** **   |                                 |   |
| **Operating Loss**                                                |   | **(318,762**                         | **)**        | (140,265                             | )      |
|                                                              |   |                                 | ** **   |                                 |   |
| **Other Income (Expense)**                                        |   |                                 | ** **   |                                 |   |
| Interest income                                                   |   | **177**                              | ** **   | 2,599                                |   |
| Interest expense                                                  |   | **(221**                             | **)**        | —                               |   |
| Miscellaneous                                                     |   | **4,900**                            | ** **   | 1,000                                |   |
| Total other income                                                |   | **4,856**                            | ** **   | 3,599                                |   |
|                                                              |   |                                 | ** **   |                                 |   |
| **Net Loss**                                                      |   | **$**                                | **(313,906** | **)**                                | $      | (136,666 | ) |
|                                                              |   |                                 | ** **   |                                 |   |
| **Net Loss Per Unit**                                             |   |                                 | ** **   |                                 |   |
| (1,280 and 962  weighted average units outstanding, respectively) |   | **$**                                | **(245.24**  | **)**                                | $      | (142.06 | ) |

 

Notes to Financial Statements are an integralpart of this Statement

 

6

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**UNITED WISCONSIN GRAIN PRODUCERS, LLC**

**(A DEVELOPMENT STAGE COMPANY)**

**STATEMENTSOF CASH FLOWS (UNAUDITED)**

 
|                                                               |   | **Six Months Ended  June 30,  2003** |         | **Six Months Ended  June 30,  2002** |       | **From  Inception (November 2, 2001) to  June 30, 2003** |   |
|--------------------------------------------------------------------|--------|--------------------------------------|--------------|--------------------------------------|------------|----------------------------------------------------------|--------|
|                                                               |   | **(Unaudited)**                      |         | **(Unaudited)**                      |       | **(Unaudited)**                                          |   |
| **Cash Flows from Operating  Activities**                          |   |                                 | ** **   |                                 |       |                                                     |   |
| Net loss                                                           |   | **$**                                | **(313,906** | **)**                                | $          | (136,666                                                 | )      | $ | (595,745 | ) |
| Adjustments to  reconcile net loss to net cash used in operations: |   |                                 | ** **   |                                 |       |                                                     |   |
| Depreciation                                                       |   | **399**                              | ** **   | —                               |       | 440                                                      |   |
| Accounts  receivable                                               |   | **(6,067**                           | **)**        | —                               |       | (6,067                                                   | )      |
| Prepaid expenses                                                   |   | **(3,370**                           | **)**        | (5,000                               | )          | (11,495                                                  | )      |
| Other payable                                                      |   | —                               |         | 5,500                                | ** ** | —                                                   |   |
| Accounts payable                                                   |   | **140,586**                          | ** **   | 85                                   |       | 190,300                                                  |   |
| Accrued  liabilities                                               |   | **4,068**                            | ** **   | —                               |       | 4,068                                                    |   |
| Net cash used in  operating activities                             |   | **(178,290**                         | **)**        | (136,081                             | )          | (418,499                                                 | )      |
|                                                               |   |                                 | ** **   |                                 |       |                                                     |   |
| **Cash Flows from Investing  Activities**                          |   |                                 | ** **   |                                 |       |                                                     |   |
| Capital  expenditures                                              |   | —                               | ** **   | —                               |       | (1,240                                                   | )      |
| Deposits on land                                                   |   | —                               | ** **   | (5,113                               | )          | (13,000                                                  | )      |
| Net cash used in  investing activities                             |   | —                               |         | (5,113                               | )          | (14,240                                                  | )      |
|                                                               |   |                                 | ** **   |                                 |       |                                                     |   |
| **Cash Flows from Financing  Activities**                          |   |                                 | ** **   |                                 |       |                                                     |   |
| Member  contributions                                              |   | —                               | ** **   | 485,000                              |       | 602,500                                                  |   |
| Proceeds from  notes payable                                       |   | **82,000**                           | ** **   | —                               |       | 82,000                                                   |   |
| Payments for  long-term debt                                       |   | **(827**                             | **)**        | —                               |       | (827                                                     | )      |
| Payments for costs  of raising capital                             |   | —                               | ** **   | (23,595                              | )          | (23,595                                                  | )      |
| Payments for  deferred offering costs                              |   | **(46,687**                          | **)**        | (30,050                              | )          | (187,364                                                 | )      |
| Payments for  membership unit redemption                           |   | —                               |         | —                               |       | (20,000                                                  | )      |
| Net cash from  financing activities                                |   | **34,486**                           | ** **   | 431,355                              |       | 452,714                                                  |   |
| **Net (Decrease) Increase in  Cash**                               |   | **(143,804**                         | **)**        | 290,161                              |       | 19,975                                                   |   |
|                                                               |   |                                 | ** **   |                                 |       |                                                     |   |
| **Cash – Beginning of Period**                                |   | **163,779**                          | ** **   | 72,756                               |       | —                                                   |   |
|                                                               |   |                                 | ** **   |                                 |       |                                                     |   |
| **Cash – End of Period**                                      |   | **$**                                | **19,975**   | ** **                           | $          | 362,917                                                  |   | $ | 19,975 |   |

 

Notes to Financial Statement are an integralpart of this Statement.

