##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-KSB
 þ
    
    Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the fiscal year ended December 31, 2007
 o
    
    Transition report under Section 13 or 15(d) of the Exchange Act.
 For the transition period from to
 Commission file number 000-51965
 WESTERN IOWA ENERGY, LLC
  Iowa
(State or other jurisdiction of 
incorporation or organization)
    
    41-2143913
(I.R.S. Employer Identification No.)1220 S. CENTER STREET, P.O BOX 399WALL LAKE, IOWA
(Address of principal executive offices)
    
    51466
(Zip Code)
 (712) 664-2173
  None
  26,447
 þ o
 þ
 o þ
      o þ




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##### 



Table of Contents
 PART I
    
    
    3ITEM 1. DESCRIPTION OF BUSINESS
    
    
    3ITEM 1A. RISK FACTORS
    
    
    26ITEM 2. DESCRIPTION OF PROPERTY
    
    
    37ITEM 3. LEGAL PROCEEDINGS
    
    
    37ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    38PART II
    
    
    38ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER
PURCHASES OF EQUITY SECURITIES
    
    
    38ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
    
    
    39ITEM 7. FINANCIAL STATEMENTS
    
    
    54ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    55ITEM 8A(T). CONTROLS AND PROCEDURES
    
    
    55ITEM 8B. OTHER INFORMATION
    
    
    55PART III
    
    
    55ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION
16(A) OF THE EXCHANGE ACT
    
    
    55ITEM 10. EXECUTIVE COMPENSATION
    
    
    56ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
    
    
    56ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
    
    
    56ITEM 13. EXHIBITS
    
    
    56ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    58SIGNATURES
    
    
    58Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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AVAILABLE INFORMATION
  
 PART I
 
 ITEM 1. Description of Business.
 Business Development
     MANAGEMENTS
DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS  Plant Management, Feedstock Procurement and
Marketing
  3




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MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS  Liquidity and Capital Resources
  General Demand
    Government Regulation and Federal Biodiesel Supports
  4




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Principal Products and Markets
   Biodiesel
      5




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Primary Co-product  Glycerin
     Biodiesel Markets
   6




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Wholesale Market / Biodiesel Marketers
 Distribution of Principal Products Dependence on One or More Major Customers
 Retail Market
  
    
    additional rail capacity;
    
    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.
  Government/Public Sector
  Distribution of Principal Products
   7




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Sales and Marketing
  
    
    Market analysis of biodiesel supply and demand;
    
    Market access to REG, Inc. developed biodiesel distribution channels;
    
    Analysis and audit of biodiesel customers including creditworthiness;
    
    Marketing specialists and sales representatives to attain and establish sales
opportunities and relationships for our products;
    
    Use of REG, Inc.s brand and
name in marketing our biodiesel;
    
    Arrangements for transportation, logistics and scheduling of biodiesel shipments;
    
    Where advantageous, arrange for leased tankers for rail shipments;
    
    Analyze and audit bulk transportation providers;
    
    Oversee reconciliation of shipments, invoicing and payments on a weekly basis; and
    
    Provide invoicing and accounts receivable management for biodiesel shipments.
    Sources and Availability of Raw Materials
 Supply
   8




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U.S. Soybean Oil PricesMarketing Year
    
    Price (cents)1997/98
    
    
    25.801998/99
    
    
    19.901999/00
    
    
    15.602000/01
    
    
    14.152001/02
    
    
    16.462002/03
    
    
    22.042003/04
    
    
    29.072004/05
    
    
    23.012005/06
    
    
    23.412006/07
    
    
    31.022007/08
    
    
    47.5 - 51.5
    (1)
 (1)
    
    Preliminary Price
 U.S. Soybean Oil Pricesfor 2006-2007Marketing YearMonth
    
    Price (cents)October
    
    
    24.80November
    
    
    27.64December
    
    
    27.63January
    
    
    28.00February
    
    
    28.94March
    
    
    29.74April
    
    
    31.06May
    
    
    32.90June
    
    
    34.01July
    
    
    35.74August
    
    
    34.87September
    
    
    36.89October
    
    
    38.10November
    
    
    42.68December
    
    
    45.16
 Data provided by USDA, Oil Crops Outlook Report, February 11, 2008.
    9




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Lard & Edible Tallow Prices for Past Ten YearsMarketing Year
    
    Lard (cents)
    
    
    Edible Tallow (cents)1997/98
    
    
    19.46
    
    
    
    20.691998/99
    
    
    14.66
    
    
    
    15.141999/00
    
    
    13.64
    
    
    
    13.212000/01
    
    
    14.61
    
    
    
    13.432001/02
    
    
    13.55
    
    
    
    13.872002/03
    
    
    18.13
    
    
    
    17.802003/04
    
    
    26.13
    
    
    
    22.372004/05
    
    
    21.80
    
    
    
    18.482005/06
    
    
    21.74
    
    
    
    18.162006/07
    
    
    28.43
    
    
    
    27.322007/08(1)
    
    
    35.5-39.5
    
    
    
    37.5-41.5
 (1)
    
    Preliminary Prices
 Lard & Edible Tallow Prices for 2006-2007Marketing YearMonth
    
    Lard (cents)
    
    
    Edible Tallow (cents)October
    
    
    23.55
    
    
    
    19.86November
    
    
    20.78
    
    
    
    21.78December
    
    
    22.58
    
    
    
    23.23January
    
    
    23.00
    
    
    
    23.91February
    
    
    23.82
    
    
    
    23.25March
    
    
    30.75
    
    
    
    24.34April
    
    
    27.71
    
    
    
    26.22May
    
    
    28.60
    
    
    
    30.19June
    
    
    32.64
    
    
    
    34.50July
    
    
    36.00
    
    
    
    35.00August
    
    
    35.77
    
    
    
    32.85September
    
    
    36.00
    
    
    
    32.69October
    
    
    35.09
    
    
    
    33.98November
    
    
    33.78
    
    
    
    36.88December
    
    
    32.66
    
    
    
    35.28
 Data provided by USDA, Oil Crops Outlook Report, February 11, 2008
   Type of Fuel
    
    Pour PointSoy-based Biodiesel (B100)
    
    30oFTallow-based Biodiesel (B100)
    
    61oFNo. 2 Petro Diesel (B0)
    
    -30oFB2 Soy Blend with No. 2 Diesel
    
    -25oF
   10




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Hedging
 MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS  Commodity
Price Risk Protection
 Pretreatment Costs
   Management and Operational Services Agreement  Feedstock and Chemical Inputs Procurement
  Feedstock Procurement.
  
    
    Provide analysis and audit of feedstock suppliers;
    
    Purchase feedstock at competitive prices meeting specifications and in
quantities adequate to satisfy the production schedule of our plant;
    
    Negotiate for discounts on feedstock, where obtainable;
    
    Arrange for transportation, logistics, and scheduling of feedstock deliveries;
and
    
    Provide analysis and audit of bulk transportation providers.
  11




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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.
  MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS  Plant Operations
 Utilities & Infrastructure
  Electricity .
 Water
 Natural Gas
  12




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New Products and Services
  Government Regulation and Federal Biodiesel Supports
 Federal Biodiesel Supports
  Renewable Fuels Standard
  th
    13




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Small Agri-Biodiesel Producer Tax Credit
  Biodiesel Tax Credits
    The Clean Air Act Amendment
   14




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State Legislation
    
    
    An Iowa RFS starting at 10% in 2009 and increasing to 25% by 2019;
    
    A retail tax credit for biodiesel blends of $0.03 per gallon for retailers whose
diesel sales include 50% or greater biodiesel blends; and
    
    An expanded infrastructure program designed to help retailers and wholesalers offset
the cost of bringing E85 and biodiesel blends to customers.
  Effect of Government Regulation
    15




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Competition
         16




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MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN
OF OPERATIONS  Plant Management, Feedstock Procurement and Marketing Dependence on One or a Few Major Customers
  
    
    Ag Processing Inc. (AGP) in Sergeant Bluff. This facility produces biodiesel from
refined bleached and deodorized soybean oil produced at its solvent extraction processing
plant in Eagle Grove, Iowa. AGP has completed an expansion of its plant, increasing its
production capacity to 30 million gallons per year.
    
    Soy Solutions of Iowa, LLC, located in Milford, Iowa. This is a stand-alone facility
that purchases soybean oil from the market. The facility has capacity to produce
approximately 2 million gallons of biodiesel annually, and utilizes virgin soybean oil as
its sole feedstock.
    
