##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-KSB
 
 þ
    
    Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the fiscal year ended September 30, 2008
 o
    
    Transition report under Section 13 or 15(d) of the Exchange Act.
 For the transition period fromto
 Commission file number 000-52428
 IOWA RENEWABLE ENERGY, LLC
  Iowa
    
    20-3386000(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)1701 East 7th Street, Washington, Iowa
    
    52353(Address of principal executive offices)
    
    (Zip Code)
 (319) 653-2890
  None
  26,331
 þ o
 þ
 o þ
 $67,135,224
     o þ




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##### 



Table of Contents
 PART I
    
    
    3ITEM 1. DESCRIPTION OF BUSINESS
    
    
    3ITEM 1A. RISK FACTORS
    
    
    25ITEM 2. DESCRIPTION OF PROPERTY
    
    
    36ITEM 3. LEGAL PROCEEDINGS
    
    
    36ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    36PART II
    
    
    37ITEM 5. MARKET FOR COMMON EQUITY, RELATED MEMBER MATTERS AND SMALL BUSINESS ISSUER PURCHASES
OF EQUITY SECURITIES
    
    
    37ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
    
    
    38ITEM 7. FINANCIAL STATEMENTS
    
    
    48ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    60ITEM 8A(T). CONTROLS AND PROCEDURES
    
    
    60ITEM 8B. OTHER INFORMATION
    
    
    61PART III
    
    
    61ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CONTROL GOVERNANCE; COMPLIANCE WITH
SECTION 16(A) OF THE EXCHANGE ACT
    
    
    61ITEM 10. EXECUTIVE COMPENSATION
    
    
    61ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
MEMBER MATTERS
    
    
    61ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
    
    
    61ITEM 13. EXHIBITS
    
    
    62ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    62SIGNATURES
    
    
    63Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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AVAILABLE INFORMATION
  
 PART I
 
 ITEM 1. Description of Business.
 Business Development
   BQ-9000
  
    
    The inability to obtain adequate amounts of feedstock in a timely manner;
    
    The inability to obtain adequate amounts of feedstock at profitable prices;
    
    Lack of demand for biodiesel;
    
    Lack of biodiesel contracts at profitable prices; and
    
    Inadequate funds to obtain feedstock due to having to pay for feedstock while
waiting for payments from our biodiesel sales.
   3




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
    
    Entering into strategic opportunities with other biodiesel plants;
    
    Continued scaled back biodiesel production;
    
    Continued temporary shutdowns of the biodiesel plant;
    
    Producing biodiesel on a toll basis, where we would produce biodiesel using raw
materials provided by someone else;
    
    Selling additional membership units;
    
    Selling our preprocessed animal fats to biodiesel plants that do not have the
technology to process animal fats; or
    
    Amending our term loan with the bank to allow interest only payments.
   General Demand
   4




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5




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Principal Products and Markets
  Primary
Product  Biodiesel
    Glycerin
  Biodiesel Markets
   6




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Wholesale Market/Biodiesel Marketers
  Retail Market
  
    
    additional rail capacity;
    
    additional storage facilities for biodiesel;
    
    increases in truck fleets capable of transporting biodiesel within localized
markets;
    
    expansion in refining and blending facilities to handle biodiesel; and
    
    growth in service stations equipped to handle biodiesel fuels.
  International Markets
   7




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Government/Public Sector
  Glycerin Markets and Demand
    Distribution of Principal Products
     8




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Sources and Availability of Raw Materials
 Feedstock Cost and Supply
   Soybean Oil
  U.S. Soybean Oil Prices for the Past 10 Years
 Marketing Year
    
    Price (cents)1998/99
    
    
    19.901999/00
    
    
    15.602000/01
    
    
    14.152001/02
    
    
    16.462002/03
    
    
    22.042003/04
    
    
    29.972004/05
    
    
    23.012005/06
    
    
    23.412006/07
    
    
    31.022007/08
    
    
    52.032008/2009
    
    
    31.0-35.0
    (1)
 U.S. Soybean Oil Prices for 2007-2008 Marketing Year
 Month
    
    Price (cents)October 2007
    
    
    38.10November 2007
    
    
    42.68December 2007
    
    
    45.16January 2008
    
    
    49.77February 2008
    
    
    56.68March 2008
    
    
    57.27April 2008
    
    
    56.58May 2008
    
    
    58.27June 2008
    
    
    62.43July 2008
    
    
    60.54August 2008
    
    
    50.78September 2008
    
    
    46.09October 2008
    
    
    35.50November 2008(1)
    
    
    31.55
 
 (1)
    
    Preliminary Price 9




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Data provided by USDA, Oil Crops Outlook Report, December 12, 2008
   Animal Fats and Other Alternative Feedstocks
   Lard & Edible Tallow Prices for Past Ten Years
 Marketing Year
    

Lard (cents)
    
    
    Edible (cents)
    
    
    Tallow1998/99
    
    
    14.66
    
    
    
    15.141999/00
    
    
    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
    
    
    
    41.682008/2009
    
    
    27.5-31.5
    (1)
    
    
    20.0-24.0
    (1)
 Lard & Edible Tallow Prices for 2007-2008 Marketing Year
 Month
    

Lard (cents)
    
    

Edible (cents)
    
    
    TallowOctober 2007
    
    
    35.09
    
    
    
    33.98November 2007
    
    
    33.78
    
    
    
    36.88December 2007
    
    
    32.66
    
    
    
    35.28January 2008
    
    
    33.01
    
    
    
    38.53February 2008
    
    
    38.33
    
    
    
    44.33March 2008
    
    
    46.00
    
    
    
    48.39April 2008
    
    
    43.04
    
    
    
    44.25May 2008
    
    
    42.27
    
    
    
    41.88June 2008
    
    
    44.93
    
    
    
    46.61July 2008
    
    
    52.82
    
    
    
    48.61August 2008
    
    
    46.50
    
    
    
    41.94September 2008
    
    
    41.73
    
    
    
    39.53October 2008
    
    
    37.07
    
    
    
    26.97November 2008
    
    
    26.40
    (1)
    
    
    18.13
    (1)
 
 (1)
    
