**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

**FORM 10-QSB**

 
| **ý**                                                                                                                                                                                                | ** ** | **Quarterly report under Section  13 or 15(d) of the Securities Exchange Act of 1934.** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------|
|                                                                                                                                                                                                      |       |                                                                                    |
| **For the  quarterly period ended March 31, 2005**                                                                                                                                                        |
|                                                                                                                                                                                                      |       |                                                                                    |
| **OR**                                                                                                                                                                                                    |
|                                                                                                                                                                                                      |       |                                                                                    |
| **o**                                                                                                                                                                                                     | ** ** | **Transition report under Section  13 or 15(d) of the Exchange Act.**                   |
|                                                                                                                                                                                                      |       |                                                                                    |
| **For the  transition period  from            to               .** |

 

**COMMISSION FILE NUMBER 000-50733**

 

**UNITED WISCONSIN GRAIN PRODUCERS,LLC**

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

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

 

**W1231Tessmann Road, Cambria, Wisconsin 53923**

(Address ofprincipal executive offices)

 

**(920)348-5016**

(Issuer’stelephone number)

 

Check whether the issuer:  (1) filed all reports required to befiled by Section 13 or 15(d) of the Exchange Act during the past 12 months (orfor such shorter period that the registrant was required to file such reports),and (2) has been subject to such filing requirements 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 May 9, 2005,there were 28,780 membership 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 or Plan of Operation** | ** ** |
| ** **                                                                  | ** ** |
| **PART II. OTHER INFORMATION**                                              | ** ** |
| ** **                                                                  | ** ** |
| **Item 1.  Legal Proceedings**                                              | ** ** |
| **Item 2.  Changes in Securities**                                          | ** ** |
| **Item 3.  Defaults Upon Senior Securities**                                | ** ** |
| **Item 4.  Submission of Matters to a Vote of Security Holders**            | ** ** |
| **Item 5.  Other Information**                                              | ** ** |
| **Item 6.  Exhibits**                                                       | ** ** |
| ** **                                                                  | ** ** |
| **SIGNATURES**                                                              | ** ** |

 

2

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**PART I. FINANCIAL INFORMATION**

 

**Item 1. Financial Statements**

 

**UNITEDWISCONSIN GRAIN PRODUCERS, LLC**

(A DevelopmentStage Company)

 

CondensedBalance Sheet

 
| ** **                        | ** ** | **March 31,  2005** | ** ** |
|-----------------------------------|------------|---------------------|------------|
| ** **                        | ** ** | **(Unaudited)**     | ** ** |
| **ASSETS**                        |       |                |       |
| **Current Assets**                |       |                |       |
| Cash and cash equivalents         |       | $                   | 716,982    |   |
| Derivative instruments            |       | 53,250              |       |
| Grants receivable                 |       | 244,398             |       |
| Prepaid expenses                  |       | 27,679              |       |
| Total current assets              |       | 1,042,309           |       |
|                              |       |                |       |
| **Property, Plant and Equipment** |       |                |       |
| Land                              |       | 1,029,909           |       |
| Office equipment                  |       | 146,160             |       |
| Administration building           |       | 411,158             |       |
| Construction in process           |       | 47,468,684          |       |
| Total property and equipment      |       | 49,055,911          |       |
| Less accumulated depreciation     |       | 13,877              |       |
| Net property, plant and equipment |       | 49,042,034          |       |
|                              |       |                |       |
| **Other Assets**                  |       |                |       |
| Debt issuance costs               |       | 539,324             |       |
| Total other assets                |       | 539,324             |       |
|                              |       |                |       |
| **Total Assets**                  |       | $                   | 50,623,667 |   |

 

Notes to Financial Statements are an integralpart of this Statement.

 

3

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**UNITEDWISCONSIN GRAIN PRODUCERS, LLC**

(A DevelopmentStage Company)

 

CondensedBalance Sheet

 
| ** **                                                           | ** ** | **March 31,  2005** | ** ** |
|----------------------------------------------------------------------|------------|---------------------|------------|
| ** **                                                           | ** ** | **(Unaudited)**     | ** ** |
| **LIABILITIES AND MEMBERS’ EQUITY**                             |       |                |       |
| **Current Liabilities**                                              |       |                |       |
| Current maturities of long-term debt                                 |       | $                   | 13,780     |   |
| Accounts payable                                                     |       | 446,416             |       |
| Construction accounts payable                                        |       | 4,164,764           |       |
| Construction loan                                                    |       | 19,784,954          |       |
| Accrued liabilities                                                  |       | 92,359              |       |
| Total current liabilities                                            |       | 24,502,273          |       |
|                                                                 |       |                |       |
| **Long-Term Debt, less current maturities**                          |       | 74,075              |       |
|                                                                 |       |                |       |
| **Commitments and Contingencies**                                    |       |                |       |
|                                                                 |       |                |       |
| **Members’ Equity**                                             |       |                |       |
| Member contributions, net of costs related  to capital contributions |       | 27,696,394          |       |
| Deficit accumulated during development  stage                        |       | (1,649,075          | )          |
| Total members’ equity                                           |       | 26,047,319          |       |
|                                                                 |       |                |       |
| **Total Liabilities and Members’ Equity**                       |       | $                   | 50,623,667 |   |

 

Notes to Financial Statements are an integralpart of this Statement.

