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**UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-Q**
(Mark one)

|X|  QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
     OF 1934

For the quarterly period ended December 31, 2008

[ ]  TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

             For the transition period from _________ to __________

                        Commission file number 000-53041
**SOUTHWEST IOWA RENEWABLE ENERGY, LLC**
             (Exact name of registrant as specified in its charter)
        Iowa                                                20-2735046
        ----                                                ----------
(State or other jurisdiction (I.R.S. Employer Identification No.)

                 10868 189th Street, Council Bluffs, Iowa 51503
                 ----------------------------------------------
                    (Address of principal executive offices)

                                 (712) 366-0392
                                 --------------
              (Registrant's telephone number, including area code)

---------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant has (1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes |X| No [ ]

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated filer, a non-accelerated  filer, or a smaller reporting company. See
the definitions of "large accelerated  filer,"  "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

   Large accelerated filer [ ]                     Accelerated filer [ ]
   Non-accelerated filer [ ]                       Smaller reporting company |X|

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No |X|

As of January 31,  2009,  the issuer had 8,805  Series A Units,  3,334  Series B
Units, and 1,000 Series C Units issued and outstanding.

**TABLE OF CONTENTS

                          PART I--FINANCIAL INFORMATION

Item Number          Item Matter                                                                      Page Number

Item 1.              Unaudited Financial  Statements . . . . . . . . . . . . . . . . . . . . . . . .       1

Item 2.              Management's Discussion and Analysis of Financial Condition and Results of
                     Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      16

Item 4.              Controls  and  Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . .       24

                           PART II--OTHER INFORMATION

Item 1.              Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       25

Item 1A.             Risk Factors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       25

Item 2.              Unregistered Sales of Equity Securities and Use of Proceeds. . . . . . . . . .        25

Item 3.              Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . . . . . . . .       25

Item 4.              Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . .       25

Item 5.              Other Information  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      25

Item 6.              Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       25

Signatures  .  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       26****PART I--FINANCIAL INFORMATION

Item 1.           Financial Statements.

                      Southwest Iowa Renewable Energy, LLC
                          (A Development Stage Company)
Balance Sheets**

                                                                        December 31, 2008                  September 30, 2008
                                                              -----------------------------------------------------------------------
ASSETS                                                                     (Unaudited)
 CURRENT ASSETS
       Cash and cash equivalents                              $                       1,840,772        $               6,557,394
       Restricted cash                                                                3,314,420                        3,289,949
       Due from broker                                                                1,447,694                              ---
       Prepaid expenses and other                                                       230,027                           43,261
       Inventory                                                                      7,520,931                              ---
                                                              -----------------------------------------------------------------------
               Total current assets                                                  14,353,844                        9,890,604
                                                              -----------------------------------------------------------------------

 PROPERTY AND EQUIPMENT
       Land                                                                           2,064,090                        2,064,090
       Construction in progress                                                     191,397,784                      172,745,278
       Office and other equipment                                                       496,912                          389,823
                                                              -------------------------------------------------------------------
                                                                                    193,958,786                      175,199,191
       Accumulated depreciation                                                        (44,773)                         (37,249)
                                                              -------------------------------------------------------------------
                                                                                    193,914,013                      175,161,942
                                                              -------------------------------------------------------------------
 OTHER ASSETS, Financing costs, net of amortization of                                2,877,494                        3,088,821
     $783,500 and $497,672                                    -------------------------------------------------------------------
                                                              $                     211,145,351       $              188,141,367
                                                              ===================================================================

              See Notes to Unaudited Financial Statements.

                                       1
**Southwest Iowa Renewable Energy, LLC
                                                  (A Development Stage Company)
Balance Sheets**

                                                                       December 31, 2008                    September 30, 2008
                                                           ----------------------------------------------------------------------
 LIABILITIES AND MEMBERS' EQUITY                                         (Unaudited)
 CURRENT LIABILITIES

        Accounts  payable                                   $                        3,861,010         $               6,260,253
        Retainage Payable                                                            7,576,316                         7,158,896
        Accrued expenses                                                             2,256,928                         1,672,950
        Derivative financial instruments                                               852,738                               ---
        Current maturities of long-term debt                                        37,282,975                        35,198,440
                                                           ----------------------------------------------------------------------
          Total current liabilities                                                 51,829,967                        50,290,539
                                                           ----------------------------------------------------------------------
 NONCURRENT LIABILITIES
        Long-term debt, less current maturities                                     87,675,151                        63,893,467
        Other                                                                          900,000                           900,000
                                                           ----------------------------------------------------------------------
                                                                                    88,575,151                        64,793,467
                                                           ----------------------------------------------------------------------
 COMMITMENTS

 MEMBERS' EQUITY
 Members' capital
                                                                                    76,474,111                        76,474,111
       (Deficit) accumulated during the development stage                          (5,733,878)                       (3,416,750)
                                                           ----------------------------------------------------------------------
                                                                                    70,740,233                        73,057,361
                                                           ----------------------------------------------------------------------
                                                            $                      211,145,351           $           188,141,367
                                                           ======================================================================

          See Notes to Unaudited Financial Statements.

                                       2
**Southwest Iowa Renewable Energy, LLC
                          (A Development Stage Company)

Statements of Operations (Unaudited)
-----------------------------------------------------------------------------------------------------------------------**

                                                  Three Months         Three Months               March 28, 2005
                                                 Ended December            Ended              (Date of Inception) to
                                                    31, 2008         December 31, 2007          December 31, 2008
                                             --------------------------------------------------------------------------

Revenues                                     $               ---  $                ---     $                       ---
                                             --------------------------------------------------------------------------

General and administrative expenses                    1,711,629               598,246                       8,862,927
                                             --------------------------------------------------------------------------
(Loss) before other income                           (1,711,629)             (598,246)                     (8,862,927)
                                             --------------------------------------------------------------------------
Other income and (expense):
Grant                                                        ---                   ---                         305,994
Interest income                                           46,134                88,031                       3,431,026
Miscellaneous income                                       5,340                 5,035                          83,086
Realized and unrealized losses on                      (656,973)                   ---                       (656,973)
derivative instruments
Loss on disposal of property                                 ---                   ---                        (34,084)
                                             --------------------------------------------------------------------------
                                                       (605,499)               93,066                       3,129,049
                                             ---------------------------------------------------------------------------
Net (loss)                                   $       (2,317,128)    $        (505,180)     $               (5,733,878)
                                             ==========================================================================
Weighted average units outstanding                        13,139                13,139                           7,712
                                             ==========================================================================
Net (loss) per unit - basic and diluted      $         ($176.35)    $          (38.45)     $                  (743.50)
                                             ==========================================================================

See Notes to Unaudited Financial Statements.

                                       3

**Southwest Iowa Renewable Energy, LLC
                                               (A Development Stage Company)

Statements of Members' Equity (Unaudited)
----------------------------------------------------------------------------------------------------------------------------**
                                                                               Earnings
                                                                               (Deficit)
                                                                              Accumulated
                                                                               During the
                                                     Members' Capital       Development Stage                Total
                                                    ------------------------------------------------------------------------

Balance, March 28, 2005 (date of inception)         $              ---   $             ---   $                          ---
    Issuance of 285 Series A membership                        570,000                 ---                          570,000
    units
    Subscription receivable for 257 Series A                 (514,000)                 ---                        (514,000)
    membership units
Net (loss)                                                         ---            (29,634)                         (29,634)
                                                    ------------------------------------------------------------------------
Balance, September 30, 2005                                     56,000            (29,634)                           26,366
    Receipt of membership units subscribed                     514,000                ---                           514,000
    Issuance of 1,047 Series A membership                    5,202,000                ---                         5,202,000
    units
    Issuance of 1 Series B membership unit                       6,000                ---                             6,000
Net (loss)                                                                       (752,231)                        (752,231)
                                                    ------------------------------------------------------------------------
Balance, September 30, 2006                                  5,778,000           (781,865)                        4,996,135
    Issuance of 7,473 Series A membership                   44,838,000                 ---                       44,838,000
    units
    Issuance of 3,333 Series B membership                   19,998,000                 ---                       19,998,000
    units
    Issuance of 1,000 Series C membership                    6,000,000                 ---                        6,000,000
    units
Offering costs                                               (139,889)                 ---                        (139,889)
Net income                                                         ---           1,082,715                        1,082,715
                                                    ------------------------------------------------------------------------
Balance, September 30, 2007                                 76,474,111             300,850                       76,774,961
Net (loss)                                                         ---         (3,717,600)                      (3,717,600)
                                                    ------------------------------------------------------------------------
Balance, September 30, 2008                                 76,474,111         (3,416,750)                       73,057,361
Net (loss)                                                         ---         (2,317,128)                      (2,317,128)
                                                    ------------------------------------------------------------------------
Balance, December 31, 2008                          $       76,474,111   $     (5,733,878)   $                   70,740,233
                                                    ========================================================================

See Notes to Unaudited Financial Statements.

                                       4
**Southwest Iowa Renewable Energy, LLC
                          (A Development Stage Company)

Statements of Cash Flows (Unaudited)
------------------------------------------------------------------------------------------------------------------------**
                                                              Three Months        Three Months         March 28, 2005
                                                                 Ended               Ended                (Date of
                                                              December 31,        December 31,         Inception) to
                                                                  2008                2007           December 31, 2008
                                                          --------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss)                                                $     (2,317,128)   $       (505,180)   $         (5,733,878)
Adjustments to reconcile net (loss) to net cash (used in)
operating activities:
 Depreciation                                                         7,524               3,428                  44,773
 Loss on disposal of property                                           ---                 ---                  34,084
 Changes in working capital components:
 (Increase) in due from broker                                  (1,447,694)                 ---             (1,447,694)
 (Increase) decrease in prepaid expenses and other                (186,766)              81,971               (230,027)
 (Increase) in inventory                                        (7,520,931)                 ---             (7,520,931)
 Increase in other non-current liabilities                              ---                 ---                 900,000
 Increase in accounts and retainage payable                       1,387,472              18,103               1,549,560
 Increase in derivative financial instruments                       852,738                 ---                 852,738
 Increase (decrease) in accrued expenses                            (5,007)              71,830                 202,982
                                                          --------------------------------------------------------------
     Net cash (used in) operating activities                    (9,229,792)           (329,848)            (11,348,393)
                                                          --------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
 Purchase of property and equipment                            (20,951,788)        (13,929,101)           (181,719,055)
 Decrease in cash-held for plant construction                           ---          13,767,081                     ---
 Increase in restricted cash                                       (24,471)                 ---             (3,314,420)
 Proceeds from sale of property and equipment                           ---                 ---               1,415,541
                                                          --------------------------------------------------------------
   Net cash (used in) investing activities                    (20,976,259)            (162,020)           (183,617,934)
                                                          --------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
 Proceeds from issuance of membership units                             ---                 ---              75,654,000
 Payments for financing costs                                      (74,501)             (3,188)             (2,700,994)
 Payments for offering costs                                            ---                 ---               (139,889)
 Proceeds from long-term borrowings                              25,568,930                 ---              91,213,899
 Proceeds from bridge loan                                              ---                 ---              34,100,000
 Payments on long-term borrowings                                   (5,000)             (5,000)             (1,319,917)
                                                          --------------------------------------------------------------
 Net cash provided by (used in) financing activities             25,489,429             (8,188)             196,807,099
                                                          --------------------------------------------------------------
 Net increase (decrease) in cash and cash equivalents           (4,716,622)           (500,056)               1,840,772
CASH AND CASH EQUIVALENTS
  Beginning                                                       6,557,394           1,742,940                     ---
                                                          --------------------------------------------------------------
  Ending                                                  $       1,840,772   $       1,242,884   $           1,840,772
                                                          ==============================================================
SUPPLEMENTAL DISCLOSURES OF NONCASH OPERATING,
INVESTING AND FINANCING ACTIVITIES
 Construction in progress included in accounts and        $        9,887,766          24,410,087               9,887,766
 retainage payable
 Membership units issued for financing costs                            ---                 ---                  960,000
 Interest capitalized and included in long-term debt               1,394,063                ---                3,801,590
 and accruals

See Notes to Unaudited Financial Statements.