    Preliminary Prices  10




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Data provided by USDA, Oil Crops Outlook Report, December12, 2008
   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
  Hedging
   11




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Pretreatment Costs
   Feedstock Procurement
  
    
    Provide analysis and audit of feedstock suppliers;
    
    Purchase feedstock at competitive prices meeting specifications and in
quantities adequate to satisfy the production schedule of our plant;
    
    Negotiate for discounts on feedstock, where obtainable;
    
    Arrange for transportation, logistics, and scheduling of feedstock deliveries;
    
    Provide analysis and audit of bulk transportation providers;
    
    Perform due diligence requirements for investigation of suppliers of the
chemical inputs;
    
    Provide analysis and audit of chemical suppliers and bulk transportation
suppliers;
    
    Purchase chemical inputs at competitive prices meeting specifications for use
in our plant;
    
    Negotiate for discounts on the purchase of chemical inputs, where obtainable;
    
    Procure adequate chemical inputs to meet our production schedules; and
    
    Arrange for transportation, logistics, and scheduling services for chemical
input deliveries by suppliers.
  Utilities
  Electricity.
  12




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Water and Sewer
 Natural Gas
 Rail.
 New Products and Services
  Government Regulation and Federal Biodiesel Supports
 Federal Biodiesel Supports
  Renewable Fuels Standard
    13




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Biodiesel Tax Credit
   14




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State Legislation
    Future Legislation
  Competition with Other Biodiesel Producers
   15




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16




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17




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Commercial Biodiesel Production Plants (September 29, 2008)
 
   AnnualProductionState
    
    Company
    
    City
    
    Capacity
    
    
    Primary FeedstockALAllied Renewable Energy, LLC
    
    Birmingham
    
    
    15,000,000
    
    
    SoyAthens Biodiesel, LLC
    
    AthensEagle Biodiesel, Inc.
    
    Bridgeport
    
    
    30,000,000Green River Biodiesel, Inc.
    
    Moundville
    
    
    
    
    
    SoyPerihelion Global, Inc.
    
    Opp
    
    
    10,000,000
    
    
    Multi FeedstockARArkansas Soy Energy Group
    
    DeWitt
    
    
    10,000,000
    
    
    Soy*
    
    Future Fuel Chemical Company
    
    Batesville
    
    
    24,000,000
    
    
    Multi FeedstockPinnacle Biofuels, Inc.
    
    Crossett
    
    
    10,000,000
    
    
    Multi FeedstockAZAmereco Arizona, LLC
    
    Arlington
    
    
    15,000,000
    
    
    Multi FeedstockCABlue Sky Bio-Fuels, Inc.
    
    Oakland
    
    
    
    
    
    Multi FeedstockCommunity Fuels
    
    Stockton
    
    
    10,000,000
    
    
    Multi FeedstockEnergy Alternative Solutions, Inc.
    
    Gonzales
    
    
    1,000,000
    
    
    Multi Feedstock*
    
    Imperial Western Products
    
    Coachella
    
    
    8,000,000
    
    
    Multi FeedstockRenewable Energy Products, LLC
    
    Santa Fe Springs
    
    
    10,000,000
    
    
    Multi FeedstockWright Biofuels, Inc.
    
    San Jacinto
    
    
    5,500,000
    
    
    Multi FeedstockYokayo Biofuels, Inc.
    
    Ukiah
    
    
    350,000
    
    
    Recycled Cooking Oil
  18




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AnnualProductionState
    
    Company
    
    City
    
    Capacity
    
    
    Primary FeedstockCTBioDiesel One Ltd
    
    Southington
    
    
    4,000,000
    
    
    Recycled Cooking OilBio-Pur Inc.
    
    Bethlehem
    
    
    1,000,000
    
    
    Multi FeedstockFLAgri-Source Fuels, Inc.
    
    Dade City
    
    
    30,000,000
    
    
    Multi Feedstock*
    
    World Energy Alternatives, LLC
    
    Lakeland
    
    
    18,000,000
    
    
    Soy, Animal Fats, Yellow GreaseGAAlterra Bioenergy of Middle Georgia, LLC
    
    Gordon
    
    
    15,000,000
    
    
    Multi FeedstockBullDog BioDiesel
    
    Ellenwood
    
    
    18,000,000
    
    
    Multi FeedstockECO Solutions, LLC
    
    Chatsworth
    
    
    25,000,000
    
    
    Multi FeedstockGeorgia Biofuels Corp.
    
    Loganville
    
    
    1,000,000
    
    
    Multi FeedstockMiddle Georgia Biofuels
    
    East Dublin
    
    
    1,500,000
    
    
    Poultry Fat, Tallow*
    
    Peach State Labs
    
    Rome
    
    
    
    
    
    SoySeminole Biodiesel
    
    Bainbridge
    
    
    10,000,000
    
    
    Multi FeedstockSunshine BioFuels, LLC
    
    Camilla
    
    
    6,000,000
    
    
    SoyUS Biofuels Inc.
    
    Rome
    
    
    10,000,000
    
    
    Multi FeedstockHIPacific Biodiesel
    
    Kahului
    
    
    500,000
    
    
    Multi FeedstockPacific Biodiesel
    
    Honolulu
    
    
    1,000,000
    
    
    Multi FeedstockIA*
    
    AGP
    
    Sergeant Bluff
    
    
    30,000,000
    
    
    Soy*
    
    Cargill
    
    Iowa Falls
    
    
    37,500,000
    
    
    Soy*
    
    Central Iowa Energy, LLC
    
    Newton
    
    
    30,000,000
    
    
    Multi FeedstockEast Fork Biodiesel, LLC
    
    Algona
    
    
    60,000,000
    
    
    Refined Vegetable Oils*
    
    Freedom Fuels, LLC
    
    Mason City
    
    
    30,000,000
    
    
    Soy*
    
    Iowa Renewable Energy, LLC
    
    Washington
    
    
    30,000,000
    
    
    Multi Feedstock*
    
    REG Ralston, LLC
    
    Ralston
    
    
    12,000,000
    
    
    Multi FeedstockRiksch BioFuels, LLC
    
    Crawfordsville
    
    
    10,000,000
    
    
    Multi FeedstockSioux Biochemical, Inc.
    
