##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
 þ
    
    Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the quarter ended December 31, 2007
 OR
 o
    
    Transition report under Section 13 or 15(d) of the Exchange Act.
 For the transition period from  to
 Commission file number 000-52429
 CENTRAL IOWA ENERGY, LLC
  Iowa
(State or other jurisdiction of 
incorporation or organization)
    
    71-0988301
(I.R.S. Employer Identification No.)
 3426 EAST 28 TH STREET N.
NEWTON, IOWA 50208
 (641) 791-1010
 þ o
 o þ
   o þ




---



##### 



INDEX
 Page No.PART I. FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis or Plan of Operations
    
    
    12PART II. OTHER INFORMATION
    
    
    31Item 1. Legal Proceedings
    
    
    31Item 1A. Risk Factors
    
    
    31Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    33Item 3. Defaults Upon Senior Securities
    
    
    33Item 4. Submission of Matters to Security Holders
    
    
    33Item 5. Other Information
    
    
    33Item 6. Exhibits
    
    
    33SIGNATURES
    
    
    34Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




---



##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 CENTRAL IOWA ENERGY, LLC
  December 31,
    
    
    September 30,2007
    
    
    2007(Unaudited)ASSETSCurrent AssetsCash and equivalents
    
    $
    1,413,415
    
    
    $
    2,268,725Margin deposits
    
    
    1,328,130
    
    
    
    326,072Trade accounts receivable  related party
    
    
    1,466,104
    
    
    
    1,159,184Federal incentive receivable
    
    
    1,036,036
    
    
    
    1,049,262Sales tax refund receivable
    
    
    
    
    
    
    461,517Prepaid expenses
    
    
    293,991
    
    
    
    105,851Inventories
    
    
    5,219,494
    
    
    
    5,896,934Total current assets
    
    
    10,757,170
    
    
    
    11,267,545Property and EquipmentLand and improvements
    
    
    7,680,111
    
    
    
    7,680,111Office equipment
    
    
    40,603
    
    
    
    40,603Office building
    
    
    629,300
    
    
    
    629,300Plant and process equipment
    
    
    32,563,620
    
    
    
    32,563,62040,913,634
    
    
    
    40,913,634Less accumulated depreciation
    
    
    1,876,418
    
    
    
    1,248,326Net property and equipment
    
    
    39,037,216
    
    
    
    39,665,308Other AssetsFinancing costs, net of amortization
    
    
    373,998
    
    
    
    383,755Total Assets
    
    $
    50,168,384
    
    
    $
    51,316,608LIABILITIES AND EQUITYCurrent LiabilitiesCurrent maturities of long-term debt
    
    $
    26,141,561
    
    
    $
    26,641,539Revolving line of credit
    
    
    1,600,000
    
    
    
    1,600,000Derivative instruments
    
    
    1,958,462
    
    
    
    719,482Accounts payable
    
    
    1,751,800
    
    
    
    1,096,370Accounts payable  related party
    
    
    268,941
    
    
    
    365,125Accrued interest payable
    
    
    186,495
    
    
    
    204,092Accrued expenses
    
    
    144,111
    
    
    
    87,438Total current liabilities
    
    
    32,051,370
    
    
    
    30,714,046Long-Term Debt, less current maturities
    
    
    
    
    
    
    Deferred Grant Financing
    
    
    745,000
    
    
    
    745,000Commitments and ContingenciesMembers EquityMember contributions, net of costs related to capital contributions,
26,672 units outstanding
    
    
    23,849,120
    
    
    
    23,849,120Deficit accumulated
    
    
    (6,487,106
    )
    
    
    (3,991,558
    )Total members equity
    
    
    17,362,014
    
    
    
    19,857,562Total Liabilities and Members Equity
    
    $
    50,158,384
    
    
    $
    51,316,608
   3




---



##### Table of Contents



CENTRAL IOWA ENERGY, LLC
  Three Months Ended
    
    
    Three Months EndedDecember 31,
    
    
    December 31,2007
    
    
    2006RevenuesSales to related party
    
    $
    14,417,979
    
    
    $
    Federal incentives
    
    
    3,476,824
    
    
    
    17,894,803
    
    
    