                                       5

**Southwest Iowa Renewable Energy, LLC
(A Development Stage Company)

Notes to Unaudited Financial Statements
--------------------------------------------------------------------------------

Note 1. Nature of Business and Significant Accounting Policies**Principal  business   activity:   Southwest  Iowa  Renewable  Energy,  LLC  (the
"Company"),  located in Council  Bluffs,  Iowa, was formed in March 2005 to pool
investors to build a 110 million gallon annual  production  dry mill  corn-based
ethanol plant. As of December 31, 2008, the Company is in the development  stage
with its efforts being principally devoted to organizational matters and nearing
completion  of  plant  construction.  As of  February,  2009,  the  Company  has
commenced limited operation of the ethanol plant as part of testing and bringing
the plant into full operation.

Basis of presentation and other  information:  The balance sheet as of September
30, 2008 was derived from the  Company's  audited  balance as of that date.  The
accompanying  financial statements as of and for the three months ended December
31, 2008 and 2007 are unaudited and reflect all  adjustments(consisting  only of
normal recurring adjustments) which are, in the opinion of management, necessary
for a fair presentation of the financial  position and operating results for the
interim periods.  These unaudited financial  statements and notes should be read
in conjunction with the audited financial  statements and notes thereto, for the
year ended  September 30, 2008 contained in the Company's  Annual Report on Form
10-K.  The results of  operations  for the  interim  periods  presented  are not
necessarily indicative of the results for the entire year.

A summary of significant accounting policies follows:

   Use of estimates:  The preparation of financial statements in conformity with
   accounting  principles  generally  accepted  in the United  States of America
   requires  management  to make  estimates  and  assumptions  that  affect  the
   reported  amounts of assets and  liabilities  and  disclosure  of  contingent
   assets  and  liabilities  at the  date of the  financial  statements  and the
   reported amounts of revenues and expenses during the reporting period. Actual
   results could differ from those estimates.

   Concentration  of credit risk:  The Company's cash balances are maintained in
   bank deposit accounts which at times may exceed federally insured limits. The
   Company has not experienced any losses in such accounts.

   Risks and uncertainties:  The current U.S. recession has reduced the nation's
   demand for  energy.  The  bankruptcy  filing of one of the  industry's  major
   producers has resulted in great economic  uncertainty  about the viability of
   ethanol.  The  ethanol  boom of  recent  years  spurred  overcapacity  in the
   industry and  capacity is  currently  nearing the  Renewable  Fuels  Standard
   ("RFS") mandates.  The average national ethanol spot market price has plunged
   over 44% since July 2008.  The drop in crude oil prices  from a record $150 a
   barrel to its  recent  price of less than $40 a barrel  has  resulted  in the
   price of  reformulated  gasoline  blendstock  for  oxygen  blending  ("RBOB")
   dropping  below $1 per gallon in  December  2008.  With  ethanol  spot prices
   exceeding RBOB prices the economic  incentives for blenders to continue using
   ethanol  has become less  advantageous.  This could  result in a  significant
   reduction in the demand for ethanol.

   As such,  the Company  may need to evaluate  whether  crush  margins  will be
   sufficient  to  operate  the plant and  generate  enough  cash to cover  debt
   service. In the event crush margins become negative for an extended period of
   time,  the Company may be required to reduce  capacity or shut down the plant
   once operational.

   Inventory: Inventory consists primarily of corn and is stated at the lower of
   cost or  market  using the  first-in,  first-out  method.  Market is based on
   current  replacement  values  except  that it does not exceed net  realizable
   values  and it is not  less  than the net  realizable  values  reduced  by an
   allowance for normal profit margin.

   Derivative  financial   instruments:   The  Company  enters  into  derivative
   contracts to hedge the Company's exposure to price risk related to forecasted
   corn needs and  forward  corn  purchase  contracts.  The  Company  uses cash,
   futures and options  contracts to hedge  changes to the  commodity  prices of
   corn and ethanol.  All the derivative contracts are recognized on the balance
   sheet at their fair market value. We do not enter into these

                                       6

**Southwest Iowa Renewable Energy, LLC
(A Development Stage Company)

Notes to Unaudited Financial Statements
--------------------------------------------------------------------------------****Note 1. Nature of Business and Significant Accounting Policies (continued)**

   derivative financial instruments for trading or speculative purposes,  nor do
   we designate these contracts as hedges for accounting  purposes,  pursuant to
   the requirements of SFAS No. 133,  Accounting for Derivative  Instruments and
   Hedging  Activities.  Accordingly,  any realized or  unrealized  gain or loss
   related to these  derivative  instruments  is  recorded in the  statement  of
   operations  as a  component  of  non-operating  income  until  the  plant  is
   operational.  Once the plant is  operational,  these  gains or losses will be
   included in revenue if the contracts relate to ethanol and cost of revenue if
   the contracts relate to corn. During the three months ended December 31, 2008
   and for the period from March 28, 2005 (date of  inception)  to December  31,
   2008,  the  Company  recorded a combined  realized  and  unrealized  loss for
   derivative  financial  instruments of ($656,973).  There   was no realized or
   unrealized  gain or loss during the three months  ended    December 31, 2007.
   The derivative financial  instruments liability of $852,738   at December 31,
   2008 is made up of 2,695,000 bushels.

   Income  taxes:  The Company has  elected to be treated as a  partnership  for
   federal and state  income tax purposes  and  generally  does not incur income
   taxes.  Instead, the Company's 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 been included in these financial statements.

   Net (loss) per unit:  (Loss) per unit have been  computed on the basis of the
   weighted average number of units outstanding during each period presented.
**Note 2. Members' Equity**

The Company was formed on March 28, 2005 to have a perpetual  life with no limit
on the number of authorized  units. The Company was initially  capitalized by an
aggregate of $570,000 in exchange for 285 Series A membership units. In December
2005, the Company issued an additional 360 Series A membership units in exchange
for  $1,080,000.  In March  2006,  the  Company  completed  a private  placement
offering  with one  membership  unit at $6,000  being at risk and the  remaining
investment  held in escrow until closing of the offering.  The Company  approved
and issued 687 Series A and one Series B at risk membership  units at $6,000 per
unit for total proceeds of $4,128,000.  The offering was closed in November 2006
with the issuance of 7,313 Series A membership units,  3,333 Series B membership
units and 1,000 Series C membership units for total proceeds of $69,876,000.

In May 2007, 25 Series A membership units were issued to a development group for
its efforts to develop  the  project.  In  addition,  in May 2007,  135 Series A
membership units were issued to a related party for its organizational services.

At December 31, 2008 and September 30, 2008 outstanding member units were:

----------------------------------------------------------------
A Units                                                    8,805
B Units                                                    3,334
C Units                                                    1,000

The  Series A, B and C unit  holders  all vote on  certain  matters  with  equal
rights.  The Series C unit  holders as a group have the right to elect one Board
member. The Series B unit holders as a group have the right to elect that number
of Board  members  which  bears  the same  proportion  to the  total  number  of
Directors in relation to Series B outstanding units to total outstanding  units.
Series A unit holders as a group have the right to elect the remaining number of
Directors not elected by the Series C and B unit holders.

Effective  March 7, 2008,  the  Company  entered  into a Series C Unit  Issuance
Agreement (the "Series C Agreement")  with ICM, Inc. ("ICM") and a Series E Unit
Issuance  Agreement (the "Series E Agreement",  together with the

                                       7

**Southwest Iowa Renewable Energy, LLC
(A Development Stage Company)

Notes to Unaudited Financial Statements
--------------------------------------------------------------------------------

Note 2. Members' Equity (continued)**

Series C Agreement,  the "Unit Issuance  Agreements")  with Bunge North America,
Inc.  ("Bunge") in connection with the LCs (see Note 3). Under the Unit Issuance
Agreements,  the  Company  has  agreed  to pay  Bunge and ICM each a fee for the
issuances  of their  respective  LCs equal to 6% per annum of the  undrawn  face
amount of their  respective LCs. The Unit Issuance  Agreements  provide that the
Company  will use its best efforts to raise funds  through a subsequent  private
placement  offering of Units (the  "Private  Placement"),  or such other form of
equity or debt financing as the Company's Board of Directors may deem necessary,
in an amount sufficient to pay off the Bridge Loan (see Note 3) in full prior to
maturity.  In the event  that the LCs are drawn  upon as  discussed  below or if
Bunge or ICM make any payment to Commerce  Bank,  N.A. (the Bridge  Lender) that
reduces  amounts owed by the Company under the Bridge Loan (each, a "Bridge LoanPayment"),   the  Unit  Issuance   Agreements  provide  that  the  Company  will
immediately  reimburse  Bunge and/or ICM, as applicable,  for the amount of such
Bridge  Loan  Payment by issuing  Units to Bunge and ICM,  as further  described
below.

Under the Series C Agreement,  if ICM makes a Bridge Loan  Payment,  the Company
will immediately issue Series C Units to ICM based on a Unit price that is equal
to the lesser of $3,000 or one half (1/2) of the lowest  purchase  price paid by
any  party  for a Unit who  acquired  (or who has  entered  into any  agreement,
instrument  or document to acquire)  such Unit as part of the Private  Placement
after the date of the  Series C  Agreement  but prior to the date of any  Bridge
Loan Payment made by ICM. The Series C Agreement  further provides that ICM will
have the right to purchase its pro rata share of any Units issued by the Company
at any time after the date of the Series C Agreement.