    Sioux Center
    
    
    2,000,000
    
    
    Corn, SoySoy Solutions
    
    Milford
    
    
    2,000,000
    
    
    SoyTri-City Energy
    
    Keokuk
    
    
    5,000,000
    
    
    Soy*
    
    Western Dubuque Biodiesel
    
    Farley
    
    
    30,000,000
    
    
    Vegetable Oils*
    
    Western Iowa Energy
    
    Wall Lake
    
    
    30,000,000
    
    
    Multi FeedstockIDBlue Sky Biodiesel, LLC
    
    New Plymouth
    
    
    10,000,000
    
    
    SoyPleasant Valley Biofuels, LLC
    
    American FallsILDiamond Biofuels
    
    Maxon
    
    
    500,000
    
    
    Animal Fats, Recycled Cooking OilHeartland Biodiesel, Inc.
    
    Marion
    
    
    3,000,000
    
    
    SoyIncobrasa  Industries, Ltd.
    
    Gilman
    
    
    31,000,000
    
    
    SoyMidwest Biodiesel Products, Inc.
    
    South Roxanna
    
    
    30,000,000
    
    
    Multi Feedstock*
    
    Stephan Company
    
    Millsdale
    
    
    22,000,000
    
    
    Multi FeedstockINe-biofuels, LLC
    
    Middletown
    
    
    25,000,000
    
    
    Multi FeedstockEvergreen Renewables
    
    Hammond
    
    
    5,000,000
    
    
    SoyIndiana Flex Fuels
    
    LaPorte
    
    
    5,000,000
    
    
    Multi FeedstockIntegrity Biofuels
    
    Morristown
    
    
    10,000,000
    
    
    SoyLouis Dreyfus Agricultural Industries, LLC
    
    Claypool
    
    
    80,000,000
    
    
    SoyKSHealy Biodiesel, Inc.
    
    Sedgwick
    
    
    1,000,000
    
    
    Recycled Cooking OilKrystal Clean Biofuels
    
    Kansas City
    
    
    
    
    
    Multi FeedstockKY*
    
    Griffin Industries
    
    Butler
    
    
    1,750,000
    
    
    Multi FeedstockOwnesboro Grain
    
    Ownesboro
    
    
    50,000,000
    
    
    SoyUnion County  Biodiesel Company, LLC
    
    Stugis
    
    
    5,000,000
    
    
    SoyLAVanguard Synfuels, LLC
    
    Pollock
    
    
    12,000,000
    
    
    Multi Feedstock
  19




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AnnualProductionState
    
    Company
    
    City
    
    Capacity
    
    
    Primary FeedstockMAMPB Bioenergy, LLC
    
    Attleboro
    
    
    500,000
    
    
    Recycled Cooking OilMDEagle Creek Fuel Services, LLC
    
    Baltimore
    
    
    1,000,000Greenlight Biofuels, LLC
    
    Princess Anne
    
    
    4,000,000
    
    
    Multi FeedstockMaryland Biodiesel
    
    Berlin
    
    
    1,000,000
    
    
    SoyMIAg Solutions, Inc.
    
    Gladstone
    
    
    5,000,000
    
    
    Multi FeedstockMichigan Biodiesel, LLC
    
    Bangor
    
    
    10,000,000
    
    
    Multi FeedstockNextDiesel
    
    Adrian
    
    
    20,000,000
    
    
    Multi Feedstock, Corn OilTPA Inc.
    
    Warren
    
    
    20,000,000
    
    
    Multi FeedstockMN*
    
    FUMPA BioFuels
    
    Redwood Falls
    
    
    3,000,000
    
    
    Multi FeedstockGreen Range Renewable Energy
    
    Ironton
    
    
    150,000
    
    
    Recycled Cooking Oil*
    
    Minnesota Soybean Processors
    
    Brewster
    
    
    30,000,000
    
    
    SoyMOAGP
    
    St. Joseph
    
    
    29,900,000
    
    
    SoyGlobal Fuels, LLC
    
    Dexter
    
    
    3,000,000
    
    
    Multi FeedstockHigh Hill Biodiesel, Inc.
    
    High Hill
    
    
    5,000,000
    
    
    Multi FeedstockMid America Biofuels, LLC
    
    Mexico
    
    
    30,000,000
    
    
    SoyNatural Biodiesel Plant, LLC
    
    Hayti
    
    
    5,000,000
    
    
    Multi FeedstockPaseo Cargill Energy, LLC
    
    Kansas City
    
    
    37,500,000
    
    
    Soy, Animal FatsPrairie Pride
    
    Deerfield
    
    
    30,000,000
    
    
    SoyMSCFC Transportation, Inc.
    
    Columbus
    
    
    1,500,000
    
    
    Multi FeedstockDelta Biofuels, Inc.
    
    Natchez
    
    
    80,000,000
    
    
    Multi FeedstockNorth Mississippi Biodiesel
    
    New Albany
    
    
    7,000,000
    
    
    SoyScott Petroleum Corporation
    
    Greenville
    
    
    20,000,000
    
    
    Multi FeedstockMTEarl Fisher Bio Fuels
    
    ChesterNCBlue Ridge Biofuels
    
    Asheville
    
    
    1,000,000
    
    
    Multi FeedstockCarolina Biodiesel, LLC
    
    DurhamEvans Environmental Energies, Inc.
    
    Wilson
    
    
    3,000,000Foothills  Bio-Energies, LLC
    
    Lenoir
    
    
    5,000,000
    
    
    Multi FeedstockGortman Biofuel, LLC
    
    Winston Salem
    
    
    100,000Leland Organic Corporation
    
    Leland
    
    
    30,000,000
    
    
    Multi FeedstockNorth Carolina BioFuels, LLC
    
    Seaboard
    
    
    1,000,000
    
    
    Multi Feedstock*
    
    Piedmont Biofuels
    
    Pittsboro
    
    
    4,000,000
    
    
    Multi FeedstockTriangle Biofuels Industries, Inc.
    
