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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the quarter ended December 31, 2009
 OR
 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
    
    20-3386000(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 1701 East 7th Street, P.O. Box 2, Washington, Iowa 52353
 (319) 653-2890
   þ o
  o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
  o þ




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##### 



INDEX
 Page No.PART I. FINANCIAL INFORMATION
    
    
    3Item 1. Unaudited Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis or Plan of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    21Item 4T. Controls And Procedures
    
    
    22PART II. OTHER INFORMATION
    
    
    23Item 1. Legal Proceedings
    
    
    23Item 1A. Risk Factors
    
    
    24Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26Item 3. Defaults Upon Senior Securities
    
    
    26Item 4. Submission of Matters to Security Holders
    
    
    26Item 5. Other Information
    
    
    26Item 6. Exhibits
    
    
    27SIGNATURES
    
    
    27Exhibit 10.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
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PART I. FINANCIAL INFORMATION
 
 Item 1. Unaudited Financial Statements
 Iowa Renewable Energy, LLC
 Unaudited Balance Sheets  December 31, 2009 and September 30, 2009
 December 31,
    
    
    September 30,2009
    
    
    2009AssetsCurrent Assets:Cash and cash equivalents
    
    $
    2,030,885
    
    
    $
    649,297Due from broker
    
    
    339,398
    
    
    
    477,059Accounts receivable
    
    
    1,260,524
    
    
    
    1,090,753Federal incentive receivable
    
    
    138,774
    
    
    
    146,182Inventory
    
    
    804,387
    
    
    
    3,265,653Prepaids and other assets
    
    
    47,942
    
    
    
    117,3504,621,910
    
    
    
    5,746,294Property and Equipment:Land
    
    
    420,000
    
    
    
    420,000Plant and processing equipment
    
    
    40,742,442
    
    
    
    40,742,442Office building, furniture and fixtures
    
    
    572,769
    
    
    
    572,769Equipment and vehicles
    
    
    240,241
    
    
    
    240,24141,975,452
    
    
    
    41,975,452Accumulated depreciation
    
    
    (6,626,480
    )
    
    
    (5,963,978
    )35,348,972
    
    
    
    36,011,474Other Assets:Cash, restricted by loan agreement
    
    
    1,225,896
    
    
    
    1,201,118Financing costs, net
    
    
    313,635
    
    
    
    339,0651,539,531
    
    
    
    1,540,183$
    41,510,413
    
    
    $
    43,297,951Liabilities and Members EquityCurrent Liabilities:Current maturities of long-term debt
    
    $
    28,961,051
    
    
    $
    30,005,576Accounts payable and accrued expenses
    
    
    638,627
    
    
    
    944,232Derivative financial instruments
    
    
    24,158
    
    
    
    66,762Total current liabilities
    
    
    29,623,836
    
    
    
    31,016,570Long-Term Debt
    
    
    
    
    
    
    CommitmentsMembers Equity:Member contributions, net of issuance costs,
units outstanding
December 31, 2009 and September 30, 2009 26,331
    
    
    23,165,422
    
    
    
    23,165,422Accumulated (deficit)
    
    
    (11,278,845
    )
    
    
    (10,884,041
    )11,886,577
    
    
    
    12,281,381$
    41,510,413
    
    
    $
    43,297,951
   3




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Iowa Renewable Energy, LLC
 Unaudited Statements of Operations
 Three Months EndedDecember 31,
    
    
    December 31,2009
    
    
    2008Revenues:Sales
    
    $
    8,455,587
    
    
    $
    9,901,695Federal incentives
    
    
    187,632
    
    
    
    1,386,2878,643,219
    
    
    
    11,287,982Cost of sales
    
    
    8,765,323
    
    
    
    11,771,075Gross (loss)
    
    
    (122,104
    )
    
    
    (483,093
    )Operating expenses:General and administrative
    
    
    350,817
    
    
    
    456,597Depreciation
    
    
    9,500
    
    
    
    9,500360,317
    
    
    
    466,097(Loss) before other income (expense)
    
    
    (482,421
    )
    
    
    (949,190
    )Other income (expense):Other income
    
    
    391,182
    
    
    
    13,099Interest expense
    
    
    (303,565
    )
    