 

4

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**UNITEDWISCONSIN GRAIN PRODUCERS, LLC**

(A Development StageCompany)

 

Condensed Statement ofOperations

 
| ** **                                                                                                   | ** ** | **Quarter Ended  March 31,  2005** | ** ** | **Quarter Ended  March 31,  2004** | ** ** | **From Inception  (November 2, 2001)  to March 31, 2005** | ** ** |
|--------------------------------------------------------------------------------------------------------------|------------|------------------------------------|------------|------------------------------------|------------|---------------------------------------------------------------------|------------|
| ** **                                                                                                   | ** ** | **(Unaudited)**                    | ** ** | **(Unaudited)**                    | ** ** | **(Unaudited)**                                                     | ** ** |
|                                                                                                         |       |                               |       |                               |       |                                                                |       |
| **Revenues**                                                                                                 |       | $                                  | —     |                               | $          | —                                                              |       | $ | — |   |
|                                                                                                         |       |                               |       |                               |       |                                                                |       |
| **Operating Expenses**                                                                                       |       |                               |       |                               |       |                                                                |       |
| Project coordinator                                                                                          |       | 52,248                             |       | 35,750                             |       | 289,621                                                             |       |
| Organization costs                                                                                           |       | —                             |       | —                             |       | 59,271                                                              |       |
| Consulting and professional fees                                                                             |       | 69,448                             |       | 75,214                             |       | 645,634                                                             |       |
| Administrative                                                                                               |       | 243,411                            |       | 61,734                             |       | 957,516                                                             |       |
| Totals                                                                                                       |       | 365,107                            |       | 172,698                            |       | 1,952,042                                                           |       |
|                                                                                                         |       |                               |       |                               |       |                                                                |       |
| **Operating Loss**                                                                                           |       | (365,107                           | )          | (172,698                           | )          | (1,952,042                                                          | )          |
|                                                                                                         |       |                               |       |                               |       |                                                                |       |
| **Other Income (Expense)**                                                                                   |       |                               |       |                               |       |                                                                |       |
| Grant income                                                                                                 |       | 75,651                             |       | 24,218                             |       | 241,500                                                             |       |
| Interest income                                                                                              |       | —                             |       | 37,902                             |       | 110,000                                                             |       |
| Interest expense                                                                                             |       | (38                                | )          | (788                               | )          | (5,707                                                              | )          |
| Gain (loss) on hedging                                                                                       |       | 164,545                            |       | —                             |       | (95,679                                                             | )          |
| Miscellaneous                                                                                                |       | —                             |       | —                             |       | 52,853                                                              |       |
| Total other income (expense), net                                                                            |       | 240,158                            |       | 61,332                             |       | 302,967                                                             |       |
|                                                                                                         |       |                               |       |                               |       |                                                                |       |
| **Net Loss**                                                                                                 |       | $                                  | (124,949   | )                                  | $          | (111,366                                                            | )          | $ | (1,649,075 | ) |
|                                                                                                         |       |                               |       |                               |       |                                                                |       |
| **Net Loss Per Unit**(28,780,  26,826** **and 12,973 weighted average units outstanding,  respectively) |       | $                                  | (4.34      | )                                  | $          | (4.15                                                               | )          | $ | (127.12 | ) |

 

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

 

5

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**UNITEDWISCONSIN GRAIN PRODUCERS, LLC**

(A Development Stage Company)

 

Condensed Statements of CashFlows

 
| ** **                                                                       | ** ** | **Quarter Ended  March 31,  2005** | ** ** | **Quarter Ended  March 31,  2004** | ** ** | **From Inception  (November 2, 2001)  to March 31, 2005** | ** ** |
|----------------------------------------------------------------------------------|------------|------------------------------------|------------|------------------------------------|------------|-----------------------------------------------------------|------------|
| ** **                                                                       | ** ** | **(Unaudited)**                    | ** ** | **(Unaudited)**                    | ** ** | **(Unaudited)**                                           | ** ** |
| **Cash Flows from Operating Activities**                                         |       |                               |       |                               |       |                                                      |       |
| Net loss                                                                         |       | $                                  | (124,949   | )                                  | $          | (111,366                                                  | )          | $ | (1,649,075 | ) |
| Adjustments to reconcile net loss to net cash  provided by (used in) operations: |       |                               |       |                               |       |                                                      |       |
| Depreciation                                                                     |       | 8,535                              |       | 352                                |       | 13,877                                                    |       |
| Unrealized loss on hedging                                                       |       | (164,545                           | )          | —                             |       | 95,679                                                    |       |
| Grant income                                                                     |       | (75,651                            | )          | (24,218                            | )          | (241,500                                                  | )          |
| Deposits on expired land options                                                 |       | —                             |       | 3,000                              |       | 3,000                                                     |       |
| Changes in assets and liabilities:                                               |       |                               |       |                               |       |                                                      |       |
| Derivative instruments                                                           |       | 276,071                            |       | —                             |       | (148,929                                                  | )          |
| Accounts receivable                                                              |       | 4,383                              |       | —                             |       |                                                      |       |
| Prepaid expenses                                                                 |       | (13,655                            | )          | 2,901                              |       | (27,679                                                   | )          |
| Accounts payable                                                                 |       | 327,477                            |       | 43,483                             |       | 437,652                                                   |       |
| Accrued liabilities                                                              |       | 76,217                             |       | (5,827                             | )          | 92,359                                                    |       |
| Net cash provided by (used in) operating activities                              |       | 313,883                            |       | (91,675                            | )          | (1,424,616                                                | )          |
|                                                                             |       |                               |       |                               |       |                                                      |       |
| **Cash Flows from Investing Activities**                                         |       |                               |       |                               |       |                                                      |       |
| Land acquisitions                                                                |       | —                             |       | (541                               | )          | (1,032,909                                                | )          |
| Capital expenditures                                                             |       | (33,486                            | )          | —                             |       | (372,385                                                  | )          |
| Payments for construction in process                                             |       | (419,767                           | )          | (6,653,400                         | )          | (25,063,744                                               | )          |
| Net cash used in investing activities                                            |       | (453,253                           | )          | (6,653,941                         | )          | (26,469,038                                               | )          |
|                                                                             |       |                               |       |                               |       |                                                      |       |
| **Cash Flows from Financing Activities**                                         |       |                               |       |                               |       |                                                      |       |
| Member contributions                                                             |       | —                             |       | 1,914,000                          |       | 28,102,500                                                |       |
| Proceeds from grants for operating expenses                                      |       | 67,133                             |       | 11,687                             |       | 202,198                                                   |       |
| Proceeds from grants for capital  expenditures                                   |       | 263,563                            |       | —                             |       | 306,206                                                   |       |
| Proceeds from construction loan                                                  |       | 531,940                            |       | —                             |       | 940,174                                                   |       |
| Payments on short-term debt                                                      |       | —                             |       | (20,343                            | )          | —                                                    |       |
| Payments for long term debt                                                      |       | (442                               | )          | (414                               | )          | (3,776                                                    | )          |
| Payments for debt issuance costs                                                 |       | (14,910                            | )          | (423,287                           | )          | (530,560                                                  | )          |
| Payments for costs of raising capital                                            |       | —                             |       |                               |       | (371,106                                                  | )          |
| Payments for membership unit redemption                                          |       | —                             |       | (15,000                            | )          | (35,000                                                   | )          |
| Net cash provided by financing activities                                        |       | 847,284                            |       | 1,466,643                          |       | 28,610,636                                                |       |
| ** **                                                                       |       |                               |       |                               |       |                                                      |       |
| **Net Increase (Decrease) in Cash**                                              |       | 707,914                            |       | (5,278,973                         | )          | 716,982                                                   |       |
| ** **                                                                       |       |                               |       |                               |       |                                                      |       |
| **Cash and Cash Equivalents – Beginning of  Period**                        |       | 9,068                              |       | 20,150,071                         |       | —                                                    |       |
|                                                                             |       |                               |       |                               |       |                                                      |       |
| **Cash and Cash Equivalents– End of Period**                                |       | $                                  | 716,982    |                               | $          | 14,871,098                                                |       | $ | 716,982 |   |