    Wilson
    
    
    3,000,000
    
    
    Multi FeedstockNDADM
    
    Velva
    
    
    85,000,000
    
    
    CanolaNEHorizon Biofuels, Inc.
    
    Arlington
    
    
    400,000
    
    
    Animal FatNortheast Nebraska Biodiesel, LLC
    
    Scribner
    
    
    5,000,000
    
    
    SoyWyobraska Biodiesel, LLC
    
    Gering
    
    
    10,000,000
    
    
    SoyNJFuel Bio One, LLC
    
    Elizabeth
    
    
    50,000,000
    
    
    Multi FeedstockInnovation Fuels
    
    Newark
    
    
    40,000,000
    
    
    Multi FeedstockNMRio Valley Biofuels, LLC
    
    Anthony
    
    
    750,000
    
    
    Multi FeedstockNVBently Biofuels
    
    Minden
    
    
    1,000,000
    
    
    Multi FeedstockBiodiesel of Las Vegas
    
    Las Vegas
    
    
    8,000,000
    
    
    Multi FeedstockNYBuffalo Biodiesel, Inc.
    
    Tonawanda
    
    
    1,500,000
    
    
    Recycled Cooking OilNorthern Biodiesel, Inc.
    
    Ontario
    
    
    
    
    
    Soy
  20




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AnnualProductionState
    
    Company
    
    City
    
    Capacity
    
    
    Primary FeedstockOHAgrifuels, LLC
    
    Breman
    
    
    1,000,000
    
    
    Multi FeedstockAmerican Ag Fuels, LLC
    
    Definance
    
    
    7,000,000
    
    
    Multi FeedstockAmerican Made Fuels, Inc.
    
    Canton
    
    
    5,000,000
    
    
    Multi FeedstockArlington Energy, LLC
    
    Mansfield
    
    
    4,000,000
    
    
    Multi FeedstockCenter Alternative Energy Company
    
    Cleveland
    
    
    5,000,000
    
    
    Soy, Choice White GreaseJatrodiesel, Inc.
    
    Miamisburg
    
    
    5,000,000
    
    
    Multi Feedstock*
    
    Peter Cremer
    
    Cincinnati
    
    
    30,000,000
    
    
    SoyPK Biodiesel
    
    Woodstock
    
    
    5,000,000
    
    
    Multi FeedstockOKHigh Plains Bioenergy
    
    Guymon
    
    
    30,000,000
    
    
    Multi FeedstockTulsa Biofuels, LLC
    
    TulsaORGreen Fuels of Oregon, Inc.
    
    Klamath Falls
    
    
    1,000,000
    
    
    CanolaSeQuential-Pacific Biodiesel, LLC
    
    Salem
    
    
    5,000,000
    
    
    Multi FeedstockPABiodiesel of Pennsylvania, Inc.
    
    White Deer
    
    
    1,500,000
    
    
    Soybean OilKeystone BioFuels, Inc.
    
    Shiremanstown
    
    
    
    
    
    Multi FeedstockLake Erie Biofuels
    
    Erie
    
    
    45,000,000
    
    
    SoyMiddletown Biofuels, LLC
    
    Middletown
    
    
    5,000,000
    
    
    SoySoy Energy, Inc.
    
    New Oxford
    
    
    1,500,000
    
    
    SoyUnited Biofuels, Inc.
    
    York
    
    
    3,000,000
    
    
    Multi FeedstockUnited Oil Company
    
    Pittsburgh
    
    
    5,000,000
    
    
    Multi FeedstockRIMason Biodiesel, LLC
    
    Westerly
    
    
    2,500,000
    
    
    Recycled Cooking OilNewport Biodiesel, LLC
    
    Newport
    
    
    300,000
    
    
    Recycled Cooking OilSCCarbon Neutral Solutions, LLC
    
    Maldin*
    
    Carolina Biofuels, LLC
    
    Greenville
    
    
    50,000,000
    
    
    SoyEcogy Biofuels, LLC
    
    Estill
    
    
    30,000,000
    
    
    SoySoutheast  BioDiesel, LLC
    
    N. Charleston
    
    
    8,000,000
    
    
    Multi FeedstockSDMidwest BioDiesel  Producers, LLC
    
    Alexandria
    
    
    7,000,000
    
    
    Multi FeedstockTNBlue Sky Biodiesel, Inc.
    
    Kingstong
    
    
    3,000,000
    
    
    Multi FeedstockMemphis Biofuels,  LLC
    
    Memphis
    
    
    50,000,000
    
    
    Multi FeedstockMilagro Biofuels of Memphis
    
    Memphis
    
    
    5,000,000
    
    
    Multi FeedstockNu-Energie, LLC
    
    Surgoinsville
    
    
    5,000,000
    
    
    Multi FeedstockNuOil
    
    Counce
    
    
    1,500,000
    
    
    Multi FeedstockSunsOil, LLC
    
    Athens
    
    
    1,500,000
    
    
    Multi FeedstockTXAgribiofuels, LLC
    
    Dayton
    
    
    12,000,000
    
    
    Multi FeedstockAgriMax Fuels, LLC
    
    Channelview
    
    
    3,000,000
    
    
    Soy*
    
    Beacon Energy
    
    Cleburne
    
    
    12,000,000
    
    
    Multi FeedstockBiodiesel of Texas, Inc.
    
    DentonBioSelect Fuels (GBBLP)
    
    Galveston
    
    
    30,000,000
    
    
    Multi FeedstockBrownfield Biodiesel, LLC
    
    Ralls
    
    
    2,000,000
    
    
    Cottonseed, Soy, CanolaCentral Texas Biofuels
    
    Giddings
    
    
    600,000
    
    
    Waste Vegetable OilDirect Fuels
    
    Euless
    
    
    10,000,000
    
    
    Multi FeedstockDouble Diamond Biofuels, Inc.
    
    Dimmitt
    
    
    8,000,000
    
    
    Multi FeedstockFuel & Lube, LLC
    
    Richmond
    
    
    1,000,000
    
    
    Recycled Cooking OilGeoGreen Fuels
    
    Gonzales
    
    
    3,000,000
    
    
    Multi FeedstockGreen Earth Fuels of Houston, LLC
    
    Galena Park
    
    
    90,000,000
    
    
    Multi FeedstockGreenHunter BioFuels, Ltd.
    
