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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 
 þ
    
    Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the fiscal year ended September 30, 2010
 o
    
    Transition report under Section 13 or 15(d) of the Exchange Act.
 For the transition period from  to
 Commission file number 000-52428
 IOWA RENEWABLE ENERGY, LLC
  Iowa
(State or other jurisdiction of
    
    20-3386000
(I.R.S. Employer Identification No.)incorporation or organization)1701 East 7thStreet, Washington, Iowa
(Address of principal executive offices)
    
    52353
(Zip Code)
 (319) 653-2890
  None
  26,331
 o þ
 o þ No
  þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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##### 



Table of Contents
 PART I
    
    
    3ITEM 1. BUSINESS
    
    
    3ITEM 1A. RISK FACTORS
    
    
    18ITEM 2. PROPERTIES
    
    
    27ITEM 3. LEGAL PROCEEDINGS
    
    
    27ITEM 4. REMOVED AND RESERVED
    
    
    28PART II
    
    
    28ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED MEMBER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
    
    
    28ITEM 6. SELECTED FINANCIAL DATA
    
    
    29ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
    
    
    29ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    39ITEM 8. FINANCIAL STATEMENTS
    
    
    F-1ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    40ITEM 9A. CONTROLS AND PROCEDURES
    
    
    40ITEM 9B. OTHER INFORMATION
    
    
    40PART III
    
    
    41ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
    
    
    41ITEM 11. EXECUTIVE COMPENSATION
    
    
    41ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER
MATTERS
    
    
    41ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
    
    
    41ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    41ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
    
    
    41SIGNATURES
    
    
    42Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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AVAILABLE INFORMATION
  
 PART I
 
 ITEM 1.
    
    BUSINESS.
 Business Development
      3




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General Demand
   Principal Products and Markets
    4




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Primary Product- Biodiesel
    Glycerin
  Biodiesel Markets
    5




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Wholesale Market / Biodiesel Marketers
  Retail Market
  
    
    additional storage facilities for biodiesel;
 
    
    expansion in refining and blending facilities to handle biodiesel; and
 
    
    growth in service stations equipped to handle biodiesel fuels.
  International Markets
  Government/Public Sector
   6




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Glycerin Markets and Demand
    Distribution of Principal Products
    7




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Sources and Availability of Raw Materials
 Feedstock Cost and Supply
   Soybean Oil
  U.S. Soybean Oil Average Prices for the Past 10 YearsMarketing Year
    
    Price (cents)1999/00
    
    
    15.602000/01
    
    
    14.152001/02
    
    
    16.462002/03
    
    
    22.042003/04
    
    
    29.972004/05
    
    
    23.012005/06
    
    
    23.412006/07
    
    
    31.022007/08
    
    
    52.032008/09
    
    
    32.162009/10
    
    
    35.952010/11
    
    
    45.0-49.0
    (1)
 U.S. Soybean Oil Average
Prices for 2009-2010Marketing YearMonth
    
    Price (cents)October 2009
    
    
    33.15November 2009
    
    
    36.59December 2009
    
    
    36.81January 2010
    
    
    34.88February 2010
    
    
    34.69March 2010
    
    
    36.39April 2010
    
    
    37.11May 2010
    
    
    35.41June 2010
    
    
    34.47July 2010
    
    
    35.07August 2010
    
    
    37.57September 2010
    
    
    39.21October 2010
    
    
    44.02November 2010(1)
    
    
    47.62
 (1)
    
    Preliminary Price  8




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Data provided by USDA, Oil Crops Outlook Report, December 13, 2010
   Animal Fats and Other Alternative Feedstocks
   Lard & Edible Tallow Average Prices for Past Ten YearsMarketing Year
    
    Lard
    
    
    Edible Tallow(cents)
    
    
    (cents)1999/00
    
    
    13.64
    
    
    
    13.212000/01
    
    
    14.61
    
    
    
    13.432001/02
    
    
    13.55
    
    
    
    13.872002/03
    
    
    18.13
    
    
    
    17.802003/04
    
    
    26.13
    
    
    
    22.372004/05
    
    
    21.80
    
    
    
    18.482005/06
    
    
    21.74
    
    
    
    18.162006/07
    
    
    28.43
    
    
    
    27.322007/08
    
    
    40.85
    
    
    
    41.682008/09
    
    
    26.72
    
    
    
    25.472009/2010
    
    
    31.99
    
    
    