    Cost of Goods Sold
    
    
    19,108,588
    
    
    
    Gross (Loss)
    
    
    (1,213,785
    )
    
    
    Operating ExpensesProfessional fees
    
    
    88,604
    
    
    
    24,710General and administrative
    
    
    600,020
    
    
    
    15,776Total
    
    
    688,624
    
    
    
    40,486Operating (Loss)
    
    
    (1,902,409
    )
    
    
    (40,486
    )Other Income (Expenses)Interest income
    
    
    16,365
    
    
    
    4,074Interest (expense)
    
    
    (609,504
    )
    
    
    Total
    
    
    (593,139
    )
    
    
    4,074Net (Loss)
    
    $
    (2,495,548
    )
    
    $
    (36,412
    )Weighted Average Units Outstanding
    
    
    26,672
    
    
    
    25,373Net (Loss) Per Unit  Basic and Diluted
    
    $
    (93.56
    )
    
    $
    (1.44
    )
   4




---



##### Table of Contents



CENTRAL IOWA ENERGY, LLC
  Three Months Ended
    
    
    Three Months EndedDecember 31,
    
    
    December 31,2007
    
    
    2006Cash Flows from Operating ActivitiesNet (loss)
    
    $
    (2,495,548
    )
    
    $
    (36,412
    )Adjustments to reconcile net (loss) to net cash
(used in) operations:Depreciation and amortization
    
    
    637,849
    
    
    
    301Member units earned for rent
    
    
    
    
    
    
    6,000Change in assets and liabilities:Margin deposits
    
    
    (1,002,058
    )
    
    
    Accounts receivable
    
    
    (306,920
    )
    
    
    Other receivable
    
    
    13,226
    
    
    
    Inventories
    
    
    677,440
    
    
    
    Prepaid expenses
    
    
    (188,140
    )
    
    
    (6,198
    )Derivative instruments
    
    
    1,238,980
    
    
    
    Accounts payable
    
    
    559,246
    
    
    
    3,009Other accrued expenses
    
    
    56,673
    
    
    
    Accrued interest payable
    
    
    (17,597
    )
    
    
    Net cash (used in) operating activities
    
    
    (826,849
    )
    
    
    (33,300
    )Cash Flows from Investing ActivitiesCapital expenditures
    
    
    
    
    
    
    (11,939,586
    )Sales tax refund from equipment purchases
    
    
    461,517
    
    
    
    Purchase of land
    
    
    
    
    
    
    (25,582
    )Net cash provided by (used in) investing activities
    
    
    461,517
    
    
    
    (11,965,168
    )Cash Flows from Financing Activities(Decrease) in checks drawn in excess of bank balance
    
    
    
    
    
    
    (216,613
    )Proceeds from (payments on) long term debt
    
    
    (499,978
    )
    
    
    12,283,145Payments for financing costs
    
    
    
    
    
    
    (26,051
    )Member contributions
    
    
    
    
    
    
    600,000Other
    
    
    
    
    
    
    (30,000
    )Net cash provided by (used in) financing activities
    
    
    (499,978
    )
    
    
    12,610,481Net Increase (Decrease) in Cash
    
    
    (865,310
    )
    
    
    612,013Cash and cash equivalents- Beginning of Period
    
    
    2,268,725
    
    
    
    Cash and cash equivalents  End of Period
    
    $
    1,403,415
    
    
    $
    612,013Supplemental Disclosure of Cash Flow Information,Cash payments for interest, net of amount capitalized
    
    $
    617,344
    
    
    $
    Supplemental Disclosure of NoncashInvesting and Financing ActivitiesConstruction costs in accounts payable
    
    $
    
    
    
    $
    2,558,630Amortization of financing costs included in construction in progress
    
    $
    
    
    
    $
    12,752Financing costs included in accounts payable
    
    $
    
    
    
    $
    48,346Land purchase included in accounts payable
    
    $
    
    
    
    $
    (25,800
    )Accrued interest included in construction in progress
    
    $
    
    
    
