##### Table of Contents



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 March 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 7 th Street, P.O. Box 2, Washington, Iowa 52353
 (319) 653-2890
  þ o
 o Yes o No
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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##### 



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
    
    
    23Item 4T. Controls And Procedures
    
    
    23PART II. OTHER INFORMATION
    
    
    23Item 1. Legal Proceedings
    
    
    23Item 1A. Risk Factors
    
    
    23Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    23Item 3. Defaults Upon Senior Securities
    
    
    24Item 4. Submission of Matters to Security Holders
    
    
    24Item 5. Other Information
    
    
    24Item 6. Exhibits
    
    
    24SIGNATURES
    
    
    25Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Unaudited Financial Statements.
 Iowa Renewable Energy, LLC
 Unaudited Balance Sheets  March 31, 2009 and September 30, 2008
 March 31,
    
    
    September 30,2009
    
    
    2008AssetsCurrent Assets:Cash and cash equivalents
    
    $
    1,639,262
    
    
    $
    189,474Due from broker
    
    
    768,005
    
    
    
    82,182Accounts receivable
    
    
    522,695
    
    
    
    4,469,451Derivative financial instruments
    
    
    
    
    
    
    65,141Federal incentive receivable
    
    
    325,157
    
    
    
    747,741Inventory
    
    
    2,607,081
    
    
    
    5,580,906Prepaids and other assets
    
    
    25,140
    
    
    
    43,6315,887,340
    
    
    
    11,178,526Property and Equipment:Land
    
    
    420,000
    
    
    
    420,000Plant and processing equipment
    
    
    40,717,683
    
    
    
    40,673,235Office building, furniture and fixtures
    
    
    572,632
    
    
    
    572,632Equipment and vehicles
    
    
    240,241
    
    
    
    226,42441,950,556
    
    
    
    41,892,291Accumulated depreciation
    
    
    (4,638,974
    )
    
    
    (3,313,970
    )37,311,582
    
    
    
    38,578,321Other Assets:Cash, restricted by loan agreement
    
    
    1,444,265
    
    
    
    1,044,817Financing costs, net
    
    
    389,928
    
    
    
    440,7901,834,193
    
    
    
    1,485,607$
    45,033,115
    
    
    $
    51,242,454Liabilities and Members EquityCurrent Liabilities:Current maturities of long-term debt
    
    $
    31,617,821
    
    
    $
    33,345,343Accounts payable and accrued expenses
    
    
    388,737
    
    
    
    2,295,121Derivative financial instruments
    
    
    38,564
    
    
    
    Total current liabilities
    
    
    32,045,122
    
    
    
    35,640,464Long-Term Debt
    
    
    
    
    
    
    CommitmentsMembers Equity:Member contributions, net of issuance costs, units outstanding
March 31, 2009 and September 30, 2008 26,331
    
    
    23,165,422
    
    
    
    23,165,422Accumulated (deficit)
    
    
    (10,177,429
    )
    
    
    (7,563,432
    )12,987,993
    
    
    
    15,601,990$
    45,033,115
    
    
    $
    51,242,454
   3




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Iowa Renewable Energy, LLC
 Unaudited Statements of Operations
 Three Months
    
    
    Three Months
    
    
    Six Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedMarch 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2009
    
    
    March 31, 2008Revenues:Sales
    
    $
    1,395,832
    
    
    $
    9,096,075
    
    
    $
    11,297,528
    
    
    $
    20,406,684Federal incentives
    
    
    532,249
    
    
    
    1,554,180
    
    
    
    1,918,536
    
    
    
    3,147,9861,928,081
    
    
    
    10,650,255
    
    
    
    13,216,064
    
    
    
    23,554,670Cost of sales
    
    
    2,709,976
    
    
    
    10,202,668
    
    
    
    14,481,051
    
    
    
    23,827,937Gross profit (loss)
    
    
    (781,895
    )
    
    
    447,587
    
    
    
    (1,264,987
    )
    
    
    (273,267
    )Operating expenses:General and administrative
    
    
    212,701
    
    
    
    233,474
    
    
    
    669,299
    
    
    
    650,747Depreciation
    
    
    9,500
    
    
    
    9,500
    
    
    
    19,000
    
    
    
    19,000222,201
    
    
    
    242,974
    
    
    
    688,299
    
    
    
    669,747(Loss) before other income
(expense)
    
    
    (1,004,096
    )
    
    
    204,613
    
    
    
    (1,953,286
    )
    
    
    (943,014
    )Other income (expense):Interest income
    
    
    8,127
    
    
    
    26,922
    
    
    