 

Notes to Financial Statements are an integralpart of this Statement.

 

6

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**UNITEDWISCONSIN GRAIN PRODUCERS, LLC**

(A Development StateCompany)

 

Condensed Statements of CashFlows

 
| ** **                                                                    | ** ** | **Quarter Ended  March 31  2005** | ** ** | **Quarter Ended  March 31,  2004** | ** ** | **From Inception  (November 2, 2001)  to March 31, 2005** | ** ** |
|-------------------------------------------------------------------------------|------------|-----------------------------------|------------|------------------------------------|------------|-----------------------------------------------------------|------------|
| ** **                                                                    | ** ** | **(Unaudited)**                   | ** ** | **(Unaudited)**                    | ** ** | **(Unaudited)**                                           | ** ** |
| **Supplemental Cash Flow Information**                                        |       |                              |       |                               |       |                                                      |       |
|                                                                          |       |                              |       |                               |       |                                                      |       |
| Cash paid during the year for:                                                |       |                              |       |                               |       |                                                      |       |
| Interest                                                                      |       | $                                 | 38         |                               | $          | 788                                                       |       | $ | 5,707 |   |
|                                                                          |       |                              |       |                               |       |                                                      |       |
| **Noncash Investing and Financing Activities**                                |       |                              |       |                               |       |                                                      |       |
|                                                                          |       |                              |       |                               |       |                                                      |       |
| Capital expenditures and construction in  process funded by long-term debt    |       | $                                 | —     |                               | $          | —                                                    |       | $ | 91,631 |   |
|                                                                          |       |                              |       |                               |       |                                                      |       |
| Capital expenditures and construction in  process funded by construction loan |       | $                                 | 4,916,471  |                               | $          | 92,345                                                    |       | $ | 18,843,780 |   |
|                                                                          |       |                              |       |                               |       |                                                      |       |
| Operating  expenses funded by construction loan                               |       | $                                 | 1,200      |                               | $          | —                                                    |       | $ | 2,200 |   |
|                                                                          |       |                              |       |                               |       |                                                      |       |
| Construction  in process in grants receivable                                 |       | $                                 | 205,096    |                               | $          | —                                                    |       | $ | 205,096 |   |
|                                                                          |       |                              |       |                               |       |                                                      |       |
| Construction  in process in accounts payable                                  |       | $                                 | 4,164,764  |                               | $          | 3,487,559                                                 |       | $ | 4,164,764 |   |
|                                                                          |       |                              |       |                               |       |                                                      |       |
| Debt  issuance costs in accounts payable                                      |       | $                                 | 671        |                               | $          | 43,070                                                    |       | $ | 671 |   |
|                                                                          |       |                              |       |                               |       |                                                      |       |
| Deposits  applied to purchased land                                           |       | $                                 | —     |                               | $          | —                                                    |       | $ | 10,000 |   |

 

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

 

7

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**UNITEDWISCONSIN GRAIN PRODUCERS, LLC**

(A DevelopmentStage Company)

 

Notes toFinancial Statements

 

March 31, 2005and 2004

 

**1.  SUMMARY OF SIGNIFICANTACCOUNTING POLICIES**

 

The accompanying unaudited condensed financial statements have beenprepared pursuant to the rules and regulations of the Securities and ExchangeCommission.  Certain information and footnote disclosures normallyincluded in annual financial statements prepared in accordance with accountingprinciples generally accepted in the United States of America have beencondensed or omitted as permitted by such rules and regulations.  Thesefinancial statements and related notes should be read in conjunction with thefinancial statements and notes thereto included in the Company’s auditedfinancial statements for the year ended December 31, 2004, contained in theCompany’s annual report on Form 10-KSB for 2004.

 

In the opinion of management, the interim condensed financialstatements reflect all adjustments considered necessary for fair presentation. The adjustments made to these statements consist only of normal recurringadjustments.

 

*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 grains as a co-product of ethanol production. The Company beganconstruction of its ethanol plant in November 2003.  As of March 31, 2005,the Company is in the development stage, with its efforts principally devotedto construction activities.  The Companybegan operations in April 2005.

 

*Accounting Estimates*

 

Management uses estimates and assumptions in preparing these financialstatements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets andliabilities, the disclosure of contingent assets and liabilities, and thereported revenues and expenses.  Actual results could differ from thoseestimates.

 

*Derivative Instruments*

 

The Company enters into derivative contracts to hedge the Company’sexposure to price risk related to forecasted corn and natural gas purchases andforward corn purchase contracts.  The Company does not typically enterinto derivative instruments other than for hedging purposes.  Allderivative contracts are recognized on the March 31, 2005 balance sheet attheir fair market value.

 

On the date the derivative instrument is entered into, the Company willdesignate the derivative as either (1) a hedge of the fair value of arecognized asset or liability or of an unrecognized firm commitment (fair valuehedge), (2) a hedge of a forecasted transaction or of the variability of cashflows to be received or paid related to a recognized asset or liability (cashflow hedge) or (3) will not designate the derivative as a hedge.  Changesin the fair value of a derivative that is designated as and meets all therequired criteria for a fair value hedge, along with the gain or loss on thehedged asset or liability that is attributable to the hedged risk, are recordedin current period earnings.