 

- Continued on Next Page -

 

7

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|                                                         |   | **Six Months Ended  June 30, 2003** |   | **Six Months Ended  June 30, 2002** |   | **From  Inception to  June 30, 2003** |   |
|--------------------------------------------------------------|--------|-------------------------------------|--------|-------------------------------------|--------|---------------------------------------|--------|
|                                                         |   |                                |   |                                |   |                                  |   |
| **Noncash Investing and  Financing Activities**              |   |                                |   |                                |   |                                  |   |
| Deferred offering  costs in accounts payable                 |   | $                                   | 44,074 |                                | $      | —                                |   | $ | 44,074 |   |
|                                                         |   |                                |   |                                |   |                                  |   |
| Capital  expenditures in long-term debt                      |   | $                                   | 5,631  |                                | $      | —                                |   | $ | 5,631 |   |
|                                                         |   |                                |   |                                |   |                                  |   |
| Membership units  redeemed through issuance of other payable |   | $                                   | — |                                | $      | —                                |   | $ | 15,000 |   |

 

Notes to Financial statements are an integral part of this Statement

 

8

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**UNITED WISCONSIN GRAINPRODUCERS, LLC**

**(A DEVELOPMENT STAGE COMPANY)**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

 

The statements included herein have beenprepared by the company, without audit, pursuant to the rules and regulationsof the Securities and Exchange Commission, and reflect all adjustments whichare, in the opinion of management, necessary to a fair presentation of thefinancial statements for the interim period, on a basis consistent with theannual audited financial statements. The adjustments made to these statements consist only of normalrecurring adjustments.  These financialstatements should be read in conjunction with the financial statements and thesummary of significant accounting policies and notes thereto included in thecompany’s registration statement on Form SB-2, as amended (SEC registration No.33-92188).

 

**1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

 

*Nature of Business*

 

The Company was organized to pool investors, some of whom intend toprovide a corn supply, for a 40 million gallon ethanol plant to be located nearthe town of Friesland in the township of Randolph, Wisconsin, with distributionto upper Midwest states. In addition, the Company intends to produce and selldistillers dried grains and carbon dioxide as co-products of ethanolproduction. Construction is anticipated to begin in 2003. As of June 30, 2003,the Company is in the development stage with its efforts being principallydevoted to organizational and project feasibility activities.

 

*Fiscal ReportingPeriod*

 

The Company has adopted a fiscal year endingDecember 31 for reporting financial operations.

 

*Accounting Estimates*

 

Management uses estimates andassumptions in preparing these financial statements in accordance withgenerally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assetsand liabilities, the disclosure of contingent assets and liabilities, and thereported revenues and expenses.  Actualresults could differ from those estimates.

 

Significant estimates includethe deferral of expenditures for land development and offering costs which aredependent upon successful financing and project development, as discussedbelow.  It is at least reasonablypossible that these estimates may change in the near term.

 

*Cash*

 

At times throughout the year,the Company’s cash balances may exceed amounts insured by the Federal DepositInsurance Corporation.

 

*Equipment*

 

Equipment is stated at thelower of cost or estimated fair value. Depreciation is provided by use of the straight-line method over theirestimated useful lives of 5 years.  Maintenanceand repairs are expensed as incurred; major improvements and betterments arecapitalized.

 

*Fair Value of Financial Instruments*

 

The fair value of the Company’s cash approximates its carryingvalue.  It is not currently practicableto estimate the fair value of the long-term debt and note payable since theseagreements contain unique terms, conditions, and restrictions, which werenegotiated at arm’s length.

 

9

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*Deposits on Land*

 

## TheCompany has made deposits on land options for 59 or 115 acres for its facility.If the Company purchases these parcels, the deposits will be applied to thepayment of $236,000 or $1,000,000, respectively.  If these options expire or management does not intend to executethe options, the deposits will be written off when such a determination ismade.  These costs have been stated atthe lower of cost or estimated fair value. At June 30, 2003, the total of all deposits on land is $13,000.

 

## *Deferred Offering Costs*

 

The Company defersthe costs incurred to raise equity financing until that financing occurs.  At such time that the issuance of new equityunits occurs, these costs will be netted against the proceeds received; or ifthe financing does not occur, they will be expensed.

