##### 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 June 30, 2008   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




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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
    
    
    13Item 3A(T). Controls And Procedures
    
    
    26PART II. OTHER INFORMATION
    
    
    26Item 1. Legal Proceedings
    
    
    26Item 1A. Risk Factors
    
    
    26Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    29Item 3. Defaults Upon Senior Securities
    
    
    29Item 4. Submission of Matters to Security Holders
    
    
    29Item 5. Other Information
    
    
    29Item 6. Exhibits
    
    
    29SIGNATURES
    
    
    30Exhibit 31.1Filed by Bowne Pure ComplianceExhibit 32.1Exhibit 32.2
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PART I. FINANCIAL INFORMATION
 
 Item 1. Unaudited Financial Statements
 CENTRAL IOWA ENERGY, LLC
 Condensed
Balance Sheets
 June 30,
    
    
    September 30,2008
    
    
    2007(Unaudited)ASSETSCurrent AssetsCash and equivalents
    
    
    2,918,646
    
    
    
    2,268,725Due from Broker
    
    
    167,592
    
    
    
    326,072Trade accounts receivable  related party
    
    
    438,748
    
    
    
    1,159,184Federal incentive receivable
    
    
    1,233,644
    
    
    
    1,049,262Sales tax refund receivable
    
    
    
    
    
    
    461,517Prepaid expenses
    
    
    94,317
    
    
    
    105,851Inventories
    
    
    8,615,109
    
    
    
    5,896,934Total current assets
    
    
    13,468,056
    
    
    
    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
    
    
    32,590,640
    
    
    
    32,563,62040,940,654
    
    
    
    40,913,634Less accumulated depreciation
    
    
    3,153,114
    
    
    
    1,248,326Net property and equipment
    
    
    37,787,540
    
    
    
    39,665,308Other AssetsFinancing costs, net of amortization
    
    
    354,485
    
    
    
    383,755Total Assets
    
    $
    51,610,081
    
    
    $
    51,316,608LIABILITIES AND EQUITYCurrent LiabilitiesCurrent maturities of long-term debt
    
    
    25,393,593
    
    
    
    26,641,539Revolving line of credit
    
    
    4,100,000
    
    
    
    1,600,000Derivative instruments
    
    
    62,028
    
    
    
    719,482Accounts payable
    
    
    1,640,251
    
    
    
    1,096,370Accounts payable  related party
    
    
    294,658
    
    
    
    365,125Accrued interest payable
    
    
    138,850
    
    
    
    204,092Accrued expenses
    
    
    218,976
    
    
    
    87,438Total current liabilities
    
    
    31,848,356
    
    
    
    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
    
    
    (4,832,395
    )
    
    
    (3,991,558
    )Total members equity
    
    
    19,016,725
    
    
    
    19,857,562Total Liabilities and Members Equity
    
    $
    51,610,081
    
    
    $
    51,316,608
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CENTRAL IOWA ENERGY, LLC
 Unaudited
Condensed Statement of Operations
 Three Months Ended
    
    
    Three Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007(Unaudited)
    
    
    (Unaudited)RevenuesSales to related party
    
    $
    24,658,701
    
    
    $
    12,284,565Federal incentives
    
    
    3,984,987
    
    
    
    2,164,36628,643,688
    
    
    
    14,448,931Cost of Goods Sold
    
    
    24,275,937
    
    
    
    14,503,465Gross Profit (Loss)
    
    
    4,367,751
    
    
    
    (54,534
    )Operating ExpensesProfessional fees
    
    
    55,524
    
    
    
    32,055General and administrative
    
    
    668,028
    
    
    
    466,628Total
    
    
    723,552
    
    
    
    498,683Operating Income (Loss)
    
    
    3,644,199
    
    
    
    (553,217
    )Other Income (Expenses)Interest income
    
    
    7,867
    
    
    
    27,695Interest (expense)
    
    
    (452,229
    )
    
    
    (522,115
    )Total
    
    
    (444,362
    )
    
    
    (494,420
    )Net Profit (Loss)
    
    $
    3,199,837
    
    
    $
    (1,047,637
    )Weighted Average Units Outstanding
    
    
    26,672
    
    
    
    25,672Net Income (Loss) Per Unit  Basic and Diluted
    
    $
    119.97
    
    
    $
    (40.81
    )
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CENTRAL IOWA ENERGY, LLC
 Unaudited
Condensed Statement of Operations
 Nine Months Ended
    
    
    Nine Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007(Unaudited)
    
    
    (Unaudited)RevenuesSales to related party
    
    $
    52,009,224
    
    
    $
    12,284,565Federal incentives
    
    
    9,604,462
    
    
    
    2,164,36661,613,686
    
    
    
    14,448,931Cost of Goods Sold
    
    
    58,782,651
    
    
    