    Houston
    
    
    105,000,000
    
    
    Multi FeedstockGreenlight Biofuels, Ltd.
    
    Littlefield
    
    
    5,000,000
    
    
    Multi Feedstock*
    
    Huish Detergents
    
    Pasadena
    
    
    15,000,000
    
    
    Palm*
    
    Johann Haltermann Ltd
    
    Houston
    
    
    12,000,000
    
    
    Multi FeedstockMomentum Biofuels, Inc.
    
    Pasadena
    
    
    20,000,000
    
    
    Multi FeedstockNew Energy Fuels, Inc.
    
    Waller
    
    
    5,000,000
    
    
    Multi FeedstockNew Fuel Company
    
    Dallas
    
    
    250,000
    
    
    Multi Feedstock*
    
    Organic Fuels, LLC
    
    Galena Park
    
    
    45,000,000
    
    
    Multi FeedstockPacific Biodiesel  Texas
    
    Hillsboro
    
    
    2,500,000
    
    
    Multi Feedstock
 21




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AnnualProductionState
    
    Company
    
    City
    
    Capacity
    
    
    Primary FeedstockRed River Biodiesel, Ltd.
    
    New Boston
    
    
    15,000,000
    
    
    Multi FeedstockREG Houston, LLC
    
    Seabrook
    
    
    35,000,000
    
    
    Refined Vegetable OilsSAFE Renewable Corp.
    
    Conroe
    
    
    30,000,000
    
    
    Multi FeedstockValco Bioenergy
    
    Harlingen
    
    
    3,000,000
    
    
    Recycled Cooking OilVACheasapeake Custom Chemical
    
    Ridgeway
    
    
    5,500,000
    
    
    Multi FeedstockRECO Biodiesel, LLC
    
    Richmond
    
    
    10,000,000
    
    
    Multi FeedstockRed Birch Energy, Inc.
    
    Bassett
    
    
    2,500,000
    
    
    Multi FeedstockVirginia Biodiesel Refinery
    
    West Point
    
    
    7,000,000
    
    
    Multi FeedstockWACentral Washington Biodiesel, LLC
    
    Ellensburg
    
    
    
    
    
    Multi FeedstockGen-X Energy Group, Inc.
    
    Burbank
    
    
    15,000,000
    
    
    Multi FeedstockImperium Grays Harbor
    
    Hoquiam
    
    
    100,000,000
    
    
    Multi Feedstock*
    
    Seattle Biodiesel
    
    Seattle
    
    
    5,000,000
    
    
    Soy, CanolaWIBest Biodiesel, Inc.
    
    Cashton
    
    
    10,000,000Sanimax Energy Inc.
    
    Deforest
    
    
    20,000,000
    
    
    Multi FeedstockWalsh Bio Diesel, LLC
    
    Mauston
    
    
    5,000,000
    
    
    Multi FeedstockWYAC & S, Inc.
    
    Nitro
    
    
    3,000,000
    
    
    Soy
 
 *
    
    Denotes BQ-9000 Accredited Producers(1)
    
    Annual Production Capacity only refers to the reported maximum production capability of the
facility. It does not represent how many gallons of biodiesel were actually produced at each
plant.(2)
    
    Includes the annual production capacity of plants which chose not to list their production. Competition from Other Fuel Sources
    22




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Glycerin Competition
   Research and Development
  Dependence on One of a Few Major Customers
    23




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Costs and Effects of Compliance with Environmental Laws
   Employees
   24




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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
 Our business is not diversified.
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We are in competition with REG, our design-builder and manager, which could place us at a
competitive disadvantage and cause a conflict of interest for our manager.
 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.
  26




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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.
 Risks Related to Biodiesel Industry
 The recent downturn in the U.S. economy has caused demand for biodiesel to decline, which may
adversely affect our ability to generate revenues.
 Several biofuels companies throughout the country have recently 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 recent decline in oil and diesel prices may affect our ability to sell biodiesel at
profitable prices.
  27




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An investigation by the European Commission into whether the U.S. biodiesel industry has been
engaging in unfair trade practices could lead to the imposition of duties or tariffs on biodiesel
imported into Europe, which could cause a significant decrease in our revenues.
 If demand for biodiesel fails to grow at the same rate as planned supply, the excess
production capacity will adversely impact our financial condition.
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Excess production of glycerin, a 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.
 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.
  As the production of biodiesel fuel increases there may not be an adequate supply of railroad
tank cars or trucks to distribute the biodiesel fuel produced by our plant.
  29




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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 are attempting 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.
 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.
  30




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If we are forced to temporarily cease operating our biodiesel plant for any reason, we might
not be able to meet our current liabilities or 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.
 Asian soybean rust and other plant diseases may decrease our ability to obtain a sufficient
feedstock supply.
 Concerns about fuel quality may impact our ability to successfully market our biodiesel.
 Cold weather may cause biodiesel to gel, which could have an adverse impact on our ability to
successfully market our biodiesel.
  31




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Our reliance upon third parties for feedstock supply may hinder our ability to profitably
produce 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.
 Our management and operational services agreement with REG does not address feedstock
allocation between REG and its other customers which could lead to insufficient feedstock to
operate our plant and negatively affect our financial condition.
  32




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Risks Related to Our Financing Plan
 We are experiencing liquidity issues which could require us to cease operations.
 The recent downturn in the U.S. economy may affect our ability to obtain additional
financing.
 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.
  33




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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 hinder our
ability to operate at a profit and reduce the value of our units.
 A change in environmental regulations or violations thereof could result in the devaluation of
our units.
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The EPAs delay in implementing the RFS requirement that 500 million gallons of biomass-based
diesel be blended into the national diesel pool in 2009 may hinder stimulation of demand for
biodiesel that may have otherwise been created by the 2007 amendments to the RFS program
 Risks Related to Conflicts of Interest
 We may have conflicts of interest with REG, which may cause difficulty in enforcing claims
against REG.
  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.
  35




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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.
 