    21,226
    
    
    
    53,946Interest expense
    
    
    (301,279
    )
    
    
    (598,691
    )
    
    
    (681,937
    )
    
    
    (1,331,973
    )Net (loss)
    
    $
    (1,297,248
    )
    
    $
    (367,156
    )
    
    $
    (2,613,997
    )
    
    $
    (2,221,041
    )Weighted average units outstanding
    
    $
    26,331
    
    
    
    26,331
    
    
    $
    26,331
    
    
    
    26,331Net (loss) per unit  basic and diluted
    
    $
    (49.27
    )
    
    $
    (13.94
    )
    
    $
    (99.27
    )
    
    $
    (84.35
    )
   4




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Iowa Renewable Energy, LLC
 Unaudited Statements of Cash Flows  Six Months Ended March 31, 2009 and 2008
 Six Months EndedMarch 31,
    
    
    March 31,2009
    
    
    2008Cash Flows from Operating Activities:Net (loss)
    
    $
    (2,613,997
    )
    
    $
    (2,221,041
    )Adjustments to reconcile net (loss) to net cash
provided by operating activities:Depreciation
    
    
    1,325,004
    
    
    
    1,325,004Amortization
    
    
    50,862
    
    
    
    50,862Unrealized (gain) loss on derivative financial instruments
    
    
    103,705
    
    
    
    (686,387
    )Change in working capital components:(Increase) decrease in due from broker
    
    
    (685,823
    )
    
    
    1,079,038Decrease in accounts receivable
    
    
    4,369,340
    
    
    
    3,228,631(Increase) decrease in inventory
    
    
    2,973,825
    
    
    
    (2,652,113
    )Decrease in prepaids and other assets
    
    
    18,491
    
    
    
    19,581(Decrease) increase in accounts payable and accrued expenses
    
    
    (1,906,384
    )
    
    
    531,180Net cash provided by operating activities
    
    
    3,635,023
    
    
    
    674,755Cash Flows from Investing Activities:Purchase and construction of property and equipment
    
    
    (58,265
    )
    
    
    (300,000
    )Sales tax and utility refund from construction of property and equipment
    
    
    
    
    
    
    813,455(Increase) in cash restricted
    
    
    (399,448
    )
    
    
    (868,636
    )Net cash (used in) investing activities
    
    
    (457,713
    )
    
    
    (355,181
    )Cash Flows from Financing Activities:Proceeds from long-term borrowings
    
    
    
    
    
    
    2,017,442Payment on long-term borrowings
    
    
    (1,727,522
    )
    
    
    (533,439
    )Net cash provided by (used in) financing activities
    
    
    (1,727,522
    )
    
    
    1,484,003Net increase in cash and cash equivalents
    
    
    1,449,788
    
    
    
    1,803,577Cash and cash equivalents:Beginning
    
    
    189,474
    
    
    
    725,522Ending
    
    $
    1,639,262
    
    
    $
    2,529,099
   5




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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
  6




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Iowa Renewable Energy, LLC
 Notes to Unaudited Financial Statements
 Inventory
 Raw material
    
    $
    1,560,770Finished goods
    
    
    1,046,311$
    2,607,081
 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
  Three Months
    
    
    Three Months
    
    
    Six Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedMarch 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2009
    
    
    March 31, 2008Realized (gain) loss
    
    $
    (59,340
    )
    
    $
    1,633,166
    
    
    $
    (669,588
    )
    
    $
    1,869,238Change in unrealized (gain) loss
    
    
    27,044
    
    
    
    (2,254,200
    )
    
    
    103,705
    
    
    
    (686,387
    )Net (gain) loss
    
    $
    (32,296
    )
    
    $
    (621,034
    )
    
    $
    (565,883
    )
    
    $
    1,182,851
 Financing costs
 Revenue recognition
  7




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Iowa Renewable Energy, LLC
 Notes to Unaudited Financial Statements
 Cost of sales
 Three Months Ended 3/31/09
    
    
    Three Months Ended 3/31/08
    
    
    Six Months Ended 3/31/09
    
    
    Six Months Ended 3/31/08Cost of Revenue/Sales
    
    Dollars
    
    
    Percentage
    
    
    Dollars
    
    
    Percentage
    
    
    Dollars
    
    
    Percentage
    
    
    Dollars
    
    
    PercentageInput costs (soybean oil, animal fats,
chemicals, etc.)
    