    Central Iowa Energy, LLC, located in Newton, Iowa. This facility has capacity to
produce 30 million gallons of biodiesel annually and utilizes both soybean oil and animal
fats as its feedstock. This biodiesel plant was constructed by REG, Inc. and is currently
managed by REG, Inc.
    
    Cargill Inc., located in Iowa Falls. Cargills facility has an annual production
capacity of 37.5 million gallons. Cargill uses soybean oil as its primary feedstock and is
located adjacent to its soybean crush facility.
    
    Clinton County BioEnergy, L.L.C., located in Clinton, Iowa. This facility has capacity
to produce 10 million gallons of biodiesel annually and uses soybean oil as its primary
feedstock.
    
    Tri-City Energy, LLC, located in Keokuk, Iowa. The facility has capacity to produce 5
million gallons of biodiesel annually and uses soybean oil as its primary feedstock.
    
    Western Dubuque Biodiesel, LLC, located near Farley, Iowa. Western Dubuque Biodiesel
has the capacity to produce 30 million gallons of biodiesel per year. This biodiesel plant
was constructed by REG, Inc. and is currently managed by REG, Inc. This plant is not
capable of pretreating animal fats like our plant.
    
    Freedom Fuels, LLC, located near Mason City, Iowa. The facility has capacity to produce
30 million gallons of biodiesel per year.
    
    Iowa Renewable Energy, LLC, located in Washington, Iowa. The facility has capacity to
produce 30 million gallons of biodiesel per year, from either vegetable oil or animal fat.
This biodiesel plant was constructed by REG, Inc. and is currently managed by REG, Inc.
  17




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
    
    Sioux Biochemical, Inc., located in Sioux Center, Iowa, is capable of producing 1.5
million gallons of biodiesel each year.
    
    Riksch Biofuels L.L.C., located in Crawfordsville, Iowa, is capable of producing 10
million gallons of biodiesel each year.
    
    East Fork Biodiesel, LLC, finished construction on its 60 million gallon per year plant
in Algona, Iowa, currently making it the largest biodiesel producer in Iowa. However, this
plant is not currently operating. This biodiesel plant was
constructed by and is currently managed by REG, Inc. and can only process refined soy oil into
biodiesel
    most
  18




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Commercial Biodiesel Production Plants (January 25, 2008)
 
   AnnualProductionState
    
    Company
    
    City
    
    Capacity
    
    
    Primary FeedstockALAlabama Biodiesel Corporation
    
    Moundville
    
    
    
    
    
    SoyAllied Renewable Energy, LLC
    
    Birmingham
    
    
    15,000,000
    
    
    SoyEagle Biodiesel, Inc.
    
    Bridgeport
    
    
    30,000,000
    
    
    SoyIndependence Renewable Energy Corp
    
    Perdue Hill
    
    
    40,000,000
    
    
    Multi FeedstockAR*
    
    FutureFuel Chemical Company
    
    Batesville
    
    
    24,000,000
    
    
    Multi FeedstockPatriot Biofuels
    
    Stuttgart
    
    
    3,000,000
    
    
    Multi FeedstockAZAmereco Arizona, LLC
    
    Arlington
    
    
    15,000,000
    
    
    Multi FeedstockPerformance Biofuels, LLC
    
    ChandlerCABay Biodiesel, LLC
    
    San Jose
    
    
    3,000,000
    
    
    Multi FeedstockBlue Sky Bio-Fuels, Inc.
    
    Oakland
    
    
    
    
    
    Multi FeedstockCentral Valley Biofuels, LLC
    
    Orange Cove
    
    
    2,000,000
    
    
    Multi FeedstockEast Bay Biofuels
    
    RichmondEnergy Alternative Solutions, Inc.
    
    Gonzales
    
    
    1,000,000
    
    
    Multi FeedstockImperial Valley Biodiesel, LLC
    
    El Centro
    
    
    3,000,000
  19




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AnnualProductionState
    
    Company
    
    City
    
    Capacity
    
    
    Primary Feedstock*
    
    Imperial Western Products
    
    Coachella
    
    
    8,000,000
    
    
    Multi FeedstockWright Biofuels, Inc.
    
    San Jacinto
    
    
    5,500,000
    
    
    Multi FeedstockYokayo Biofuels, Inc.
    
    Ukiah
    
    
    300,000
    
    
    Recycled Cooking OilCTBio-Pur Inc.
    
    Bethlehem
    
    
    1,000,000
    
    
    Multi Feedstock Yellow Grease, Tallow,  Soy, PoultryCT Biodiesel, LLC
    
    Cheshire
    
    
    4,000,000
    
    
    FatFLAgri-Source Fuels, Inc.
    
    Dade City
    
    
    30,000,000
    
    
    Multi Feedstock Soy, Animal Fats,*
    
    World Energy Alternatives, LLC
    
    Lakeland
    
    
    18,000,000
    
    
    Yellow GreaseGAAlterra Bioenergy of Middle Georgia, LLC
    
    Gordon
    
    
    15,000,000
    
    
    SoyBullDog BioDiesel
    
    Ellenwood
    
    
    20,000,000
    
    
    Multi FeedstockECO Solutions, LLC
    
    Chatsworth
    
    
    25,000,000
    
    
    Multi Feedstock Plant Oils, AnimalGeorgia Biofuels Corp.
    
    Loganville
    
    
    1,000,000
    
    
    FatsMiddle Georgia Biofuels
    
    East Dublin
    
    
    1,500,000
    
    
    Poultry Fat*
    
    Peach State Labs
    
    Rome
    
    
    
    
    
    SoySunshine BioFuels, LLC
    
    Camilla
    
    
    6,000,000
    
    
    SoyUS Biofuels Inc.
    
    Rome
    
    
    10,000,000
    
    
    Multi FeedstockHIPacific Biodiesel
    
    Kahului
    
    
    500,000
    
    
    Multi FeedstockPacific Biodiesel
    
    Honolulu
    
    
    1,000,000
    
    
    Multi FeedstockIA*
    
    AGP
    
    Sergeant Bluff
    
    
    30,000,000
    
    
    Soy*
    
    Cargill
    
    Iowa Falls
    
    
    37,500,000
    
    
    SoyCentral Iowa Energy, LLC
    
    Newton
    
    
    30,000,000
    
    
    Multi FeedstockEast Fork Biodiesel, LLC
    
    Algona
    
    
    60,000,000
    
    
    SoyFreedom Fuels, LLC
    
    Mason City
    
    
    30,000,000
    
    
    SoyIowa Renewable Energy, LLC
    
    Washington
    
    
    30,000,000
    
    
    Multi Feedstock*
    
    Renewable Energy Group, Inc.
    
    Ralston
    
    
    12,000,000
    
    
    SoyRiksch BioFuels, LLC
    
    Crawfordsville
    
    
    10,000,000
    
    
    Multi FeedstockSioux Biochemical, Inc.
    
    Sioux Center
    
    
    2,000,000
    
    
    Corn OilSoy Solutions
    
    Milford
    
    
    2,000,000
    
    
    SoyTri-City Energy
    
    Keokuk
    
    
    5,000,000
    
    
    SoyWestern Dubuque Biodiesel
    
    Farley
    
    
    30,000,000
    
    
    Soy*
    
    Western Iowa Energy
    
    Wall Lake
    
    
    30,000,000
    
    
    Multi FeedstockIDBlue Sky Biodiesel, LLC
    
    New Plymouth
    
    
    10,000,000
    
    
    SoyILHeartland Biodiesel, Inc.
    
    Marion
    
    
    3,000,000
    
    
    SoyIncobrasa  Industries, Ltd.
    
    Gilman
    
    
    31,000,000
    
    
    SoyMidwest Biodiesel Products, Inc.
    
    South Roxanna
    
    
    30,000,000
    
    
    Soy*
    
    Stepan Company
    
    Millsdale
    
    
    22,000,000
    
    
    SoyINe-biofuels, LLC
    
    Middletown
    
    
    25,000,000
    
    
    SoyEvergreen Renewables
    
    Hammond
    
    
    5,000,000
    
    
    SoyHeartland Biofuel
    
    Flora
    
    
    450,000
    
    
    SoyIntegrity Biofuels
    
    Morristown
    
    
    10,000,000
    
    
    SoyLouis Dreyfus Agricultural Industries, L
    
    LC      Claypool
    
    
    80,000,000
    
    
    SoyKSHealy Biodiesel, Inc.
    