 ITEM 2. DESCRIPTION OF PROPERTY.
  
    
    Administrative building
    
    Processing building
    
    Pretreatment building
    
    Storage tank farm
   
 ITEM 3. LEGAL PROCEEDINGS.
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
   36




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PART II
 
 ITEM 5. MARKET FOR COMMON EQUITY, RELATED MEMBER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF
EQUITY SECURITIES.
 Market Information
  Unit Holders
  Distributions
  Equity Compensation Plans
  Sale of Unregistered Securities
  Repurchases of Equity Securities
   37




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ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
 Cautionary Statements Regarding Forward Looking Statements
           
    
    national, state or local energy policy;
    
    federal and state biodiesel tax incentives;
    
    legislation establishing a renewable fuel standard 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;
                  38




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Overview
   
    
    The inability to obtain adequate amounts of feedstock in a timely manner;
 
    
    The inability to obtain adequate amounts of feedstock at competitive costs;
 
    
    Lack of demand for biodiesel;
 
    
    Lack of biodiesel contracts at profitable margins; and
 
    
    Inadequate funds to obtain feedstock due to having to pay for feedstock while
waiting for payments from our biodiesel sales.
   Plan of Operations for the Next 12 Months
 Plant Operations
   39




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Results of Operations
 Comparison of Fiscal Years Ended September 30, 2008 and September 30, 2007
  Fiscal Year Ended
    
    
    Fiscal Year EndedSeptember 30, 2008
    
    
    September 30, 2007Income Statement DataRevenues
    
    $
    67,135,224
    
    
    
    100.00
    %
    
    $
    16,443,440
    
    
    
    100.00
    %Cost of Goods Sold
    
    $
    67,000,778
    
    
    
    99.80
    %
    
    $
    18,231,147
    
    
    
    110.87
    %Gross Profit (Loss)
    
    $
    134,446
    
    
    
    0.20
    %
    
    $
    (1,787,707
    )
    
    
    (10.87
    %)Operating Expenses
    
    $
    1,729,356
    
    
    
    2.58
    %
    
    $
    670,296
    
    
    
    4.08
    %Interest Income
    
    $
    91,762
    
    
    
    0.14
    %
    
    $
    229,859
    
    
    
    1.40
    %Interest (Expense)
    
    $
    (2,281,776
    )
    
    
    (3.40
    )%
    
    $
    (716,470
    )
    
    
    (4.36
    )%Net (Loss)
    
    $
    (3,784,924
    )
    
    
    (5.64
    )%
    
    $
    (2,944,614
    )
    
    
    17.91
    %
   40




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Revenues
 Fiscal
Year Ended September 30, 2008
    
    

Fiscal
Year Ended September 30, 2007Revenue Source
    
    Amount
    
    
    % of Revenues
    
    
    Amount
    
    
    % of RevenuesBiodiesel Sales
    
    $
    57,539,313
    
    
    
    95
    %
    
    $
    14,583,103
    
    
    
    99
    %Glycerin Sales
    
    $
    1,887,636
    
    
    
    3
    %
    
    $
    173,404
    
    
    
    1
    %Fatty Acids and
Soapstock Sales
    
    $
    901,617
    
    
    
    2
    %
    
    $
    14,280
    
    
    
    0
    %Total Revenues from
Sales
    
    $
    60,328,566
    
    
    
    100
    %
    
    $
    14,770,787
    
    
    
    100
    %
       41




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Cost of Goods Sold
    42




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43




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Operating Expenses.
  Other Income (Expenses).
   Changes in Financial Condition
  September 30,
    
    
    September 30,2008
    
    
    2007Current Assets
    
    $
    11,178,526
    
    
    $
    12,352,679Current Liabilities
    
    $
    35,640,464
    
    
    $
    35,527,516Members Equity
    
    $
    15,601,990
    
    
    $
    19,386,914
 Current Assets
 Current Liabilities
 Members Equity
  44




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Liquidity and Capital Resources
 Cash Flow from Operating Activities .
 Cash Flow from Investing Activities .
 Cash Flow from Financing Activities .
 Short-Term and Long-Term Debt Sources
 The Wall Street Journal
     45




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Grants and Government Programs
   Critical Accounting Estimates
  Revenue Recognition
  Derivative Instruments and Hedging Activities
 Accounting for Derivative Instruments and
Hedging Activities
 Commodity Price Risk Protection
   46




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Off-Balance Sheet Arrangements
   47




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ITEM 7. FINANCIAL STATEMENTS.
 
 Report of Independent Registered Public Accounting Firm
 
          48




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Iowa Renewable Energy, LLC
 Balance Sheets
September 30, 2008 and 2007
 2008
    
    
    2007AssetsCurrent Assets:Cash and cash equivalents
    
    $
    189,474
    
    
    $
    725,522Due from broker
    
    
    82,182
    
    
    
    1,337,860Accounts receivable
    
    
    4,469,451
    
    
    
    5,614,315Derivative financial instruments
    
    
    65,141
    
    
    
    Federal incentive receivable
    
    
    747,741
    
    
    
    822,228Inventory
    
    
    5,580,906
    
    
    
    3,815,722Prepaids and other assets
    
    
    43,631
    
    
    
    37,03211,178,526
    
    
    
    12,352,679Property and Equipment:Land
    
    
    420,000
    
    
    
    420,000Plant and processing equipment
    
    
    40,673,235
    
    
    
    41,464,111Office building, furniture and fixtures
    
    
    572,632
    
    
    
    572,665Equipment and vehicles
    
    
    226,424
    
    
    
    226,42441,892,291
    
    
    
    42,683,200Accumulated depreciation
    
    
    (3,313,970
    )
    
    
    (663,962
    )38,578,321
    
    
    
    42,019,238Other Assets:Cash, restricted by loan agreement
    
    
    1,044,817
    
    
    
    Financing costs, net
    
    
    440,790
    
    
    
    542,5131,485,607
    
    
    
    542,513$
    51,242,454
    
    
    $
    54,914,430Liabilities and Members EquityCurrent Liabilities:Current maturities of long-term debt
    
    $
    33,345,343
    
    
    $
    33,342,558Accounts payable and accrued expenses
    
    
    2,295,121
    
    
    