 

8

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Changes in the fair value of a derivative that is designated as andmeets all the required criteria for a cash flow hedge are recorded inaccumulated other comprehensive income and reclassified into earnings as theunderlying hedged item affects earnings.  Changes in the fair value of aderivative that is not designated as a hedge are recorded in current periodearnings.  Although the Company believes its derivative positions areeconomic hedges, none have been designated as a cash flow hedge for accountingpurposes.

 

The Company has recorded an asset of $53,250 and unrealized gain onderivative instruments for $164,545 related to its derivative contracts for thethree months ended March 31, 2005.  TheCompany is required to maintain cash balances at its broker related toderivative instrument positions.  AtMarch 31, 2005, restricted cash was $40,475, and is included in cash and cashequivalents.

 

*Grants*

 

The Company will recognize grant income as other income forreimbursement of expenses incurred upon complying with the conditions of thegrant.  For reimbursements of capital expenditures, the grants arerecognized as a reduction of the basis of the asset upon complying with theconditions of the grant.

 

**2.  BANK FINANCING**

 

On February 26, 2004 the Company closed on a construction loan from afinancial institution.  The construction loan for $33,024,200 converts,within sixty days post construction upon certification of completion andattainment of the engineer’s production guarantee, into two loans with the firstloan a $4,000,000 revolving loan and the second with a $29,024,200 termloan.  The term of the loans is five years with a ten-yearamortization.  The loan commitment offers a variable and fixed interestrate option.  The variable interest rate option has a variable base ratedetermined by the percentage of members’ equity at a range from 275 to 375basis points.  The construction period is 16 months from loan closing notto exceed 60 days from initial plant start-up.  The fixed rate quoteoption is subject to change weekly and is available at the conversion of theconstruction loan to the term loan.  The final term facility can besegmented between a fixed portion and a variable portion.

 

The loan fees consist of underwriting fees, participation fee, and annualfacility fee.  The underwriting fees are $100,000 of which $20,000 was dueand was paid upon acceptance of the term sheet and $80,000 was due and paid atloan closing.  There was a 75 basis point participation fee on the entirecredit facility paid at loan closing totaling $247,682.  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 in whole or in part, within three yearfollowing the date of the agreement; a prepayment penalty applies.  Prepayment penalties of 3%, 2% and 1% of theamount prepaid will apply in the 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 issecured by substantially all the Company’s assets.  As of March 31, 2005,the Company had borrowed $19,784,954 on this credit facility.

 

**3.  LONG TERM DEBT**

 

In April 2003, the Company entered into a capital lease agreement foroffice equipment for $5,631 with accumulated depreciation at March 31, 2005 of$2,235.  The lease calls for thirty-six monthly payments of $160 includinginterest at 7%, maturing March 2006 and secured by equipment.

 

In March 2004, the Company finalized the agreement with an electriccooperative to finance the remaining $86,000 of the aid-to-constructcosts.  The agreement calls for 60monthly payments of $2,138 including interest at 17%, beginning April 2005 andmaturing March 2010.

 

9

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Long term debtmaturities are as follows:

 

 
| **Years Ending December 31,** | ** ** | ** ** | ** ** |
|-------------------------------|------------|------------|------------|
| 2005                          |       | $          | 13,780     |   |
| 2006                          |       | 14,012     |       |
| 2007                          |       | 16,027     |       |
| 2008                          |       | 18,898     |       |
| 2009                          |       | 22,471     |       |
| 2010                          |       | 2,667      |       |
|                          |       | $          | 87,855     |   |

 

**4.  MEMBERS’ EQUITY**

 

As specified in the Company’s operating agreement, the Company willhave one class of membership units.  The Company is authorized to issue upto 28,000 membership units in addition to the seed capital units issued priorto the registered offering.

 

The Company prepared and filed, on Form SB-2, a Registration Statementwith the Securities and Exchange Commission (SEC).  The Offering was forup to 27,500 membership units at $1,000 per unit.  As of May 14, 2003, theRegistration Statement was declared effective.  In October 2003, theCompany had raised the minimum of $19,250,000 through the Offering and obtainedand accepted a written debt financing commitment through a lender as discussedin Note 2.  The Company reached their maximum Offering and the Offeringwas closed on April 9, 2004.

 

Income and losses are allocated to all members based upon theirrespective percentage units held.

 

**5.  RELATED PARTY TRANSACTIONS**

 

As of March 31, 2005, the Company had incurred $14,722 in director feesand related expense in 2005, of which $3,748 is included in accounts payable atMarch 31, 2005 to eight members.

 

**6.  GRANTS**

 

In October 2003, the Wisconsin Department of Commerce approved a grantfor $271,000 in funds to reimburse the Company for infrastructure costs. Through March 31, 2005, the Company has incurred the $271,000 of costs eligiblefor reimbursement under this grant, of which $40,750 is included in grantsreceivable.  $268,525 of this amount isassociated with capital expenditures and has been recognized as a reduction ofthe basis of the asset and the remaining $2,475 of this amount is associatedwith expenses and is reflected in grant income. At March 31, 2004, the Company had not incurred any costs associatedwith this grant.

 

In January 2004, the Company was approved for a matching grant from theUnited States Department of Agriculture for $450,000.  Through March 31,2005, the Company had incurred costs of $321,802 associated with this grant ofwhich $43,648 is included in grants receivable. $239,025 of this amount is associated with expenses and is reflected ingrant income and the remaining $82,777 is associated with capital expendituresand has been recognized as a reduction of the basis of asset.  At March 31, 2004, the Company had incurredcosts of $24,218 associated with this grant, of which $12,531 was included ingrant receivable.

 

10

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In February 2004, the Company was approved for a matching grant fromthe Transportation Facilities Economic Development Program (TEA) for$160,000.  The proceeds of the grant will be used to fund a portion of asingle contract with a contractor hired to do the rail spur development.  Through March 31, 2005, the Company hasincurred the $160,000 of costs eligible for reimbursement under thisgrant.  The Company has accounted forthis grant as a receivable and has reduced the basis of the capital expenditurewhich is included in construction in process. At March 31, 2004, the Company had not incurred any costs associatedwith this grant.