    
    (380,658
    )Net income (loss)
    
    $
    (394,804
    )
    
    $
    (1,316,749
    )Weighted average units outstanding
    
    
    26,331
    
    
    
    26,331Net income (loss) per unit  basic and diluted
    
    $
    (14.99
    )
    
    $
    (50.01
    )
   4




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Iowa Renewable Energy, LLC
 Unaudited Statements of Cash Flows
 Three Months EndedDecember 31,
    
    
    December 31,2009
    
    
    2008Cash Flows from Operating Activities:Net (loss)
    
    $
    (394,804
    )
    
    $
    (1,316,749
    )Adjustments to reconcile net (loss) to net cash
provided by operating activities:Depreciation
    
    
    662,502
    
    
    
    662,502Amortization
    
    
    25,430
    
    
    
    25,431Unrealized (gain) loss on derivative financial
instruments
    
    
    (42,604
    )
    
    
    76,661Change in working capital components:(Increase) decrease in due from broker
    
    
    137,661
    
    
    
    (651,467
    )(Increase) decrease in accounts receivable
    
    
    (162,363
    )
    
    
    2,598,005Decrease in inventory
    
    
    2,461,266
    
    
    
    2,917,566Decrease in prepaids and other assets
    
    
    69,408
    
    
    
    9,484(Decrease) in accounts payable and accrued
expenses
    
    
    (305,605
    )
    
    
    (1,462,303
    )Net cash provided by operating activities
    
    
    2,450,891
    
    
    
    2,859,130Cash Flows from Investing Activities:Purchase and construction of property and equipment
    
    
    
    
    
    
    (58,484
    )(Increase) in cash restricted
    
    
    (24,778
    )
    
    
    (399,448
    )Net cash (used in) investing activities
    
    
    (24,778
    )
    
    
    (457,932
    )Cash Flows from Financing Activity,
payment on long-term borrowings
    
    
    (1,044,525
    )
    
    
    (975,777
    )Net increase in cash and cash equivalents
    
    
    1,381,588
    
    
    
    1,425,421Cash and cash equivalents:Beginning
    
    
    649,297
    
    
    
    189,474Ending
    
    $
    2,030,885
    
    
    $
    1,614,895Supplemental Disclosure of Cash Flow Information,
cash payments for interest
    
    $
    303,518
    
    
    $
    391,874
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Iowa Renewable Energy, LLC
 Notes to Unaudited Financial Statements
 Note 1. Nature of Business, Basis of Presentation and Significant Accounting Policies
 Nature of business:
  Basis of presentation:
  Significant accounting policies:
        6




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Iowa Renewable Energy, LLC
 Notes to Unaudited Financial Statements
  Raw material
    
    $
    119,589Finished goods
    
    
    684,798$
    804,387
  YearsPlant and process equipment
    
    10  20Office building
    
    10  20Office equipment
    
    3  7Other equipment
    
    3  7
   Derivatives and Hedging
  Three Months EndedDecember 31,
    
    
    December 31,2009
    
    
    2008Realized (gain) loss
    
    $
    67,466
    
    
    $
    (610,248
    )Change in unrealized (gain) loss
    
    
    (42,604
    )
    
    
    76,661Net (gain) loss
    
    $
    24,862
    
    
    $
    (533,587
    )
   7




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Iowa Renewable Energy, LLC
 Notes to Unaudited Financial Statements
   Three Months Ended December 31,
    
    
    Three Months Ended December 31,2009
    
    
    2008Cost of Revenue/Sales
    
    Dollars
    
    
    Percentage
    
    
    Dollars
    
    
    PercentageInput costs (soybean oil, animal fats,
chemicals, etc.)
    