Under the Series E Agreement,  if Bunge makes a Bridge Loan Payment, the Company
will  immediately  issue  Series E Units to Bunge  based on a Unit price that is
equal to the  lesser of $3,000 or one half (1/2) of the  lowest  purchase  price
paid  by any  party  for a Unit  who  acquired  (or  who has  entered  into  any
agreement,  instrument  or document to acquire) such Unit as part of the Private
Placement  after the date of the Series E Agreement but prior to the date of any
Bridge Loan Payment made by Bunge. The Series E Agreement  further provides that
Bunge will have the right to purchase  its pro rata share of any Units issued by
the Company at any time after the date of the Series E Agreement.
**Note 3. Construction and Revolving Loan/Credit Agreements**

In May  2007 and  amended  as  noted  below,  the  Company  entered  into a loan
commitment  with AgStar  Financial  Services,  PCA ("AgStar")  for  $126,000,000
senior  secured  debt,  consisting  of a  $111,000,000  construction  loan and a
$15,000,000  revolving line of credit under the terms of a Credit Agreement (the
"Credit  Agreement").  The  Credit  Agreement  also  provides  for a loan  up to
$1,000,000 on a revolving basis (the "Swingline Revolver"). Borrowings under the
construction loan include a variable interest rate based on LIBOR plus 3.65% for
each advance under the Credit  Agreement.  Upon completion of construction,  the
construction  loan may be segmented  into two credit  facilities,  an amortizing
term facility of $101,000,000 and a revolving term facility of $10,000,000. Upon
conversion,  the Company has the option of converting  50% of the term note into
fixed rate loans at the lender's bonds rate plus 3.25%.  The portion of the term
loan not fixed and the term revolving line of credit will accrue  interest equal
to LIBOR plus 3.45%.  The Credit  Agreement and Revolving Line of Credit require
the  maintenance of certain  financial and  nonfinancial  covenants.  Borrowings
under the  Credit  Agreement  are  collateralized  by  substantially  all of the
Company's  assets.  The  construction/revolving  term credit  facility  requires
monthly principal  payments  starting the seventh month following  conversion of
the  construction  loan to a term loan. The conversion will occur the earlier of
March 1 or 60 days  after  completion  of the  construction.  The  loan  will be
amortized over 114 months and will mature five years after the conversion  date.
The revolving term credit  agreement  expires in five years after the conversion
of the loan at which  time the  principal  outstanding  is due.  Borrowings  are
subject  to  borrowing  base  restrictions,  and the Credit  Agreement  includes
certain prepayment penalties.

                                       8
**Southwest Iowa Renewable Energy, LLC
(A Development Stage Company)

Notes to Unaudited Financial Statements
--------------------------------------------------------------------------------

Note 3. Construction and Revolving Loan/Credit Agreements (continued)**

In  December  2008,  the  Company  executed  a second  amendment  to the  Credit
Agreement  that granted the Company early access to the seasonal  Revolving Line
of Credit (as defined in the Credit  Agreement).  A borrowing base limitation is
included in the agreement that limits the availability of funds to the lesser of
$15,000,000  or  75  percent  of  eligible  accounts   receivable  and  eligible
inventory.  Letters  of credit can be drawn on the  seasonal  line of credit and
cannot exceed  $5,000,000 in the  aggregate.  Additionally,  the Company  caused
AgStar to issue a Letter of Credit in favor of MidAmerican  Energy in the amount
of $3,300,000.  The Letter of Credit was issued  against the Seasonal  Revolving
Line of Credit.  A third  amendment was executed on December 30, 2008, to change
the definition of "Completion  Date" to the earlier of March 1, 2009 or the date
a completion certificate is issued.

As of December 31, 2008 the outstanding  balance under the Credit  Agreement was
approximately  $89,731,000.  In  addition  to all other  payments  due under the
Credit  Agreement,  the Company also agreed to pay,  beginning at the end of the
third  fiscal  quarter  after the  Conversion  Date (as  defined  in the  Credit
Agreement),  the  amount  equal to 65% of the  Company's  Excess  Cash  Flow (as
defined in the Credit  Agreement),  up to a total of  $4,000,000  per year,  and
$16,000,000 over the term of the Credit Agreement.

On March 7, 2008,  the  Company  amended the terms of the Credit  Agreement  and
obtained a bridge  loan in the  maximum  principal  amount of  $36,000,000  (the
"Bridge  Loan").  The  Bridge  Loan debt is  secured  by two  letters of credit,
described below.

Bunge  caused its bank to issue a letter of credit in the amount equal to 76% of
the maximum  principal  amount of the Bridge Loan in favor of the Bridge  Lender
(the  "Bunge  LC"),  and ICM caused its  lender to  similarly  issue a letter of
credit in the amount equal to 24% of the maximum  principal amount of the Bridge
Loan in favor of the Bridge  Lender (the "ICM LC" and,  together  with the Bunge
LC, the "LCs").  Both LCs expire on March 16, 2009,  and the Bridge  Lender will
only draw  against  the LCs to the extent that the  Company  defaults  under the
Bridge Loan or if the Company has not repaid the Bridge Loan in full by March 1,
2009.  In the event the Bridge  Lender draws  against the LCs, the amounts drawn
will be in proportion to Bunge's and ICM's respective ownership of the Company's
Units which are not Series A--76% and 24%,  respectively.  As the Company repays
the principal of the Bridge Loan, the LCs' stated amounts will  automatically be
reduced  in  the  same  proportion.  As of  December  31,  2008,  there  was  an
outstanding  principal and interest balance of approximately  $35,064,000  under
the Bridge Loan.

The Company has  requested  an  extension  from both Bunge and ICM on the LCs to
extend the Bridge Loan. The Company is currently working with Bunge, ICM and all
banks involved to draft documents for extension of the Bridge Loan.

In connection  with the Bridge Loan, the Company  entered into the Unit Issuance
Agreements  with Bunge and ICM,  which govern the  Company's  repayment of Bunge
and/or  ICM,  as the case may be, in the event the LCs are drawn  upon (see Note
2).

                                       9
**Southwest Iowa Renewable Energy, LLC
(A Development Stage Company)

Notes to Unaudited Financial Statements
--------------------------------------------------------------------------------

Note 4. Long-Term Debt**

Long-term  debt  consists of the following as of December 31, 2008 and September
30, 2008:
                                                                            **December 31, 2008      September 30, 2008
                                                                             ------------------     --------------------**
$200,000 Note payable to Iowa Department Economic Development ("IDED")
non-interest bearing monthly payments of $1,667 due through maturity
date of March 2012 on non-forgivable portion (A)                          $       **163,333**        $         **168,333**

Bridge Loan  bearing  interest at LIBOR plus .80% (1.24% at December  31,
2008) through  maturity on March 1, 2009 secured by two letters of credit
as described in Note 3.                                                         **35,064,144****34,761,857**

Construction loan payable to AgStar bearing interest at LIBOR plus
3.65% (4.09% at December 31, 2008).  See maturity discussed in Note 3.          **89,730,649              64,161,717**
                                                                         -----------------------------------------------
                                                                                **124,958,126             99,091,907**
Less current maturities                                                       **(37,282,975)           (35,198,440)**
                                                                         -----------------------------------------------
                                                                          **$     87,675,151       $      63,893,467**
                                                                         ===============================================

(A)  This debt is comprised of two  components  under the Master  Contract  (the
     "Master Contract") dated November 21, 2006 and amended June 5, 2008 between
     the Company and the IDED. A $100,000 loan is non  interest-bearing  and due
     in monthly payments of $1,667 beginning April 2007, with a final payment of
     $1,667 due March 2012; and a $100,000 forgivable loan. Both notes under the
     Master Contract are  collateralized  by substantially  all of the Company's
     assets and subordinate to the above $126,000,000 financial institution debt
     and construction and revolving  loan/credit  agreements included in Note 3.
     The $100,000  forgivable  loan may be forgiven upon IDED's  confirmation of
     the creation and retention of qualifying  jobs as per the Master  Contract.
     If the Company does not meet the requirements of the Master  Contract,  the
     note is due on an agreed upon payment schedule.
**Note 5.   Related-Party Transactions**

In September  2005, the Company  entered into an agreement that expired May 2007
(and was not  renewed)  with a  management  company  that  included a member and
director,  for project development  services for a monthly fee of $10,000,  plus
actual travel and other approved expenses.  The agreement also included a fee of
up to $1,600,000 for securing financing for the construction of a 110 gallon per
year ethanol  facility.  Financial close of the project occurred during the year
ended September 30, 2007 and 135 Series A membership  units were issued directly
to the party's  principals for $810,000 of the $1,600,000  fee. The total fee of
$1,600,000 has been capitalized as financing costs.

In September 2006, the Company entered into a design-build agreement with ICM, a
related  party and a member of the  Company,  for a lump-sum  contract  price of
$118,000,000  (the "ICM  Contract").  Under the ICM  Contract,  the  Company was
required  to make a down  payment of 10% of the  original  contract  price which
$2,000,000 was paid at

                                       10
**Southwest Iowa Renewable Energy, LLC (A Development Stage
Company)

Notes to Unaudited Financial Statements
--------------------------------------------------------------------------------

Note 5.   Related-Party Transactions (continued)**

the  delivery  of the letter of intent,  an  additional  $2,000,000  was paid in
November 2006 when the Company broke escrow and the remaining  $7,800,000 of the
10% was paid in  January  2007.  Monthly  applications  are  submitted  for work
performed,  subject to retainage.  As of December 31, 2008 and 2007, the Company
incurred approximately $144,520,000 and $64,053,000 of construction in progress,
respectively  under the ICM  Contract.  A total of  $9,089,000  is  included  in
retainage and accounts payable as of December 31, 2008.

The Company  entered into an  agreement  in October  2006 with Bunge,  a related
party and a member of the  Company,  to purchase all of the  distiller's  grains
with soluble ("DGS")  produced by the plant (the "DGS  Agreement").  The Company
agreed to pay a purchase price subject to the sales price, transportation costs,
rail lease charge and a fixed rate  marketing fee for the DGS produced.  The DGS
Agreement  commences when the Company begins producing DGS and continues for ten
years when it will automatically renew for successive  three-year terms unless a
180-day  written notice is given of either party's  election not to renew before
the  expiration  of the  initial  term or the  then  current  renewal  term.  In
addition,   the  Company  is  required  to  deliver  written  estimates  of  its
anticipated  production  annually and monthly.  The Company is required to pay a
minimum annual marketing fee of $150,000.  Beginning on the third anniversary of
the  effective  date of the DGS  Agreement and  thereafter,  the annual  minimum
amount  and the  purchase  price  may be  adjusted  based  on terms  within  the
contract.  Either party may terminate the agreement based on specific guidelines
in the DGS Agreement.