    32.262010/11
    
    
    41.0-45.0
    (1)
    
    
    38.5-42.5
    (1)
 Lard & Edible
Tallow Average Prices for 2009-2010Marketing YearMonth
    
    Lard
    
    
    Edible Tallow(cents)
    
    
    (cents)October 2009
    
    
    25.75
    
    
    
    27.63November 2009
    
    
    30.07
    
    
    
    29.65December 2009
    
    
    28.75
    
    
    
    29.99January 2010
    
    
    28.60
    
    
    
    29.48February 2010
    
    
    28.25
    
    
    
    29.42March 2010
    
    
    32.95
    
    
    
    33.73April 2010
    
    
    33.95
    
    
    
    35.14May 2010
    
    
    34.24
    
    
    
    35.33June 2010
    
    
    32.98
    
    
    
    35.72July 2010
    
    
    31.42
    
    
    
    32.50August 2010
    
    
    33.33
    
    
    
    33.54September 2010
    
    
    43.59
    
    
    
    35.02October 2010
    
    
    46.64
    
    
    
    37.00November 2010
    
    
    37.32
    (1)
    
    
    41.75
    (1)
 (1)
    
    Preliminary Prices  9




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Data provided by USDA, Oil Crops Outlook Report, December 13, 2010
   Feedstock Cold Flow Properties
  Type of Fuel
    
    Pour PointSoy-based Biodiesel (B100)
    
    
    30oFTallow-based Biodiesel (B100)
    
    
    61oFNo. 2 Petro Diesel (B0)
    
    
    -30oFB2 Soy Blend with No. 2 Diesel
    
    
    -25oF
   10




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Hedging
  Pretreatment Costs
   Feedstock Procurement
  Utilities
  Electricity.
 Water and Sewer
 Natural Gas
 Rail.
 New Products and Services
   11




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Government Regulation and Federal Biodiesel Supports
 Federal Biodiesel Supports
  Renewable Fuels Standard
     12




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Biodiesel Tax Credit
  Commodity Credit Corporation Bioenergy Program
  State Legislation
     13




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
    
    6.5 cents per gallon of E100 if retailer meets the biofuel standard threshold percentage
    
    4.5 cents per gallon of E100 if retailer is within 1-2% of threshold percentage
    
    2.5 cents per gallon of E100 if retailer is within 3-4% of threshold percentage
    
    0 cents if more than 4% below the threshold percentage
   Future Legislation
  Competition with Other Biodiesel Producers
     14




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Competition from Other Fuel Sources
   15




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Glycerin Competition
   16




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Research and Development
  Dependence on One Major Customers
  Costs and Effects of Compliance with Environmental Laws
   Employees
     17




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ITEM 1A.
    
    RISK FACTORS.
 You should carefully read and consider the risks and uncertainties below and the other information
contained in this report. The risks and uncertainties described below are not the only ones we may
face. The following risks, together with additional risks and uncertainties not currently known to
us or that we currently deem immaterial could impair our financial condition and results of
operations.
 Risks Related to Our Business
 We are experiencing liquidity issues which could require us to cease operations.
 We have a history of losses and may not ever operate profitably
 We may be required to write down our long-lived assets and these impairment charges would
adversely affect our operating results.
 Our business is not diversified.
  18




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We have limited experience in the biodiesel industry, which increases the risk of our
inability to operate the biodiesel plant.
 We engage in hedging transactions which involve risks that can harm our business.
  Risks Related to Operation of the Biodiesel Plant
 We depend on key suppliers, whose failure to perform could force us to abandon business,
hinder our ability to operate profitably or decrease the value of our units.
  Changes in production technology could require us to commit resources to updating the
biodiesel plant or could otherwise hinder our ability to compete in the biodiesel industry or to
operate at a profit.
 Because our natural gas provider will not allow us to enter into forward contracts for our
natural gas, we may pay higher prices for our natural gas than other biodiesel producers, which
puts us at a competitive disadvantage and may increase our losses .
  19




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Risks Related to Biodiesel Industry
 The downturn in the U.S. economy has caused demand for biodiesel to decline, which may
adversely affect our ability to generate revenues.
 Several biodiesel companies throughout the country have filed for Chapter 1l bankruptcy due to
industry and economic conditions, and we may also be forced to consider filing for bankruptcy
protection in the event that economic conditions and our liquidity problems do not improve.
 The decline in oil and diesel prices may affect our ability to sell biodiesel at profitable
prices.
  20