 

*Grants*

 

The Company willrecognize grant income as other income for reimbursement of expenses incurredupon complying with the conditions of the grant.  For reimbursements of capital expenditures, the grants arerecognized as a reduction of the basis of the asset upon complying with theconditions of the grant.

 

*IncomeTaxes*

 

The Company is treated as a partnership forfederal and state income tax purposes and is generally not subject to eitherfederal or state income taxes.  Instead,its earnings and losses are included in the income tax returns of the members.Therefore, no provision or liability for federal or state income taxes has beenincluded in these financial statements.

 

*Reclassification*

 

Certain amounts in the Statement ofOperations for 2002 and inception to date have been reclassified to conform to2003 classifications.  Thesereclassifications had no effect on net loss as previously reported.

 

**2.  DEVELOPMENT STAGE ENTERPRISE**

 

The Company was formed on November 2, 2001 tohave a perpetual life.  The Company wasinitially capitalized by contributions from its founding members and later byadditional seed capital investors. The ten founders contributed an aggregate of$117,500 for 235 units.  Forty-sixmembers, including nine of the founders, contributed an additional aggregate of$485,000 for 485 units that were issued in January 2002.

 

Effective April 1,2002, the 720 units purchased by the founding members and seed capitalinvestors were split on a two-for-one basis resulting in 1,440 shares outstanding.

 

Effective October16, 2002, the Company redeemed a total of 160 units from two board members for$35,000, of which $20,000 has been paid by the Company.  The remaining $15,000, which is included inother payables, will be paid when the Company obtains all debt financing forthe project.  In the event of theCompany’s liquidation or dissolution prior to obtaining the debt financing forthe project, this payable will become subordinate to the rights of theCompany’s members.  At June 30, 2003, theCompany has 1,280 units outstanding.

 

The weighted averageunits and loss per unit computations have been adjusted retroactively toaccount for the aforementioned split.

 

**3.  MEMBERS’ EQUITY**

 

As specified in the Company’s operatingagreement, the Company will have one class of membership units. The Company isauthorized to issue 28,000 membership units. The Company has filed aRegistration Statement on Form SB-2 with the Securities and Exchange Commission(SEC).  As of May 14, 2003, theRegistration Statement has been declared effective.  No membership units have been sold other than the units describedin Note 2.  The offering will be for amaximum of 27,500 units which will be available for sale at $1,000 perunit.  Should the Company not raise theminimum of $19,250,000 through the offering, the capital raised through theoffering will be returned to the respective investors.  If the

 

10

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offering is highly effective, the Companywill have to obtain the approval of its members to issue units in excess of28,000 units the Company is authorized to issue.   As of August 12, 2003, approximately 14,300 units have beensubscribed.

 

Income and lossesare allocated to all members based upon their respective percentage units held.

 

**4.  RELATED PARTY TRANSACTIONS**

 

As of June 30, 2003,the Company had incurred $19,375 in project coordinator fees, $8,375 of whichis included in accounts payable, to three current members and one formermember.

 

As of June 30, 2003,the Company has also incurred $33,823 in director fees and related expense, ofwhich is all included in accounts payable, to six current members.

 

**5.  COMMITMENTS AND CONTINGENCIES**

 

If the Companyraises the maximum amount of equity financing, they anticipate raisingapproximately $29.3 million in senior debt financing with specific terms to benegotiated.  In addition to the debtfinancing, the Company is seeking approximately $0.6 million of stategovernment grants.

 

The Company hassigned a letter of intent with an engineer and general contractor for theproject.  The letter of intentstipulates that the engineer and general contractor will be engaged toconstruct a plant, with costs estimated at $45.3 million.  The Company intends to begin construction in2003 and anticipates total project costs to approximate $57.4 million.

 

In February 2002,the Company executed a master environmental services agreement with anorganization that will provide environmental consulting, engineering, andanalytical services.  The Company willsubmit work authorization requests on a project-by-project basis.  As of June 30, 2003, the Company hasincurred approximately $197,000 in costs related to this agreement that areincluded in professional fees, of which approximately $40,801 is included inaccounts payable at June 30, 2003.

 

In March 2002, theCompany executed a contract with a railroad engineering firm in order toprovide a conceptual, schematic railroad layout for their plant.  The estimated commitment for railroadengineering is approximately $12,500. As of June 30, 2003, the Company has incurred $11,530 of these costs.

 

In April 2002, theCompany executed a consulting agreement with a firm that is engaged to assistthe Company in its equity marketing efforts and securing debt financing.  The Company paid the consulting firm amaximum of $3,000 per month, until the Company was legally authorized to sellits member units, at which time the fees increased to a maximum of $6,000 permonth.  In addition, if the Company isable to raise the necessary amount of equity and receive a binding commitmentfrom a prospective lender to provide the remaining financing, the Company willpay a one-time bonus of $75,000 to the consulting firm.  At June 30, 2003, the Company has incurredcosts of $33,081 relating to this agreement, of which $9,011 is included inaccounts payable.