    $
    7,488,096
    
    
    
    85.43
    %
    
    $
    10,564,507
    
    
    
    89.75
    %Plant wages and salaries
    
    
    116,395
    
    
    
    1.33
    
    
    
    196,477
    
    
    
    1.67Utilities and waste disposal
    
    
    244,628
    
    
    
    2.79
    
    
    
    377,747
    
    
    
    3.21Fees-procurement, operation mgmt
    
    
    34,250
    
    
    
    0.39
    
    
    
    48,784
    
    
    
    0.41(Gain) loss on derivative financial
instruments
    
    
    24,862
    
    
    
    0.28
    
    
    
    (533,587
    )
    
    
    (4.53
    )Depreciation
    
    
    653,002
    
    
    
    7.45
    
    
    
    653,002
    
    
    
    5.55Maintenance, supplies and other expenses
    
    
    204,090
    
    
    
    2.33
    
    
    
    464,145
    
    
    
    3.94Total cost of revenue/sales
    
    $
    8,765,323
    
    
    
    100.00
    %
    
    $
    11,771,075
    
    
    
    100.00
    %
     Note 2. Major Customer and Subsequent Event
    8




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Iowa Renewable Energy, LLC
 Notes to Unaudited Financial Statements
 
 Note 3. Long-Term Debt
  Note payable to Marshall Bank Group for term loan (A)
    
    $
    28,590,141Note payable to the Iowa Department of Economic Development (B)
    
    
    110,000Note payable to the Iowa Department of Transportation (C)
    
    
    260,910$
    28,961,051
 (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 variable interest at prime plus 0.25% (3.50%
as of December 31, 2009) and is due in monthly principal and interest payments of $373,000.(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 December 31, 2009 of $110,000. 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 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 loan agreement with
the Iowa Department of Transportation/Rail Development. The $132,000 loan bears an interest
rate of 3.67% for five years, due in semi-annual payments of $14,569 beginning December
2008 for a term of five years with a balance as of December 31, 2009 of $92,910. Borrowing
under this agreement is collateralized by substantially all of the Companys assets and is
not subordinate to the $34,715,000 of financial institution debt. The $168,000 loan is
forgivable at the end of the five year term provided all payments were made on the $132,000
loan.   9




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Iowa Renewable Energy, LLC
 Notes to Unaudited Financial Statements
 Note 4. Contingencies
  Note 5. Going Concern
    10




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Item 2. Managements Discussion and Analysis of Financial Conditions and Results of Operations
  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;
     11




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Overview
   
    
    Lack of biodiesel contracts at profitable margins;
 
    
    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, related largely to the loss of the blenders tax
credit;
 
    
    Inadequate funds to obtain feedstock due to having to pay for feedstock while
waiting for payments from our biodiesel sales; and
 
    
    Insufficient working capital to operate our business.
   12




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13




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Results of Operations for the Three Months Ended December 31, 2009 and 2008
  Three Months Ended
    
    
    Three Months EndedDecember 31, 2009 (Unaudited)
    
    
    December 31, 2008 (Unaudited)Income Statement Data
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentRevenues
    
    
    8,643,219
    
    
    
    100.0
    %
    
    
    11,287,982
    
    
    
    100.0
    %Cost of Goods Sold
    
    
    8,765,323
    
    
    
    101.4
    %
    
    
    11,771,075
    
    
    
    104.3
    %Gross (Loss)
    
    
    (122,104
    )
    
    
    (1.4
    %)
    
    
    (483,093
    )
    
    
    (4.3
    %)Operating Expenses
    
    
    360,317
    
    
    
    4.2
    %
    
    
    466,097
    
    
    
    4.1
    %Operating (Loss)
    
    
    (482,421
    )
    
    
    (5.6
    %)
    
    
    (949,190
    )
    
    
    (8.4
    %)Other Income
    
    
    391,182
    
    
    
    4.5
    %
    
    
    13,099
    
    
    
    0.1
    %Interest Expense
    
    
    (303,565
    )
    
    
    (3.5
    %)
    
    
    (380,658
    )
    
    
    (3.4
    %)Net (Loss)
    
    
    (394,804
    )
    
    
    (4.6
    %)
    
    
    (1,316,749
    )
    
    
    (11.7
    %)
   14




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Revenues
  Three Months Ended
    
    
    Three Months EndedDecember 31, 2009
    
    
    December 31, 2008Revenue Source
    
    Amount
    
    
    % of Revenues
    
    
    Amount
    
    
    % of RevenuesBiodiesel Sales
    
    $
    8,469,443
    
    
    
    97.9
    %
    
    $
    10,964,425
    
    
    
    97.1
    %Glycerin Sales
    
    
    116,999
    
    
    