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An investigation by the European Commission into whether the U.S. biodiesel industry has been
engaging in unfair trade practices has led to the imposition of tariffs on biodiesel imported into
Europe, which could result in further losses from our business.
 If demand for biodiesel fails to grow at the same rate as planned supply, the excess
production capacity will adversely impact our financial condition.
  Excess production of glycerin, the primary co-product of the biodiesel production process, may
cause the price of glycerin to decline, thereby adversely affecting our ability to generate revenue
from the sale of glycerin.
  21




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The biodiesel manufacturing industry is a feedstock limited industry. As more plants are
developed and go into production there may not be an adequate supply of feedstock to supply the
demands of the industry, which could threaten the viability of our plant.
 The biodiesel industry is becoming increasingly competitive and we compete with some larger,
better financed entities which could impact our ability to operate profitably
 Risks Related to Biodiesel Production
 Declines in the demand for and prices of biodiesel and its primary co-product will have a
significant negative impact on our financial performance.
   Because of volatile soybean oil prices, we have attempted to use alternative feedstocks, such
as corn oil, to produce our biodiesel, which may have risks and disadvantages of which we are not
yet fully aware.
  22




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The decreasing availability and volatile cost of feedstock may hinder our ability to
profitably produce biodiesel and may result in plant shut downs and decreased revenues.
 If we are forced to continue to have to temporarily cease operating our biodiesel plant, we
might not be able to meet our current liabilities and our losses may be increased.
 We are at a disadvantage in marketing our glycerin because our plant will not produce
pharmaceutical grade glycerin, thereby decreasing the market for the glycerin we produce.
 Competition from other sources of fuel may decrease the demand for our biodiesel.
 Concerns about fuel quality may impact our ability to successfully market our biodiesel.
  23




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Cold weather may cause biodiesel to gel, which could have an adverse impact on our ability to
successfully market our biodiesel.
  Automobile manufacturers and other industry groups have expressed reservations regarding the
use of biodiesel, which could negatively impact our ability to market our biodiesel.
  Competition from other diesel fuel lubricity additives for ultra low sulfur diesel may be a
less expensive alternative to our biodiesel, which would cause us to lose market share and
adversely affect our ability to generate revenues.
 Risks Related to Our Financing Plan
 We are experiencing liquidity issues which could require us to cease operations.
  24




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The loan agreement under which we obtained financing for the construction of our biodiesel
plant contains restrictive covenants.
 We may be unable to raise additional capital in the event our funds from operations and our
credit facilities are insufficient to fund our operations for the next twelve months.
 Our auditor has raised doubts about our ability to continue as a going concern and if we are
unable to continue our business, our units may have little or no value.
 Risks Related to Regulation and Governmental Action
 Loss of or ineligibility for favorable tax benefits for biodiesel production could further
hinder our ability to operate at a profit and reduce the value of our units.
  25




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A change in environmental regulations or violations thereof could result in the devaluation of
our units.
 Risks Related to Conflicts of Interest
 Our directors may have relationships with individuals, companies or organizations with which
we do business which may result in conflicts of interest.
 Risks Related to Tax Issues in a Limited Liability Company
 We expect to be taxed as a partnership, however, if we are taxed as a corporation we could be
subject to corporate level taxes which could decrease our net income, if any, and decrease the
amount of cash available to distribute to our members.
 Members may be allocated a share of our taxable income that exceeds any cash distributions
received, therefore members may have to pay this tax liability using their personal funds.
 If we are audited by the IRS resulting in adjustments to our tax returns, this could cause the
IRS to audit members tax returns, which could lead to additional tax liability for our members.
 We do not anticipate declaring distributions to members in the foreseeable future.
  26




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ITEM 2.
    
    PROPERTIES.
  
    
    Administrative building
 
    
    Processing building
 
    
    Pretreatment building
 
    
    Storage tank farm
   
 ITEM 3.
    
    LEGAL PROCEEDINGS.
     27




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ITEM 4.
    
    REMOVED AND RESERVED
 
 PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED MEMBER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES.
 Market Information
  Unit Holders
  Distributions
  Equity Compensation Plans
  Sale of Unregistered Securities
  Repurchases of Equity Securities
   28




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ITEM 6.
    
    SELECTED FINANCIAL DATA.
  
 ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 Cautionary Statements Regarding Forward Looking Statements
              
    
    national, state or local energy policy;
    
    federal and state biodiesel tax incentives;
    
    the RFS or other legislation mandating the use of biodiesel or other lubricity additives; or
    
    environmental laws and regulations that apply to our plant operations and their enforcement;
         29




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Overview
   Plan of Operations for the Next 12 Months
 Plant Operations
   30




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Results of Operations
 Comparison of Fiscal Years Ended September 30, 2010 and September 30, 2009
  Fiscal Year Ended
    
    
    Fiscal Year EndedIncome Statement Data
    
    September 30, 2010
    
    
    September 30, 2009Revenues
    
    $
    9,234,866
    
    
    
    100.00
    %
    
    $
    29,132,604
    
    
    
    100.00
    %Cost of Goods Sold
    
    $
    12,070,190
    
    
    
    130.70
    %
    
    $
    29,795,410
    
    
    
    102.28
    %Gross (Loss)
    
    $
    (2,835,324
    )
    
    
    (30.70
    )%
    
    $
    (662,806
    )
    
    
    (2.28
    )%Operating Expenses
    
    $
    887,187
    
    
    
    9.60
    %
    
    $
    1,421,907
    
    
    
    4.88
    %Interest and Other Income
    
    $
    460,104
    
    
    
    4.98
    %
    
    $
    36,579
    
    
    
    0.13
    %Interest Expense
    
    $
    1,109,649
    
    
    
    12.02
    %
    
    $
    1,272,475
    
    
    
    4.37
    %Net (Loss)
    
    $
    (4,372,056
    )
    
    
    (47.34
    )%
    
    $
    (3,320,609
    )
    
    
    (11.40
    )%
  Revenues
 Fiscal Year Ended
    
    
    Fiscal Year EndedSeptember 30, 2010
    
    
    September 30, 2009Revenue Source
    
    Amount
    
    
    % of Revenues
    
    
    Amount
    
    
    % of RevenuesBiodiesel Sales
    
    $
    8,820,946
    
    
    
    96.52
    %
    
    $
    24,995,232
    
    
    
    85.80
    %Glycerin Sales
    
    
    169,511
    
    
    
    1.84
    %
    
    
    486,327
    
    
    
    1.67
    %Fatty Acids and
Soapstock Sales
    
    
    56,777
    
    
    
    0.61
    %
    
    
    424,978
    
    
    
    1.46
    %Federal Incentives
    
    
    187,632
    
    
    
    2.03
    %
    
    
    3,226,067
    
    
    
    11.07
    %Total Revenues from
Sales
    
    $
    9,234,866
    
    
    
    100.00
    %
    
    $
    29,132,604
    
    
    
    100.00
    %
  31




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32




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Cost of Goods Sold
       33




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Operating Expenses
   34




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Other Income (Expenses)
  Changes in Financial Condition
  September 30, 2010
    
    
    September 30, 2009Current Assets
    
    $
    1,233,887
    
    
    $
    5,746,294Current Liabilities
    
    $
    27,769,336
    
    
    $
    31,016,570Members Equity
    
    $
    7,909,325
    
    
    $
    12,281,381
 Current Assets
 Current Liabilities
 Members Equity
 Liquidity and Capital Resources
 Cash Flow from Operating Activities .
 Cash Flow from Investing Activities .
 Cash Flow from Financing Activities .
  35




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Short-Term and Long-Term Debt Sources
 The
Wall Street Journal
       Companys Leverage Ratio
    
    LIBOR Applicable MarginLess than 2.75 to 1.00
    
    
    4.00
    %Greater than or equal to 2.75 to 1.00 but less than 3.5 to 1.00
    
    
    4.75
    %Greater than or equal to 3.5 to 1.00 but less than 4.25 to 1.00
    
    
    5.25
    %Greater than or equal to 4.25 to 1.00 but less than 5.0 to 1.00
    
    
    5.50
    %
  36




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Grants and Government Programs
    37




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Critical Accounting Estimates
  Revenue Recognition
  Derivative Instruments and Hedging Activities
 Accounting Standards Codification (ASC) Topic No. 815, Derivatives and Hedging Activities
 Commodity Price Risk Protection
     38




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Impairment of long-lived assets
 Property, Plant, and Equipment
 Off-Balance Sheet Arrangements
  
 ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
   39




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ITEM 8.
    
    FINANCIAL STATEMENTS.
 