    Sedgwick
    
    
    1,000,000
    
    
    Recycled Cooking OilKrystal Clean Biofuels
    
    Kansas City
    
    
    
    
    
    Multi FeedstockSalemby Resources
    
    Burden
    
    
    
    
    
    CanolaKY*
    
    Griffin Industries
    
    Butler
    
    
    1,750,000
    
    
    Multi FeedstockOwensboro Grain
    
    Ownesboro
    
    
    50,000,000
    
    
    SoyUnion County  Biodiesel Company, LLC
    
    Stugis
    
    
    5,000,000
    
    
    Soy
  20




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AnnualProductionState
    
    Company
    
    City
    
    Capacity
    
    
    Primary FeedstockLAAllegro Biodiesel Corporation
    
    Pollock
    
    
    12,000,000
    
    
    SoyMAMPB Bioenergy, LLC
    
    West Bridgewater
    
    
    500,000
    
    
    Recycled Cooking OilMDGreenlight Biofuels, LLC
    
    Princess Anne
    
    
    4,000,000
    
    
    Multi FeedstockMaryland Biodiesel
    
    Berlin
    
    
    1,000,000
    
    
    SoyMIAg Solutions, Inc.
    
    Gladstone
    
    
    5,000,000
    
    
    Multi FeedstockMichigan Biodiesel, LLC
    
    Bangor
    
    
    10,000,000
    
    
    Multi FeedstockNextDiesel
    
    Adrian
    
    
    20,000,000
    
    
    Multi FeedstockMN*
    
    FUMPA BioFuels
    
    Redwood Falls
    
    
    3,000,000
    
    
    Multi FeedstockGreen Range Renewable Energy
    
    Ironton
    
    
    150,000
    
    
    Recycled Cooking Oil*
    
    Minnesota Soybean Processors
    
    Brewster
    
    
    30,000,000
    
    
    Soy*
    
    Soymor
    
    Albert Lee
    
    
    30,000,000
    
    
    SoyMOAGP
    
    St. Joseph
    
    
    29,900,000
    
    
    SoyGlobal Fuels, LLC
    
    Dexter
    
    
    3,000,000
    
    
    Multi FeedstockGreat River Soy Processing Cooperative
    
    Lilbourn
    
    
    5,000,000
    
    
    Soy, Poultry FatHigh Hill Biodiesel, Inc.
    
    High Hill
    
    
    5,000,000
    
    
    Multi FeedstockMid America Biofuels, LLC
    
    Mexico
    
    
    30,000,000
    
    
    SoyMissouri Better Bean
    
    Bunceton
    
    
    15,000,000
    
    
    Multi FeedstockNatural Biodiesel Plant, LLC
    
    Hayti
    
    
    5,000,000
    
    
    Multi FeedstockPrairie Pride
    
    Deerfield
    
    
    30,000,000
    
    
    SoyMSCFC Transportation, Inc.
    
    Columbus
    
    
    1,500,000
    
    
    Multi FeedstockDelta Biofuels, Inc.
    
    Natchez
    
    
    80,000,000
    
    
    Multi FeedstockNorth Mississippi Biodiesel
    
    New Albany
    
    
    7,000,000
    
    
    SoyScott Petroleum Corporation
    
    Greenville
    
    
    20,000,000
    
    
    Multi FeedstockUniversal Bioenergy North America, Inc.
    
    Nettleton
    
    
    10,000,000NCBlue Ridge Biofuels
    
    Asheville
    
    
    1,000,000
    
    
    Multi FeedstockEvans Environmental Energies, Inc.
    
    Wilson
    
    
    6,000,000Foothills  Bio-Energies, LLC
    
    Lenoir
    
    
    5,000,000
    
    
    Multi FeedstockGortman Biofuel, LLC
    
    Winston Salem
    
    
    100,000North Carolina BioFuels, LLC
    
    Seaboard
    
    
    1,000,000
    
    
    Multi FeedstockPiedmont Biofuels
    
    Pittsboro
    
    
    4,000,000
    
    
    Multi FeedstockSmoky Mountain Biofuels, Inc.
    
    Dilsboro
    
    
    1,500,000
    
    
    Multi FeedstockTraingle Biofuels Industries, Inc.
    
    Wilson
    
    
    3,000,000
    
    
    Multi FeedstockNDADM
    
    Velva
    
    
    85,000,000
    
    
    CanolaAll American Biodiesel
    
    York
    
    
    2,000,000
    
    
    SoyNEHorizon Biofuels, Inc.
    
    Arlington
    
    
    500,000
    
    
    Animal FatNortheast Nebraska Biodiesel, LLC
    
    Scribner
    
    
    5,000,000
    
    
    SoyWyobraska Biodiesel, LLC
    
    Gering
    
    
    10,000,000
    
    
    SoyNJFuel Bio One, LLC
    
    Elizabeth
    
    
    50,000,000
    
    
    Multi FeedstockInnovation Fuels
    
    Newark
    
    
    40,000,000
    
    
    Multi FeedstockNMRio Valley Biofuels, LLC
    
    Anthony
    
    
    500,000
    
    
    Multi FeedstockNVBently Biofuels
    
    Minden
    
    
    1,000,000
    
    
    Multi FeedstockBiodiesel of Las Vegas
    
    Las Vegas
    
    
    8,000,000
    
    
    Multi FeedstockOHAgrifuels, LLC
    
    Breman
    
    
    1,000,000
    
    
    Multi FeedstockAmerican Ag Fuels, LLC
    
    Definance
    
    
    7,000,000
    
    
    Multi FeedstockAmerican Made Fuels, Inc.
    
    Canton
    
    
    5,000,000
    
    
    SoyCenter Alternative Energy Company
    
    Cleveland
    
    
    5,000,000
    
    
    Soy, Choice White GreaseJatrodiesel, Inc.
    
    Miamisburg
    
    
    5,000,000
    
    
    Multi Feedstock*
    
    Peter Cremer
    
    Cincinnati
    
    
    30,000,000
    
    
    Soy
  21




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AnnualProductionState
    
    Company
    
    City
    
    Capacity
    
    
    Primary FeedstockOKEarth Biofuels, Inc.
    
    Durant
    
    
    10,000,000
    
    
    Multi FeedstockTulsa Biofuels, LLC
    
    TulsaORGreen Fuels of Oregon, Inc.
    
    Klamath Falls
    
    
    1,000,000
    
    
    CanolaSeQuential-Pacific Biodiesel, LLC
    
    Salem
    
    
    1,000,000
    
    
    Multi FeedstockPABiodiesel of Pennsylvania, Inc.
    
    White Deer
    
    
    1,500,000
    
    
    Soybean OilKeystone BioFuels, Inc.
    
    Shiremanstown
    
    
    
    
    
    Multi FeedstockLake Erie Biofuels
    
    Erie
    
    
    45,000,000
    
    
    SoyMiddletown Biofuels, LLC
    
    Middletown
    
    
    2,000,000
    
    
    SoySoy Energy, Inc.
    
    New Oxford
    
    
    1,500,000
    
    
    SoyUnited Biofuels, Inc.
    
    York
    
    
    1,500,000
    
    
    SoyUnited Oil Company
    
    Pittsburgh
    
    
    5,000,000
    
    
    Multi FeedstockRIMason Biodiesel, LLC
    
    Westerly
    
    
    2,500,000
    
    
    SoyNewport Biodiesel, LLC
    
    Newport
    
    
    300,000
    
    
    Recycled Cooking OilSC*
    
    Carolina Biofuels, LLC
    
    Greenville
    
    
    5,000,000
    
    
    SoyEcogy Biofuels, LLC
    
    Estill
    
    
    30,000,000
    
    
    SoySoutheast  BioDiesel, LLC
    
    Charleston
    
    
    8,000,000
    
    
    Multi FeedstockSDMidwest BioDiesel  Producers, LLC
    
    Alexandria
    
    
    7,000,000
    
    
    SoyTNBIG Biodiesel, LLC
    
    Pulaski
    
    
    150,000
    
    
    SoyBiofuel of Tennessee, LLC
    
    Decaturville
    
    
    10,000,000
    
    
    SoyBlue Sky Biodiesel, Inc.
    