On January  30,  2008,  the Company and Bunge  entered  into a Support  Services
Agreement  (the  "Support  Services  Agreement"),  under which  Bunge  agreed to
provide  engineering  support to the project,  provide  reports to the Company's
lender and assist the Company with requests by the lender's  agent.  The Company
will pay, in addition  to Bunge's out of pocket  expenses,  an hourly fee of $95
for such services. The Support Services Agreement terminates upon the earlier of
completion  of the ethanol  plant or December 31, 2008.  Bunge may terminate the
Support  Services  Agreement at any time,  and the Company may  terminate  under
specified circumstances.  Expenses for the three month period ended December 31,
2008 and 2007,  and for the period  from March 28, 2005 (date of  inception)  to
December 31, 2008 were approximately $21,000, none, and $135,000, respectively.

In December 2008,  the Company and Bunge entered into other various  agreements.
Under a Lease  Agreement  (the "Lease  Agreement"),  the Company has leased from
Bunge a grain  elevator  located  in Council  Bluffs,  Iowa,  for  approximately
$67,000 per month.  Expenses for the three month period ended December 31, 2008,
and for the period from March 28, 2005 (date of  inception) to December 31, 2008
were approximately  $33,000, and $33,000,  respectively.  In connection with the
Lease  Agreement,  the Company  entered into a grain purchase  agreement,  under
which the Company  agreed to purchase the grain  inventory at the grain elevator
and the grain inventory located in the Company's  on-site storage facility.  The
Company  purchased  approximately  1,900,000  bushels of corn at an  approximate
market value of $6,980,000.

Under an Ethanol  Purchase  Agreement (the "Ethanol  Purchase  Agreement"),  the
Company  has agreed to sell Bunge all of the  ethanol  produced  at the  ethanol
plant,  and Bunge has agreed to purchase  the same,  up to the  ethanol  plant's
nameplate  capacity of 110,000,000  gallons a year. The Company will pay Bunge a
per-gallon  fee for ethanol sold by Bunge for the Company under this  agreement,
subject to a minimum annual fee of $750,000 and adjusted  according to specified
indexes  after  three  years.  The  initial  term of the  agreement,  which will
commence upon the termination of that Ethanol  Merchandising  Agreement  between
the  Company  and  Lansing  Ethanol  Services,  LLC,  is three years and it will
automatically  renew for successive  three-year  terms unless one party provides
the other with notice of their  election to terminate  180 days prior to the end
of the term.

Under a Risk  Management  Services  Agreement  (the  "Risk  Management  ServicesAgreement"), Bunge has agreed to provide the Company with assistance in managing
its commodity  price risks for a quarterly fee of $75,000.  The agreement has an
initial term of three years and will  automatically  renew for successive  three
year terms,  unless one party  provides  the other  notice of their  election to
terminate 180 days prior to the end of the term. The agreement is

                                       11
**Southwest Iowa Renewable Energy, LLC (A Development Stage
Company)

Notes to Unaudited Financial Statements
--------------------------------------------------------------------------------**Note 5.   Related-Party Transactions (continued)**

effective January 1, 2009 and therefore, no fees have been paid or accrued under
this agreement as of December 31, 2008.

In October 2006,  the Company  entered into an agreement with a company in which
Bunge  holds a  membership  interest,  AGRI-Bunge,  LLC,  to  procure  all grain
required for the Company's  ethanol  plant.  The Company agreed to pay an agency
fee mutually agreed to by both parties for corn delivered by truck or rail, with
a minimum  annual fee. On December  15, 2008,  this  agreement  was  temporarily
suspended and replaced with a grain supply  agreement  between the parties.  The
revised  agreement  has a  term  of  ten  years  and  automatically  renews  for
successive  three-year  terms unless a 180-day written notice is given by either
party.  The Company  agreed to pay an annual  minimum fee of $675,000  under the
revised agreement. No fees are due as the plant is not currently operational.

In connection  with obtaining the Bridge Loan, the Company entered into the Unit
Issuance Agreements, as described above in Note 2.
**Note 6. Commitments**

The total cost of the project,  including the  construction of the ethanol plant
and start-up expenses, is expected to be approximately $225,000,000. The Company
is funding the development of the ethanol plant by using the total equity raised
of  $75,654,000,  long term financing of  approximately  $126,000,000  under the
Credit  Agreement and bridge financing of  approximately  $36,000,000  under the
Bridge Loan.

The Company entered into a contract with an unrelated party for  construction of
a rail line in November 2007. The original  contract amount was for $971,565 and
a change  order was issued July 2008 in the amount of  $227,671.  As of December
31,  2008,  $821,198 has been paid with $ 378,038  remaining  in the  contracted
price.  Approximately $107,000 was included in accounts and retainage payable at
December 31, 2008.

The Company entered into a contract with an unrelated party in July 2008 for the
construction   of  parking  lots  and  roads.   The  contract   amount  was  for
approximately $1,274,000. As of December 31, 2008, $1,181,000 has been paid with
$93,000 remaining in the contracted price.  Approximately  $114,000 was included
in accounts and retainage payable at December 31, 2008.

The Company  entered into a contract in March 2008 with an  unrelated  party for
installation of the electrical system for the plant's grain storage and handling
system. The contract amount is $1,114,000.  As of December 31, 2008,  $1,004,000
has been paid with  approximately  $109,000  included  in  accounts  payable  at
December 31, 2008.

The Company  entered into various other  contracts  during 2007 and 2008 for the
construction for the ethanol plant, office building,  rail track and acquisition
of equipment  totaling  approximately  $2,600,000.  With a future  commitment of
approximately  $316,000 as of December 31, 2008, which is expected to be paid in
calendar 2009. Of this total, approximately $167,000 is included in accounts and
retainage payable as of December 31, 2008.

In November 2006, the Company entered into an agreement with an unrelated entity
for  marketing,  selling and  distributing  all of the  ethanol  produced by the
Company.  The Company will pay a fee mutually agreed to by both parties for each
gallon of ethanol  sold.  The Company  intends to give notice that the  contract
will  be  terminated  six  months  after  the  start  of  ethanol  manufacturing
operations.  There are no penalties involved with terminating this agreement. As
of December 31, 2008,  the ethanol plant is not  operational  and no amounts are
due under this agreement.

The Company has entered  into a steam  contract  with an  unrelated  party dated
January  22,  2007.  The  agreement  was  amended  October  2008 to  modify  the
circumstances  under  which the steam  service  can be  interrupted.  The vendor
agreed to provide the steam  required by the Company,  up to 475,000  pounds per
hour.  The  Company  agreed to pay a

                                       12
**Southwest  Iowa  Renewable  Energy,  LLC (A
Development Stage Company)

Notes to Unaudited Financial Statements
--------------------------------------------------------------------------------****Note 6. Commitments (continued)**

net energy rate for all steam service  provided  under the steam  contract and a
monthly  demand charge for  condensate  not returned  (steam  delivered less the
condensation  returned.)  The net energy  rate is set for the first  three years
then  adjusted  each year  beginning on the third  anniversary  date.  The steam
contract  will  remain in effect for ten years from the  earlier of the date the
Company commences a continuous grind of corn for ethanol production, or February
1, 2009.  As of December 31, 2008,  no expenses  have been  incurred  under this
agreement.

In October,  2007 the  Company  entered  into an  agreement  with an  investment
banking  firm, an unrelated  party,  to assist in obtaining  additional  equity.
While the Bridge Loan is not due until March 1, 2009,  the Company's  goal is to
raise  sufficient  equity to replace  the Bridge Loan as soon as  possible.  The
Company  will pay a monthly  fee of $10,000 for the  services of the  investment
banking firm until the  agreement is terminated by both parties or the equity is
secured. As of October 2008, the Company temporarily suspended the agreement due
to the current  credit  market  conditions.  Expenses for the three month period
ended  December 31, 2008 and 2007,  and for the period from March 28, 2005 (date
of  inception)  to December  31,  2008,  were  $10,000,  $55,000  and  $505,000,
respectively.

In April, 2008 the Company entered into a Firm Throughput Service Agreement with
a natural gas  supplier,  an unrelated  party,  under which the vendor agreed to
provide the gas  required  by the  Company,  up to 900 Dth per day.  The Company
agreed to pay the maximum  reservation and commodity rates as provided under the
vendor's  FERC  Gas  Tariff  as  revised  from  time to  time,  as well as other
additional  charges.  The agreement  specifies an in-service  date of October 1,
2008, and the term of the agreement is seven years. Expenses for the three month
period ended  December 31, 2008 and 2007, and for the period from March 28, 2005
(date of  inception)  to  December  31,  2008 were  $52,400,  none and  $52,400,
respectively.

In March, 2008, the Company entered into the Unit Issuance Agreements,  pursuant
to  which  the  Company  has  agreed  to pay  Bunge  and ICM  each a fee for the
issuances  of their  respective  LCs equal to 6% per annum of the  undrawn  face
amount  of their  respective  LCs for a total  annual  amount  of  approximately
$2,160,000.  For the three  months  ended  December  31, 2008 and for the period
March 28, 2005 (date of inception) to December 31, 2008, the Company capitalized
$552,000 and $1,800,000, respectively, for interest related to the Unit Issuance
Agreements. No payments have been made under these agreements as of December 31,
2008.

In January,  2007, the Company  entered into an agreement  with Iowa  Interstate
Railroad,  LTD to provide the  transportation of the Company's  commodities from
Council  Bluffs,  Iowa  to an  agreed  upon  customer  location.  The  agreement
commences   on  the  date  that  the   contract   is  approved  by  the  Surface
Transportation  Board,  then it continues for five years and will  automatically
renew for  additional  one year periods  unless  cancelled by either party.  The
Company agreed to pay a mutually agreed upon rate per car.

In July 2008,  the Company  entered into a services  agreement with an unrelated
party.  Under the terms of the agreement,  the vendor will provide operation and
maintenance  services of the Company's natural gas border station. The agreement
became  effective  in  November  2008 and has a term of one year.  For the three
months  ended  December  31,  2008 and for the  period  March 28,  2005 (date of
inception)  to December 31, 2008,  the Company has incurred an expense of $5,000
under this agreement.

In August 2008, the Company  entered into an agreement  with an unrelated  party
which  establishes  terms  governing the Company's  purchase of natural gas. The
agreement  commenced in August 2008 and has a term of two years. The Company has
incurred no expense under this contract as of December 31, 2008.