    $
    148,134
   5




---



##### Table of Contents



CENTRAL IOWA ENERGY, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
December 31, 2007 and 2006
 NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 PRINCIPAL BUSINESS ACTIVITY 
 BASIS OF PRESENTATION
  USE OF ESTIMATES 
 REVENUE RECOGNITION 
 FEDERAL INCENTIVE PAYMENTS AND RECEIVABLES 
 CASH AND EQUIVALENTS 
  ACCOUNTS RECEIVABLE
   6




---



##### Table of Contents



CENTRAL IOWA ENERGY, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
December 31, 2007 and 2006
 INVENTORIES
 DERIVATIVE INSTRUMENTS  Accounting for Derivative Instruments and Hedging Activities
  PROPERTY AND EQUIPMENT
 Land improvements
    
    15-20 yearsOffice building
    
    10-20 yearsOffice equipment
    
    5 yearsPlant and process equipment
    
    10-20 years
  FINANCING COSTS 
 FAIR VALUE OF FINANCIAL INSTRUMENTS
  7




---



##### Table of Contents



CENTRAL IOWA ENERGY, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
December 31, 2007 and 2006
 DEFFERED GRANT FINANCING 
 INCOME TAXES 
 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS 
  NOTE B: INVENTORIES
  Raw materials
    
    $
    2,188,134Work in process
    
    
    141,182Finished goods
    
    
    2,890,178Total
    
    $
    5,219,494
 NOTE C: RELATED PARTY TRANSACTIONS
   8




---



##### Table of Contents



CENTRAL IOWA ENERGY, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
December 31, 2007 and 2006
 NOTE D: REVOLVING LINE OF CREDIT
  NOTE E: LONG-TERM DEBT
  Mortgage Term Note payable to F & M Bank  Iowa  See details below
    
    $
    21,036,907Term Revolving Note payable to F & M Bank  Iowa  See details below
    
    
    5,000,000Equipment
capital lease, due in monthly installments of $3,345 through August 2010 with a final option payment of $11,500 for the
purchase of the equipment.
    
    
    104,654$
    26,141,561
       9




---



##### Table of Contents



CENTRAL IOWA ENERGY, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
December 31, 2007 and 2006
  NOTE F: RETIREMENT PLAN
  NOTE G: COMMITMENTS AND CONTINGENCIES
 Purchase Contracts
  Utility Contracts
    NOTE H: GOING CONCERN
   10




---



##### Table of Contents



CENTRAL IOWA ENERGY, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
December 31, 2007 and 2006
    11




---



##### Table of Contents



Item 2. Managements Discussion and Analysis or Plan of Operations
 Cautionary Statements Regarding Forward Looking Statements
 RISK FACTORS
 
    
    Competition with other manufacturers in the biodiesel industry;
    
    Overcapacity within the biodiesel industry;
    
    Decrease in the demand for biodiesel;
    
    Actual biodiesel and glycerin production varying from expectations;
    
    Availability and cost of products and raw materials, particularly soybean oil, animal fats, and methanol;
    
    Changes in the price and market for biodiesel and its co-products, such as glycerin;
    
    Our ability to market and our reliance on third parties to market our products;
    
    Changes in or elimination of governmental laws, tariffs, trade or other controls or enforcement
practices such as:
 
    
    national, state or local energy policy;
    
    federal 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;
 
    
    Total U.S. consumption of diesel fuel;
    
    Fluctuations in petroleum prices;
    
    Changes in plant production capacity or technical difficulties in operating the plant;
    
    Changes in our business strategy, capital improvements or development plans;
    
    Results of our hedging strategies;
    
    Changes in interest rates or the availability of credit;
    
    Our ability to generate free cash flow to invest in our business and service our debt;
    
    Our liability resulting from litigation;
    
    Our ability to retain key employees and maintain labor relations;
    
    Changes and advances in biodiesel production technology;
  12




---



##### Table of Contents




    
    Competition from alternative fuels and alternative fuel additives;
    
    Failure to comply with loan covenants contained in our financing agreements;
    
    Our ability to raise additional equity capital proceeds;
    
    Our ability to generate profits; and
    
    Other factors described elsewhere in this report.
  Overview
      13




---



##### Table of Contents



Plant Management, Feedstock Procurement and Marketing
 Liquidity and Capital
Resources
 Liquidity and Capital Resources
     14