    Wartburg
    
    
    3,000,000
    
    
    Multi FeedstockFreedom Biofuels, Inc.
    
    Madison
    
    
    12,000,000
    
    
    SoyMemphis Biofuels,  LLC
    
    Memphis
    
    
    50,000,000
    
    
    Multi FeedstockMilagro Biofuels of Memphis
    
    Memphis
    
    
    5,000,000
    
    
    SoyNu-Energie, LLC
    
    Surgoinsville
    
    
    10,000,000
    
    
    Multi FeedstockNuOil
    
    Counce
    
    
    1,500,000
    
    
    SoySunsOil, LLC
    
    Athens
    
    
    1,500,000
    
    
    Multi FeedstockTXAgribiofuels, LLC
    
    Dayton
    
    
    12,000,000
    
    
    Cottonseed, SoyAgriMax Fuels, LLC
    
    Channelview
    
    
    3,000,000
    
    
    SoyBiodiesel  Industries of Greater Dallas-Fort Worth
    
    Denton
    
    
    3,000,000
    
    
    Multi FeedstockBioSelect Fuels (GBBLP)
    
    Galveston
    
    
    30,000,000
    
    
    Multi Feedstock Cottonseed, Soy,Brownfield Biodiesel, LLC
    
    Ralls
    
    
    2,000,000
    
    
    CanolaCentral Texas Biofuels
    
    Giddings
    
    
    600,000
    
    
    Waste Vegetable OilDouble Diamond Biofuels, Inc.
    
    Dimmitt
    
    
    3,000,000
    
    
    CanolaGeoGreen Fuels, LLC
    
    Gonzales
    
    
    3,000,000
    
    
    Multi FeedstockMulti FeedstockGreen Earth Fuels of Houston, LLC
    
    Galena Park
    
    
    90,000,000
    
    
    Cottonseed, AnimalGreenlight Biofuels, Ltd.
    
    Littlefield
    
    
    5,000,000
    
    
    Fats*
    
    Huish Detergents
    
    Pasadena
    
    
    15,000,000
    
    
    Palm*
    
    Johann Haltermann Ltd
    
    Houston
    
    
    20,000,000
    
    
    SoyKemlink Energy, Inc.
    
    Pasadena
    
    
    2,500,000
    
    
    Multi FeedstockMomentum Biofuels, Inc.
    
    Pasadena
    
    
    20,000,000
    
    
    Multi FeedstockNew Energy Fuels, Inc.
    
    Waller
    
    
    5,000,000
    
    
    Multi FeedstockNew Fuel Company
    
    Dallas
    
    
    250,000
    
    
    Multi Feedstock*
    
    Organic Fuels, LLC
    
    Galena Park
    
    
    30,000,000
    
    
    Multi FeedstockPacific Biodiesel  Texas
    
    Hillsboro
    
    
    2,500,000
    
    
    Multi FeedstockSafe Renewable Corp.
    
    Conroe
    
    
    30,000,000
    
    
    Multi FeedstockSmithfield Bioenergy LLC
    
    Cleburne
    
    
    12,000,000
    
    
    Multi FeedstockSMS Envirofuels
    
    Poteet
    
    
    6,000,000
    
    
    SoyValco Bioenergy
    
    Harlingen
    
    
    3,000,000
    
    
    Recycled Cooking Oil
  22




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AnnualProductionState
    
    Company
    
    City
    
    Capacity
    
    
    Primary FeedstockUTDenali Industries, LLC
    
    American Fork
    
    
    3,800,000
    
    
    Multi FeedstockVACheasapeake Custom Chemical
    
    Ridgeway
    
    
    5,500,000
    
    
    Multi FeedstockRECO Biodiesel, LLC
    
    Richmond
    
    
    6,000,000
    
    
    Multi FeedstockRenroh Environmental Company
    
    South Boston
    
    
    80,000Virginia Biodiesel Refinery
    
    New Kent
    
    
    7,000,000
    
    
    SoyWACentral Washington Biodiesel, LLC
    
    Ellensburg
    
    
    
    
    
    Multi FeedstockGen-X Energy Group, Inc.
    
    Burbank
    
    
    15,000,000
    
    
    Multi FeedstockImperium Grays Harbor
    
    Hoquiam
    
    
    100,000,000
    
    
    Multi Feedstock*
    
    Seattle Biodiesel
    
    Seattle
    
    
    5,000,000
    
    
    Soy, CanolaStandard Biodiesel USA Inc.
    
    Arlington
    
    
    5,000,000
    
    
    Waste Vegetable OilTG Energy, Inc.
    
    Ferndale
    
    
    3,000,000
    
    
    Multi FeedstockWIBest Biodiesel, Inc.
    
    Cashton
    
    
    10,000,000
    
    
    Multi FeedstockSanimax Energy Inc.
    
    Deforest
    
    
    20,000,000
    
    
    Multi FeedstockWalsh Bio Diesel, LLC
    
    Mauston
    
    
    5,000,000
    
    
    SoyWVAC & S, Inc.
    
    Nitro
    
    
    3,000,000
    
    
    Soy
 
 *
    
    Denotes BQ-9000 Accredited Producers(1)
    
    Annual Production Capacity only refers to the reported maximum production capability of the
facility. It does not represent how many gallons of biodiesel were actually produced at each
plant.(2)
    
    Includes the annual production capacity of plants which chose not to list their production.
    23




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Competition from Other Fuel Sources
 Biodiesel Competition
    Glycerin Competition
   24




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Research and Development
  Dependence on One or a Few Major Customers
    25




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DESCRIPTION OF BUSINESS  Competition RISK FACTORS, DESCRIPTION OF BUSINESS  Distribution of Principal Products MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS  Plant Management, Feedstock
Procurement and Marketing
 Costs and Effects of Compliance with Environmental Laws
 MANAGEMENTS
DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS Permitting
    Employees
 MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS  Employees
 
 ITEM 1A. RISK FACTORS.
 You should carefully read and consider the risks and uncertainties below and the other information
contained in this report. The risks and uncertainties described below are not the only ones we may
face. The following risks, together with additional risks and uncertainties not currently known to
us or that we currently deem immaterial could impair our financial condition and results of
operations.
  26




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Risks Related to Our Business
 We have a limited operating history.
 
    
    effectively manage our business and operations;
    
    recruit and retain key personnel; and
    
    develop new products that complement our existing business.
  We experienced a net loss during the 2007 fiscal year and may not operate profitably in the
future
 Our business is not diversified.
 Our business is sensitive to demand for biodiesel and glycerin.
 Our business is sensitive to feedstock prices. Changes in the prices and availability of our
feedstock may hinder our ability to generate revenue.
  27




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We are in competition with REG, Inc., our design-builder and manager, which could place us at
a competitive disadvantage and cause a conflict of interest for our manager.
 Increases in the price of natural gas could reduce our profitability.
  We have limited experience in the biodiesel industry, which increases the risk of our
inability to operate the biodiesel plant.
 Our exclusive reliance on REG, Inc. to manage our plant, procure our inputs and market our
products could damage our profitability if REG, Inc. fails to perform its obligations under the
agreement.
  28




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We engage in hedging transactions which involve risks that can harm our business.
   Risks Related to Operation of the Biodiesel Plant
 We depend on key suppliers, whose failure to perform could force us to abandon business,
hinder our ability to operate profitably or decrease the value of our units.
  29




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Technological advances could significantly decrease the cost of producing biodiesel or result
in the production of higher-quality biodiesel, and if we are unable to adopt or incorporate
technological advances into our operations, our plant could become uncompetitive or obsolete.
 Risks Related to Biodiesel Industry
 If demand for biodiesel fails to grow at the same rate as planned supply, the excess
production capacity will adversely impact our financial condition.
  30




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Excess production of glycerin, a co-product of the biodiesel production process, may cause the
price of glycerin to decline, thereby adversely affecting our ability to generate revenue from the
sale of glycerin.
 The biodiesel manufacturing industry is a feedstock limited industry. As more plants are
developed and go into production there may not be an adequate supply of feedstock to supply the
demands of the industry, which could threaten the viability of our plant.
 The biodiesel industry is becoming increasingly competitive and we compete with some larger,
better financed entities which could impact our ability to operate profitably.
  31