As of December  31,  2008,  the Company has  several  corn cash  contracts  with
unrelated parties  amounting to 699,820 bushels,  for a commitment of $3,005,000
and several basis contracts representing  approximately 395,000 bushels of corn.
The contracts mature on various dates through December 2010.
**Note 7.  Fair Value Measurement**

Effective  October 1, 2008,  the Company  adopted *FASB  Statement  No. 157, Fair
Value Measurements*(SFAS No. 157), which provides a framework for measuring fair
value under generally accepted accounting principles. SFAS

                                       13

**Southwest Iowa Renewable Energy, LLC
(A Development Stage Company)

Notes to Unaudited Financial Statements
--------------------------------------------------------------------------------

Note 7.  Fair Value Measurement (continued)**

No.  157  applies  to all  financial  instruments  that are being  measured  and
reported on a fair value basis.  There were no material financial impacts to the
Company's adoption of SFAS No. 157.

As defined in SFAS No.  157,  fair value is the price that would be  received to
sell an asset or paid to transfer a liability in an orderly  transaction between
market  participants at the  measurement  date. In determining  fair value,  the
Company uses various methods including market, income and cost approaches. Based
on these approaches,  the Company often utilizes certain assumptions that market
participants would use in pricing the asset or liability,  including assumptions
about risk and/or the risks  inherent in the inputs to the valuation  technique.
These  inputs  can be  readily  observable,  market-corroborated,  or  generally
unobservable inputs. The Company utilizes valuation techniques that maximize the
use of observable inputs and minimize the use of unobservable  inputs.  Based on
the observability of the inputs used in the valuation techniques, the Company is
required  to  provide  the  following  information  according  to the fair value
hierarchy.  The fair value  hierarchy  ranks the quality and  reliability of the
information  used to determine  fair values.  Financial  assets and  liabilities
carried at fair value will be  classified  and disclosed in one of the following
three categories:

  Level 1 -    Valuations  for assets and  liabilities  traded in active markets
               from readily  available  pricing sources for market  transactions
               involving identical assets or liabilities.

  Level 2 -    Valuations  for  assets  and  liabilities  traded in less  active
               dealer  or  broker   markets.   Valuations   are  obtained   from
               third-party  pricing  services for identical or similar assets or
               liabilities.

  Level 3 -    Valuations  incorporate  certain  assumptions  and projections in
               determining   the  fair  value   assigned   to  such   assets  or
               liabilities.

A description of the valuation  methodologies  used for instruments  measured at
fair value, including the general classification of such instruments pursuant to
the valuation hierarchy,  is set forth below. These valuation methodologies were
applied  to all of the  Company's  financial  assets and  financial  liabilities
carried at fair value.

The following table summarizes financial liabilities measured at fair value on a
recurring  basis  as of  December  31,  2008,  segregated  by the  level  of the
valuation inputs within the fair value hierarchy utilized to measure fair value:

Derivative  financial  statements.  Commodity  futures contracts are reported at
fair value utilizing Level 1 inputs.  For these  contracts,  the Company obtains
fair value  measurements  from an independent  pricing  service.  The fair value
measurements  consider  observable  data that may include dealer quotes and live
trading levels from the CBOT and NYMEX markets.

                                                    Total          Level 1      Level 2      Level 3
                                               ----------------- ------------ ------------- ----------

Liability, derivative financial instruments       (852,738)        (852,738)        ---        ---

                                       14
**Southwest Iowa Renewable Energy, LLC
(A Development Stage Company)

Notes to Unaudited Financial Statements
--------------------------------------------------------------------------------

Note 8.  Subsequent Events**

On February  1, 2009,  the Base  Agreement  dated  August 27,  2008  between the
Company and Constellation  NewEnergy was amended to provide  additional  natural
gas during  periods  when steam is  interrupted  from  MidAmerican  Energy.  The
amendment  requires  an annual fee of  $225,000  and is  payable on a  quarterly
basis.

Subsequent to December 31, 2008 and in February,  2009,  the ethanol plant began
limited  operations  as part  of  testing  and  bringing  the  plant  into  full
operation.

                                       15
**Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations.

*Forward Looking Statements***

     This  report on Form 10-Q by  Southwest  Iowa  Renewable  Energy,  LLC (the
"Company," "we" or "us") contains forward-looking statements that involve future
events,  our future  performance and our expected future operations and actions.
In some cases you can identify  forward-looking  statements  by the use of words
such as "may," "should,"  "anticipate,"  "believe,"  "expect," "plan," "future,"
"intend," "could," "estimate,"  "predict," "hope,"  "potential,"  "continue," or
the negative of these terms or other similar expressions.  These forward-looking
statements are only our predictions and involve numerous assumptions,  risks and
uncertainties.  Our actual results or actions may differ  materially  from these
forward-looking statements for many reasons, including the following factors:

     •    Overcapacity in the ethanol industry;
     •    Our ability to obtain any  additional  equity  financing  which may be
          required to complete plant  construction and commence  operations,  or
          our inability to fulfill our debt financing covenants;
     •    Changes in our business strategy,  capital improvements or development
          plans;
     •    Construction  delays and technical  difficulties in  constructing  the
          plant;
     •    Changes in the environmental  regulations that apply to our plant site
          and operations;
     •    Our ability to hire and retain key  employees for the operation of the
          plant;
     •    Changes in general  economic  conditions or the  occurrence of certain
          events  causing  an  economic  impact  in  the  agricultural,  oil  or
          automobile industries;
     •    Changes  in the  availability  and  price of  electricity,  steam  and
          natural gas;
     •    Changes in federal and/or state laws (including the elimination of any
          federal and/or state ethanol tax incentives);
     •    Changes and advances in ethanol production technology; and competition
          from alternative fuel additives.

     Our actual results or actions could and likely will differ  materially from
those anticipated in the forward-looking  statements for many reasons, including
the reasons  described in this  report.  We are not under any duty to update the
forward-looking  statements contained in this report. We cannot guarantee future
results, levels of activity,  performance or achievements. We caution you not to
put undue reliance on any forward-looking statements, which speak only as of the
date of this  report.  You  should  read  this  report  completely  and with the
understanding  that our actual future  results may be materially  different from
what we currently  expect. We qualify all of our  forward-looking  statements by
these cautionary statements.

***Overview, Status and Recent Developments***

     We are a development  stage Iowa limited liability company which was formed
on March 28, 2005 to develop,  construct,  own and operate a 110 million  gallon
dry mill corn-based  ethanol plant near Council Bluffs,  Iowa (the  "Facility").
Based upon  engineering  specifications  from ICM, our primary  constructor,  we
expect the Facility to process  approximately  39.3 million  bushels of corn per
year into 110 million  gallons of denatured fuel grade ethanol,  300,000 tons of
distillers' dry grains with solubles ("DDGS") and 50,000 tons of wet distillers'
grains with solubles ("WDGS," together with DDGS, "Distillers Grains"). The fuel
grade  ethanol  will  be  sold in  markets  throughout  the  United  States  and
Distillers   Grains   sold  in  markets   throughout   the  United   States  and
internationally.  To execute our business  plan, we raised  capital  through two
offerings--an  initial seed round in the fourth  quarter of 2005 and a secondary
round  in the  first  quarter  of  2006.  With the  proceeds  of our two  equity
offerings,  we began  construction  of our  Facility in  February  of 2007.  The
Facility  began  limited  operation  in  February,  2009 as part of testing  and
bringing  the plant into full  operation,  and there are only two areas that are
not complete as of this filing:

     •    Back-up  boilers:  Our  revised  air permit  was  issued  mid-December
          allowing us to complete  construction  of our permanent  backup boiler
          system.  This back-up system is expected to be operational by March 1,
          2009 and will have the  capacity to supply  100% of our plant's  steam
          needs in the event of a Mid America Energy shutdown.
     •    Site  paving:  A few areas will be  completed  in the  spring,  due to
          weather.

                                       16

     On May 2, 2007, we entered into a $126,000,000 credit facility (as amended,
the "Credit Agreement") with AgStar Financial Services, PCA ("AgStar"), as agent
for a syndicate  group of lenders (the  "Lenders").  Effective March 7, 2008, we
amended the terms of our primary lending  agreements,  obtained a bridge loan in
the maximum  principal  amount of $36,000,000  (the "Bridge Loan") from Commerce
Bank, N.A. (the "Bridge Lender") and entered into  arrangements  with the Bridge
Lender and our key equity holders and operational partners,  ICM and Bunge North
America,  Inc. (a wholly owned subsidiary of Bunge Limited,  a  publicly-traded,
global agribusiness company) ("Bunge").  On March 7, 2008, we made the following
arrangements:

     •  We  obtained  the  Bridge  Loan  in  the  maximum  principal  amount  of
     $36,000,000, which is secured by two letters of credit, as described below.
     As of  December  31,  2008,  we  have  drawn  $35,064,000  for  payment  of
     construction in progress and interest on the Bridge Loan.

     • Bunge  caused its bank to issue a letter of credit in the amount equal to
     76% of the  maximum  principal  amount of the  Bridge  Loan in favor of the
     Bridge  Lender (the  "Bunge  LC"),  and ICM caused its lender to  similarly
     issue  a  letter  of  credit  in the  amount  equal  to 24% of the  maximum
     principal amount of the Bridge Loan in favor of the Bridge Lender (the "ICMLC" and,  together with the Bunge LC, the "LCs").  Both LCs expire on March
     16,  2009,  and the Bridge  Lender  will only draw  against  the LCs to the
     extent  that we default  under the Bridge Loan or if we have not repaid the
     Bridge Loan in full by March 1, 2009.  In the event the Bridge Lender draws
     against the LCs,  the amounts  drawn will be in  proportion  to Bunge's and
     ICM's  respective  ownership  of the  Company's  Units which are not Series
     A--76% and 24%, respectively. As we repay the principal of the Bridge Loan,
     the  LCs'  stated  amounts  will  automatically  be  reduced  in  the  same
     proportion.

     • We entered into a Series C Unit Issuance  Agreement with ICM (the "SeriesC  Agreement")  and a Series E Unit  Issuance  Agreement  with  Bunge  (the
     "Series E  Agreement",  together  with the  Series C  Agreement,  the "UnitIssuance  Agreements") in connection with their respective issuances of the
     LCs.  Under the Unit  Issuance  Agreements,  we agreed to pay Bunge and ICM
     each a fee for the issuances of their  respective LCs equal to 6% per annum
     of the  undrawn  face amount of their  respective  LCs.  The Unit  Issuance
     Agreements provide that we will use our best efforts to raise funds through
     a subsequent private placement offering of Units (the "Private Placement"),
     or such other form of equity or debt  financing  as our Board of  Directors
     may deem necessary,  in an amount  sufficient to pay off the Bridge Loan in
     full prior to maturity. Although we anticipate that funds obtained from the
     Private  Placement or such other equity or debt financing will enable us to
     pay off the Bridge  Loan in full prior to  maturity,  in the event that the
     LCs are drawn upon as  discussed  above or if Bunge or ICM make any payment
     to the Bridge Lender that reduces  amounts owed by us under the Bridge Loan
     (each, a "Bridge Loan Payment"),  the Unit Issuance Agreements provide that
     we will  immediately  reimburse  Bunge and/or ICM, as  applicable,  for the
     amount of such  Bridge Loan  Payment by issuing  Units to Bunge and ICM, as
     further described below.