    $
    1,584,524
    
    
    
    58.47
    %
    
    $
    9,224,082
    
    
    
    90.41
    %
    
    $
    12,149,031
    
    
    
    83.90
    %
    
    $
    19,632,291
    
    
    
    82.39
    %Plant wages and salaries
    
    
    178,391
    
    
    
    6.58
    
    
    
    239,370
    
    
    
    2.35
    
    
    
    374,868
    
    
    
    2.59
    
    
    
    459,883
    
    
    
    1.93Utilities and waste disposal
    
    
    148,037
    
    
    
    5.46
    
    
    
    308,529
    
    
    
    3.02
    
    
    
    525,784
    
    
    
    3.63
    
    
    
    557,641
    
    
    
    2.34Fees-procurement, operation mgmt
    
    
    8,613
    
    
    
    0.32
    
    
    
    154,353
    
    
    
    1.51
    
    
    
    57,397
    
    
    
    0.40
    
    
    
    339,866
    
    
    
    1.43Accrual for contract transfer
    
    
    
    
    
    
    
    
    
    
    75,000
    
    
    
    0.74
    
    
    
    
    
    
    
    
    
    
    
    75,000
    
    
    
    0.32(Gain) loss on derivative
financial instruments
    
    
    (32,296
    )
    
    
    (1.19
    )
    
    
    (621,034
    )
    
    
    (6.09
    )
    
    
    (565,883
    )
    
    
    (3.91
    )
    
    
    1,182,851
    
    
    
    4.96Depreciation
    
    
    653,002
    
    
    
    24.10
    
    
    
    653,002
    
    
    
    6.40
    
    
    
    1,306,004
    
    
    
    9.02
    
    
    
    1,306,004
    
    
    
    5.48Maintenance, supplies and
other expenses
    
    
    169,705
    
    
    
    6.26
    
    
    
    169,366
    
    
    
    1.66
    
    
    
    633,850
    
    
    
    4.37
    
    
    
    274,401
    
    
    
    1.15Total cost of revenue/sales
    
    $
    2,709,976
    
    
    
    100.00
    %
    
    $
    10,202,668
    
    
    
    100.00
    %
    
    $
    14,481,051
    
    
    
    100.00
    %
    
    $
    23,827,937
    
    
    
    100.00
    %
 Shipping and handling costs
 Income taxes
 Earnings (loss) per unit
 Note 2. Major Customer
     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)
    
    $
    31,077,390Note payable to the Iowa Department of Economic Development (B)
    
    
    255,000Note payable to the Iowa Department of Transportation (C)
    
    
    285,431$
    31,617,821
 (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 March 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 March 31, 2009 of $255,000. 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 March 31, 2009 of $117,431. 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. Contingencies
   9




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




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Item 2. Managements Discussion and Analysis or Plan of Operations.
  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;
      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;
    
    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 March 31, 2009 and 2008
  Three Months Ended March 31, 2009
    
    
    Three Months Ended March 31, 2008(Unaudited)
    
    
    (Unaudited)Income Statement Data
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentRevenues
    
    $
    1,928,081
    
    
    
    100.00
    %
    
    $
    10,650,255
    
    
    
    100.00
    %Cost of Goods Sold
    
    
    2,709,976
    
    
    
    140.55
    %
    
    
    10,202,668
    
    
    
    95.80
    %Gross Profit (Loss)
    
    
    (781,895
    )
    
    
    (40.55
    %)
    
    
    447,587
    
    
    
    4.20
    %Operating Expenses
    
    
    222,201
    
    
    
    11.52
    %
    
    
    242,974
    
    
    
    2.28
    %Operating Income (Loss)
    
    
    (1,004,096
    )
    
    
    (52.07
    %)
    
    
    204,613
    
    
    
    1.92
    %Interest Income
    
    
    8,127
    
    
    
    0.42
    %
    
    
    26,922
    
    
    
    0.25
    %Interest Expense
    
    
    (301,279
    )
    
    
    (15.63
    %)
    
    
    (598,691
    )
    
    
    (5.62
    %)Net (Loss)
    
    
    (1,297,248
    )
    
    
    (67.28
    %)
    
    
    (367,156
    )
    
    
    (3.45
    %)
   14




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Revenues
  Three Months Ended March 31, 2009
    
    
    Three Months Ended March 31, 2008Revenue Source
    
    Amount
    
    
    % of Revenues
    
    
    Amount
    
    
    % of RevenuesBiodiesel Sales
    
    $
    1,843,900
    
    
    
    95.7
    %
    
    $
    10,313,344
    
    
    
    96.8
    %Glycerin Sales
    
    
    65,311
    
    
    
    3.3
    %
    
    
    261,800
    
    
    