 

In November 2002,the Company executed a contract with an energy management organization in orderto provide pipeline consulting services. The estimated commitment for this agreement is approximately$24,000.  As of June 30, 2003, theCompany has incurred $10,000 of these costs, of which $8,000 is included inaccounts payable.

 

In March 2003, theCompany executed a contract with an insurance consulting firm.  The estimated commitment for this agreementis $9,000.  As of June 30, 2003 theCompany has incurred $4,500 of these costs.

 

11

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In May 2003, theCompany executed a new revolving bank line of credit.  The new agreement permits the Company to borrow up to $220,000 atthe floating one-month LIBOR rate of interest plus 3%.  The borrowings on the line are due in May2004.  The line is secured by certainassets of the Company.  In addition, theline is guaranteed by members of the Board of Directors of the Company andtheir spouses.  As of June 30, 2003 theoutstanding balance was $82,000.

 

The Company is partyto an unasserted claim that it may have to defend.  The amount of liability, if any, from the unasserted claim cannotbe estimated, but management is of the opinion that the outcome of the claimwill not have a material impact on the Company’s financial position.  Nevertheless, due to uncertainties in thesettlement process, it is at least reasonably possible that management’s viewof the outcome may change in the near term.

 

The Company enteredan agreement in June 2003 with the railroad engineering firm to complete allrequired documentation requirements covering a Transportation EconomicAssistance grant. The TEA grant may fund up to fifty percent of the projectcosts relating to transportation improvements. The estimated commitment forthis agreement is approximately $20,950.

 

In June 2003, theCompany executed a consulting agreement with a firm that is engaged to assistthe Company in performing a Preliminary Road Design and assist with a CommunityDevelopment Block Grant Application. The estimated commitment for this agreement is $13,950.

 

**6.     SUBSEQUENT EVENT**

 

In July 2003, theCompany signed an agreement with an employee recruitment firm.  The Company will pay a fee based on apercentage of the first year of the employees’ salary.

 

12

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**Item2.    Management’s Discussion and Analysisand Plan of Operations**

 

This report contains forward-lookingstatements that involve future events, our future performance and our expectedfuture operations and actions.  In somecases you can identify forward-looking statements by the use of words such as“may,” “should,” “anticipate,” “believe,” “expect,” “will,” “plan,” “future,”“intend,” “could,” “estimate,” “predict,” “hope,” “potential,” “continue,” orthe negative of these terms or other similar expressions.  These forward-looking statements are onlyour predictions and involve numerous assumptions, risks and uncertainties.  Our actual results or actions may differmaterially from these forward-looking statements for many reasons, includingthe risks described in our Registration Statement on Form SB-2, as amended (SECRegistration No. 333-92188) and appearing elsewhere in this report.  We are not under any duty to update theforward-looking statements contained in this report.  We cannot guarantee future results, levels of activity,performance or achievements.  We cautionyou not to put undue reliance on any forward-looking statements, which speakonly as of the date of this report.  Youshould read this report and the documents that we reference in this report andhave filed as exhibits, completely and with the understanding that our actualfuture results may be materially different from what we currently expect.  We qualify all of our forward-lookingstatements by these cautionary statements.

 

**Overview**

 

We are a start-up company in the developmentstage.  We plan to build a corn-basedethanol plant that will produce ethanol, distillers grains and carbondioxide.  The ethanol plant is expectedto process approximately 15 million bushels of corn per year into 40 milliongallons of denatured fuel grade ethanol. We also intend to produce approximately 128,000 tons of dried distillersgrains and 126,000 tons of raw carbon dioxide gas on an annual basis.

 

We filed a Registration Statement on FormSB-2 (SEC Registration No. 333-92188), as amended, with the Securities and Exchange Commission,which became effective on May 14, 2003 (the “Registration Statement”) for aninitial public offering of our units (the “Offering”).  Depending on the results of the Offering, weexpect that the project will cost approximately $57,425,000.  We haveraised approximately $602,500 in seed capital, and plan to raise a minimum of$19,250,000 and a maximum of $27,500,000 in the Offering and secure the balancethrough federal, state and local grants and debt financing.  We will require a significant amount of debtfinancing to complete our project.  Theamount of debt financing that we need depends on the amount of equity we raisein the Offering and whether we receive all of our grant proceeds.  We have contacted and have had limiteddiscussions with prospective lenders, but have no agreement with any lender forthe debt financing that we need.  If wedo not secure the debt financing that we need, we will not be able to constructour proposed ethanol plant and may have to abandon our business.