    1,374,711Derivative financial instruments
    
    
    
    
    
    
    510,247Construction payable, including retainage
2008 none; 2007 $300,000
    
    
    
    
    
    
    300,000Total current liabilities
    
    
    35,640,464
    
    
    
    35,527,516Long-Term Debt
    
    
    
    
    
    
    CommitmentsMembers Equity:Member contributions, net of issuance costs, units
outstanding 2008 26,331; 2007 26,331
    
    
    23,165,422
    
    
    
    23,165,422Accumulated (deficit)
    
    
    (7,563,432
    )
    
    
    (3,778,508
    )15,601,990
    
    
    
    19,386,914$
    51,242,454
    
    
    $
    54,914,430
   49




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Iowa Renewable Energy, LLC
 Statements of Operations
Years Ended September 30, 2008 and 2007
 2008
    
    
    2007Revenues:Sales
    
    $
    60,328,566
    
    
    $
    14,770,787Federal incentives
    
    
    6,806,658
    
    
    
    1,672,65367,135,224
    
    
    
    16,443,440Cost of sales
    
    
    67,000,778
    
    
    
    18,231,147Gross profit (loss)
    
    
    134,446
    
    
    
    (1,787,707
    )Operating expenses:General and administrative
    
    
    1,691,356
    
    
    
    660,796Depreciation
    
    
    38,000
    
    
    
    9,5001,729,356
    
    
    
    670,296(Loss) before other income (expense)
    
    
    (1,594,910
    )
    
    
    (2,458,003
    )Other income (expense):Interest income
    
    
    91,762
    
    
    
    229,859Interest expense
    
    
    (2,281,776
    )
    
    
    (716,470
    )Net (loss)
    
    $
    (3,784,924
    )
    
    $
    (2,944,614
    )Weighted average units outstanding
    
    
    26,331
    
    
    
    26,241Net (loss) per unit  basic and diluted
    
    $
    (143.74
    )
    
    $
    (112.21
    )
   50




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Iowa Renewable Energy, LLC
 Statements of Changes in Members Equity
Years Ended September 30, 2008 and 2007
 Member
    
    
    Accumulated
    
    
    Total MembersMember Units
    
    
    Contributions
    
    
    Deficit
    
    
    EquityBalance, September 30, 2006
    
    
    25,231
    
    
    $
    22,615,422
    
    
    $
    (833,894
    )
    
    $
    21,781,528Exercise of unit options
    
    
    1,100
    
    
    
    550,000
    
    
    
    
    
    
    
    550,000Net (loss)
    
    
    
    
    
    
    
    
    
    
    (2,944,614
    )
    
    
    (2,944,614
    )Balance, September 30, 2007
    
    
    26,331
    
    
    
    23,165,422
    
    
    
    (3,778,508
    )
    
    
    19,386,914Net (loss)
    
    
    
    
    
    
    
    
    
    
    (3,784,924
    )
    
    
    (3,784,924
    )Balance, September 30, 2008
    
    
    26,331
    
    
    $
    23,165,422
    
    
    $
    (7,563,432
    )
    
    $
    15,601,990
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Iowa Renewable Energy, LLC
 Statements of Cash Flows
Years Ended September 30, 2008 and 2007
 2008
    
    
    2007Cash Flows from Operating Activities:Net (loss)
    
    $
    (3,784,924
    )
    
    $
    (2,944,614
    )Adjustments to reconcile net (loss) to net cash
provided by (used in) operating activities:Depreciation
    
    
    2,650,008
    
    
    
    662,502Amortization
    
    
    101,723
    
    
    
    25,432Unrealized (gain) loss on derivative financial instruments
    
    
    (575,388
    )
    
    
    510,247Change in working capital components:(Increase) decrease in due from broker
    
    
    1,255,678
    
    
    
    (1,337,860
    )(Increase) decrease in accounts receivable
    
    
    1,219,351
    
    
    
    (6,436,543
    )(Increase) in inventory
    
    
    (1,765,184
    )
    
    
    (3,815,722
    )(Increase) in prepaids and other assets
    
    
    (6,599
    )
    
    
    (37,032
    )Increase in accounts payable and accrued expenses
    
    
    920,410
    
    
    
    1,364,366Net cash provided by (used in) operating activities
    
    
    15,075
    
    
    
    (12,009,224
    )Cash Flows from Investing Activities:Purchase and construction of property and equipment
    
    
    (22,481
    )
    
    
    (30,942,594
    )Sales tax and utility refund from construction of property and equipment
    
    
    813,390
    
    
    
    (Increase) decrease in cash restricted
    
    
    (1,044,817
    )
    
    
    10,263,792Net cash used in investing activities
    
    
    (253,908
    )
    
    
    (20,678,802
    )Cash Flows from Financing Activities:Issuance of membership units, an exercise of unit options
    
    
    
    
    
    
    550,000Payments for financing costs
    
    
    
    
    
    
    (552,515
    )Proceeds from long-term borrowings
    
    
    1,717,442
    
    
    
    32,997,558Payment on long-term borrowings
    
    
    (2,014,657
    )
    
    
    (55,000
    )Net cash provided by (used in) financing activities
    
    
    (297,215
    )
    
    
    32,940,043Net increase (decrease) in cash and cash equivalents
    
    
    (536,048
    )
    
    
    252,017Cash and cash equivalents:Beginning
    
    
    725,522
    
    
    
    473,505Ending
    
    $
    189,474
    
    
    $
    725,522Supplemental Disclosure of Cash Flow Information,
cash payments for interest, net of amount capitalized
    
    $
    2,287,429
    
    
    $
    443,754Supplemental Disclosure of Noncash Operating and
Financing Activities:Construction in progress included in accounts payable
    
    $
    
    
    
    $
    300,000Amortized financing costs included in construction in process
    
    
    
    
    
    
    67,815
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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
 2008
    
    
    2007Raw material
    
    $
    2,695,569
    
    
    $
    469,649Finished goods
    
    
    2,885,337
    
    
    