    2.5
    %Fatty Acid
and Soapstock Sales
    
    
    18,869
    
    
    
    1
    %
    
    
    75,111
    
    
    
    0.7
    %$
    1,928,081
    
    
    
    100
    %
    
    $
    10,650,255
    
    
    
    100
    %
     15




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Cost of Goods Sold
   16




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Operating Expenses
   17




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Other Income (Expenses)
   Results of Operations for the Six Months Ended March 31, 2009 and 2008
  Six Months Ended March 31, 2009
    
    
    Six Months Ended March 31, 2008(Unaudited)
    
    
    (Unaudited)Income Statement Data
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentRevenues
    
    $
    13,216,064
    
    
    
    100.00
    %
    
    $
    23,554,670
    
    
    
    100.00
    %Cost of Goods Sold
    
    
    14,481,051
    
    
    
    109.57
    %
    
    
    23,827,937
    
    
    
    101.16
    %Gross Loss
    
    
    (1,264,987
    )
    
    
    (9.57
    %)
    
    
    (273,267
    )
    
    
    (1.16
    %)Operating Expenses
    
    
    688,299
    
    
    
    5.21
    %
    
    
    669,747
    
    
    
    2.84
    %Operating Loss
    
    
    (1,953,286
    )
    
    
    (14.78
    %)
    
    
    (943,014
    )
    
    
    (4.00
    %)Interest Income
    
    
    21,226
    
    
    
    0.16
    %
    
    
    53,946
    
    
    
    0.23
    %Interest Expense
    
    
    (681,937
    )
    
    
    (5.16
    %)
    
    
    (1,331,973
    )
    
    
    (5.65
    %)Net Loss
    
    
    (2,613,997
    )
    
    
    (19.78
    %)
    
    
    (2,221,041
    )
    
    
    (9.43
    %)
 Revenues
  Six Months Ended March 31, 2009
    
    
    Six Months Ended March 31, 2008Revenue Source
    
    Amount
    
    
    % of Revenues
    
    
    Amount
    
    
    % of RevenuesBiodiesel Sales
    
    $
    12,808,325
    
    
    
    96.9
    %
    
    $
    22,903,505
    
    
    
    97.2
    %Glycerin Sales
    
    
    321,162
    
    
    
    2.4
    %
    
    
    557,472
    
    
    
    2.4
    %Fatty Acid and Soapstock Sales
    
    
    86,576
    
    
    
    0.7
    %
    
    
    93,694
    
    
    
    0.4
    %Total Revenues
    
    
    13,216,064
    
    
    
    100
    %
    
    
    23,554,670
    
    
    
    100
    %
   18




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Cost of Goods Sold
  Operating Expense
  Interest Expense
  Changes in Financial Condition for the Six Months Ended March 31, 2009
  March 31,
    
    
    September 30,2009
    
    
    2008Current Assets
    
    $
    5,887,340
    
    
    $
    11,178,526Total Assets
    
    
    45,033,115
    
    
    
    51,242,454Current Liabilities
    
    
    32,045,122
    
    
    
    35,640,464Members Equity
    
    
    12,987,993
    
    
    
    15,601,990
 Current Assets
  Current Liabilities
  Members Equity
   19




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Liquidity and Capital Resources
 Cash Flow from Operating Activities
  Cash Flow used in Investing Activities
  Cash Flow provided by (used in) Financing Activities
  Short-Term and Long-Term Debt Sources
        20




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##### Table of Contents



Grants and Government Programs
   Additional Equity Capital and Debt Financing
  
    
    Raising equity through one or more private placement offerings or a state
registered offering of the Companys membership units;
    
    Seeking additional sources of short-term debt financing and credit facilities;
    
    Refinancing our current debt financing and credit facilities; or
    
    Seeking strategic business opportunities, including with other biodiesel plants.
  Commodity Price Risk Protection
   21




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##### Table of Contents



Distribution to Unit Holders
  Critical Accounting Estimates
  Revenue Recognition
  Derivative Instruments and Hedging Activities
  Impairment
of Long-Lived Assets
   22




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##### Table of Contents



Off-balance Sheet Arrangements
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risk.
  
 Item 4T. Controls And Procedures.
      
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
   23




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##### Table of Contents



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.  24




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##### Table of Contents



SIGNATURES
  IOWA RENEWABLE ENERGY, LLCDate: May 15, 2009
    /s/ Michael BohannanMichael BohannanChairman and PresidentDate: May 15, 2009
    /s/ Todd WillsonTodd WillsonChief Financial Officer  25




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##### Table of Contents



EXHIBIT INDEX
 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.  26