 

We expect that it will take approximately 14to 16 months from the date we close the Offering to construct the ethanol plantand commence start-up operations.  We donot intend to hire a sales staff to market our products.  We plan to engage third party distributorsto market or purchase our ethanol and distillers grains.  We have entered into discussions with thirdparty distributors to market our ethanol, but have not executed any agreementwith any distributor for our ethanol or distillers grains.  We plan to pay commissions or fees todistributors to market our products.  Weintend to hire staff only to operate our ethanol plant and manage our business.

 

We entered into a letter of intent datedJanuary 10, 2003 with BOC Gases, a division of The BOC Group, Inc., regardingthe purchase of the raw carbon dioxide by-product.  By its terms, the letter of intent continued in effect until theearlier of the execution of a definitive agreement or May 1, 2003.  The letter of intent was not a bindingagreement and BOC has subsequently withdrawn from the letter of intent.  This means that BOC has indicated that itdoes not intend to execute a binding agreement with us to purchase our carbondioxide by-product.  Although we areseeking bids for the purchase of the carbon dioxide that we intend to produce,we currently have no plans at this time to sell our carbon dioxide to a thirdparty processor.

 

13

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**Plan of Operations to Start-upof the Ethanol Plant**

 

*Plan ofOperations Before Completion of Offering*

 

Before we complete theOffering, we expect to continue work principally on the preliminary design anddevelopment of our proposed plant, obtaining the necessary constructionpermits, identifying potential sources of debt financing and negotiating cornsupply, utility and other contracts. We plan to fund these initiativesprimarily through use of the $602,500 of seed capital we raised through ourNovember 2001 and January 2002, private placement and our available line ofcredit.

 

During thetime preceding completion of the Offering, we will identify and interviewsenior bank lenders to obtain needed debt financing. We intend to begin thisprocess by identifying regional lenders that are able to fund projects of thesize of our plant and inviting those lenders to inform us of their level ofinterest in offering us debt financing. We will then determine which of those lenders have the least restrictiverequirements of us and the terms that are most favorable to us.  We expect to have the senior bank loancommitment from a major financing institution or institutions in place atapproximately the closing of the Offering.

 

In the next3-6 months, we expect to exercise our real estate option for the 115 acreparcel to be used for our plant site.  Weanticipate the expiration of our real estate option on the alternative 59 acreparcel.

 

We arecurrently in the process of negotiating a design-build contract with Fagen,Inc.  We expect that the construction ofthe plant and rail spur will take 14 months from the time constructioncommences.  We expect that initialstart-up and operations of the plant will be under the general direction andguidance of Fagen, Inc. employees and our own personnel, who will have experiencein ethanol production or will have received on-site training provided by Fagen,Inc.  We further anticipate thatadditional on-site support will be provided by Fagen, Inc. for the first 30days of plant operation

 

We entered anagreement in June 2003 with Key Engineering Group, Ltd. (Key Engineering) tocomplete all required documentation requirements covering a TransportationEconomic Assistance (TEA) grant. The TEA grant may fund up to fifty percent ofthe project costs relating to transportation improvements. The estimatedcommitment for this agreement is approximately $20,950.

 

In June 2003,we also executed a consulting agreement with Key Engineering to assist theCompany in performing a Preliminary Road Design and assist with a CommunityDevelopment Block Grant Application. The estimated commitment for this agreement is $13,950.

 

We currently have onefull-time employee engaged in these preliminary matters.  We expect to hire a general manager duringthe next quarter.  We do not anticipatehiring any additional employees related to the ethanol plant operations untilapproximately six months before completion of plant construction andcommencement of plant operations. We believe that our existing funds willpermit us to continue our preliminary activities through May 14, 2004. If we areunable to close on the Offering by that time or otherwise obtain other funds,we may need to discontinue operations.

* *

*Plan of Operations After Completion of Offering andBefore Receipt of Debt Financing Funds*

 

We will not close on the Offering until we receivesubscriptions and proceeds for the minimum amount offered ($19,250,000) andsecure a written debt financing commitment for the debt financing that we needranging from a minimum of $29,315,000 to a maximum of $37,565,000 depending onthe level of equity raised and assuming grant funding of $610,000 is received.However, a written commitment only obligates the lender to lend us the debtfinancing that we need if we satisfy all the conditions of the commitment.These conditions may include, among others, the total cost of the project beingwithin a specified amount, the receipt of engineering and constructioncontracts acceptable to the lender, evidence of the issuance of all permits,acceptable insurance coverage and title commitment, the contribution of aspecified amount of equity and attorney opinions. At this time, we do not knowwhat business and financial conditions will be imposed on us. We may notsatisfy the loan commitment conditions before closing, or at all. If thisoccurs we may:

 

•                  commence construction of the plant using allor a part of the equity funds raised while we seek another debt financingsource;

 

•                  hold the equity funds raised indefinitely inan interest-bearing account while we seek another debt financing source; or

 

14

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•                  return the equity funds, if any, to investorswith accrued interest, after deducting the currently indeterminate expenses ofoperating our business or partially constructing the plant before we return thefunds.