     • Under the Series C Agreement, if ICM makes a Bridge Loan Payment, we will
     immediately issue Series C Units to ICM based on a Unit price that is equal
     to the lesser of $3,000 or one half (1/2) of the lowest purchase price paid
     by any  party  for a Unit  who  acquired  (or  who  has  entered  into  any
     agreement,  instrument  or document to acquire) such Unit after the date of
     the Series C  Agreement  but prior to the date of any Bridge  Loan  Payment
     made by ICM. The Series C Agreement further provides that ICM will have the
     right to purchase  its pro rata share of any Units issued by us at any time
     after the date of the Series C Agreement.

     • Under the Series E Agreement,  if Bunge makes a Bridge Loan  Payment,  we
     will  immediately  issue Series E Units to Bunge based on a Unit price that
     is equal to the lesser of $3,000 or one half  (1/2) of the lowest  purchase
     price paid by any party for a Unit who  acquired  (or who has entered  into
     any agreement,  instrument or document to acquire) such Unit after the date
     of the Series E Agreement  but prior to the date of any Bridge Loan Payment
     made by Bunge. The Series E Agreement further provides that Bunge will have
     the right to purchase  its pro rata share of any Units  issued by us at any
     time after the date of the Series E Agreement.

     The Bridge Loan is due March 1, 2009. We have requested an extension of the
Bridge Loan arrangement from Bridge Lender,  AgStar,  Bunge and ICM and drafting
documents for the extension is currently underway.

                                       17
***Results of Operations***

     For the three month periods  ended  December 31, 2008 and 2007, we incurred
net losses of approximately ($2,317,000) and ($505,000),  respectively.  We have
incurred an accumulated net loss of  approximately  ($5,734,000)  for the period
March 28, 2005 (date of inception)  through December 31, 2008. These losses were
incurred for general and  administrative  expenses  relating to organization and
development  as we continue to construct  our plant.  We recorded a net realized
and  unrealized  loss  of  ($656,973)  for  corn  hedging  contracts,   for  the
three-month  period  ending  December 31, 2008 and for the period from March 28,
2005 (date of inception) through December 31, 2008, respectively.
***Liquidity and Capital Resources***

     We  intend  to  rely  on our  current  equity  and  available  debt to fund
completion of the project,  cover start-up costs and purchase inventory prior to
our  operational  date. We will seek to issue equity to replace the Bridge Loan,
as described above.  However, if we are not successful in raising equity or debt
from  third  parties  to  replace  the  Bridge  Loan,  it will be  converted  to
additional Series C and Series E Units. Under the terms of the Credit Agreement,
as of December 31, 2008 we have drawn approximately $89,731,000 under the Credit
Agreement  and have  also  drawn  approximately  $35,064,000  of  principal  and
interest under the Bridge Loan. We anticipate  that our working  capital will be
tight  because  of  the  implementation  of a 75%  borrowing  base  on  accounts
receivable  and  inventory in an amendment  to the Credit  Agreement  that could
significantly reduce cash available for draws.

     Once  operational,  we believe  operating  margins  will be very tight.  We
anticipate  that cash flow from  operations  will allow us to make our  interest
payments,  but may not be adequate to service our  principal  payments.  We have
requested  that  AgStar  delay  the start  date of  principal  payments.  If the
extension is granted,  principal payments under the Credit Agreement,  presently
scheduled to begin December 1, 2009, would be extended an additional six months,
to June 1, 2010.

     We executed a second  amendment  to our Credit  Agreement  on December  19,
2008, that granted us early access to our seasonal Revolving Line of Credit. The
amendment  allows access to the funds prior to the plant being  operational  and
includes a borrowing base limitation  which limits the  availability of funds to
the lesser of  $15,000,000 or 75% of eligible  accounts  receivable and eligible
inventory. We can use this line of credit to hedge corn, natural gas and ethanol
futures. The volatility in the commodities markets recently has resulted in wide
swings in margins for ethanol  production.  If additional  working  capital were
available, we would be able to more effectively reduce the impact of commodities
volatility.

     Cash (used in)  operations  for the three month period  ended  December 31,
2008 and December 31, 2007, and from March 28, 2005 (date of inception)  through
December 31, 2008, was ($9,229,792), ($329,848) and ($11,348,393), respectively.
Cash has been used primarily for  pre-operational  and administrative  expenses.
For the three month  period ended  December 31, 2008 and December 31, 2007,  and
from March 28, 2005 (date of inception) through December 31, 2008, net cash used
in  investing  activities  was  ($20,976,259),  ($162,020)  and  ($183,617,934),
respectively, primarily related to the construction of our plant. Cash (used in)
operations  increased  significantly for the three-month  period ending December
31,  2008  due  to the  purchase  of  inventories  of  corn  and  chemicals  for
operations.

     Cash for the period  ending  December 31, 2008 was provided by advance from
our construction loan. We used cash of $8,188 for the period ending December 31,
2007 to fund  financing  costs and pay down on the  Master  Contract  (the "IDEDContract") with the Iowa Department Economic Development (the "IDED"), effective
November 21, 2006 and amended June 5, 2008.  For the three month  periods  ended
December  31,  2008 and  December  31,  2007,  and from March 28,  2005 (date of
inception)  through  December 31,  2008,  cash  provided by (used in)  financing
activities was $25,489,429,  ($8,188) and $196,807,099,  respectively. This cash
was generated  through our equity  financing of $75,654,000,  the Bridge Loan of
$34,100,000 and $89,731,000 from our construction loan.

                                       18
***Trends and Uncertainties Impacting Ethanol Industry and Our Future Operations***

     Our operations are highly dependent on commodity prices,  especially prices
for corn,  ethanol,  distiller's  grains and  natural  gas. As a result of price
volatility  for  these   commodities,   our  operating   results  may  fluctuate
substantially.  The price and  availability  of corn are subject to  significant
fluctuations  depending upon a number of factors that affect commodity prices in
general, including crop conditions,  weather,  governmental programs and foreign
purchases.  We may  experience  increasing  costs for corn and  natural  gas and
decreasing  prices for ethanol and distillers  grains which could  significantly
impact  our  operating  results.  Because  the  market  price of  ethanol is not
directly  related to corn prices,  ethanol  producers  are generally not able to
compensate  for increases in the cost of corn feedstock  through  adjustments in
prices charged for ethanol.  Based on recent forward prices of corn and ethanol,
it is possible  that in the future we may be  operating  the  Facility at low to
negative operating margins. At this time, we plan to commence operations even if
we are not  immediately  profitable,  but we will  continue to monitor  corn and
ethanol prices and their effect on our longer-term profitability.

     The price of corn has been very  volatile  during the past year.  Since the
end of fiscal 2007, the Chicago  Mercantile  Exchange  ("CME")  near-month  corn
price has risen above $7.00 per bushel.  The CME near-month corn price for March
2009 was $3.97 per bushel.  We believe the increase in corn prices was primarily
due to  export  demand,  speculation,  ethanol  demand  and  current  production
concerns.  Higher corn prices will  negatively  affect our costs of  production.
However, we also believe that higher corn prices may, depending on the prices of
alternative  crops,  encourage farmers to plant more acres of corn in the coming
years and  possibly  divert  land in the  Conservation  Reserve  Program to corn
production.  We believe an increase  in land  devoted to corn  production  could
reduce the price of corn to some extent in the future.

     The United States Department of Agriculture ("USDA") is projecting a higher
carryout for corn this year due to smaller than  expected  usage for ethanol and
exports.  The USDA  report  for crop  year 2008 (the  period of  September  2008
through  August 2009) has  projected  the  season-average  farm price of corn at
$3.55 to $4.25 per bushel.  We feel that there will continue to be volatility in
the corn market.  The report  projected corn inventory to be 316 million bushels
(a decrease from the prior year's report), corn used in ethanol production to be
3,600 million  bushels (a decrease by 100 million  bushels from the prior year's
report) and corn exports to be 1,750  million  bushels (a decrease by 50 million
bushels  from the prior  year's  report).  Assuming no  significant  increase in
speculative investing  activities,  these projections would indicate corn prices
could continue to decline.

     Historically,  ethanol  prices have tended to track the wholesale  price of
gasoline. Ethanol prices can vary from state to state at any given time. For the
past two years,  according to ProExporter,  the average U.S.  ethanol  wholesale
price was $2.13 per gallon. For the same time period, the average U.S. wholesale
gasoline price was $2.45 per gallon.  During the last six months of fiscal 2008,
the average U.S.  ethanol price was $2.26 per gallon.  For the same time period,
U.S. gasoline prices have averaged $2.03 per gallon, or approximately  $0.23 per
gallon below  ethanol  prices.  In December  2008,  JP Morgan cut its 2009 price
target  for oil to $43 a barrel  from $69,  citing  "deterioration  in the world
economic  environment and the ensuing sharp  contraction in global oil demand in
both 2008 and 2009". If corn were to average $4.00 per bushel,  we would need to
generate  an  average  netback  of $1.65 per  gallon to be able to  service  our
interest and  principal  payments.  Netback is the sales price minus all freight
charges, storage charges or marketing fees.

     Federal policy has a significant  impact on ethanol market demand.  Ethanol
blenders  benefit from incentives  that encourage  ethanol usage and a tariff on
imported ethanol  supports the domestic  industry.  Additionally,  the Renewable
Fuels Standard ("RFS") mandates  increased level of usage of both corn-based and
cellulosic ethanol.  The RFS policies were challenged in a proceeding at the EPA
by the  State of  Texas.  The  State of Texas  sought a waiver of 50% of the RFS
mandate because of the economic impact of high corn prices.  The EPA denied this
request in early August, 2008. Any adverse ruling in the future on any other RFS
waiver request could have an adverse impact on short-term ethanol prices.

     We believe that any reversal in federal policy could have a profound impact
on the ethanol  industry.  In recent  months,  a political  debate has developed
related to the alleged adverse impact that increased ethanol  production has

                                       19

had on food prices.  The  high-profile  debate focuses on  conflicting  economic
theories  explaining  increased  commodity prices and consumer costs.  Political
candidates and elected officials have responded with proposals to reduce,  limit
or eliminate the RFS mandate,  blender's credit and tariff on imported  ethanol.
While at present no policy change appears imminent,  we believe that the debates
have  created  uncertainty  and  increased  the ethanol  industry's  exposure to
political risk.

***Competition***

     There are many other  ethanol  projects in Iowa and  Nebraska  that compete
with us for limited resources including investors and key business relationships
with suppliers and purchasers.  Ethanol is a commodity product, like corn, which
means our ethanol plant  competes  with other ethanol  producers on the basis of
price and, to a lesser  extent,  delivery  service.  We believe  our  Facility's
location  offers an advantage over other ethanol  producers in that it has ready
access by rail to both local and national markets.

