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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 fromto
 Commission file number 000-52428
 IOWA RENEWABLE ENERGY, LLC
 
 Iowa
(State or other jurisdiction of 
incorporation or organization)
    
    20-3386000
(I.R.S. Employer Identification No.)
 1701 East 7 th Street
P.O. Box 2
Washington, Iowa 52353
 (319) 653-2890
 þ o
 o þ
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INDEX
 Page No.PART I. FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis or Plan of Operations
    
    
    11PART II. OTHER INFORMATION
    
    
    21Item 1. Legal Proceedings
    
    
    21Item 1A. Risk Factors
    
    
    21Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    22Item 3. Defaults Upon Senior Securities
    
    
    22Item 4. Submission of Matters to Security Holders
    
    
    22Item 5. Other Information
    
    
    22Item 6. Exhibits
    
    
    22SIGNATURES
    
    
    22Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
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PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements  Iowa Renewable Energy, LLC
 Unaudited Balance Sheets
 December 31,
    
    
    September 30,2007
    
    
    2007AssetsCurrent Assets:Cash and cash equivalents
    
    $
    2,506,036
    
    
    $
    725,522Margin deposit
    
    
    2,716,988
    
    
    
    1,337,860Accounts receivable
    
    
    4,023,503
    
    
    
    5,614,315Federal incentive receivable
    
    
    583,604
    
    
    
    822,228Inventory
    
    
    4,216,924
    
    
    
    3,815,722Prepaids and other assets
    
    
    24,950
    
    
    
    37,03214,072,005
    
    
    
    12,352,679Property and Equipment:Land
    
    
    420,000
    
    
    
    420,000Plant and processing equipment
    
    
    40,650,689
    
    
    
    41,464,111Office building, furniture and fixtures
    
    
    572,632
    
    
    
    572,665Equipment and vehicles
    
    
    226,424
    
    
    
    226,42441,869,745
    
    
    
    42,683,200Accumulated depreciation
    
    
    (1,326,464
    )
    
    
    (663,962
    )40,543,281
    
    
    
    42,019,238Other Assets, financing costs, net
    
    
    517,082
    
    
    
    542,513$
    55,132,368
    
    
    $
    54,914,430Liabilities and Members EquityCurrent Liabilities:Current maturities of long-term debt
    
    $
    34,353,178
    
    
    $
    33,342,558Accounts payable and accrued expenses
    
    
    868,101
    
    
    
    1,374,711Derivative financial instruments
    
    
    2,078,060
    
    
    
    510,247Construction retainage
    
    
    300,000
    
    
    
    300,000Total current liabilities
    
    
    37,599,339
    
    
    
    35,527,516Long-Term Debt
    
    
    
    
    
    
    CommitmentsMembers Equity:Member contributions, net of issuance costs, units
outstanding 2007 26,331; 2006 26,331
    
    
    23,165,422
    
    
    
    23,165,422Accumulated (deficit)
    
    
    (5,632,393
    )
    
    
    (3,778,508
    )17,533,029
    
    
    
    19,386,914$
    55,132,368
    
    
    $
    54,914,430
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Iowa Renewable Energy, LLC
 Unaudited Statements of Operations
Quarters Ended December 31, 2007 and 2006
 2007
    
    
    2006Revenues:Sales
    
    $
    11,310,609
    
    
    $
    Federal incentives
    
    
    1,593,806
    
    
    
    12,904,415
    
    
    
    Cost of sales
    
    
    13,625,269
    
    
    
    Gross (loss)
    
    
    (720,854
    )
    
    
    Operating expenses:General and administrative
    
    
    417,273
    
    
    
    49,378Depreciation
    
    
    9,500
    
    
    
    381426,773
    
    
    
    49,759(Loss) before other income (expense)
    
    
    (1,147,627
    )
    
    
    (49,759
    )Other income (expense):Interest income
    
    
    27,024
    
    
    
    74,988Interest expense
    
    
    (733,282
    )
    
    
    Net income (loss)
    
    $
    (1,853,885
    )
    
    $
    25,229Weighted average units outstanding
    
    $
    26,331
    
    
    
    25,972Net income (loss) per unit  basic and diluted
    
    $
    (70.41
    )
    
    $
    0.97
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Iowa Renewable Energy, LLC
 Unaudited Statements of Cash Flows 
Quarter Ended December 31, 2007 and 2006
 2007
    
    
    2006Cash Flows from Operating Activities:Net income (loss)
    
    $
    (1,853,885
    )
    
    $
    25,229Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation
    
    
    662,502
    
    
    
    381Amortization
    
    
    25,431
    
    
    
    Unrealized loss on derivative financial instruments
    
    
    1,567,813
    
    
    