 

*Plan of Operations After Completion of Offering andReceipt of Debt Financing*

 

We plan to build our plant in south central Wisconsin in the Columbia Countytownship of Randolph, just outside the village of Friesland. The site islocated within three miles of United States Interstate 90/94 and withinone-half mile of the state highway 33 and two miles east of state highway 73.The Union Pacific Railroad provides rail service to the site. We haveidentified other potential sites in south central Wisconsin. Our board ofdirectors reserves the right to select a different site in Wisconsin toconstruct the plant if it believes that doing so would be better for ourbusiness. We expect to commence construction, depending upon the season and theweather, approximately 60 days after we release funds from escrow.

 

Weexpect to complete construction of the proposed plant and commence operationsapproximately 14 to 16 months after construction commences. Our work willinclude completion of the final design and development of the plant. We alsoplan to negotiate and executed finalized contracts concerning the constructionof the plant, provision of necessary electricity, natural gas and other powersources and marketing agreements for ethanol and distillers grains. Assumingthe successful completion of the Offering and our obtaining necessary debtfinancing, we expect to have sufficient cash on hand to cover construction andrelated start-up costs necessary to make the plant operational. We estimatethat we will need approximately $57,425,000 to construct the plant and coverall capital expenditures necessary to complete the project, make the plantoperational and produce revenue.

 

The gross proceeds from the Offering will be$19,250,000 if the minimum amount of equity offered is sold, and $27,500,000 ifthe maximum number of units offered is sold, before deduction of expenses.  We estimate the offering expenses tobe approximately $256,000, and the net proceeds of the offering to be$18,994,000 if the minimum amount of units offered is sold, and $27,244,000 ifthe maximum number of units offered is sold.

 

Assuming the successful completion of the Offering and the related debtfinancing, we expect to have sufficient cash on hand to cover all costsassociated with construction of the project, including but not limited to, siteacquisition, utilities, construction, equipment acquisition and sitedevelopment. In addition, we expect to have enough cash to cover our coststhrough this period, including staffing, office costs, audit, legal, complianceand staff training.

 

We must obtain debt financing in order tocomplete construction on the ethanol Plant. The amount and nature of the debtfinancing that we are seeking is subject to the interest rates and the creditenvironment as well as other economic factors over which we have no control. Wehave no binding contracts or commitments with any bank, lender or financialinstitution for our debt financing, but we will not close on the Offering untilwe execute binding financing arrangements.

 