 Report of Independent Registered Public Accounting Firm
 
      
  F-1




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Iowa Renewable Energy, LLC
 Balance Sheets
September 30, 2010 and 2009
 2010
    
    
    2009AssetsCurrent Assets:Cash and cash equivalents
    
    $
    479,309
    
    
    $
    649,297Due from broker
    
    
    310,390
    
    
    
    477,059Accounts receivable
    
    
    
    
    
    
    1,090,753Federal incentive receivable
    
    
    
    
    
    
    146,182Inventory
    
    
    372,547
    
    
    
    3,265,653Prepaids and other assets
    
    
    71,641
    
    
    
    117,3501,233,887
    
    
    
    5,746,294Property and Equipment:Land
    
    
    420,000
    
    
    
    420,000Plant and processing equipment
    
    
    40,742,442
    
    
    
    40,742,442Office building, furniture and fixtures
    
    
    588,965
    
    
    
    572,769Equipment and vehicles
    
    
    240,241
    
    
    
    240,24141,991,648
    
    
    
    41,975,452Accumulated depreciation
    
    
    (8,615,336
    )
    
    
    (5,963,978
    )33,376,312
    
    
    
    36,011,474Other Assets:Cash, restricted by loan agreement
    
    
    730,288
    
    
    
    1,201,118Financing costs, net
    
    
    338,174
    
    
    
    339,0651,068,462
    
    
    
    1,540,183$
    35,678,661
    
    
    $
    43,297,951Liabilities and Members EquityCurrent Liabilities:Current maturities of long-term debt
    
    $
    27,457,729
    
    
    $
    30,005,576Accounts payable and accrued expenses
    
    
    311,607
    
    
    
    944,232Derivative financial instruments
    
    
    
    
    
    
    66,762Total current liabilities
    
    
    27,769,336
    
    
    
    31,016,570Long-Term Debt
    
    
    
    
    
    
    CommitmentsMembers Equity:Member contributions, net of issuance
costs, units
outstanding 2010 and 2009 26,331
    
    
    23,165,422
    
    
    
    23,165,422Accumulated (deficit)
    
    
    (15,256,097
    )
    
    
    (10,884,041
    )7,909,325
    
    
    
    12,281,381$
    35,678,661
    
    
    $
    43,297,951
   F-2




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Iowa Renewable Energy, LLC
 Statements of Operations
Years Ended September 30, 2010 and 2009
 2010
    
    
    2009Revenues:Sales
    
    $
    9,047,234
    
    
    $
    25,906,537Federal incentives
    
    
    187,632
    
    
    
    3,226,0679,234,866
    
    
    
    29,132,604Cost of sales
    
    
    12,070,190
    
    
    
    29,795,410Gross (loss)
    
    
    (2,835,324
    )
    
    
    (662,806
    )Operating expenses:General and administrative
    
    
    849,187
    
    
    
    1,383,907Depreciation
    
    
    38,000
    
    
    
    38,000887,187
    
    
    
    1,421,907(Loss) before other
income (expense)
    
    
    (3,722,511
    )
    
    
    (2,084,713
    )Other income (expense):Interest and other income
    
    
    460,104
    
    
    
    36,579Interest expense
    
    
    (1,109,649
    )
    
    
    (1,272,475
    )Net (loss)
    
    $
    (4,372,056
    )
    
    $
    (3,320,609
    )Weighted average units outstanding
    
    
    26,331
    
    
    
    26,331Net (loss) per unit  basic and diluted
    
    $
    (166.04
    )
    
    $
    (126.11
    )
   F-3




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Iowa Renewable Energy, LLC
 Statements of Changes in Members Equity (Deficit)
Years Ended September 30, 2010 and 2009
 Member
    
    
    Accumulated
    
    
    Total MembersMember Units
    
    
    Contributions
    
    
    Deficit
    
    
    EquityBalance, September 30, 2008
    
    
    26,331
    
    
    $
    23,165,422
    
    
    $
    (7,563,432
    )
    
    $
    15,601,990Net (loss)
    
    
    
    
    
    
    
    
    
    
    (3,320,609
    )
    
    
    (3,320,609
    )Balance, September 30, 2009
    
    
    26,331
    
    
    
    23,165,422
    
    
    
    (10,884,041
    )
    
    
    12,281,381Net (loss)
    
    
    
    
    
    
    
    
    
    
    (4,372,056
    )
    