---



##### Table of Contents



Plan of Operations for the Next 12 Months
  Plant Operations
    15




---



##### Table of Contents



Plant Management, Feedstock Procurement and Marketing
  Feedstock Procurement
 
    
    Provide analysis and audit of feedstock suppliers;
    
    Purchase feedstocks at competitive prices meeting specifications and in
quantities adequate to satisfy the production schedule of our plant;
    
    Negotiate for discounts on feedstocks, where obtainable;
    
    Arrange for transportation, logistics, and scheduling of feedstock deliveries;
and
    
    Provide analysis and audit of bulk transportation providers.
 Chemical Inputs Procurement
 
    
    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.
 Sales and Marketing
 
    
    Market analysis of biodiesel supply and demand;
    
    Market access to REGs developed biodiesel distribution channels;
  16




---



##### Table of Contents




    
    Analysis and audit of biodiesel customers, including for creditworthiness, and
bulk transportation providers;
    
    Marketing specialists and sales representatives to attain and establish sales
opportunities and relationships for our products;
    
    Arrangements for transportation, logistics, and scheduling of biodiesel
shipments;
    
    Arrangements for leased tankers for rail shipments, where advantageous;
    
    Oversight and reconciliation of shipments, invoicing and payments on a weekly
basis; and
    
    Provide invoicing and accounts receivable management for biodiesel shipments.
 Administrative Services
 
    
    Accounting;
    
    Human Resources;
    
    Information Technology;
    
    Payroll; and
    
    Communications.
   
    
    Utilize his or her ongoing best efforts to successfully and profitably
manage the plant in our best interests;
    
    Develop an annual budget for presentation to and approval of our board;
    
    Attend meetings of our board and provide information upon its request;
    
    Insure that all raw product costs are minimized and that all finished
product revenues are maximized;
    
    Work with us to formulate our mission and goals;
    
    Manage the plants resources to efficiently achieve such mission and goals;
    
    Manage our duties and rights under agreements with third parties relating to
the plant;
    
    Assist with regulatory affairs monitoring and compliance;
    
    Hire, terminate and replace plant personnel as necessary and in all cases in
accordance with the policies of our board;
    
    Management of governmental relations, including the United States Department
of Agricultures biodiesel programs; and
    
    Perform such other duties as may be agreed upon.
   
    
    Plan and schedule biodiesel production to meet our needs and marketing
goals;
    
    Monitor and improve quality control;
    
    Oversee facility and equipment maintenance;
    
    Assist with budgeting and the monitoring of labor and other expenses in the
operation;
    
    Implement processing changes and new technologies as they evolve, and plan
for new projects relating to biodiesel production; and
    
    Perform such other duties as may be agreed upon.
  17




---



##### Table of Contents




    
    Monthly Fee. For the first month in which our biodiesel was sold, which was
April 2007, and for six months thereafter (the initial period), we paid a monthly fee of
5.7 cents per gallon of biodiesel sold by REG. For the first month after the initial
period we paid 5.7 cents per gallon for any biodiesel that was produced but not sold
during the initial period in addition to 5.7 cents per gallon of biodiesel produced in the
first month following the initial period. Thereafter, we pay a monthly fee of 5.7 cents
per gallon of biodiesel produced at our plant.
    
    Net Income Bonus. We will pay an annual bonus to REG based on the amount of
our annual net income, as that term is defined in the agreement. REGs bonus may range
from 0% to 6% of our annual net income, depending on our performance, but will not exceed
the amount of $1,000,000.
    Energy Management
   18




---



##### Table of Contents



Operating Budget and Financing of Plant Operations
  Operating Costs:Feedstock Costs
    
    $
    85,235,000Chemicals
    
    
    9,169,000Utilities
    
    
    1,022,000Other Production Costs
    
    
    3,460,000General and Administrative
    
    
    1,300,000Total operating costs
    
    $
    100,186,000
 Trends and
Uncertainties Impacting the Biodiesel Industry and Our Future Operations RISK FACTORS
 RISK FACTORS Liquidity and Capital Resources
 Trends and Uncertainties Impacting the Biodiesel Industry and Our Future Operations
   19




---



##### Table of Contents



20




---



##### Table of Contents



21




---



##### Table of Contents




    
    additional rail capacity and rail cars;
    