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As the production of biodiesel fuel increases there may not be an adequate supply of railroad
tank cars or trucks to distribute the biodiesel fuel produced by our plant.
 Risks Related to Biodiesel Production
 The decreasing availability and increasing price of soybean oil may hinder our ability to
profitably produce biodiesel and may result in plant shut downs and decreased revenues.
 Declines in the prices of biodiesel and its co-product will have a significant negative impact
on our financial performance.
   32




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Our business is sensitive to feedstock costs and the availability of adequate supplies of
feedstock. Changes in the cost and availability of our feedstock may hinder our ability to generate
revenue and reduce the value of our units.
 If we are forced to temporarily cease operating our biodiesel plant for any reason, we might
not be able to meet our current liabilities or our losses may be increased.
 We are at a disadvantage in marketing our glycerin because our plant will not produce
pharmaceutical grade glycerin, thereby decreasing the market for the glycerin we produce.
 Competition from other sources of fuel may decrease the demand for our biodiesel.
 Asian soybean rust and other plant diseases may decrease our ability to obtain a sufficient
feedstock supply.
  33




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##### Table of Contents



Concerns about fuel quality may impact our ability to successfully market our biodiesel.
 Cold weather may cause biodiesel to gel, which could have an adverse impact on our ability to
successfully market our biodiesel.
  Our reliance upon third parties for feedstock supply may hinder our ability to profitably
produce our biodiesel.
 Automobile manufacturers and other industry groups have expressed reservations regarding the
use of biodiesel, which could negatively impact our ability to market our biodiesel.
  Competition from other diesel fuel lubricity additives for ultra low sulfur diesel may be a
less expensive alternative to our biodiesel, which would cause us to lose market share and
adversely affect our ability to generate revenues.
  34




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Risks Related to Our Financing Plan
 We are in violation of certain restrictive covenants contained in the loans agreements under
which we obtained financing for the construction of our biodiesel plant. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS  Liquidity and Capital Resources
 Our auditor has raised 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.
  35




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Risks Related to Regulation and Governmental Action
 Loss of or ineligibility for favorable tax benefits for biodiesel production could hinder our
ability to operate at a profit and reduce the value of our units.
 A change in environmental regulations or violations thereof could be expensive and increase
our losses.
 Risks Related to Conflicts of Interest
 We may have conflicts of interest with REG, Inc. which may cause difficulty in enforcing
claims against REG, Inc.
  Risks Related to Tax Issues in a Limited Liability Company
 We expect to be taxed as a partnership, however, if we are taxed as a corporation we would be
subject to corporate level taxes which would decrease our net income and decrease the amount of
cash available to distribute to our members.
 Members may be allocated a share of our taxable income that exceeds any cash distributions
received, therefore members may have to pay this tax liability using their personal funds.
  36




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If we are audited by the IRS resulting in adjustments to our tax returns, this could cause the
IRS to audit members tax returns, which could lead to additional tax liability for our members.
 We do not anticipate declaring distributions to members in the foreseeable future.
  
 ITEM 2. DESCRIPTION OF PROPERTY.
   
    
    Principal office building
    
    Processing building
    
    Pretreatment building
    
    Loading/receiving building
    
    Storage warehouse
    
    Storage tank farm
    
    Iron treatment facility
 MANAGEMENTS
DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS  Liquidity and Capital Resources.
 
 ITEM 3. LEGAL PROCEEDINGS.
   37




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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  
 PART II
 
 ITEM 5. MARKET FOR COMMON EQUITY, RELATED MEMBER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF
EQUITY SECURITIES.
 Market Information
    Completed Unit TransactionsFiscal Quarter
    

Low
Per Unit Price
    
    
    High Per Unit Price2006 1st
    
    $
    
    
    
    $
    2006 2nd
    
    $
    
    
    
    $
    2006 3rd
    
    $
    
    
    
    $
    2006 4th
    
    $
    1,300
    
    
    $
    2,8202007 1st
    
    $
    1,800
    
    
    $
    2,5002007 2nd
    
    $
    1,200
    
    
    $
    1,9502007 3rd
    
    $
    1,200
    
    
    $
    1,9502007 4th
    
    $
    1,100
    
    
    $
    1,200
   38




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Unit Holders
  Distributions
    Equity Compensation Plans
  Sale of Unregistered Securities
  Repurchases of Equity Securities
  
 ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
 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;
  39




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##### Table of Contents




    
    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;
    
    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; and
    
    Other factors described elsewhere in this report.
  Overview
    40




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##### Table of Contents



DESCRIPTION OF BUSINESS  Distribution of Principal
Products
   Plan of Operations for the Next 12 Months
  Plant Operations
   41




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##### Table of Contents



DESCRIPTION OF BUSINESS 
Distribution of Principal Products
 
    
    General Manager and
Operations Manager Pre-Production Fee. $14,000 per month for
the General Managers services and $11,000 per month for the Operations Managers services
during pre-production. We did not have an Operations Manager during pre-production and
did not pay the monthly fee for an operations manager.
    
    General Manager and Operations Manager. We pay $0.0133 per gallon of biodiesel
produced per month from the plant during the month for which the fee is computed.
    
    Feedstock Procurement Fee. We pay 1/10 of $0.01 per pound of feedstock
procured payable monthly.
    
    Chemical Procurement Fee. We pay 1/5 of $0.01 per gallon of biodiesel produced
payable monthly.
    
    Biodiesel Marketing Fees. We pay $0.01 for each gallon of biodiesel marketed.
    
    Glycerin and Fatty Acids Marketing Fee. We pay 1/5 of $0.01 for each gallon of
biodiesel marketed as a glycerin and fatty acids marketing fee.
    
    Net Income Bonus. We pay a yearly income bonus equal to 6% of our net income
as defined in the agreement.
  Completion of Construction of Pretreatment Facility
   42




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##### Table of Contents



Operating Budget and Financing of Plant Operations
  Operating Costs:Feedstock Costs
    
    $
    95,600,000Chemicals
    
    
    9,200,000Utilities
    
    
    1,800,000Other Production Costs
    
    
    1,000,000General and Administrative
    
    
    6,300,000Total operating costs
    
    $
    113,900,000
 RISK FACTORS Trends
and Uncertainties Impacting the Biodiesel Industry and Our Future Operations
 Trends and Uncertainties Impacting the Biodiesel Industry and Our Future Operations
      43




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Vegetable Oil Prices
October 2004- October 2007
 
 Cental Illinois Soybean Processors and Corn Processors
      44




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##### Table of Contents



Cumulative Consumption of Soybean Oil for Biodiesel
 
 Fats and Oils: Consumption, Production, and Stocks.
     DESCRIPTION
OF BUSINESS  Government Regulation and Federal Biodiesel Supports
  45




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
    
    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
     46




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Permitting and Regulatory Activities
 DESCRIPTION OF BUSINESS  Costs and Effects of Compliance with
Environmental Laws.
 Employees
  Liquidity and Capital Resources
  Comparison of Fiscal Years Ended December 31, 2007 and 2006 .
 Year ended December 31,2007
    
    
    2006Cash and Cash Equivalents
    
    $
    32,048
    
    
    $
    28,322Current Assets
    
    $
    16,885,286
    
    
    $
    14,321,948Total Assets
    
    $
    49,080,864
    
    
    $
    48,831,373Current Liabilities
    
    $
    11,628,196
    
    
    $
    6,166,566Long Term Liabilities
    
    $
    12,366,667
    
    
    $
    12,851,239Total Members Equity
    
    $
    25,086,001
    
    
    $
    29,813,568Total Distributions Paid to Members
    
    $
    2,121,314
    
    
    $
    0
 Cash Flow From Operations
    47




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##### Table of Contents



Distribution to Unit Holders
  Sources of Funds
  Short-Term and Long-Term Debt Sources
   
    
    During the fiscal year ending 2007, the Company cannot expend in the aggregate, more
than $2,600,000, and each year thereafter, in the aggregate, more than $500,000, for
the acquisition of fixed or capital assets;
    
    The Company cannot declare or pay any dividends or make any distribution of assets
to the members/owners, or purchase, redeem retire or otherwise acquire for value any of
its membership units, or allocate or otherwise set apart any sum for any of the
foregoing, except that in any fiscal year of the Company, a distribution may be made to
the Companys members/owners of up to 40% of the net profit for each fiscal year after
receipt of the audited financial statements for the pertinent fiscal year;
    
    Unless otherwise agreed in writing, the Company will not create, incur, assume or
permit to exist any obligation as lessee under operating leases or leases which should
be capitalized in accordance with GAAP for the rental or hire of any real personal
property, except leases which do not in the aggregate require the Company to make
scheduled payments to the lessors in any fiscal year of the Company in excess of
$100,000;
    
    Unless otherwise agreed in writing, the Company will have at the end of each period
for which financial statements are required to be furnished an excess of current assets
over current liabilities of not less than $6,000,000, except that in determining
assets, any amount available under the Construction and Revolving Term Loan Supplement
hereto may be included; and
    
    The Company will have at the end of each period for which financial statements are
required to be furnished an excess of total assets over total liabilities of not less
than $26,000,000.
  48




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##### Table of Contents




    
    The Company promises to repay the loans as follows: (i) in 20 equal, consecutive,
quarterly installments of $450,000 with the first installment due on December 20, 2006
and the last such installment due on September 20, 2011; and (ii) followed by a final
installment in an amount equal to the remaining unpaid principal balance of loans on
December 20, 2011.
    