    
    (4,372,056
    )Balance, September 30, 2010
    
    
    26,331
    
    
    $
    23,165,422
    
    
    $
    (15,256,097
    )
    
    $
    7,909,325
   F-4




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Iowa Renewable Energy, LLC
 Statements of Cash Flows

Years Ended September 30, 2010 and 2009
 2010
    
    
    2009Cash Flows from Operating Activities:Net (loss)
    
    $
    (4,372,056
    )
    
    $
    (3,185,489
    )Adjustments to reconcile net (loss) to net cash
provided by operating activities:Depreciation
    
    
    2,651,358
    
    
    
    2,650,008Amortization
    
    
    121,891
    
    
    
    101,725Unrealized (gain) loss on derivative financial instruments
    
    
    (66,762
    )
    
    
    131,903Change in working capital components:(Increase) decrease in due from broker
    
    
    166,669
    
    
    
    (394,877
    )Decrease in accounts receivable
    
    
    1,236,935
    
    
    
    3,845,137Decrease in inventory
    
    
    2,893,106
    
    
    
    2,315,253(Increase) decrease in prepaids and other assets
    
    
    45,709
    
    
    
    (73,719
    )(Decrease) in accounts payable and accrued expenses
    
    
    (632,625
    )
    
    
    (1,350,889
    )Net cash provided by operating activities
    
    
    2,044,225
    
    
    
    4,039,052Cash Flows from Investing Activities:Purchase of property and equipment
    
    
    (16,196
    )
    
    
    (83,161
    )(Increase) decrease in cash restricted
    
    
    470,830
    
    
    
    (156,301
    )Net cash provided by (used in) investing activities
    
    
    454,634
    
    
    
    (239,462
    )Cash Flows from Financing Activities:Debt issuance costs
    
    
    (121,000
    )
    
    
    Payment on long-term borrowings
    
    
    (2,547,847
    )
    
    
    (3,339,767
    )Net cash (used in) financing activities
    
    
    (2,668,847
    )
    
    
    (3,339,767
    )Net increase (decrease) in cash and cash
equivalents
    
    
    (169,988
    )
    
    
    459,823Cash and cash equivalents:Beginning
    
    
    649,297
    
    
    
    189,474Ending
    
    $
    479,309
    
    
    $
    649,297Supplemental Disclosure of Cash Flow Information,
cash payments for interest
    
    $
    923,670
    
    
    $
    1,119,767
   F-5




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Iowa Renewable Energy, LLC

Notes to Financial Statements
 Note
1. Nature of Business and Significant Accounting Policies
 Nature of business:
  Significant accounting policies:
 Use of estimates
 Concentrations of credit risk
 Cash and cash equivalents
 Restricted cash
 Accounts receivable
  Inventory
 2010
    
    
    2009Raw material
    
    $
    111,951
    
    
    $
    1,418,828Finished goods
    
    
    260,596
    
    
    
    1,846,825$
    372,547
    
    
    $
    3,265,653
  F-6




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##### Table of Contents



Iowa Renewable Energy, LLC
Notes to Financial Statements
 Organizational costs and startup costs
 Property and equipment
 YearsPlant and process equipment
    
    10 - 20Office building
    
    10 - 20Office equipment
    
    3 - 7Other equipment
    
    3 - 7
   Financing costs
 Derivative instruments Derivatives and Hedging
  2010
    
    
    2009Realized (gain) loss
    
    $
    96,377
    
    
    $
    (692,002
    )Change in unrealized (gain) loss
    
    
    (66,762
    )
    
    
    131,903Net (gain) loss
    
    $
    29,615
    
    
    $
    (560,099
    )
 Revenue recognition
  F-7




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Iowa Renewable Energy, LLC
Notes to Financial Statements
 Federal incentive payments and receivables
 Cost of sales
 Cost Of Revenue/Sales
    
    2010 Dollars
    
    
    2010 Percentage
    
    
    2009 Dollars
    
    
    2009 PercentageInput costs (soy oil, chemicals, etc.)
    
    $
    7,961,421
    
    
    
    65.96
    %
    
    $
    24,580,763
    
    
    
    82.50
    %Plant wages and salaries
    
    
    448,908
    
    
    
    3.72
    
    
    
    771,670
    
    
    
    2.59Utilities and waste disposal
    
    
    446,595
    
    
    
    3.70
    
    
    
    1,055,769
    
    
    