    14,718,393Gross Profit (Loss)
    
    
    2,831,035
    
    
    
    (269,462
    )Operating ExpensesProfessional fees
    
    
    235,818
    
    
    
    159,208General and administrative
    
    
    1,859,299
    
    
    
    537,020Total
    
    
    2,095,117
    
    
    
    696,228Operating Income (Loss)
    
    
    735,918
    
    
    
    (965,690
    )Other Income (Expenses)Interest income
    
    
    29,185
    
    
    
    38,528Interest (expense)
    
    
    (1,605,940
    )
    
    
    (522,115
    )Total
    
    
    (1,576,755
    )
    
    
    (483,587
    )Net (Loss)
    
    $
    (840,837
    )
    
    $
    (1,449,277
    )Weighted Average Units Outstanding
    
    
    26,172
    
    
    
    25,563Net (Loss) Per Unit  Basic and Diluted
    
    $
    (32.13
    )
    
    $
    (56.69
    )
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CENTRAL IOWA ENERGY, LLC
 Unaudited
Condensed Statement of Cash Flows
 Nine Months Ended
    
    
    Nine Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007(Unaudited)
    
    
    (Unaudited)Cash Flows from Operating ActivitiesNet (loss)
    
    $
    (840,837
    )
    
    $
    (1,449,277
    )Adjustments to reconcile net (loss) to net cash from operations:Depreciation and amortization
    
    
    1,934,058
    
    
    
    667,368Membership units earned but not issued
    
    
    
    
    
    
    10,000Change in assets and liabilitiesDue from broker
    
    
    158,480
    
    
    
    (103,039
    )Accounts receivable
    
    
    720,436
    
    
    
    (2,050,796
    )Other receivable
    
    
    (184,382
    )
    
    
    (1,046,826
    )Inventories
    
    
    (2,718,175
    )
    
    
    (4,999,367
    )Prepaid expenses
    
    
    11,534
    
    
    
    (263,652
    )Derivative instruments
    
    
    (657,454
    )
    
    
    747,052Accounts payable
    
    
    473,414
    
    
    
    980,808Accrued expenses
    
    
    131,539
    
    
    
    82,971Accrued interest payable
    
    
    (65,242
    )
    
    
    182,701Net cash (used in) operating activities
    
    
    (1,036,629
    )
    
    
    (7,242,057
    )Cash Flows from Investing ActivitiesCapital expenditures
    
    
    (27,020
    )
    
    
    (15,710,332
    )Sales tax refund from equipment purchases
    
    
    461,517
    
    
    
    Purchase of land
    
    
    
    
    
    
    (2,403,272
    )Net cash provided by (used in) investing activities
    
    
    434,497
    
    
    
    (18,113,604
    )Cash Flows from Financing Activities(Decrease) in checks drawn in excess of bank balance
    
    
    
    
    
    
    (216,613
    )Proceeds on revolving line of credit
    
    
    2,500,000
    
    
    
    1,000,000Proceeds from long-term debt
    
    
    400,000
    
    
    
    27,000,000Payments for long-term debt
    
    
    (1,647,946
    )
    
    
    (116,476
    )Payments for financing costs
    
    
    
    
    
    
    (82,806
    )Member contributions
    
    
    
    
    
    
    600,000Other
    
    
    
    
    
    
    (30,000
    )Net cash provided by financing activities
    
    
    1,252,054
    
    
    
    28,154,105Net Increase in Cash
    
    
    649,922
    
    
    
    2,798,444Cash and
cash equivalents  Beginning of Period
    
    
    2,268,725
    
    
    
    Cash and cash equivalents  End of Period
    
    $
    2,918,647
    
    
    $
    2,798,444Supplemental Disclosure of Cash Flow Information,Cash payments for interest, net of amount capitalized
    
    $
    1,671,182
    
    
    $
    Supplemental Disclosure of Noncash Investing and Financing ActivitiesConstruction costs in accounts payable
    
    $
    
    
    
    $
    114,831Amortization of financing costs included in construction in progress
    
    $
    
    
    
    $
    22,316Membership units to be issued for capital expenditures
    
    $
    
    
    