 

**7.  COMMITMENTS AND CONTINGENCIES**

 

The Company estimates of total costs of the project to be$60,058,528.  The Company anticipates funding the development of theethanol plant by using grants, the proceeds it raised through the Offering, andutilizing debt financing for the remainder of the costs.

 

On October 8, 2003, the Company entered into an agreement with a relatedparty, Fagen, Inc., to perform all design and construction services, provideall material, equipment, tools and labor, necessary to build a 40 milliongallon dry grind ethanol plant for $45,575,000, subsequently amended to$45,605,205.  The design-build contract provides that the Company may beentitled to receive either consequential damages for losses such as loss ofuse, profits, business, reputation or financing, or liquidated damages in theevent Fagen, Inc. fails to substantially complete the plant by the scheduledcompletion date.  These liquidated damages are in lieu of consequentialdamages for any losses we may incur, such as loss of use, profits, business,reputation, or financing.  If Fagen, Inc. does not complete withinspecified dates, they will pay the Company for each day that substantialcompletion remains outstanding.  If the plant is substantially completed 1to 90 days prior to substantial completion date, the Company will pay theFagen, Inc. an early performance bonus for each day that substantial completionis achieved prior to the substantial completion date.  If the contract isterminated by the Company without cause or by Fagen, Inc. for cause, theCompany is required to pay the Fagen, Inc. a fee of $1,000,000 if the Companyresumes construction of the plant through their own employees or thirdparties.  As of March 31, 2005, the Company has incurred $43,133,198 incosts related to this contract, of which $3,725,883 is included in constructionaccounts payable.

 

As of March 31, 2005, the Company had forward corn purchase contractstotaling 7,100,000 bushels for various delivery periods, May through November2006.  The prices on these contractsrange from $2.03 to $2.48 per bushel.

 

**8.  SUBSEQUENT EVENTS**

 

*Marketing Agreement*

 

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

 

*Plant Operations*

 

Subsequent to March 31, 2005, the Company began operations, andsuccessfully completed performance testing of the plant.

 

11

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**Item 2.  Management’s Discussion and Analysis and Plan ofOperations**

 

This report contains forward-lookingstatements that involve future events, our future performance and our expectedfuture operations and actions.  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.  These forward-looking statements are only ourpredictions and involve numerous assumptions, risks and uncertainties. Our actual results or actions may differ materially from these forward-lookingstatements for many reasons, including the following factors:

 

**•**                  Changes in theavailability and price of corn;

**•**                  Increases ordecreases in the supply and demand for ethanol;

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

**•**                  Changes ininterest rates or the availability of credit;

**•**                  Changes in ourbusiness strategy, capital improvement 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;

**•**                  Changes in theavailability and price of natural gas;

**•**                  Increases ordecreases in the supply and demand for distiller grains; and

**•**                  Changes andadvances in ethanol production technology.

 

We are not under any duty to update theforward-looking statements contained in this report.  We cannot guaranteefuture results, levels of activity, performance or achievements.  Wecaution you not to put undue reliance on any forward-looking statements, whichspeak only as of the date of this report.  You should read this report andthe documents that we reference in this report and have filed as exhibits,completely and with the understanding that our actual future results may bematerially different from what we currently expect.  We qualify all of ourforward-looking statements by these cautionary statements.

 

**Overview**

 

United Wisconsin Grain Producers, LLC was formed as a Wisconsin limitedliability company on November 2, 2001, for the purpose of constructing andoperating a 40 million gallon per year ethanol plant near Friesland,Wisconsin.   We expect the total projectto cost approximately $60,058,528.

 

We raised equity by a public offering registered with the Securitiesand Exchange Commission on Form SB-2. During the offering we sold 27,500,000 units and received aggregateoffering proceeds of $27,500,000 to supplement our initial seed capital.  To complete financing of the project, weexecuted debt financing agreements securing a senior credit facility of$33,024,200 from AgStar Financial Services, PCA.

 

As of March 31, 2005, construction of our project was nearingcompletion.  Subsequent to our quarterend on March 31, 2005, we substantially completed construction of our ethanolplant and began producing ethanol and distillers grains.   We expect to fund our operations over thenext 12 months using cash flow from continuing operations, USDA Commodity CreditCorporation Bioenergy Program payments, revolving lines of credit, and oursenior credit facility.

 

We are subject to industry-wide factors that affect our operating andfinancial performance. These factors include, but are not limited to, theavailable supply and cost of corn from which our ethanol and distillers grainsare processed; the cost of natural gas, which we use in the production process;dependence on our ethanol marketer and distillers grains marketer to market anddistribute our products; the intensely competitive nature of the ethanolindustry; possible legislation at the federal, state and/or local level;changes in federal ethanol tax incentives and the cost of complying withextensive environmental laws that regulate our industry.

 

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As of March 31, 2005, we were in the development-stage and only becameoperational in April 2005.  Accordingly,we do not yet have comparable income, production and sales data for the threemonths ended March 31, 2005. Accordingly, we do not provide a comparison of our financial resultsbetween reporting periods in this report. If you undertake your own comparison of our first fiscal quarter of 2004and our first fiscal quarter of 2005, it is important that you keep this inmind.

 

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

 

We expect to spend the next 12 monthsoperating the ethanol plant to produce and sell ethanol and distillersgrains.  We will focus primarily on thesethree areas: (i) operating the plant and completing any unfinished site work; (ii)maximizing our plant’s operational efficiency to operate as competitively aspossible; and (iii) purchasing important manufacturing inputs such as corn andnatural gas as cost effectively as possible.

 

*Plant Construction and Operations*

 

As of March 31, 2005, plant construction wasin process and the outstanding balance on the plant design-build contract was$3,492,475, including $2,278,750 held in retainage.  Other construction account payables totaled$672,289 as of March 31, 2005.

 

Based upon the project inspection reportprepared for our senior lender, project construction was 94% complete as ofMarch 31, 2005.  As of March 31, 2005,construction costs under the design-build contract equaled 95% of their scheduledvalue.  Based upon construction costs andother project costs incurred to date, we expect our final project cost to be onbudget at approximately $60,058,528.