    1.4
    
    
    
    255,851
    
    
    
    2.3Fatty Acid and
Soapstock Sales
    
    
    56,777
    
    
    
    .7
    
    
    
    67,706
    
    
    
    .6Total Sales Revenue
    
    $
    8,643,219
    
    
    
    100.0
    %
    
    $
    11,287,982
    
    
    
    100.0
    %
      15




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16




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Cost of Goods Sold
       17




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Operating Expenses
  Other Income (Expenses)
  Changes in Financial Condition for the Three Months Ended December 31, 2009
  December 31, 2009
    
    
    September 30, 2009Current Assets
    
    
    4,621,910
    
    
    
    5,746,294Total Assets
    
    
    41,510,413
    
    
    
    43,297,951Current Liabilities
    
    
    29,623,836
    
    
    
    31,016,570Members Equity
    
    
    41,510,413
    
    
    
    43,297,951
 Current Assets
  Current Liabilities
  Members Equity
  Liquidity and Capital Resources
 Cash Flow from Operating Activities
  Cash Flow used in Investing Activities
   18




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Cash Flow provided by (used in) Financing Activities
  Short-Term and Long-Term Debt Sources
 The Wall Street Journal
       19




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Grants and Government Programs
   Additional Debt Financing
  Distribution to Unit Holders
  Critical Accounting Estimates
  Revenue Recognition
   20




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Derivative Instruments and Hedging Activities
 Accounting Standards Codification (ASC) Topic No. 815, Derivatives and Hedging Activities
 Impairment of Long-Lived Assets
  Off-balance Sheet Arrangements
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
 Derivatives and Hedging.
 Interest Rate Risk
 Item 2  Managements Discussion and Analysis of Financial
Condition and Results of Operations  Liquidity and Capital Resources
  Outstanding Variable Rate Debt at
    
    Interest Rate at
    
    
    Adverse 10% Change in
    
    
    Annual Adverse ChangeDecember 31, 2009
    
    December 31, 2009
    
    
    Interest Rates
    
    
    to Income$28,590,141
    
    
    3.50
    %
    
    
    3.85
    %
    
    $
    100,000
 Commodity Price Risk
   21




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Effect ofHypotheticalAdverse Change -Fair Value
    
    
    Market RiskDecember 31, 2009
    
    $
    24,158
    
    
    $
    35,542
 
 Item 4. Controls And Procedures
     22




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PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings.
      23




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Item 1A. Risk Factors.
 MANAGEMENTS DISCUSSION AND ANALYSIS
 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.
 There are 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.
 We are in a transition period with our manager/marketer and this could damage our
profitability.
 The European Commission has imposed definitive anti-dumping and countervailing duties on
biodiesel imported into Europe, which may negatively impact biodiesel demand and our revenues.
  24




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We may be required to write down our long-lived assets and these impairment charges would
adversely affect our operating results .
 We are experiencing liquidity issues which could require us to cease operations.
 The loan agreement under which we obtained financing for the construction of our biodiesel
plant contains restrictive covenants.
   25




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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
    
 Item 4. Submission of Matters to Security Holders.
  
 Item 5. Other Information.
   26




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Item 6. Exhibits
  Exhibit
    
    
    
    Method ofNo.
    
    Description
    
    Filing10.1
    
    
    Management Services Agreement between WMG Services
LLC and Iowa Renewable Energy, LLC dated January
27, 2010.+
    
    *31.1
    
    
    Certificate pursuant to 17 CFR 240 13a-14(a)
    
    *31.2
    
    
    Certificate pursuant to 17 CFR 240 13a-14(a)
    
    *32.1
    
    
    Certificate pursuant to 18 U.S.C. Section 1350
    
    *32.2
    
    
    Certificate pursuant to 18 U.S.C. Section 1350
    
    *
 (*)
    
    Filed herewith.(+)
    
    Confidential Treatment Requested. 
 SIGNATURES
  IOWA RENEWABLE ENERGY, LLCDate: February 16, 2010
    
    /s/ Michael Bohannan

Michael BohannanChairman and PresidentDate: February 16, 2010
    
    /s/ Todd Willson

Todd WillsonChief Financial Officer
  27