    $
    1,000,000
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CENTRAL IOWA ENERGY, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2008 and 2007
 NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 PRINCIPAL BUSINESS ACTIVITY Central Iowa Energy, LLC, (an Iowa Limited Liability Company) was
organized with the intentions of developing, owning and operating a 30 million gallon biodiesel
manufacturing facility near Newton, Iowa. The Company was in the development stage until April
2007, when the Company commenced operations.BASIS OF PRESENTATION The accompanying unaudited condensed interim financial statements have
been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in annual financial statements
prepared in accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted as permitted by such rules and regulations. These
financial statements and related notes should be read in conjunction with the financial
statements and notes thereto included in the Companys audited financial statements for the year
ended September 30, 2007 included in the Companys Annual Report on Form 10-KSB.In the opinion of management, the condensed interim financial statements reflect all adjustments
(consisting of normal recurring accruals) that they consider necessary to present fairly the
Companys results of operations, financial position and cash flows. The results reported in
these condensed interim financial statements should not be regarded as necessarily indicative of
results that may be expected for the entire year.USE OF ESTIMATES Management uses estimates and assumptions in preparing these financial
statements in accordance with generally accepted accounting principles of the United States of
America. Those estimates and assumptions affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities, and the reported revenues and expenses.
Actual results could differ from those estimates.REVENUE RECOGNITION Revenues are recognized when the customer has taken title and has assumed
the risks and rewards of ownership, prices are fixed or determinable, and collectibility is
reasonably assured.FEDERAL INCENTIVE PAYMENTS AND RECEIVABLES Revenue from federal incentive programs is recorded
when the Company has sold blended biodiesel and satisfied the reporting requirements under the
applicable program. When it is uncertain that the Company will receive full allocation and
payment due under the federal incentive program, it derives an estimate of the incentive revenue
for the relevant period based on various factors including the most recently used payment factor
applied to the program. The estimate is subject to change as management becomes aware of
increases or decreases in the amount of funding available under the incentive programs or other
factors that affect funding or allocation of funds under such programs.CASH AND EQUIVALENTS The Company considers all highly liquid debt instruments with a maturity
of three months or less to be cash and equivalents.The Company maintains its accounts primarily at two financial institutions. At times throughout
the year, the Companys cash and equivalents balances may exceed amounts insured by the Federal
Deposit Insurance Corporation.ACCOUNTS RECEIVABLE  Accounts receivable are presented at face value, net of the allowance for
doubtful accounts. The allowance for doubtful accounts is established through provisions charged
against income and is maintained at a level believed adequate by management to absorb estimated
bad debts based on historical experience and current economic conditions. Management believes
all receivables will be collected and therefore the allowance has been established to be zero at
June 30, 2008.
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CENTRAL IOWA ENERGY, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2008 and 2007
  INVENTORIES 
 DERIVATIVE INSTRUMENTS  Accounting for Derivative Instruments and Hedging Activities
  Three months
    
    
    Nine monthsRealized loss
    
    $
    113,405
    
    
    $
    2,884,058Change in unrealized loss
    
    
    (283,431
    )
    
    
    (657,454
    )Net (income) loss
    
    $
    (170,026
    )
    
    $
    2,226,604
 PROPERTY AND EQUIPMENT 
 Land improvements
    
    15-20 yearsOffice building
    
    10-20 yearsOffice equipment
    
    5 yearsPlant and process equipment
    
    10-20 years
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CENTRAL IOWA ENERGY, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2008 and 2007
 FINANCING COSTS 
 FAIR VALUE OF FINANCIAL INSTRUMENTS  over-the-counter
 DEFERRED GRANT FINANCING 
 NOTE B: INVENTORIES
  Raw materials
    
    $
    4,475,185Work in process
    
    
    217,361Finished goods
    
    
    3,922,563Total
    
    $
    8,615,109
 NOTE C: RELATED PARTY TRANSACTIONS
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CENTRAL IOWA ENERGY, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2008 and 2007
 NOTE D: REVOLVING LINE OF CREDIT
  NOTE E: LONG-TERM DEBT
  Mortgage Term Note payable to F & M Bank  Iowa  See details below
    
    $
    19,919,903Iowa Department of Economic Development  See details below
    
    
    385,000Term 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.
    
    
    88,690$
    25,393,593
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CENTRAL IOWA ENERGY, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2008 and 2007
   NOTE F: RETIREMENT PLAN
  NOTE G: COMMITMENTS AND CONTINGENCIES
 Utility Contracts
    Contingencies
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CENTRAL IOWA ENERGY, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2008 and 2007
 NOTE H: GOING CONCERN
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Item 2. Managements Discussion and Analysis or Plan of Operations
 Cautionary Statements Regarding Forward Looking Statements
 RISK FACTORS
 
    
    Changes in interest rates or the availability of credit;
 
    
    Our ability to raise additional equity capital proceeds;
 
    
    Overcapacity within the biodiesel industry resulting in increased competition and costs for feedstock
and/or decreased prices for our biodiesel and glycerin;
 
    
    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 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;
 
    
    Total U.S. consumption of diesel fuel;
 
    
    Fluctuations in petroleum and diesel 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;
 
    
    Competition with other manufacturers in the biodiesel industry;
 
    
    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;
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
    
    Changes and advances in biodiesel production technology;
 
    
    Competition from alternative fuels and alternative fuel additives;
 
    
    Failure to comply with loan covenants contained in our financing agreements;
 