 

On April 21, 2005, we substantially completedplant construction and commenced start-up operations.  As of May 5, 2005, the plant passedperformance testing and became fully operational.  As owner of the project, we are responsiblefor the rail-yard, site development, landscaping, excavation, access roads,office building, fire protection, water supply and equipment.  As of March 31, 2005, those items areapproximately 92% complete.  We stillneed to complete paving the roadways at the plant, landscaping, seeding and theautomated truck handling system.  We expectto complete these items in the next few months without interruption or delay ofplant operations.

 

During the next 12 months, we expect to focuson producing ethanol and distillers grains at our plant.  We have engaged an ethanol marketing firm tomarket our ethanol and a distillers grains marketing firm to market our drieddistillers grains.  We may alsoindependently market a portion of our dried distillers grains to locallivestock producers.  Subsequent to thequarter ended March 31, 2005, we engaged Commodity Specialists Company tomarket our modified wet distillers grains.  The initial term of this agreement is one yearand it automatically renews for successive one-year periods unless either partygives at least 120 days prior written notice. Commodity Specialists Company also markets our dried distillers grains.

 

*Trends and Uncertainties Impacting theEthanol Industry and Our Future Revenues*

 

As we transition from a development-stage company to becomingoperational, our revenues will consist of sales of ethanol and distillersgrains.  We expect ethanol sales toconstitute the bulk of our revenues.  Thesupply of ethanol is currently outpacing ethanol demand.  Recent market values for ethanol have fallen30% to 40% from the values experienced in the last quarter.  Demand increases may continue to lagproduction maintaining downward pressure on ethanol prices in the short to midterm.  Based upon the number of newethanol plants scheduled to begin production and the expansion of currentplants, we do not expect a return to strong ethanol prices in the short to midterm.  Areas where demand may increaseare new markets in Atlanta, Nashville, Baton Rouge and Houston.  Minnesota may also generate additional demandif the Minnesota legislature passes pending legislation mandating a 20% ethanolblend in its gasoline.

 

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Potential increases in demand do not include national implementation ofa Renewable Fuels Standard or similar legislation, which could cause increasesin demand to be greater than currently projected.  If the use of MTBE is phased out on anational level in the next few years and the reformulated gasoline oxygenaterequirement remains unchanged, the anticipated growth may yield a doubling ofethanol demand much sooner than currently anticipated.  However, even as new markets develop, theindustry continues to grow rapidly and national production is expected to riseby 750,000 gallons over the next year from 3.4 billion gallons to 4.15 billiongallons annually.  In addition, none ofthese new markets is assured nor is the timing of any other new demand in theethanol industry.

 

We currently benefit from federal ethanol supports and federal taxincentives. Changes to these supports or incentives could significantly impactdemand for our ethanol.  In March 2005, abi-partisan bill containing a proposed Renewable Fuels Standard (“RFS”) wasintroduced in the U.S. Senate.  The RFSbill would require the use of 4 billion gallons of renewable fuels in 2006increasing to 8 billion gallons by 2012. The bill is a national flexible program that does not require that anyrenewable fuels be used in any particular area or state, allowing refiners touse renewable fuel blends in those areas where it is most cost-effective.  In addition, the bill eliminates thereformulated gasoline (“RFG”) oxygenate standard, enhances RFG air qualityrequirements and improves the credit and waiver provisions of the RFSpackage.  There is no assurance orguarantee that Congress will pass RFS legislation or that any RFS legislationapproved by Congress will contain provisions sufficiently favorable to theethanol industry to cause a sustainable increase in ethanol demand.

 

Demand for ethanol may also increase as a result of increasedconsumption of E85 fuel.  E85 fuel is ablend of 70% to 85% ethanol and gasoline. According to the Energy Information Administration, E85 consumption isprojected to increase from a national total of 11 million gallons in 2003 to 47million gallons in 2025.  E85 is used asan aviation fuel and as a hydrogen source for fuel cells.  In the U.S., there are currently about 3million flexible fuel vehicles capable of operating on E85 and 400 retailstations supplying it.  Automakers haveindicated plans to produce an estimated 2 million more flexible fuel vehiclesper year.

 

Ethanol production continues to grow as additional plants becomeoperational. Demand for ethanol has been supported by higher oil prices and itsrefined components and by clean air standards mandated by federal agencies haverequired highly populated areas to blend ethanol into their gasoline suppliesas an oxygenate. The intent of the air standards is to reduce harmful emissionsinto the atmosphere. These mandates have been challenged in severalmetropolitan areas, and are currently being reviewed by the courts. In thefuture, the combination of additional supply, successful challenges to theclean air standards and stagnant or reduced demand may adversely affect ourrevenues, profit margin and ability to maintain positive cash flows.

 

*Technology Developments*

 

A new technology has recently been introduced by Vortex DehydrationTechnology of Hanover, Maryland, to remove corn oil from concentrated thinstillage (a byproduct of “dry milling” ethanol processing facilities) whichwould be used as an animal feed supplement or possibly as an input forbio-diesel production.  Although therecovery of oil from the thin stillage may be economically feasible, it failsto produce the advantages of removing the oil prior to the fermentation process.  The FWS Group of Companies, headquartered outof Canada with offices in the United States, is currently working on a starchseparation technology that would economically separate a corn kernel into itsmain components. The process removes the germ, pericarp and tip of the kernelleaving only the endosperm of kernel for the production of ethanol.  This technology has the capability to reducedrying costs and the loading of volatile organic compounds.  The separated germ would also be availablethrough this process for other uses such as high oil feeds or bio-dieselproduction.  Each of these newtechnologies is currently in its early stages of development.  There is no guarantee that either technologywill be successful or that we will be able to implement the technology in ourethanol plant.

 

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*Employees*

 

Our ethanol plant is fully staffed.  We employ 33 full-time employees.Approximately ten of our employees will be involved primarily in management andadministration.  The remainder will beinvolved primarily in plant operations. We do not expect any significant change to the number of employeesnecessary to operate our plant.