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|                                           |   | **Minimum** |           | **Maximum** |   |
|------------------------------------------------|--------|-------------|----------------|-------------|--------|
|                                           |   |        |           |        |   |
| **SOURCES OF FUNDS:**                          |   |        |           |        |   |
| Term Debt                                      |   | $           | 37,565,000     |        | $      | 29,315,000 |   |
| Cash and  Equity Equivalents                   |   | 19,250,000  |           | 27,500,000  |   |
| Grants                                         |   | 610,000     |           | 610,000     |   |
|                                           |   |        |           |        |   |
| **Total Sources of Funds**                     |   | **$**       | **57,425,000** |        | **$**  | **57,425,000** |   |
|                                           |   |        |           |        |   |
| **USES OF FUNDS**                              |   |        |           |        |   |
| **Land & Land Improvements**               |   |        |           |        |   |
| Site  Infrastructure and Development           |   | 4,900,000   |           | 4,900,000   |   |
| Land  Acquisition                              |   | 1,000,000   |           | 1,000,000   |   |
|                                           |   |        |           |        |   |
| **Total:**                                     |   | $           | 5,900,000      |        | $      | 5,900,000 |   |
|                                           |   |        |           |        |   |
| **Plant Construction**                         |   |        |           |        |   |
| Grain  Handling Facilities                     |   | 4,892,000   |           | 4,892,000   |   |
| Cooking  Facilities                            |   | 3,956,000   |           | 3,956,000   |   |
| Fermentation  Facilities                       |   | 5,387,000   |           | 5,387,000   |   |
| Distillation  Facilities                       |   | 5,147,000   |           | 5,147,000   |   |
| Liquid/Solids  Separation Facilities           |   | 3,628,000   |           | 3,628,000   |   |
| Evaporation  Facilities                        |   | 4,355,000   |           | 4,355,000   |   |
| Dryer  Facilities                              |   | 5,225,000   |           | 5,225,000   |   |
| Product  Storage Facilities                    |   | 2,935,000   |           | 2,935,000   |   |
| Plant  Utilities                               |   | 4,280,000   |           | 4,280,000   |   |
| General  Plant Facilities and Services         |   | 5,495,000   |           | 5,495,000   |   |
|                                           |   |        |           |        |   |
| **Total:**                                     |   | $           | 45,300,000     |        | $      | 45,300,000 |   |
|                                           |   |        |           |        |   |
| **Miscellaneous Costs**                        |   |        |           |        |   |
| Construction  Contingency                      |   | 500,000     |           | 600,000     |   |
| Construction  Insurance                        |   | 100,000     |           | 100,000     |   |
| Permits                                        |   | 240,000     |           | 240,000     |   |
| Offering  Expenses                             |   | 256,000     |           | 256,000     |   |
| Capitalized  Interest                          |   | 900,000     |           | 800,000     |   |
| Organizational  Costs                          |   | 569,000     |           | 569,000     |   |
|                                           |   |        |           |        |   |
| **Total:**                                     |   | $           | 2,565,000      |        | $      | 2,565,000 |   |
|                                           |   |        |           |        |   |
| **Start-Up Costs:**                            |   |        |           |        |   |
| Pre-production  period Costs                   |   | 660,000     |           | 660,000     |   |
| Inventory —  Corn                         |   | 960,000     |           | 960,000     |   |
| Inventory —  Chemicals, Yeast, Denaturant |   | 200,000     |           | 200,000     |   |
| Inventory —  Ethanol and Distillers Grain |   | 750,000     |           | 750,000     |   |
| Spare Parts                                    |   | 260,000     |           | 260,000     |   |
| Working  Capital                               |   | 400,000     |           | 400,000     |   |
|                                           |   |        |           |        |   |
| **Total:**                                     |   | $           | 3,230,000      |        | $      | 3,230,000 |   |
|                                           |   |        |           |        |   |
| **Financing Costs**                            |   |        |           |        |   |
| Lender Fee                                     |   | 360,000     |           | 360,000     |   |
| Legal Fees                                     |   | 20,000      |           | 20,000      |   |
| Commitment  Fees                               |   | 25,000      |           | 25,000      |   |
| Miscellaneous  Expenses                        |   | 25,000      |           | 25,000      |   |
|                                           |   |        |           |        |   |
| **Total:**                                     |   | $           | 430,000        |        | $      | 430,000 |   |
|                                           |   |        |           |        |   |
| **Total:**                                     |   | $           | 57,425,0000    |        | $      | 57,425,000 |   |

 

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**Liquidity and Capital Resources**

 

As of June 30,2003, we had cash of $19,975 and total assets of $288,406.  Our total assets include $231,438 ofdeferred offering costs relating to the Offering.  At the time we issue units in the Offering, these costs will benetted against the proceeds received, or if we do not complete the sale of anyunits in the Offering, they will be expensed. To date, we have raised a total of $602,500 in seed capital, which wehave used to fund our organization and operation to date.  In addition, in May 2003, we executed a newline of credit of up to $220,000, which we are using to fund ouroperations.  As of June 30, 2003, we hadcurrent liabilities of $337,083, which consists primarily of our accountspayable.  Since our inception throughJune 30, 2003, we have an accumulated deficit of $595,745.  Total members’ equity (deficit) as of June30, 2003 was ($51,840).  Since ourinception, we have generated no revenue from operations.  As of August 12, 2003, approximately 14,300units have been subscribed.

 

We are seeking to raise a minimum of$19,250,000 and a maximum of $27,500,000 in the Offering. Depending on theresults of the Offering, we believe that the project will cost a total ofapproximately $57,425,000.  We plan tofinance the project with seed capital, proceeds from the Offering, governmentgrants and debt financing.  The amountof debt financing that we need depends on the results of the Offering andwhether we receive all of our anticipated grant proceeds.  We expect the debt financing torange from a minimum of $29,315,000 to a maximum of $37,565,000 assuming weobtain grants totaling $610,000.  Wehave no commitments for the debt financing that we need or for any additionalgrants.  Completion of the proposedethanol plant depends on our ability to close on our debt financing and satisfyall conditions for breaking escrow and closing on the Offering.

 

We expect that our debt financing will be inthe form of a construction loan that will convert to a permanent loan when webegin operations.  We also expect thatthe loan will be secured by all of our real property and substantially all ofour other assets, including receivables and inventories.  In addition to repaying the principal, weplan to pay interest on the loan at market rate for loans to start-up ethanolprojects, plus annual fees for maintenance and observation of the loan by thelender.  We intend to capitalize all ofour interest until we commence start-up operation, which means that we will notmake any payment on the loan until we construct the ethanol plant and beginproducing ethanol.  If the projectsuffers delays, we may not be able to timely repay the loan.  If interest rates increase, we will have higherinterest payments, which could adversely affect our business. We currently haveno commitment for any financing.