    3.54Fees- procurement
    
    
    34,250
    
    
    
    0.28
    
    
    
    142,591
    
    
    
    0.48(Gain) loss on derivative financial
instruments
    
    
    29,615
    
    
    
    0.25
    
    
    
    (560,099
    )
    
    
    (1.88
    )Depreciation
    
    
    2,613,358
    
    
    
    21.65
    
    
    
    2,612,008
    
    
    
    8.77Maint., supplies and other expenses
    
    
    536,043
    
    
    
    4.44
    
    
    
    1,192,708
    
    
    
    4.00Total cost of revenue/sales
    
    
    12,070,190
    
    
    
    100.00
    
    
    
    29,795,410
    
    
    
    100.00
 Shipping and handling costs
 Income taxes
 (Loss) per unit
 Fair value of financial instruments
   F-8




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Iowa Renewable Energy, LLC
Notes to Financial Statements
      Total Carrying
    
    
    
    
    
    
    Significant other
    
    
    SignificantValue at
    
    
    Quoted prices in
    
    
    observable
    
    
    unobservableSeptember 30,
    
    
    active markets
    
    
    inputs
    
    
    inputs2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)LiabilitiesDerivative financial instruments
liabilities
    
    $
    66,762
    
    
    $
    66,762
    
    
    $
    
    
    
    $
    
  Note.
2 Major Customer and Related Party
      F-9




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Iowa Renewable Energy, LLC
Notes to Financial Statements
  Note
3. Members Equity
     Note
4. Long-Term Debt
  2010
    
    
    2009Note payable to Marshall Bank Group for construction loan (A)
    
    $
    27,142,668
    
    
    $
    29,505,098Note payable to the Iowa Department of Economic Development (B)
    
    
    65,000
    
    
    
    225,000Note payable to the Iowa Department of Transportation (C)
    
    
    250,061
    
    
    
    275,478$
    27,457,729
    
    
    $
    30,005,576
 (A)
    
    On October 26, 2006, the Company entered into a $34,715,000 construction-term loan agreement
which was used to complete the biodiesel project. The loan consisted of two phases: a
construction phase where the Company made periodic requests for fund advances to meet
construction obligations and at the completion of construction, the loan converted to a
senior debt instrument. Previously, the note bore interest at prime plus .25% and was due in
monthly principal and interest payments of $373,000. The loan is secured by substantially all
assets of the Company. The Company violated the debt covenants and on April 2, 2009 received
a written notice of default from the lender. In conjunction with the line of credit discussed
below, the Lender has agreed until February 1, 2011 to allow the Company  to defer principal
payments on the term debt, interest payments related to the term loan will be charged against
the debt service reserve fund, and the Company has been granted a forbearance on the covenant requirements of the term
loan, specifically, section 5.02 (m)-(q). In place of the covenants, the Company has
additional reporting requirements which accelerate their monthly reporting and provide
additional cash flow information to the lender. While this does represent additional external
reporting the information provided is data that is currently captured and reported internally.
The forbearance also accelerates the maturity date for the entire loan to September 5, 2011
and increases the interest rate to 6.0% plus the one month LIBOR rate in effect two New York
Banking Days prior to the beginning of each calendar month (6.26% as of September 30, 2010).
New York Banking Days is defined as any day other than Saturday or Sunday that a commercial
bank is open for business in New York, New
York. The LIBOR margin will be adjusted every six months based on a schedule set in the
agreement based on the Companys leverage ratio at that time.  F-10




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##### Table of Contents



Iowa Renewable Energy, LLC

Notes to Financial Statements
 Debt service reserve: Commencing one month following the conversion date, the
Company shall make monthly deposits to a debt service reserve until such time as the balance
equals $1,319,265. Monthly deposits shall consist of not less than one-third of all
available monthly projected EBITDA. (See Note 1 for modification.)Capital improvements reserve: Commencing one month after the conversion date, the
Company shall make deposits into a custodial account held by the Lender. The fund will be
used to fund capital improvements. During the term of the loan, the capital improvements
reserve must be maintained at $125,000.Sinking fund: Commencing one month after the conversion date, one-third of all
monthly projected EBITDA shall be applied to reduce loan principal. At the point the
outstanding principal loan balance is reduced to $20,182,750 no additional sinking fund
deposits will be required.(B)
    