    For each fiscal year end, beginning with the fiscal year ending in 2006, and ending
with the fiscal year ending in 2012, the Company shall also, within 120 days after the
end of each fiscal year, make a special payment of an amount equal to 50% of the Free
Cash Flow of the Company; provided, however, that: (i) if such payment would result in
a covenant default under the Construction and Term Loan Supplement or Master Loan
Agreement, the amount of the payment shall be reduced to an amount which would not
result in a covenant default; (ii) if such payment would result in a breakage of a
fixed interest rate, the applicable broken funding surcharges would still apply; and
(iii) the aggregate of such payments shall not exceed $6,000,000.
      49




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Issuance of Additional Units
  Grants and Government Programs
  
    
    Authority to receive a property tax abatement from the City of Wall Lake at
85% of the tax on the property without the abatement for 10 years followed by
an abatement at 75% of the tax on the property without the abatement for 5
years.
    
    An investment tax credit equal to $2,990,400 (this Iowa tax credit may be
passed through to unit holders and carried forward for up to 7 years by them
until depleted);
    
    Funding for training new employees through a supplemental new jobs
withholding credit equal to one and one-half percent (1.5%) of the gross wages
of the new jobs created by the project; and
    
    A refund of one hundred percent (100%) of the sales, service and use taxes
paid to contractors and subcontractors during the construction phase of the
project (excluding local option sales taxes on intangible property, furniture
and furnishings).
  50




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Results of Operations
 Comparison of Fiscal Years Ended December 31, 2007 and 2006.
  Fiscal Year Ended
    
    
    Fiscal Year EndedDecember 31, 2007
    
    
    December 31, 2006Income Statement Data
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentRevenues
    
    $
    78,676,998
    
    
    
    100.0
    %
    
    $
    31,991,876
    
    
    
    100.0
    %Cost of Sales
    
    $
    78,253,820
    
    
    
    99.46
    %
    
    $
    23,715,252
    
    
    
    74.12
    %Gross Profit
    
    $
    423,178
    
    
    
    0.54
    %
    
    $
    8,276,624
    
    
    
    25.88
    %Operating Expenses
    
    $
    1,750,886
    
    
    
    2.22
    %
    
    $
    1,606,516
    
    
    
    5.02
    %Other Income (Expense)
    
    $
    (1,278,545
    )
    
    
    (1.63)
    %
    
    $
    (337,583
    )
    
    
    (1.05)
    %Net Income (Loss)
    
    $
    (2,606,253
    )
    
    
    (3.31)
    %
    
    $
    6,332,525
    
    
    
    19.80
    %
 Revenues
  Revenue Sources
    
    Amount
    
    
    Total RevenueBiodiesel Sales
    
    $
    77,195,818
    
    
    
    98.10
    %Crude Glycerin Sales
    
    $
    1,258,074
    
    
    
    1.60
    %Misc. Sales
    
    $
    223,106
    
    
    
    0.03
    %Total Revenue
    
    $
    78,676,998
    
    
    
    100.0
    %
  Percentage ofRevenue Sources
    
    Amount
    
    
    Total RevenueBiodiesel Sales
    
    $
    31,799,000
    
    
    
    99.40
    %Crude Glycerin Sales
    
    
    193,000
    
    
    
    0.60
    %Total Revenue
    
    $
    31,992,000
    
    
    
    100.0
    %
  51




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##### Table of Contents



Cost of Sales
     Operating Expenses
   52




---



##### Table of Contents



Other Income (Expenses)
  Critical Accounting Estimates
  Revenue Recognition
  Derivative Instruments and Hedging Activities
 Accounting for Derivative Instruments and
Hedging Activities
 Off-Balance Sheet Arrangements
   53




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##### Table of Contents



ITEM 7. FINANCIAL STATEMENTS.
 TABLE OF CONTENTS
 PAGEREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    
    F-1FINANCIAL STATEMENTSBalance Sheets
    
    
    F-2Statements of Operations
    
    
    F-3Statements of Changes in Members Equity
    
    
    F-4Statements of Cash Flows
    
    
    F-5Notes to Financial Statements
    
    
    F-6
  54




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
  F-1




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##### Table of Contents



WESTERN IOWA ENERGY, LLC
BALANCE SHEETS
December 31, 2007 and 2006
 ASSETS
 2007
    
    
    2006CURRENT ASSETSCash and cash equivalents
    
    $
    32,048
    
    
    $
    28,322Margin deposits
    
    
    1,427,218
    
    
    
    267,260Trade accounts receivable  related party
    
    
    5,816,085
    
    
    
    4,331,349Other receivables
    
    
    5,997
    
    
    
    Incentive receivable
    
    
    317,225
    
    
    
    597,878Inventory
    
    
    9,098,351
    
    
    
    7,796,183Derivative instruments
    
    
    
    
    
    
    1,267,749Prepaid expenses and other assets
    
    
    188,362
    
    
    
    33,207Total current assets
    
    
    16,885,286
    
    
    
    14,321,948PROPERTY, PLANT AND EQUIPMENTLand and land improvements
    
    
    1,364,842
    
    
    
    1,299,384Office building and equipment
    
    
    643,705
    
    
    
    641,799Plant and process equipment
    
    
    33,308,507
    
    
    
    33,537,541Total, at cost
    
    
    35,317,054
    
    
    
    35,478,724Less accumulated depreciation
    
    
    3,261,429
    
    
    
    1,095,538Total property, plant and equipment
    
    
    32,055,625
    
    
    
    34,383,186OTHER ASSETSLand options
    
    
    596
    
    
    
    596Other investments
    
    
    33,810
    
    
    
    2,000Loan origination fees, net of accumulated amortization of $32,349 and $14,253
at December 31, 2007 and 2006
    
    
    105,547
    
    
    
    123,643Total other assets
    
    
    139,953
    
    
    
    126,239TOTAL ASSETS
    
    $
    49,080,864
    
    
    $
    48,831,373LIABILITIES AND MEMBERS EQUITYCURRENT LIABILITIESAccounts payable:Trade
    
    $
    1,747,007
    
    
    $
    926,744Related
parties
    
    
    2,061,742
    
    
    
    415,912Construction  related party
    
    
    
    
    
    
    848,426Revolving line of credit
    
    
    3,800,000
    
    
    
    Current portion of long-term debt
    
    
    1,909,722
    
    
    
    3,386,789Derivative instruments
    
    
    1,936,375
    
    
    
    Accrued interest
    
    
    100,542
    
    
    
    115,964Accrued wages and benefits
    
    
    56,689
    
    
    
    46,561Accrued payroll taxes
    
    
    3,255
    
    
    
    33,519Accrued expenses  related party
    
    
    
    
    
    
    392,651Other current liabilities
    
    
    12,864
    
    
    
    Total current liabilities
    
    
    11,628,196
    
    
    
    6,166,566LONG-TERM LIABILITIESLong-term debt, less current portion above
    
    
    12,366,667
    
    
    
    12,851,239Total liabilities
    
    
    23,994,863
    
    
    
    19,017,805MEMBERS EQUITYContributed capital
    
    
    23,516,376
    
    
    
    23,516,376Retained earnings
    
    
    1,569,625
    
    
    
    6,297,192Total members equity
    
    
    25,086,001
    
    
    