    Change in working capital components:(Increase) in margin deposits
    
    
    (1,379,128
    )
    
    
    Decrease in accounts receivable
    
    
    1,829,436
    
    
    
    Decrease in inventory
    
    
    137,965
    
    
    
    (Increase) in prepaids and other assets
    
    
    (527,085
    )
    
    
    (Decrease) in accounts payable and accrued expenses
    
    
    (506,610
    )
    
    
    (1
    )Net cash provided by (used in) operating activities
    
    
    (43,561
    )
    
    
    25,609Cash Flows from Investing Activities:Purchase and construction of property and equipment
    
    
    
    
    
    
    (11,759,527
    )Sales tax and utility refund from construction of property and equipment
    
    
    813,455
    
    
    
    (Increase) decrease in cash restricted
    
    
    
    
    
    
    7,479,892Net cash provided by (used in) investing activities
    
    
    813,455
    
    
    
    (4,279,635
    )Cash Flows from Financing Activities:Issuance of membership units, on exercise of unit options
    
    
    
    
    
    
    550,000Payments for financing costs
    
    
    
    
    
    
    (552,515
    )Proceeds from long-term borrowings
    
    
    1,020,620
    
    
    
    4,336,245Payment on long-term borrowings
    
    
    (10,000
    )
    
    
    (5,000
    )Net cash provided by financing activities
    
    
    1,010,620
    
    
    
    4,328,730Net increase in cash and cash equivalents
    
    
    1,780,514
    
    
    
    74,704Cash and cash equivalents:Beginning
    
    
    725,522
    
    
    
    473,505Ending
    
    $
    2,506,036
    
    
    $
    548,209Supplemental Disclosure of Cash Flow Information,
cash payments for interest, net of amount capitalized
    
    $
    690,110
    
    
    $
    Supplemental Disclosures of Noncash Operating and
Financing Activities:Construction in progress included in accounts payable
    
    
    300,000
    
    
    
    4,143,793Amortized financing costs included in construction in process
    
    
    
    
    
    
    16,954Accrued interest included in construction in process
    
    
    
    
    
    
    32,522
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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:
 Use of estimates
 Concentrations of credit risk
 Cash and cash equivalents
 Restricted cash
 Accounts receivable
  Federal incentive payments and receivables
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Inventory
 Raw material
    
    $
    1,076,613Finished goods
    
    
    2,601,144Deposits on inventory in transit
    
    
    539,167$
    4,216,924
 Property and equipment
 YearsPlant and process equipment
    
    10  20Office building
    
    10  20Office equipment
    
    3  7Other equipment
    
    3  7
  Derivative instruments Accounting for Derivative Instruments and Hedging Activities
  Financing costs
 Revenue recognition
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Cost of sales
 Cost of Revenue/Sales
    
    Dollars
    
    
    PercentageInput costs (soybean oil, chemicals, etc.)
    
    $
    10,408,209
    
    
    
    76.39
    %Plant wages and salaries
    
    
    220,513
    
    
    
    1.62Utilities and waste disposal
    
    
    249,112
    
    
    
    1.83Fees-marketing, sales, procurement
    
    
    185,513
    
    
    
    1.36Loss on derivative financial instruments
    
    
    1,803,885
    
    
    
    13.24Depreciation
    
    
    653,002
    
    
    
    4.79Maintenance, supplies and other expenses
    
    
    105,035
    
    
    
    0.77Total cost of revenue/sales
    
    $
    13,625,269
    
    
    
    100.00
    %
  Shipping and handling costs
 Income taxes
 Earnings (loss) per unit
 Note 2. Major Customer
    Note 3. Long-Term Debt
  Note payable to Marshall Bank Group for construction loan (A)
    
    $
    33,718,178Note payable to the Iowa Department of Economic Development (B)
    
    
    335,000Note payable to the Iowa Department of Transportation (C)
    
    
    300,000$
    34,353,178
 (A)
    
    On October 26, 2006, the Company entered into a $34,715,000 construction-term loan
agreement which will be used to complete the biodiesel project. The loan consists of two
phases: a construction phase where the Company will make periodic requests for fund
advances to meet construction obligations and at the completion of construction the loan
will convert to a senior debt instrument. The note bears interest at prime plus 0.75%
(8.00% as of December 31, 2007).
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(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, 2007 of $235,000. 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 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 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, 2007 of $132,000. 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.
  Note 4. Lease Commitments and Additional Contingencies
  Year ending September 30:2008
    