    The Company has a $300,000 loan agreement and a $100,000 forgivable loan agreement with the
Iowa Department of Economic Development. The $300,000 loan is noninterest-bearing and due in
monthly payments of $5,000 beginning December 2006 for a term of 60 months with a balance as
of September 30, 2010 and 2009 of $65,000 and $185,000, respectively. Borrowings under this
agreement are collateralized by substantially all of the Companys assets and will be
subordinate to the $34,715,000 of financial institution debt. The $100,000 loan is forgivable
upon the completion of 36 months of the 60 month term. The $100,000 loan was forgiven during
the quarter ended December 31, 2009 as the Company met the employment and production criteria
defined in the agreement. The forgiveness was included in other income on the statement of
operations.(C)
    
    The Company has a $132,000 loan agreement and a $168,000 forgivable grant agreement with the
Iowa Department of Transportation. The $132,000 loan bears interest at 3.67% beginning June
2008 and is due in semi-annual payments of $14,569 beginning December 2008 for a term of 60
months. The balance at September 30, 2010 was $82,061. Borrowings under this agreement are
collateralized by substantially all of the Companys assets and is not subordinate to the
$34,715,000 of financial instrument debt. The $168,000 grant is forgivable upon completion of
the loan agreement.  Year ending September 30:2011
    
    $
    27,229,0332012
    
    
    32,3422013
    
    
    196,354$
    27,457,729
   F-11




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Iowa Renewable Energy, LLC
Notes to Financial Statements
 Note
5. Lease Commitment and Other Contingencies
   Note 6. Going Concern Matters and Management Plans
    F-12




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##### Table of Contents



ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  
 ITEM 9A. CONTROLS AND PROCEDURES.
 Disclosure Controls and Procedures
  Managements Report on Internal Control over Financial Reporting
  
    
    Pertain to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the Company;
 
    
    Provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with Generally Accepted Accounting
Principles, and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the Company; and
 
    
    Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Companys assets that could have a
material effect on the financial statements.
   Changes in Internal Control Over Financial Reporting
  
 ITEM 9B.
    
    OTHER INFORMATION.
   40




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##### Table of Contents



PART III
 
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.
  
 ITEM 11.
    
    EXECUTIVE COMPENSATION.
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER
MATTERS.
  
 ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES.
  
 ITEM 15.
    
    EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
  Exhibit
    
    
    
    Method ofNo.
    
    Description
    
    Filing3.2
    
    
    Second Amended and Restated Operating Agreement dated March 27, 2010.
    
    
    110.1
    
    
    Management Services Agreement between WMG Services LLC and Iowa
Renewable Energy, LLC dated January 27, 2010.+
    
    
    231.1
    
    
    Certificate pursuant to 17 CFR 240 13a-14(a)
    
    
    *31.2
    
    
    Certificate pursuant to 17 CFR 240 13a-14(a)
    
    
    *32.1
    
    
    Certificate pursuant to 18 U.S.C. Section 1350
    
    
    *32.2
    
    
    Certificate pursuant to 18 U.S.C. Section 1350
    
    
    *
 
 (*)
    
    Filed herewith.(+)
    
    Confidential Treatment Requested.(1)
    
    Incorporated by reference to Exhibit of the same number filed with our quarterly report on Form
10-Q filed with the Securities and Exchange Commission on August 16, 2010.(2)
    
    Incorporated by reference to Exhibit of the same number filed with our quarterly report on Form
10-Q filed with the Securities and Exchange Commission on February 16, 2010.  41




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SIGNATURES
  IOWA RENEWABLE ENERGY, LLCDate: December 29, 2010
    /s/ Mike BohannanMike BohannanChairman and PresidentDate: December 29, 2010
    /s/ J. William PimJ. William PimChief Financial Officer  Date: December 29, 2010
    
    /s/ Mike Bohannan

Mike BohannanChairman and PresidentDate: December 29, 2010
    
    /s/ Mark CobbMark CobbVice Chairman and DirectorDate: December 29, 2010
    
    /s/ Dick GallagherDick GallagherSecretary and DirectorDate: December 29, 2010
    
    /s/ Larry RippeyLarry Rippey, DirectorDate: December 29, 2010
    
    /s/ Steven
PowellSteven
Powell, DirectorDate: December 29, 2010
    
    /s/ Edwin J. HershbergerEdwin J. Hershberger, DirectorDate: December 29, 2010
    
    /s/ John HeisdorfferJohn Heisdorffer, Director
  42