    29,813,568TOTAL LIABILITIES AND MEMBERS EQUITY
    
    $
    49,080,864
    
    
    $
    48,831,373
   F-2




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##### Table of Contents



WESTERN IOWA ENERGY, LLC
STATEMENTS OF OPERATIONS
Years Ended December 31, 2007 and 2006
 2007
    
    
    2006REVENUESRelated parties
    
    $
    68,595,272
    
    
    $
    26,178,438Incentive funds
    
    
    10,081,726
    
    
    
    5,813,43878,676,998
    
    
    
    31,991,876COST OF SALES
    
    
    78,253,820
    
    
    
    23,715,252Gross profit
    
    
    423,178
    
    
    
    8,276,624OPERATING EXPENSESConsulting and professional fees
    
    
    302,503
    
    
    
    252,929Office and administrative expenses
    
    
    1,448,383
    
    
    
    1,353,587Total operating expenses
    
    
    1,750,886
    
    
    
    1,606,516OTHER INCOME (EXPENSE)Interest and dividend income
    
    
    122,176
    
    
    
    50,379Interest expense
    
    
    (1,400,721
    )
    
    
    (406,062
    )Gain on sale of asset
    
    
    
    
    
    
    2,800Other income
    
    
    
    
    
    
    15,300Total other expense
    
    
    (1,278,545
    )
    
    
    (337,583
    )NET INCOME (LOSS)
    
    $
    (2,606,253
    )
    
    $
    6,332,525BASIC AND DILUTED EARNINGS
(LOSS) PER UNIT
    
    $
    (98.55
    )
    
    $
    246.65WEIGHTED AVERAGE UNITS
OUTSTANDING, BASIC
AND DILUTED
    
    
    26,447
    
    
    
    25,674
   F-3




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##### Table of Contents



WESTERN IOWA ENERGY, LLC
STATEMENTS OF CHANGES IN MEMBERS EQUITY
Years Ended December 31, 2007 and 2006
 Contributed
    
    
    Retained EarningsUnits
    
    
    Capital
    
    
    (Accumulated Deficit)
    
    
    TotalBALANCE, DECEMBER 31, 2005
    
    
    25,447
    
    
    $
    22,516,376
    
    
    $
    (35,333
    )
    
    $
    22,481,043Units issued in exchange for reduction in construction payable,
1,000 units at $1,000 per unit (See Note 6)
    
    
    1,000
    
    
    
    1,000,000
    
    
    
    
    
    
    
    1,000,000Net income for the year ended December 31, 2006
    
    
    
    
    
    
    
    
    
    
    6,332,525
    
    
    
    6,332,525BALANCE, DECEMBER 31, 2006
    
    
    26,447
    
    
    
    23,516,376
    
    
    
    6,297,192
    
    
    
    29,813,568Distributions to members
    
    
    
    
    
    
    
    
    
    
    (2,121,314
    )
    
    
    (2,121,314
    )Net loss for the year ended December 31, 2007
    
    
    
    
    
    
    
    
    
    
    (2,606,253
    )
    
    
    (2,606,253
    )BALANCE, DECEMBER 31, 2007
    
    
    26,447
    
    
    $
    23,516,376
    
    
    $
    1,569,625
    
    
    $
    25,086,001
   F-4




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##### Table of Contents



WESTERN IOWA ENERGY, LLC
STATEMENTS OF CASH FLOWS
Years Ended December 31, 2007 and 2006
 2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)
    
    $
    (2,606,253
    )
    
    $
    6,332,525Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activitiesDepreciation
    
    
    2,183,988
    
    
    
    1,105,452Gain on sale of asset
    
    
    
    
    
    
    (2,800
    )Non cash portion of patronage dividends
    
    
    (31,810
    )
    
    
    Effects of changes in operating assets and liabilitiesMargin deposits
    
    
    (1,159,958
    )
    
    
    (267,260
    )Trade accounts receivable  related party
    
    
    (1,484,736
    )
    
    
    (4,331,349
    )Other receivables
    
    
    (5,997
    )
    
    
    Incentive receivable
    
    
    280,653
    
    
    
    (597,878
    )Inventory
    
    
    (1,302,168
    )
    
    
    (7,796,183
    )Derivative instruments
    
    
    3,204,124
    
    
    
    (1,267,749
    )Prepaid expenses and other assets
    
    
    (155,155
    )
    
    
    (33,207
    )Accounts payable
    
    
    2,466,093
    
    
    
    1,342,394Accrued interest
    
    
    (15,422
    )
    
    
    115,964Accrued wages
    
    
    10,128
    
    
    
    46,561Accrued payroll taxes
    
    
    (30,264
    )
    
    
    32,480Accrued expenses  related party
    
    
    (379,788
    )
    
    
    392,651Net cash provided by (used in) operating activities
    
    
    973,435
    
    
    
    (4,928,399
    )CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment,
including construction in progress
    
    
    (1,130,291
    )
    
    
    (16,228,520
    )Sales tax refund received on plant construction costs
    
    
    443,535
    
    
    
    Proceeds from sale of asset
    
    
    
    
    
    
    33,600Net cash used in investing activities
    
    
    (686,756
    )
    
    
    (16,194,920
    )CASH FLOWS FROM FINANCING ACTIVITIESLoan origination fees
    
    
    
    
    
    
    (2,307
    )Proceeds from revolving line of credit
    
    
    3,800,000
    
    
    
    Proceeds from long-term debt
    
    
    10,109,472
    
    
    
    18,640,528Payments on long-term debt
    
    
    (12,071,111
    )
    
    
    (2,422,275
    )Distributions to members
    
    
    (2,121,314
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    (282,953
    )
    
    
    16,215,946NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    3,726
    
    
    
    (4,907,373
    )CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
    
    
    28,322
    
    
    
    4,935,695CASH AND CASH EQUIVALENTS, END OF YEAR
    
    $
    32,048
    
    
    $
    28,322
   F-5




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##### Table of Contents



Western
Iowa Energy, LLCNotes to Financial
StatementsDecember 31, 2007 and 2006
 
 NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Use of Estimates in Preparing Financial Statements
  Basis of Accounting
  Revenue Recognition
  Cash and Cash Equivalents
  Accounts Receivable
   Derivative Instruments and Hedging Activities
    F-6




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##### Table of Contents



Western
Iowa Energy, LLCNotes to Financial
StatementsDecember 31, 2007 and 2006
   Inventories
  Property, Plant, and Equipment
   YearsLand improvements
    
    
    20  40Office building
    
    
    5  40Office equipment
    
    
    5  20Plant and process equipment
    
    
    10  40
   Loan Origination Fees
  Other Investments
   F-7




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##### Table of Contents



Western
Iowa Energy, LLCNotes to Financial
StatementsDecember 31, 2007 and 2006
 Other Income
  Income Taxes
  Earnings (Loss) Per Unit
  Cost of Sales
  Shipping and Handling Costs
  Environmental Liabilities
  Reclassifications
  NOTE 2  INCENTIVE PAYMENTS AND RECEIVABLE
    F-8




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##### Table of Contents



Western
Iowa Energy, LLCNotes to Financial
StatementsDecember 31, 2007 and 2006
 NOTE 3  INVENTORY
  2007
    
    
    2006Raw material
    
    $
    2,168,644
    
    
    $
    1,284,002Work in progress
    
    
    1,382,679
    
    
    
    2,752,701Finished goods
    
    
    5,547,028
    
    
    
    3,759,480Total
    
    $
    9,098,351
    
    
    $
    7,796,183
 NOTE 4  LAND OPTION
  NOTE 5  DEBT AND FINANCING
 Revolving line of credit
   2007
    
    
    2006Note payable to Farm Credit Services of America and CoBank under term note
agreement  see details below.
    
    $
    5,950,000
    
    
    $
    9,550,000Note payable to Farm Credit Services of America and CoBank under reducing
revolving credit note  see details below.
    
    
    7,260,000
    
    
    
    5,550,528Note payable to the Iowa Department of Economic Development  see details below.
    
    
    367,500
    
    
    
    397,500Note payable to Glidden Rural Electric Cooperative  see details below.
    