     Until very  recently,  excess  capacity in the ethanol  industry has had an
adverse effect on many plants'  results of operations,  cash flows and financial
conditions,  as market forces have already  reduced the  profitability  of other
currently  operational  ethanol companies.  According to the March 2009 issue of
Ethanol Producer's Magazine there are currently 32 plants that are not producing
ethanol.  Many of these plants may have halted production because of unfavorable
cost-of-production/sale  price  conditions.  There  is  speculation  within  the
ethanol industry that several  additional plants will close and that many plants
under development will not be completed.

     In a  manufacturing  industry,  producers  have an incentive to manufacture
additional  products  so long as the sale price  exceeds  the  marginal  cost of
production  (i.e.,  the cost of producing only the next unit,  without regard to
interest,  overhead or fixed costs).  This incentive can disappear if the market
price of ethanol is reduced to a level that is inadequate to generate sufficient
cash flow to cover costs of production.

     Finally,  alternative fuels and ethanol  production methods are continually
under  development by other parties,  including other ethanol  producers and oil
companies,  with far greater resources than us and who can influence legislation
and public  perception  of ethanol.  New ethanol  products or methods of ethanol
production  developed by larger and  better-financed  competitors  could provide
them competitive advantages and harm our business.

***Sources of Funds***

     The total project cost to construct our Facility and commence operations is
currently estimated to be approximately  $225,000,000.  To date, we have planned
to finance the  construction  of the Facility with a  combination  of equity and
debt capital.  We initially  raised  equity from our seed capital  investors and
completed a secondary  private  offering in March 2006. We intend to draw on our
debt financing  under the terms of the Credit  Agreement and the Bridge Loan. We
have also  received  grant  income  from the USDA and a loan from the IDED.  The
following  schedule  sets forth the  sources  of funds from our equity  offering
proceeds and our debt financing proceeds and grants:

                                       20

**Source of Funds                                                                   Amount            Percent of Total***Equity:*
         Member Equity (Seed Capital Offerings)                               $      1,650,000              0.74    %
         Member Equity (Secondary Offering)                                   $     74,004,000             32.94    %

     *Other:*
         Interest, Grant and Other Income                                     $      3,881,400              1.72    %
     **Total Equity and Other                                                   $     79,535,400             35.40    %***Debt:*
         Credit Facility                                                      $    111,000,000             49.40    %
         Bridge Loan                                                          $     34,100,000             15.20    %**Total Debt                                                               $    145,100,000             64.60    %****------------------------------------------------------------------------------------------------------------------
Total                                                                         $    224,635,000               100  %****Other Income**

     In addition to our equity  financing,  the Credit  Agreement and the Bridge
Loan, we have earned interest,  rent, grant and other income of $51,000, $93,065
and $3,821,000 for the three-month periods ending December 31, 2008 and December
31, 2007, and from date of inception,  respectively. We had significant interest
income  from  equity  contributions  prior to  construction  of the  plant.  The
remainder of the income was from the USDA grant discussed below.

     **Debt Financing**

     In May 2007, we closed on our debt  financing  with AgStar as agent for the
Lenders. Our debt financing is principally governed by the Credit Agreement with
the Lenders,  along with other  agreements,  which were amended March 7, 2008 in
connection  with  the  Bridge  Loan.  The  Credit  Agreement   provides  for  an
$111,000,000  construction  loan  which is  convertible  into a term  loan  (the
"Construction Loan"), at a variable interest rate of LIBOR (the London Interbank
Offered  Rate) plus 3.65%.  The Credit  Agreement  requires that we make monthly
principal  payments  commencing seven months following the date the Construction
Loan converts to a term loan (60 days after  completion of  construction  of the
Facility) (the "Conversion  Date"). On the Conversion Date, the Credit Agreement
provides that the Construction  Loan will be converted into a term loan of up to
$101,000,000  (the "Term Loan") and a term  revolving  loan of up to $10,000,000
(the "Term Revolver"); and up to 50% of the outstanding Construction Loan can be
converted to a fixed rate term loan ("Fixed Rate Loan"). In addition, the Credit
Agreement  provides for a revolving line of credit of approximately  $15,000,000
(the "Revolving Line of Credit").  The Revolver provides for a variable interest
rate of LIBOR plus 3.45%. Finally, the Credit Facility provides for a loan up to
$1,000,000 on a revolving basis (the "Swingline  Revolver").  Under the terms of
the First Amendment to the Credit  Agreement,  the Company's  lenders waived any
and all covenant violations or events of default as of March 7, 2008 arising out
of or related to increased project costs.

     In addition to all other payments due under the Credit  Agreement,  we also
agreed  to pay,  beginning  at the end of the  third  fiscal  quarter  after the
Conversion  Date, the amount equal to 65% of our Excess Cash Flow (as defined in
the Credit  Agreement),  up to a total of $4,000,000 per year,  and  $16,000,000
over the term of the  Credit  Agreement.  Such  payment  will be  applied to the
outstanding principal of the Term Loan (once funded), and will not be subject to
the prepayment fee. The prepayment fee is due if the  Construction  Loan or Term
Loan is paid in full within 24 months after the Conversion  Date. We also agreed
to pay to each  Lender,  annually,  a letter  of  credit  fee equal to 150 basis
points of each  Lender's  maximum  amount  available  to us under its  letter of
credit.  We will pay a commitment  fee of 35 basis points per year of the unused
portion  of  each  Lender's  Revolving  Commitment,  as  defined  in the  Credit
Agreement,  and payable in arrears in quarterly  installments.  The repayment of
any  loan  will  be  made  to the  Lenders  pro  rata  based  on  each  Lender's
contribution to the total outstanding principal of that loan.

                                       21

     In December  2008, we issued a Letter of Credit in the favor of MidAmerican
Energy in the amount of  $3,300,000  as  required by our steam  agreement.  This
Letter of Credit was issued against our Revolving Line of Credit and reduces the
availability   of  our  $15,000,000   seasonal   revolving  line  of  credit  to
$11,700,000.

     **Governmental Programs**

     • IDED:  We entered into the IDED  Contract,  which  provides for financial
assistance  from IDED. The awards granted under the IDED Contract can be reduced
or terminated if there is a change in the IDED revenues appropriated to us under
the Master Contract or for any other reason beyond IDED's  control.  All amounts
of  financing  received  from  IDED  will be  spent on the  construction  of our
Facility.  As part of the Master Contract,  we granted to IDED a second position
security  interest in all of our assets,  and a first position security interest
in our  rolling  stock  valued at  $200,000.  We covenant  to (i)  maintain  our
business and Facility in Iowa, (ii) create certain numbers of jobs, based on the
job category (the "Job  Requirement"),  (iii)  provide  certain  benefits,  (iv)
complete the Facility and comply with  performance  requirements  regarding  its
completion,  (v) maintain our properties in a condition of good repair, (vi) pay
all  taxes,  assessments  and fees,  and (vii)  insure  our risks as any  person
similarly  situated  would.  We agree to provide  reports  including  a mid-year
status report, an end-of-year  status report,  an end of project report,  and an
end of job maintenance period report. Additionally,  we agreed to not be a party
to any merger or  consolidation,  we agree to not sell,  transfer,  or lease any
property  covered by a security  interest,  and we agreed to not form or acquire
any  subsidiaries  or transfer any assets pledged as security to any subsidiary.
The  Master  Contract  contains  standard  events of  default,  and in  addition
declares an event of default  when we are  subject to any  judgment in excess of
$100,000, in the aggregate.

     The IDED  Contract  contains  a  VAAPFAP  Funding  Agreement  ("VA  FundingAgreement"),  which provides us with an interest-free loan of $100,000,  payable
over 60 months,  and a $100,000  forgivable  loan,  payable over 36 months.  The
forgivable loan is only due if IDED determines that we failed to comply with the
terms of the VA Funding  Agreement  and the IDED  Contract.  In  addition to the
requirements for funding under the IDED Contract,  we must also provide evidence
that we have access to steam energy from  MidAmerica  Energy's  plant to replace
natural gas before we will receive funds under the VA Funding Agreement.  In the
event  we  fail to meet  our Job  Requirement,  IDED  can  either  require  full
repayment of the loan or  repayment on a pro rata basis.  If we fail to meet our
Job Requirement,  the forgivable loan will be forgiven on a pro rata basis, with
the remaining  balance being  amortized over a two year period and carrying a 6%
interest rate, due from the first day of disbursement  of the shortfall  amount.
We have signed two  promissory  notes,  each for  $100,000,  covering  the loans
provided for under the VA Funding Agreement. The VA Funding Agreement terminates
upon (i) IDED  determining we have fully met all of the  requirements  of the VA
Funding Agreement,  including repayment, (ii) an event of default, (iii) lack of
any  distribution  under the VA Funding  Agreement within 24 months of the award
date, or (iv) mutual agreement.

     The IDED Contract also contains a High Quality Job Creation Program Funding
Agreement ("HQJCP Funding Agreement"). Under the HQJCP Funding Agreement, we are
allowed to claim an  investment  tax credit  ("Tax  Credit") of up to 5% (with a
maximum of $6,922,308) of our qualifying  expenses  directly related to new jobs
created by the start-up, location,  expansion, or modernization of our Facility,
we are  eligible  for a  refund  of  sales,  service,  and use  taxes  we pay to
contractors  or  subcontractors,  and  we are  eligible  for a  value-added  tax
exemption. Under the HQJCP Funding Agreement, we must create 45 new high quality
jobs.  These new jobs must be created  within five years of Facility  completion
and must be maintained for at least two years thereafter.  We also agree to make
a qualifying  investment of $141,331,160 toward the purchase and construction of
our  Facility.  Additionally,  we must (i) offer our new  employees a pension or
profit  sharing  plan,  (ii)  create  a high  value-added  good  or  service  in
"Value-Added  Agriculture"  (one of Iowa's  target  industries),  (iii)  provide
employees 90% of the cost of medical and dental insurance,  and (iv) have active
productivity  and safety  programs.  If we fail to create the number of required
jobs,  then we will be  required  to repay  these tax  benefits  pro rata to the
percent of jobs we failed to create  over the number of jobs we are  required to
create. If we fail to meet the four  requirements  above for two years in a row,
then we forfeit all tax benefits we receive under the HQJCP  Funding  Agreement.
If we sell or dispose of any building,  land, or structure that has received tax
incentives  under this  program,  then our tax  liability  will be  increased as
outlined in the HQJCP  Funding  Agreement.  In the event we layoff  employees or
close our Facility  prior to  receiving  any tax  benefits,  the benefits may be
reduced or terminated by IDED. The HQJCP Funding  Agreement  terminates upon (i)
IDED  determining we have fully met all of the requirements of the HQJCP Funding
Agreement,  including  repayment,  (ii) an event of  default,  (iii) lack of any
distribution  under the HQJCP  Funding  Agreement  within 24 months of the award
date, or (iv) mutual agreement.