    
    Our ability to continue to export our biodiesel;
 
    
    The imposition of tariffs or other duties on biodiesel imported into Europe;
 
    
    Our ability to generate profits; and
 
    
    Other factors described elsewhere in this report
  Overview
  BQ-9000 BQ-9000
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RISK FACTORS
 higher-cost fat-based fat-based RISK FACTORS
 Results of Operations for the Three Months Ended June 30, 2008 and 2007
  Three Months Ended June 30, 2008
    
    
    Three Months Ended June 30, 2007(Unaudited)
    
    
    (Unaudited)Income Statement Data
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentRevenues
    
    $
    28,643,688
    
    
    
    100.00
    %
    
    $
    14,448,931
    
    
    
    100.00
    %Cost of Goods Sold
    
    
    24,275,937
    
    
    
    84.75
    %
    
    
    14,503,465
    
    
    
    100.38
    %Gross Profit (Loss)
    
    
    4,367,751
    
    
    
    15.25
    %
    
    
    (54,534
    )
    
    
    (0.38
    %)Operating Expenses
    
    
    723,552
    
    
    
    2.53
    %
    
    
    498,683
    
    
    
    3.45
    %Operating Income
(Loss)
    
    
    3,644,199
    
    
    
    12.72
    %
    
    
    (553,217
    )
    
    
    (3.83
    %)Other Income
(Expense)
    
    
    (444,362
    )
    
    
    (1.55
    %)
    
    
    (494,420
    )
    
    
    (3.42
    %)Net Income (Loss)
    
    
    3,199,837
    
    
    
    11.17
    %
    
    
    (1,047,637
    )
    
    
    (7.25
    %)
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Revenues
  Three Months Ended June 30, 2008
    
    
    Three Months Ended June 30, 2007Revenue Source
    
    Amount
    
    
    % of Revenues
    
    
    Amount
    
    
    % of RevenuesBiodiesel Sales
    
    
    27,280,641
    
    
    
    95.2
    
    
    
    14,254,837
    
    
    
    98.7Glycerin Sales
    
    
    815,946
    
    
    
    2.9
    
    
    
    174,698
    
    
    
    1.2Fatty Acid and
Soapstock Sales
    
    
    547,101
    
    
    
    1.9
    
    
    
    19,396
    
    
    
    .1Total Revenues
    
    
    28,643,688
    
    
    
    100
    
    
    
    14,448,931
    
    
    
    100
    16




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RISK FACTORS
  17




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Cost of Goods Sold
     18




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Commodity Risk Protection
 Operating Expenses
  Other Income (Expenses)
  Changes in Financial Condition
  June 30, 2008
    
    
    September 30, 2007Current Assets
    
    $
    13,468,056
    
    
    $
    11,267,545Current Liabilities
    
    $
    31,848,356
    
    
    $
    30,714,046Members Equity
    
    $
    19,016,752
    
    
    $
    19,857,562
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Current Assets
 Current Liabilities
 Members Equity
 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
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Loan Covenants and Events of Default
   th
 th
  23




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Additional Equity Capital
  Government Programs and Grants
 Loan Covenants and Events
of Default
   24




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Commodity Price Risk Protection
     Distribution to Unit Holders
  Critical Accounting Estimates
  Revenue Recognition
   25




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Derivative Instruments and Hedging Activities
 Accounting for Derivative Instruments and
Hedging Activities
 Off-Balance Sheet Arrangements
  
 Item 3A(T). Controls And Procedures
   
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
 MANAGEMENTS DISCUSSION AND ANALYSIS
 The loan agreements under which we obtained financing for the construction of our biodiesel
plant contain restrictive covenants, including one with which we have failed to comply for the
period ended June 30, 2008. Liquidity and Capital Resources th
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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.
 Because of the high cost of soybean oil, 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.
 We may be unable to raise the additional equity capital necessary to cure our default under
our loan agreements. Loan Covenants
and Events of Default
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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.
 Our auditors doubts about our ability to continue as a going concern and current market
conditions may make it difficult to raise any desired capital in the future
 We may be unable to obtain additional debt facilities in the event our lender fails to renew
our revolving line of credit.
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The VEETC, a federal biodiesel tax credit on which we currently rely could expire on December
31, 2008, causing a material adverse affect on our future revenues.
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
 th
 
 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
  29




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SIGNATURES
  CENTRAL IOWA ENERGY, LLCDate: August 14, 2008
    /s/ John E. Van ZeeJohn E. Van ZeePresident and Chief Executive Officer
(Principal Executive Officer)Date: August 14, 2008
    /s/ Kimberly SmithKimberly SmithChief Financial Officer
(Principal Financial and Accounting Officer)  30




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##### Table of Contents



EXHIBIT INDEX
 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
  31