    
    698,889
    
    
    
    740,000Total
    
    
    14,276,389
    
    
    
    16,238,028Less current portion
    
    
    1,909,722
    
    
    
    3,386,789Long-term portion
    
    $
    12,366,667
    
    
    $
    12,851,239
  F-9




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##### Table of Contents



Western
Iowa Energy, LLCNotes to Financial
StatementsDecember 31, 2007 and 2006
  2008
    
    $
    1,909,7222009
    
    
    1,928,7862010
    
    
    1,930,2752011
    
    
    831,8712012
    
    
    1,903,608Thereafter
    
    
    5,772,127Total
    
    $
    14,276,389
       F-10




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##### Table of Contents



Western
Iowa Energy, LLCNotes to Financial
StatementsDecember 31, 2007 and 2006
  NOTE 6  MEMBERS EQUITY
    NOTE 7  INCOME TAXES
  NOTE 8  CONCENTRATION OF CREDIT RISK
  NOTE 9  CASH FLOW DISCLOSURES
  2007
    
    
    2006Cash paid for interest
    
    $
    1,416,143
    
    
    $
    289,534
  2007
    
    
    2006Units issued in exchange for reduction in
construction payable
    
    $
    
    
    
    $
    1,000,000Construction in progress in accounts payable
    
    
    
    
    
    
    848,426
  F-11




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##### Table of Contents



Western
Iowa Energy, LLCNotes to Financial
StatementsDecember 31, 2007 and 2006
 NOTE 10  RELATED PARTY TRANSACTIONS
    NOTE 11  LEASE COMMITMENTS
  2008
    
    $
    35,6272009
    
    
    35,6272010
    
    
    35,6272011
    
    
    17,813Total
    
    $
    124,694
  NOTE 12  RETIREMENT AND SAVINGS PLAN
  NOTE 13  FAIR VALUE OF FINANCIAL INSTRUMENTS
   F-12




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##### Table of Contents



Western
Iowa Energy, LLCNotes to Financial
StatementsDecember 31, 2007 and 2006
 NOTE 14  UNCERTAINTY
    F-13




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##### Table of Contents



ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  
 ITEM 8A(T). CONTROLS AND PROCEDURES.
 Disclosure Controls and Procedures
  Internal Control  Integrated Framework
     Changes in Internal Control over Financial Reporting
  
 ITEM 8B. OTHER INFORMATION.
  
 PART III
 
 ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION
16(A) OF THE EXCHANGE ACT.
   55




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##### Table of Contents



ITEM 10. EXECUTIVE COMPENSATION.
  
 ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER
MATTERS.
  
 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
  
 ITEM 13. EXHIBITS.
  Exhibit
    
    
    
    Method ofNo.
    
    Description
    
    Filing3.1
    
    
    Articles of Organization of Western Iowa Energy, LLC.
    
    
    13.2
    
    
    Amended and Restated Operating Agreement of Western Iowa Energy, LLC
    
    
    
    110.1
    
    
    Water Supply and Storage Agreement between the Incorporated City of
Wall Lake, Iowa and Western Iowa Energy, LLC.
    
    
    
    110.2
    
    
    Master Loan Agreement between Farm Credit Services of America and
Western Iowa Energy, LLC.
    
    
    
    110.3
    
    
    Construction and Term Loan Supplement between Farm Credit Services
of America and Western Iowa Energy, LLC.
    
    
    
    110.4
    
    
    Construction and Revolving Term Loan Supplement between Farm Credit
Services of America and Western Iowa Energy, LLC.
    
    
    
    110.5
    
    
    Administrative Agency Agreement between Farm Credit Services of
America and Western Iowa Energy, LLC.
    
    
    
    110.6
    
    
    Design/Build Agreement between Renewable Energy Group and Western
Iowa Energy.
    
    
    
    110.7
    
    
    Management and Operational Services Agreement between West Central
Cooperative and Western Iowa Energy, LLC.
    
    
    
    110.8
    
    
    Letter from CoBank regarding term extension for the Construction
and Term Loan Supplement (exhibit 10.3) between Farm Credit
Services of America and Western Iowa Energy, LLC.
    
    
    110.9
    
    
    Iowa Department of Economic Development VAAPFAP Loan/Forgivable
Loan Agreement and Promissory Note.
    
    
    1
  56




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##### Table of Contents



Exhibit
    
    
    
    Method ofNo.
    
    Description
    
    Filing10.10
    
    
    Statused Revolving Credit Supplement Agreement between Farm Credit
Services, FLCA and Western Iowa Energy, LLC dated August 3, 2006.
    
    
    210.11
    
    
    Industry Track Agreement between Chicago Central and Pacific
Railroad Company and Western Iowa Energy, LLC dated June 5, 2006.
    
    
    210.12
    
    
    Assignment and Pledge Agreement
    
    
    210.13
    
    
    Letter Agreement between Renewable Energy Group, LLC and Western
Iowa Energy, LC regarding the issuance of 1,000 membership units to
Renewable Energy Group, LLC
    
    
    210.14
    
    
    Rural Development Loan Agreement between Glidden Rural Electric
Cooperative and Western Iowa Energy, LLC.
    
    
    310.15
    
    
    Amendment to Management and Operations Agreement between Renewable
Energy Group, Inc. and Western Iowa Energy, LLC.
    
    
    410.16
    
    
    Amendment to Master Loan Agreement between Farm Credit Services of
America, FLCA and Western Iowa Energy, LLC, dated June 21, 2007.
    
    
    510.17
    
    
    Amendment to Construction and Term Loan Supplement between Farm
Credit Services of America, FLCA and Western Iowa Energy, LLC,
dated June 21, 2007.
    
    
    510.18
    
    
    Statused Revolving Credit Supplement between Farm Credit Services
of America, FLCA and Western Iowa Energy, LLC, dated June 21, 2007.
    
    
    514.1
    
    
    Code of Ethics
    
    
    431.1
    
    
    Certificate Pursuant to 17 CFR 240 15d-14(a)
    
    
    *31.2
    
    
    Certificate Pursuant to 17 CFR 240 15d-14(a)
    
    
    *32.1
    
    
    Certificate Pursuant to 18 U.S.C. Section 1350
    
    
    *32.2
    
    
    Certificate Pursuant to 18 U.S.C. Section 1350
    
    
    *
 
 (1)
    
    Incorporated by reference as filed on our Registration Statement on Form 10-SB, No.
000-51965, originally filed on May 2, 2006.(2)
    
    Incorporated by reference as filed on our Quarterly Report on Form 10-QSB filed on August 18,
2006.(3)
    
    Incorporated by reference as filed on our Quarterly Report on Form 10-QSB filed on November 14,
2006.(4)
    
    Incorporated by reference as filed on our Annual Report on Form 10-KSB filed on March 9, 2007.(5)
    
    Incorporated by reference to Exhibit 10.1 as filed on our Quarterly Report on Form 10-QSB
filed on August 14, 2007.(6)
    
    Incorporated by reference to Exhibit 10.2 as filed on our Quarterly Report on Form 10-QSB
filed on August 14, 2007.(7)
    
    Incorporated by reference to Exhibit 10.3 as filed on our Quarterly Report on Form 10-QSB
filed on August 14, 2007.(*)
    
    Filed herewith.  57




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##### Table of Contents



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
  
 SIGNATURES
  WESTERN IOWA ENERGY, LLCDate: March 5, 2008
    /s/ William J. HoranWilliam J. HoranChairman, President and Director

(Principal Executive Officer) Date: March 5, 2008
    /s/ Denny MauserDenny MauserTreasurer and Director

(Principal Financial and Accounting Officer)  Date: March 5, 2008
    /s/ William J. HoranWilliam J. Horan, Chairman, President,Director (Principal Executive Officer) Date:  March 5, 2008
    /s/ Denny MauserDenny Mauser, Treasurer, Director(Principal Financial and Accounting Officer)Date: March 5, 2008
    /s/ Kevin J. RossKevin J. Ross, Secretary and DirectorDate: March 5, 2008
    /s/ John GeakeJohn Geake, Vice-Chairman and DirectorDate: March 5, 2008
    /s/ Warren L. BushWarren L. Bush, DirectorDate: March 5, 2008
    /s/ Wayne SeamanWayne Seaman, DirectorDate: March 5, 2008
    /s/ Nile RamsbottomNile Ramsbottom, Director  58




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##### Table of Contents



EXHIBIT INDEX
 Exhibit
    
    
    
    Method ofNo.
    
    Description
    
    Filing31.1
    
    
    Certificate Pursuant to 17 CFR 240 15d-14(a)
    
    *31.2
    
    
    Certificate Pursuant to 17 CFR 240 15d-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.  59