    3,346,073$
    5,580,906
    
    
    $
    3,815,722
  53




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Iowa Renewable Energy, LLC
 Notes to Financial Statements
  Property and equipment
 YearsPlant and process equipment
    
    10  20Office building
    
    10  20Office equipment
    
    3  7Other equipment
    
    3  7
  Offering costs
 Financing costs
 Derivative instruments Accounting for Derivative Instruments and Hedging Activities
  Revenue recognition
 Federal incentive payments and receivables
  54




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##### Table of Contents



Iowa Renewable Energy, LLC
 Notes to Financial Statements
 Cost of sales
 Cost of Revenue/Sales
    
    2008 Dollars
    
    
    2008 Percentage
    
    
    2007 Dollars
    
    
    2007 PercentageInput costs (soy oil, chemicals, etc.)
    
    $
    58,780,600
    
    
    
    87.73
    %
    
    $
    15,809,583
    
    
    
    86.72
    %Plant wages and salaries
    
    
    824,139
    
    
    
    1.23
    
    
    
    398,868
    
    
    
    2.19Utilities and waste disposal
    
    
    1,847,708
    
    
    
    2.76
    
    
    
    318,185
    
    
    
    1.75Fees-marketing, sales, procurement
    
    
    253,547
    
    
    
    0.38
    
    
    
    79,182
    
    
    
    0.43Loss on derivative financial
instruments
    
    
    1,636,163
    
    
    
    2.44
    
    
    
    524,827
    
    
    
    2.88Depreciation
    
    
    2,612,008
    
    
    
    3.90
    
    
    
    653,002
    
    
    
    3.58Maint., supplies and other expenses
    
    
    1,046,613
    
    
    
    1.56
    
    
    
    447,500
    
    
    
    2.45Total cost of revenue/sales
    
    $
    67,000,778
    
    
    
    100.00
    
    
    $
    18,231,147
    
    
    
    100.00
  Shipping and handling costs
 Income taxes
 (Loss) per unit
 Fair value of financial instruments
       55




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Iowa Renewable Energy, LLC
 Notes to Financial Statements
  Quoted
    
    
    SignificantTotal Carrying
    
    
    prices in
    
    
    other
    
    
    SignificantValue at
    
    
    active
    
    
    observable
    
    
    unobservableSeptember 30,
    
    
    markets
    
    
    inputs
    
    
    inputs2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)AssetsDerivative
financial
instruments
assets
    
    $
    65,141
    
    
    $
    65,141
    
    
    $
    
    
    
    $
    
  Reclassifications
 Note 2. Major Customer and Related Party
    Note 3. Members Equity
   56




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Iowa Renewable Energy, LLC
 Notes to Financial Statements
    Note 4. Long-Term Debt
  2008
    
    
    2007Note payable to Marshall Bank Group for construction loan (A)
    
    $
    32,760,343
    
    
    $
    32,997,558Note payable
to the Iowa Department of Economic
Development (B)
    
    
    285,000
    
    
    
    345,000Note payable to the Iowa Department of Transportation (C)
    
    
    300,000
    
    
    
    $
    33,345,343
    
    
    $
    33,342,558
  (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. The note bears interest at prime plus .75% (5.25% as of September
30, 2008 and 8.50% as of September 30, 2007) and is due in monthly principal and interest
payments of $373,000. The Company was in violation of the debt covenants at September 30,
2008 (See Note 8).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.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.  57




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##### Table of Contents



Iowa Renewable Energy, LLC
 Notes to Financial Statements
 (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,
2008 and 2007 of $185,000 and $245,000, 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 will be forgiven if the Company complies with certain employment and
production criteria defined in the agreement. In the event of noncompliance or default, the
loan will be repaid over a two-year period starting with the date of noncompliance,
including interest at 6%.(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, 2008 was $132,000. 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 30:2009
    
    $
    3,102,0002010
    
    
    3,064,0002011
    
    
    3,225,0002012
    
    
    3,340,0002013
    
    
    20,614,000$
    33,345,000
 Note 5. Lease Commitments and Other Contingencies
  Year ending September 30:2009
    
    $
    4,8822010
    
    
    3,3042011
    
    
    1,377$
    9,563
    58




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Iowa Renewable Energy, LLC
 Notes to Financial Statements
 Note 6. Related Party Transactions
   .
 Note 7. Pending Accounting Pronouncement
 Disclosures about Derivative Instruments and Hedging
Activities
 Note 8. Going Concern
    59




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ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  
 ITEM 8A(T). 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.
    60




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##### Table of Contents




    
    We now have a full-time chief financial officer in place; and
    
    We have hired external assistance with our financial reporting.
  Changes in Internal Control Over Financial Reporting
  
 ITEM 8B. OTHER INFORMATION.
  
 PART III
 
 ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION
16(A) OF THE EXCHANGE ACT.
  
 ITEM 10. EXECUTIVE COMPENSATION.
  
 ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER
MATTERS.
  
 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
   61




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ITEM 13. EXHIBITS.
  Exhibit
    
    
    
    Method ofNo.
    
    Description
    
    Filing31.1
    
    
    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. 
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
   62




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SIGNATURES
  IOWA RENEWABLE ENERGY, LLCDate: December 22, 2008
    
    /s/ Mike BohannanMike BohannanChairman and PresidentDate: December 22, 2008
    
    /s/ Todd Willson

Todd WillsonChief Financial Officer
  Date: December 22, 2008
    
    /s/ Mike BohannanMike BohannanChairman and PresidentDate: December 22, 2008
    
    /s/ Mark Cobb

Mark CobbVice Chairman and DirectorDate: December 22, 2008
    
    /s/ Dick Gallagher

Dick Gallagher
Secretary and DirectorDate: December 22, 2008
    
    /s/ Warren L. Bush

Warren L. Bush, DirectorDate: December 22, 2008
    
    /s/ William J. HoranWilliam J. Horan, DirectorDate: December 22, 2008
    
    /s/ Edwin J. Hershberger

Edwin J. Hershberger, DirectorDate: December 22, 2008
    
    /s/ John Heisdorffer

John Heisdorffer, DirectorDate: December 22, 2008
    
    /s/ William J. Pim

William J. Pim, Director
  63