 

The following table represents the current positions within the plantand the number of individuals we currently employ for each position:

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

 

*Trends and Uncertainties Impacting the Cornand Natural Gas Markets and Our Future Cost of Goods Sold*

 

As we transition from a development-stage company to becomingoperational, our future cost of goods sold will consist primarily of costsrelating to the corn and natural gas supplies necessary to produce ethanol anddistillers grains for sale.  The 2004corn crop was the largest corn crop on record with national production atapproximately 11.8 billion bushels.  The2004 corn supply is expected to outpace demand by approximately 1 billionbushels. Locally, however, our production suffered due to an excessively rainyplanting season. To the north of our plant, many acres were left idle and notplanted.  As a result, the cash basis forlocally grown corn is higher than normal. This has equated to slightly higher corn prices than most areas of theMidwestern United States.  National cornprices should remain low into the 2005 spring planting season. However, as weget nearer to corn planting season we expect the grain market to begin focusingon prospects for the 2005 corn crop. Variables such as planting dates, rainfall, and temperatures will likelycause market uncertainty and create corn price volatility as the growing seasonbegins.

 

As of March 31, 2005, we have forward corn purchase contracts totaling7,100,000 bushels for various delivery periods, May through November 2006.  The prices on these contracts range from$2.03 to $2.48 per bushel.  We also haveprice protection in place in the form of long corn futures positions on theChicago Board of Trade for approximately 3% of our corn needs through December2005.  Our combined forward contracts andfutures coverage represents price protection for approximately 63% of our cornneeds through December 2005.  As we moveforward, we will continue to monitor our risk in the corn market.  We may determine that additional protectionis necessary.  As corn prices move inreaction to market trends and information, our income statement will beaffected depending on the impact such market movements have on the value of ourforward contracts and futures positions. Our forward contracts and futures positions are classified as derivativeinstruments in our financial statements. Depending on market movements, crop prospects and weather, these priceprotection positions may lose value in the short-term but are expected toproduce long-term positive growth for us.

 

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Natural gas is also an important input commodity to our manufacturingprocess.  We estimate that our naturalgas usage will be approximately 118,000 million British thermal units (mmbtu)per month.  We use natural gas to dry ourdistiller’s grain products to moisture contents at which they can be stored forlong periods of time, and can be transported greater distances.  Dry distiller’s grains have a much broadermarket base, including the western cattle feedlots, and the dairies ofCalifornia and Florida.  Recently, theprice of natural gas has risen along with other energy sources.  Natural gas prices are considerably higherthan the  10-year average.  We look for continued volatility in thenatural gas market, led mainly by the speculators who are taking advantage ofthis market, and any increases in the price of natural gas will increase ourcost of production and negatively impact our profit margins.  We have secured a marketing firm and anenergy consultant for our natural gas, and will work with them to develop waysto protect our business against adverse price risk.  Currently we have not locked in any gasvolumes due to high price levels.  Wehave target prices in place, at which we will forward purchase natural gas.

 

On February 17, 2005, our board of directors approved a risk managementpolicy as presented by our risk management committee.  The policy contains five primarysections.  The first section details ourrisk management objectives, which includes proactively managing our commodityprice risk.  The second section outlinesapproved derivative instruments for purposes of commodity transactions,including instruments related to price protection for corn, natural gas, distillersgrains, ethanol and denaturant.  Thissection also outlines approved derivative instruments for purposes of financialtransactions and risk management activities. The third section contains our approved position limits and forwardpricing guidelines.  The fourth sectionoutlines the basic structure and levels of authority regarding forward pricingand risk management decisions. The fifth section provides suggested guidelineswith respect to risk control procedures. We expect to design and implement our risk management strategy withinthe limits contained in our risk management policy.

 

**Application of Critical Accounting Policies**

 

Management uses estimates and assumptions in preparing our financialstatements, in accordance with generally accepted accounting principles.  These estimates and assumptions affect thereported amounts of assets and liabilities, the disclosure of contingent assetsand liabilities, and the reported revenues and expenses.  Of the significant accounting policiesdescribed in the notes to our financial statements, we believe that thefollowing is the most critical:

 

*Derivative Instruments*

 

We enter into derivative contracts to hedge our exposure to price riskrelated to forecasted corn and natural gas purchases and forward corn purchasecontracts.  We do not typically enterinto derivative instruments other than for hedging purposes.  All derivative contracts are recognized onthe March 31, 2005 balance sheet at their fair market value.

 

On the date the derivative instrument is entered into, we willdesignate the derivative as either (1) a hedge of the fair value of arecognized asset or liability or of an unrecognized firm commitment (fair valuehedge), (2) a hedge of a forecasted transaction or of the variability of cashflows to be received or paid related to a recognized asset or liability (cashflow hedge) or (3) will not designate the derivative as a hedge.  Changes in the fair value of a derivativethat is designated as and meets all the required criteria for a fair value hedge,along with the gain or loss on the hedged asset or liability that isattributable to the hedged risk are recorded in current period earnings.Changes in the fair value of a derivative that is designated as and meets allthe required criteria for a cash flow hedge are recorded in accumulatedother  comprehensive income andreclassified into earnings as the underlying hedge item affects earnings.  Changes in the fair value of a derivativethat is not designated as a hedge are recorded in current period earnings.  Although we believe our derivative positionsare economic hedges, none have been designated as a hedge for accountingpurposes.

 

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**Liquidity and Capital Resources**

 

As of March 31, 2005, we had cash and cashequivalents of $716,982, current assets of $1,042,309 and total assets of$50,623,667.  As of March 31, 2005, wehad current liabilities of $24,502,273 and long term liabilities of $74,075.

 

The members’ contributions, net of costsrelated to capital contributions, are $27,696,394.  The accumulated deficit from inceptionthrough March 31, 2005 is $1,649,075. Total members’ equity as of March 31, 2005, is $26,047,319.  Since our inception through the quarter endedMarch 31, 2005, we have generated no revenue from operations.

 

*Short-Term and Long-Term Debt Sources*

 

We have entered into a senior credit facilityconsisting of a $33,024,200 single construction loan with AgStar FinancialServices, PCA.   As of March 31, 2005 ourloan balance was $19,784,954.  The creditfacility is secured by substantially all of our assets. During construction wehave made interest only payments on the principal balance at an interest rateequal to the one-month LIBOR (the London Interbank Offered Rate) plus 3.75%.