                                       22

• USDA: We entered into a Value-Added  Agricultural  Product Market  Development
(VAPG) Grant Agreement  ("Grant  Agreement")  with the United States of America,
dated  November  3, 2006.  We  received a grant of  $300,000  for payment of (i)
administrative staff salaries during construction and start-up,  (ii) the rental
of temporary  office space, and (iii) permanent staff salaries for three months.
As a condition to receiving the grant, we agreed to contribute at least $300,000
of our own  money  to be  spent  at an equal  or  greater  rate  than the  Grant
Agreement  funds.  We also agree to maintain a financial  management  system and
receive payment in accordance with federal regulations.  Additionally, we agreed
to comply  with  certain  bonding  coverage,  audit and  reporting  obligations.
Finally,  we agreed to comply  with  federal  regulations  concerning  property,
procurement and records access. The Grant Agreement expired September 30, 2008.
***Uses of Funds***

     The  following  table  describes the estimated use of our offering and debt
financing  proceeds.  The figures  are  estimates  only,  and the actual uses of
proceeds may vary significantly from the descriptions given below.
**Estimated Uses of Funds                                          Amount            Percent of Total**
Plant Construction                                           $    119,161,000              53.1    %
Other Construction                                           $     65,635,000              29.2    %
Land and Site Development                                    $     10,331,000               4.6    %
Site Utilities, Fire Protection and Water Supply             $      3,893,000               1.7    %
Rolling Stock                                                $      1,450,000               0.6    %
Administration Building, Computer Systems and Furnishings    $      1,140,000               0.5    %
Rail line                                                    $     12,544,000               5.6    %
Construction Insurance                                       $        443,000               0.2    %
Equity and Debt Financing Expenses+                          $      2,414,000               1.1    %
Organizational                                               $      5,424,000               2.4    %
Start-Up                                                     $      2,200,000               1.0    %
-----------------------------------------------------------------------------------------------------**Total                                                        $    224,635,000               100    %**

+    Does not  include  additional  expenses  we may  incur to raise  additional
     equity as discussed elsewhere in this report.

     The ICM  Contract  provides  for a fixed fee of  $118,000,000  to build the
primary  portions of our Facility.  In 2008, we executed ten change orders under
the ICM  Contract in the amount of  $30,519,000.  These  change  orders were for
items  outside  of the scope of the ICM  Contract  and  therefore  were time and
material  based items  instead of fixed price.  Through  December 31, 2008,  the
Company has incurred approximately  $144,520,000 for construction services under
the ICM Contract,  leaving $4,000,000 of future  commitment,  which we expect to
pay in 2009. The Standard Form of Design-Build  Agreement and General Conditions
Between  Owner and  Contractor  dated  December 18, 2006,  between us and Todd &
Sargent,  Inc.  ("T&S"),  provides  for a fee,  subject  to  change  orders,  of
approximately  $9,661,000  to design and  construct  a  1,000,000  bushel  grain
receiving and storage facility and Distillers Grain storage facility, which work
is completed. Through December 31, 2008, we have paid T&S $9,641,000,  leaving a
balance of $20,000 in future commitments.
***Summary of Critical Accounting Policies and Estimates***

     Note  1 to our  condensed  consolidated  financial  statements  contains  a
summary of our significant accounting policies, many of which require the use of
estimates  and  assumptions.  Accounting  estimates  are an integral part of the
preparation  of financial  statements  and are based upon  management's  current
judgment.  We used our  knowledge and  experience  about past events and certain
future  assumptions to make estimates and judgments  involving  matters that are
inherently  uncertain  and that  affect  the  carrying  value of our  assets and
liabilities.

                                       23

***Application of Critical Accounting Estimates***

     Management  uses  estimates  and  assumptions  in preparing  our  financial
statements in accordance with accounting  principles  generally  accepted in the
United States.  These estimates and assumptions  affect the reported  amounts of
assets and liabilities, the disclosure of contingent assets and liabilities, and
the  reported  revenues  and  expenses.  We do  not  believe  that  any  of  the
significant  accounting  policies  described  in  the  notes  to  the  financial
statements  are  critical at this time;  however we expect to continue to review
our accounting  policies as we commence  operation of our ethanol plant in order
to determine if any of these accounting policies are critical.
***Market Risks***
     We engage in hedging  transactions  which involve risks that could harm our
business.  We are  exposed  to market  risk from  changes in  commodity  prices.
Exposure to commodity price risk results from our dependence on corn and natural
gas in the  ethanol  production  process.  We seek to  minimize  the risks  from
fluctuations  in the prices of corn and  natural  gas through the use of hedging
instruments.  The effectiveness of our hedging  strategies is dependent upon the
cost of corn and natural gas and our ability to sell sufficient  products to use
all of the corn and natural gas for which we have futures contracts. There is no
assurance that our hedging  activities will successfully  reduce the risk caused
by price  fluctuation  which may leave us  vulnerable  to high corn and  natural
prices.  Alternatively,  we may choose not to engage in hedging  transactions in
the  future.  As a result,  our  future  results  of  operations  and  financial
conditions  may also be adversely  affected  during periods in which corn and/or
natural gas prices increase.

     We have a  significant  amount of debt,  and our  existing  debt  financing
agreements  contain,  and our future  debt  financing  agreements  may  contain,
restrictive  covenants that limit  distributions and impose  restrictions on the
operation of our business. The use of debt financing makes it more difficult for
us to operate  because  we must make  principal  and  interest  payments  on the
indebtedness and abide by covenants contained in our debt financing  agreements.
The  level  of our  debt  may have  important  implications  on our  operations,
including,  among other  things:  (a) limiting our ability to obtain  additional
debt or equity  financing;  (b) making us  vulnerable to increases in prevailing
interest rates; (c) placing us at a competitive  disadvantage  because we may be
substantially more leveraged than some of our competitors; (d) subjecting all or
substantially  all of our  assets to liens,  which  means  that  there may be no
assets left for shareholders in the event of a liquidation; and (e) limiting our
ability to make  business and  operational  decisions  regarding  our  business,
including, among other things, limiting our ability to pay dividends to our unit
holders,  make  capital  improvements,  sell or  purchase  assets  or  engage in
transactions we deem to be appropriate and in our best interest.
***Off-Balance Sheet Arrangements***

     We have no off-balance sheet arrangements.
**Item 4.  Controls and Procedures.**

     Our management,  including our President and Chief  Executive  Officer (our
principal executive officer), Mark Drake, along with our Chief Financial Officer
(our principal financial officer), Cindy Patterson,  have reviewed and evaluated
the effectiveness of our disclosure  controls and procedures (as defined in Rule
13a-15 under the under the Securities  Exchange Act of 1934, as amended),  as of
December 31, 2008. Based upon this review and evaluation, these officers believe
that our  disclosure  controls and  procedures  are effective as of December 31,
2008 in ensuring that material information related to us is recorded, processed,
summarized and reported within the time periods  required by the forms and rules
of the Securities and Exchange Commission.

     The Company has entered  into  derivatives  and  inventory  management  and
transactions. Our management feels we have adequate internal controls over these
activities.

      Our  management,   including  our  principal  executive  officer  and  our
principal  financial  officer,  have  reviewed and  evaluated any changes in our
internal control over financial  reporting that occurred as of December 31, 2008
and there has been no  change  that has  materially  affected  or is  reasonably
likely to materially affect our internal control over financial reporting.

                                       24

**PART II

Item 1.  Legal Proceedings.

     None.

Item 1A.  Risk Factors.

     Not Applicable.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

     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.**

3(i) Articles  of  Organization,  as filed with the Iowa  Secretary  of State on
     March 28, 2005  (incorporated  by reference to Exhibit 3(i) of Registration
     Statement on Form 10 filed by Registrant on January 28, 2008).
3(ii) Second  Amended  and  Restated  Operating  Agreement  dated  March 7, 2008
     (incorporated   by  reference  to  Exhibit  4(i)  of  Amendment  No.  1  to
     Registration Statement on Form 10 filed by Registrant on March 21, 2008).
10.1 Lease  Agreement  dated  December 15, 2008 with Bunge North  America,  Inc.
     (incorporated by reference to Exhibit 10.2 of Form 8-K filed by the Company
     on December 22, 2008).
10.2 Ethanol  Purchase  Agreement  dated  December  15,  2008 with  Bunge  North
     America,  Inc.  Portions of the Agreement  have been omitted  pursuant to a
     request for  confidential  treatment  (incorporated by reference to Exhibit
     10.3 of Form 8-K filed by the Company on December 22, 2008).
10.3 Risk Management Services Agreement dated December 15, 2008 with Bunge North
     America, Inc.  (incorporated by reference to Exhibit 10.4 of Form 8-K filed
     by the Company on December 22, 2008).
10.4 Base Agreement with  Cornerstone  Energy,  LLC d/b/a  Constellation  Energy
     dated August 27, 2008  (incorporated by reference to Exhibit 10.1 of Report
     on Form 8-K filed by the Registrant on September 2, 2008).
10.5 Grain Feedstock  Supply  Agreement dated December 15, 2008 with AGRI-Bunge,
     LLC.  Portions of the Agreement have been omitted pursuant to a request for
     confidential  treatment  (incorporated by reference to Exhibit 10.1 of Form
     8-K filed by the Company on December 22, 2008).
31.1 Rule  13a-14(a)/15d-14(a)  Certification  (pursuant  to Section  302 of the
     Sarbanes-Oxley Act of 2002) executed by the Principal Executive Officer.
31.2 Rule 15d-14(a) Certification (pursuant to Section 302 of the Sarbanes-Oxley
     Act of 2002) executed by the Principal Financial Officer.
32.1 Rule   15d-14(b)   Certifications   (pursuant   to   Section   906  of  the
     Sarbanes-Oxley Act of 2002) executed by the Principal Executive Officer.
32.2 Rule   15d-14(b)   Certifications   (pursuant   to   Section   906  of  the
     Sarbanes-Oxley Act of 2002) executed by the Principal Financial Officer.

                                       25

**SIGNATURES**
         In accordance with the requirements of the Exchange Act, the Registrant
has caused this report to be signed on its behalf by the undersigned,  thereunto
duly authorized.

                                          SOUTHWEST IOWA RENEWABLE ENERGY, LLC

Date:  February 17, 2009                   /s/ Mark Drake
                                           ----------------------------------
                                           Mark Drake, President and
                                           Chief Executive Officer

Date: February 17, 2009                    /s/ Cindy Patterson
                                           ----------------------------------
                                           Cindy Patterson
                                           Chief Financial Officer

                                       26**
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