    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.
  Commodity Price Risk Protection
     22




---



##### Table of Contents



Permitting and Regulatory Activities
  Employees
  JOB TITLE
    
    NUMBER EMPLOYEESProcess Operator
    
    
    16Accounting Manager
    
    
    1Mechanic
    
    
    1Electrician
    
    
    1Administrative Assistant
    
    
    1Shipping/Receiving
    
    
    3Operations Supervisor
    
    
    1Quality Assurance Manager
    
    
    1Laboratory Technician
    
    
    1Accounting Assistant
    
    
    1Total
    
    
    27
 Plant Management, Feedstock Procurement, and
Marketing
  23




---



##### Table of Contents



Liquidity and Capital Resources
  Debt Financing
      24




---



##### Table of Contents



th th
  25




---



##### Table of Contents



th th
 FINANCIAL STATEMENTS
  26




---



##### Table of Contents



Government Programs and Grants
    Additional Capital
 FINANCIAL
STATEMENTS RISK FACTORS
 Distribution to Unit Holders
  Results of Operations
 Financial Summary and Analysis of the Quarter Ended December 31, 2007
  27




---



##### Table of Contents



Quarter EndedDecember 31, 2007Income Statement Data
    
    Amount
    
    
    PercentRevenues
    
    $
    17,894,803
    
    
    
    100.00
    %Cost of Sales
    
    $
    19,108,588
    
    
    
    106.78
    %Gross (Loss)
    
    $
    (1,213,785
    )
    
    
    (6.78
    )%Operating Expenses
    
    $
    688,624
    
    
    
    3.85
    %Operating (Loss)
    
    $
    (1,902,409
    )
    
    
    (10.63
    )%Other Income (Expense)
    
    $
    (593,139
    )
    
    
    (3.31
    )%Net (Loss)
    
    $
    (2,495,548
    )
    
    
    (13.95
    )%
  Revenues
  Cost of Goods Sold
 MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS  Commodity Risk Protection
   28




---



##### Table of Contents



Operating Expenses
  Other Income (Expenses)
  Cash Flows
 Cash Flow from Operating Activities
  Cash Flow from Investing Activities
  Cash Flow from Financing Activities
 Debt Financing
 Critical Accounting Estimates
  Revenue Recognition
   29




---



##### Table of Contents



Derivative Instruments and Hedging Activities
 Accounting for Derivative Instruments and
Hedging Activities
 Off-Balance Sheet Arrangements
  Research and Development
  Costs and Effects of Compliance with Environmental Laws
   Item 3. Controls And Procedures
    30




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
 MANAGEMENTS DISCUSSION AND ANALYSIS
 The decreasing availability and increasing price of soybean oil and animal fats may hinder our
ability to profitably produce biodiesel and may result in plant shut downs and decreased revenues.
  The loans agreements under which we obtained financing for the construction of our biodiesel
plant contain restrictive covenants.
 MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS  Liquidity and Capital Resources
  31




---



##### Table of Contents



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.
 FINANCIAL STATEMENTS
 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.
 FINANCIAL
STATEMENTS
  32




---



##### Table of Contents



Doubts about our ability to continue as a going concern and current market
conditions and prices may make it difficult to raise any desired capital in the future.
 FINANCIAL
STATEMENTS MANAGEMENTS
DISCUSSION AND ANALYSIS
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
 orking capital MANAGEMENTS DISCUSSION AND ANALYSIS 
Liquidity and Capital Resources  Debt Financing
 
 Item 4. Submission of Matters to Security Holders.
  
 Item 5. Other Information.
  
 Item 6. Exhibits.
  ExhibitNo.
    
    Description31.1
    
    
    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 135032.2
    
    
    Certificate pursuant to 18 U.S.C. Section 1350
  33




---



##### Table of Contents



SIGNATURES
  CENTRAL IOWA ENERGY, LLCDate: February 14, 2008
    /s/ John E. Van ZeeJohn E. Van ZeePresident and Chief Executive Officer
(Principal Executive Officer)Date: February 14, 2008
    /s/ Kimberly SmithKimberly SmithChief Financial Officer
(Principal Financial and Accounting Officer)  34