 

Now that our ethanol plant is complete and weare operational, 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.  The loan commitment offers a variableand a fixed interest rate option. Depending on the interest rates in effect at the time of conversion andanticipated changes in the credit environment, we may elect to allocate someportion of the loan to a variable interest rate and the balance to a fixedinterest rate.  The variable interestrate on the converted term loan will be at a rate equal to the monthly LIBORplus 3.75%.  This variable interest ratemay be adjusted downward depending on our level of owners’ equity as reportedin our monthly financial statements.  Thefixed interest rate option is subject to change weekly and is available at theconversion of the construction loan to the term loan.  The final term facility can be segmentedbetween a fixed portion and a variable portion. Interest on the revolving loanwill accrue at a rate equal to the monthly LIBOR plus 3.75%.  However, this interest rate may be adjusteddownward 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, for any reason, our revenuessignificantly decrease and/or our cost of goods significantly increases, we maynot be able to timely repay the loan.  Ifinterest rates increase, we will have higher interest payments, which couldadversely affect our business.

 

*Bioenergy Program Payments*

 

We have enrolled in the USDA Commodity Credit Corporation’s Bioenergyprogram. Under the USDA CCC Bioenergy program, the Commodity Credit Corporationwill reimburse eligible ethanol producers of less than 65 million gallonsof bioenergy in the amount of one bushel of corn for every two and one-halfbushels of corn used for the increased production of ethanol. No eligibleproducer may receive more than $7.5 million under the program. Because weexpect to be an eligible producer and to annually utilize 15 millionbushels of corn in the increased production of ethanol, we could potentiallyreceive the maximum award of $7.5 million. However, the Commodity CreditCorporation may award only $100 million annually fiscal years 2005 through2006, and any award we received may be reduced based upon the volume ofapplications from other eligible producers. 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).  Based upon the recent increase in nationalethanol production, we anticipate a pro rata reduction in aggregate payments toall eligible producers.  We anticipatethe pro rata reduction to be in the range of 55% to 60%.  Therefore, we may not receive the maximumaward of $7.5 million.  Given the lowertotal payout and the number of gallons of new

 

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production being reported weestimate our total funds out of the program in our fiscal year 2005 to beapproximately $2.0 million.  In addition,the Commodity Credit Corporation Bioenergy Program is scheduled to expire onSeptember 30, 2006.  The grants availableunder the CCC program may not continue beyond their scheduled expiration dateor if they do continue, the grants may not be at the same level.

 

Ethanol production for our second quarter (commencing with our start-update of April 21 through June 30, 2005) will be eligible for Bioenergy programpayments.  We will file our applicationfor Bioenergy program payments for second quarter production no later than July31, 2005.  We expect to receive thepayments for second quarter production sometime during our third quarter.

 

*Operating Budget and Financing of Plant Operations*

 

As of March 31, 2005, we have incurredapproximately $49,056,000 of construction costs.  The construction costs incurred as of March31, 2005 include approximately $39,407,315 paid to Fagen, Inc. under thedesign-build agreement and a construction payable of approximately $3,725,883to Fagen, Inc.  As we transition from adevelopment-stage company to becoming operational, we expect that outgoing cashflows will be directed towards funding plant operations and paying off debt.

 

We expect to have sufficient cash from cash flow generated by plantoperations, our senior credit facility and Bioenergy program payments to coverour operating costs over the next 12 months, including the cost of corn andnatural gas supplies, other production costs, staffing, office audit, legalcompliance and working capital costs. The following is our estimate of our operating costs and expendituresfor the next 12 months:

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

 

The estimates in the table set forth above are based upon theexperience of our general contractor with other ethanol plants similar toours.  These are only estimates and ouractual expenses and costs could be much higher due to a variety of factorsdiscussed throughout this report.

 

**Off-Balance Sheet Arrangements**

 

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

 

**Item 3.  Controls and Procedures**

 

Our management, including our Chief Executive Officer (the principalexecutive officer), Jeff Robertson, along with our Chief Financial Officer (theprincipal financial officer), Barb Bontrager, have reviewed and evaluated theeffectiveness of our disclosure controls and procedures as of March 31,2005.  Based upon this review and evaluation, these officers believe thatour disclosure controls and procedures are effective in ensuring that materialinformation related to us is recorded, processed, summarized and reportedwithin the time periods required by the forms and rules of the Securities andExchange 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

 

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March 31, 2005 and there hasbeen no change that has materially affected or is reasonably likely tomaterially affect our internal control over financial reporting.

 

**PART II.  OTHERINFORMATION**

 
| **Item 1****.** | **Legal Proceedings**                                    |
|-----------------|----------------------------------------------------------|
|            |                                                     |
|            | None.                                                    |
|            |                                                     |
| **Item 2****.** | **Changes in Securities**                                |
|            |                                                     |
|            | None.                                                    |
|            |                                                     |
| **Item 3****.** | **Defaults Upon Senior Securities**                      |
|            |                                                     |
|            | None.                                                    |
|            |                                                     |
| **Item 4****.** | **Submission of Matters to a Vote of Security  Holders** |
|            |                                                     |
|            | None.                                                    |
|            |                                                     |
| **Item 5****.** | **Other Information**                                    |
|            |                                                     |
|            | None.                                                    |
|            |                                                     |
| **Item 6****.** | **Exhibits**                                             |
|            |                                                     |
|            | The following exhibits are included herein:              |

 
| **Exhibit  No.** | ** ** | **Exhibit**                                    |
|------------------|------------|------------------------------------------------|
|             |       |                                           |
| 31.1             |       | Certificate Pursuant to 17 CFR 240.13a-14(a).  |
|             |       |                                           |
| 31.2             |       | Certificate Pursuant to 17 CFR 240.13a-14(a).  |
|             |       |                                           |
| 32.1             |       | Certificate Pursuant to 18 U.S.C. § 1350. |
|             |       |                                           |
| 32.2             |       | Certificate Pursuant to 18 U.S.C. § 1350. |

 

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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: May 13, 2005 |                       | /s/ J.F.  Robertson |   |
|               |                       | J.F. Robertson |   |
|               |                       | Chief Executive Officer |   |
|               |                       | (Principal Executive Officer) |   |
|               |                       |   |   |
| Date: May 13, 2005 |                       | /s/ Barb  Bontrager |   |
|               |                       | Barb Bontrager |   |
|               |                       | Chief Financial Officer |   |
|               |                       | (Principal Accounting Officer) |   |

 

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