    $
    32,8682009
    
    
    32,8682010
    
    
    3,300$
    69,036
 Note 5. Related Party Transactions
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Note 6. Pending Accounting Pronouncements
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial LiabilitiesIncluding an Amendment of FASB Statement No. 115
 Note 7. Going Concern
   Note 8. Subsequent Events
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Item 2. Managements Discussion and Analysis or Plan of Operations
 Forward Looking Statements
  
    
    Changes in our business strategy, management, capital improvement and development
plans;
    
    Changes in plant production capacity or technical difficulties in operating the plant;
    
    Overcapacity within the biodiesel industry leading to a decline in biodiesel prices;
    
    Changes in the availability and price of feedstock, which includes soybean oil and
animal fat;
    
    Increases or decreases in the supply and demand for biodiesel, including anticipated
significant increases in supply from new biodiesel plants and expansions of existing
biodiesel plants;
    
    Changes in environmental regulations that apply to our plant operations;
    
    Changes in general economic conditions or the occurrence of certain events causing an
economic impact in the agriculture, oil or automobile industries;
    
    Changes in the availability and price of natural gas;
    
    Failure to comply with our loan covenants;
    
    Continued and increased temporary shutdowns;
    
    Our ability to raise additional capital if necessary;
    
    The availability of credit and our ability to borrow additional amounts;
    
    Increases or decreases in the supply and demand for glycerin leading to a decline in
prices; and
    
    Changes and advances in biodiesel production technology.
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Overview
      12




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Plan of Operations for the Next 12 Months
 Plant Operations
  Permitting
  Permit:
    
    Status:VOC Emissions from Equipment Leaks
Permit-Operation
    
    We have 18 months following the
start of production to draft a plan
for the air operations permit and we
have started that process.Tier II Report
    
    We will be required to file a Tier
II Report prior to March 1, 2008 for
the year 2007. We have a process in
place for filing this report.Superfund Amendments and
Reauthorization Act (SARA) Section
313 Form R
    
    We will be required to file Form R
prior to July 1, 2008 for the year
2007. We have a process in place for
filing this report.
 Utilities & Infrastructure
 Electricity.
 Water and Sewer
 Natural Gas
 Rail.
 Operating Budget and Financing of Plant Operations
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Operating Costs:Feedstock and Utilities Costs
    
    $
    76,785,000General and Administrative Costs
    
    $
    1,245,000Production and Other Costs
    
    $
    8,826,000Total Operating Costs
    
    $
    86,856,000
  Administration and Employees
  Trends and Uncertainties Impacting the Biodiesel Industry and Our Future Operations
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
    
    additional rail capacity and rail tank 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
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Results of Operations
 Financial Summary and Analysis of the Quarter Ended December 31, 2007
  Quarter EndedDecember 31, 2007Income Statement Data
    
    Amount
    
    
    PercentRevenues
    
    $
    12,904,415
    
    
    
    100.00
    %Cost of Sales
    
    $
    13,625,269
    
    
    
    105.59
    %Gross (Loss)
    
    $
    (720,854
    )
    
    
    (5.59
    )%Operating Expenses
    
    $
    426,773
    
    
    
    3.31
    %Operating (Loss)
    
    $
    (1,147,627
    )
    
    
    (8.90
    )%Interest income
    
    $
    27,024
    
    
    
    0.21
    %Interest expense
    
    $
    (733,282
    )
    
    
    (5.68
    )%Net (Loss)
    
    $
    (1,853,885
    )
    
    
    (14.37
    )%
  Revenues
  Cost of Goods Sold
 MANAGEMENTS DISCUSSION AND
ANALYSIS OR PLAN OF OPERATIONS  Commodity Risk Protection
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Operating Expenses
  Other Income (Expenses)
  Cash Flows
 Cash Flow from Operating Activities
  Cash Flow from Investing Activities
  Cash Flow from Financing Activities
   18




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Summary of Critical Accounting Policies
  Revenue Recognition
  Derivative Instruments and Hedging Activities
  Off-balance Sheet Arrangements
  Liquidity and Capital Resources
  Use of Capital
   Sources of Funds
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Research and Development
  Costs and Effects of Compliance with Environmental Laws
   Item 3. Controls And Procedures
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PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  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 becoming more dependent upon our ability to obtain adequate supplies of animal fat to
produce our biodiesel and adverse changes in the animal fat market may negatively impact our
profitability.
  Conversion of our construction loan to a term loan will subject us to restrictive covenants
which may restrict our operating flexibility.
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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.
  
 Item 6. 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.
 
 SIGNATURES
  IOWA RENEWABLE ENERGY, LLCDate: February 14, 2008
    
    /s/ Michael Bohannan

Michael BohannanChairman and PresidentDate: February 14, 2008
    
    /s/ J. William Pim

J. William PimChief Financial Officer and Treasurer
  22