 

**Administration**

 

We currently have an office staff comprisedof one full-time employee.  The staff isdedicated to coordinating our campaign to complete our equity drive and tocomplying with state and federal regulations in the process.  We are also dependent on our board ofdirectors to maintain our books and records. These individuals are ultimately responsible for complying with the rulesand 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 anticipate that we will havesignificant 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, weintend to hire approximately 34 additional employees. Approximately eleven ofour employees will be involved primarily in management and administration andthe remainder will be involved primarily in Plant operations.

 

The following table represents some of theanticipated positions within the Plant and the minimum number of individuals weintend to employ for each position:

 

17

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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     |   | 4              |
| Shift Supervisors      |   | 4              |
| Maintenance Supervisor |   | 1              |
| Maintenance  Craftsmen |   | 4              |
| Plant Operators        |   | 14             |
| **TOTAL**              |   | **34**         |

 

**Item3.    Controlsand Procedures**

 

(a)           Evaluation of Disclosure Controls andProcedures.

 

Our President (the principal executiveofficer), Kevin M. Roche, and our Treasurer (the principal financialofficer), Robert J. Miller, have reviewed our disclosure controls andprocedures as of the end of the period covered by this quarterly report.  Based upon this review, these officersbelieve that our disclosure controls and procedures are effective in ensuringthat material information related to us is made known to them by others withinthe Company.

 

(b)           Changes in Internal Control overFinancial Reporting.

 

Our President (the principal executiveofficer), Kevin M. Roche, and our Treasurer (the principal financial officer),Robert J. Miller, have evaluated any changes in our internal control overfinancial reporting that occurred as of the end of the period covered by thisquarterly report and there has been no change that has materially affected oris reasonably likely to materially affect our internal control over financialreporting.

 

**PART II****.                OTHER INFORMATION**

 

**Item1.    LegalProceedings**

 

None.

 

**Item2.    Changesin Securities**

 

The Securities and Exchange Commissiondeclared our Registration Statement on Form SB-2 (SEC Registration No. 333-92188) effective on May 14,2003.  We commenced our initial publicoffering of our units shortly thereafter. We have not closed the Offering and are continuing to offer the units. Ourofficers and directors are offering and selling the units on a best effortsbasis without the assistance of an underwriter.  We do not pay our officers or directors any compensation forservices related to the offer or sale of the units.

 

We registered a total of 27,500 units with anaggregate gross offering price of $27,500,000, or $1,000.00 per unit.  We intend to close the Offering on May 14,2004.  From the effective date of ourregistration statement on May 14, 2003 to August 12, 2003, we have receivedsubscriptions for approximately 14,300 units, or an aggregate of $14,300,000 ofsubscription payments in the form of cash and notes.  We are depositing all subscription payments from the Offering inan escrow account.  We have not yet metthe conditions to breaking escrow and therefore have not completed the sale ofany of the units subscribed.  We willnot break escrow and complete the sale of any of the units subscribed for untilwe satisfy the following conditions:

•                                 thesubscription proceeds in the escrow account equals or exceeds $19.25 million(exclusive of interest);

•                                 weobtain a written debt financing commitment sufficient to carry out our businessplan; and

 

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•                                 weelect, in writing, to terminate the escrow agreement.

 

For the period detailed by this report, wereceived $5,360,000in net offering proceeds, none of which proceeds have been used.

 

**Item3.    Defaults Upon Senior Securities**

 

None.

 

**Item4.    Submission of Matters to a Vote ofSecurity Holders**

 

None.

 

**Item5.    Other Information**

 

None.

 

**Item6.    Exhibits and Reports on Form 8-K**

 

(a)           Thefollowing exhibits are included herein:

 
| 31.1 |   | Certificate Pursuant to 17 CFR  240.15d-14(a) |
|------|--------|-----------------------------------------------|
| 31.2 |   | Certificate Pursuant to 17 CFR  240.15d-14(a) |
| 32.1 |   | Certificate Pursuant to 18 U.S.C. § 1350 |

 

(b)           Reportson Form 8-K.

 

None.

 

**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:  | August 14, 2003 |                                                    | /s/ Kevin  M. Roche |
|   |            | Kevin M. Roche                                          |
|   |            | President  (Principal Executive Officer)                |
|   |            |                                                    |
| Date:  | August 14, 2003 |                                                    | /s/ Robert J.  Miller |
|   |            | Robert J. Miller                                        |
|   |            | Treasurer  (Principal Financial and Accounting Officer) |

 

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