##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934.
 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2008
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM            TO
 COMMISSION FILE NUMBER: 000-52033
 RED TRAIL ENERGY, LLC
  NORTH DAKOTA
(State or other jurisdiction 
of incorporation or organization)
    
    76-0742311
(IRS Employer
Identification No.)
 
  o þ
  o o o þ
  o þ




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##### 



PagePART I  FINANCIAL INFORMATION
    
    
    1Item 1. Condensed Financial Statements (Unaudited)
    
    
    1Condensed Balance Sheets
    
    
    1Condensed Statements of Operations
    
    
    2Condensed Statements of Cash Flows
    
    
    3Notes to Unaudited Condensed Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Disclosure Regarding Forward-Looking Statements
    
    
    15Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    24Item 4. Controls and Procedures
    
    
    25PART II  OTHER INFORMATION
    
    
    26Item 1. Legal Proceedings
    
    
    26Item 1A. Risk Factors
    
    
    26Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26Item 3. Defaults Upon Senior Securities
    
    
    26Item 4. Submission of Matters to a Vote of Security Holders
    
    
    26Item 5. Other Information
    
    
    26Item 6. Exhibits
    
    
    26SIGNATURES
    
    
    27Exhibit Index
    
    
    28Assignment and Assumption AgreementCertification by CEOCertification by CFOSection 1350 CertificationSection 1350 Certification




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1.
    
     Condensed Financial Statements (Unaudited)
 
 RED TRAIL ENERGY, LLC
 March 31, 2008
    
    
    December 31, 2007(Unaudited)ASSETSCurrent AssetsCash and equivalents
    
    $
    12,561,446
    
    
    $
    8,231,709Accounts receivable
    
    
    5,875,215
    
    
    
    5,960,041Corn and ethanol derivative instruments, at
    
    
    3,031,241
    
    
    
    3,190,790fair valueInventory
    
    
    9,432,638
    
    
    
    8,297,356Prepaid expenses
    
    
    32,753
    
    
    
    53,411Total current assets
    
    
    30,933,293
    
    
    
    25,733,307Property, Plant and EquipmentLand
    
    
    300,602
    
    
    
    300,602Plant and equipment
    
    
    78,141,688
    
    
    
    78,139,237Land Improvements
    
    
    3,918,766
    
    
    
    3,918,766Buildings
    
    
    5,312,995
    
    
    
    5,312,995Construction in progress
    
    
    12,804
    
    
    
    87,686,855
    
    
    
    87,671,600Less accumulated depreciation
    
    
    7,158,351
    
    
    
    5,729,058Net property and equipment
    
    
    80,528,504
    
    
    
    81,942,542Other AssetsDebt issuance costs, net of amortization
    
    
    718,149
    
    
    
    768,405Investment in RPMG
    
    
    605,000
    
    
    
     ̄Deposits
    
    
    80,000
    
    
    
    80,000Total other Assets
    
    
    1,403,149
    
    
    
    848,405Total Assets
    
    $
    112,864,946
    
    
    $
    108,524,254LIABILITIES AND MEMBERS EQUITYCurrent LiabilitiesCurrent maturities of long-term debt
    
    $
    6,565,233
    
    
    $
    6,578,004Accounts payable
    
    
    5,869,131
    
    
    
    6,682,330Accrued expenses
    
    
    4,559,073
    
    
    
    2,502,936Interest rate swap, at fair value
    
    
    2,281,685
    
    
    
    1,044,191Total current liabilities
    
    
    19,275,122
    
    
    
    16,807,461Other LiabilitiesContracts Payable
    
    
    275,000
    
    
    
    275,000Long-Term Debt
    
    
    51,670,142
    
    
    
    52,538,310Commitments and ContingenciesMembers Equity
    
    
    41,644,682
    
    
    
    38,903,483Total Liabilities and
Members Equity
    
    $
    112,864,946
    
    
    $
    108,524,254
  1




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RED TRAIL ENERGY, LLC
 Quarter Ended
    
    
    Quarter EndedMarch 31, 2008
    
    
    March 31, 2007(Unaudited)
    
    
    (Unaudited)RevenuesEthanol, net of loss on derivative instruments
    
    $
    28,496,987
    
    
    $
    17,034,537Distillers grains
    
    
    4,923,018
    
    
    
    1,900,338Total Revenue
    
    
    33,420,005
    
    
    
    18,934,875Cost of Goods SoldCost of Goods Sold
    
    
    26,251,476
    
    
    
    13,713,255Depreciation
    
    
    1,415,746
    
    
    
    1,404,910Total Cost of Goods Sold
    
    
    27,667,222
    
    
    
    15,118,165Gross Margin
    
    
    5,752,783
    
    
    
    3,816,710General and Administrative
    
    
    746,596
    
    
    
    793,586Operating Income
    
    
    5,006,187
    
    
    
    3,023,124Interest Expense
    
    
    2,439,805
    
    
    
    1,203,738Other income (expense), net
    
    
    169,817
    
    
    
    (46,078
    )Net Income
    
    $
    2,736,199
    
    
    $
    1,773,308Weighted Average Units Outstanding  Basic
    
    
    40,173,973
    
    
    
    40,373,973Net Income Per Unit  Basic
    
    $
    0.07
    
    
    $
    0.04Weighted Average Units Outstanding  Diluted
    
    
    40,223,973
    
    
    
    40,403,973Net Income Per Unit  Diluted
    
    $
    0.07
    
    
    $
    0.04
  2




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RED TRAIL ENERGY, LLC
 Three months
    
    
    Three monthsended
    
    
    endedMarch 31, 2008
    
    
    March 31, 2007(Unaudited)
    
    
    (Unaudited)Cash Flows from Operating ActivitiesNet income
    
    $
    2,736,199
    
    
    $
    1,773,308Adjustment to reconcile net income to net cash provided
by (used in) operating activities:Depreciation
    
    
    1,429,293
    
    
    
    1,417,306Amortization of debt financing costs
    
    
    50,256
    
    
    
    54,210Change in market value of derivative instruments
    
    
    159,549
    
    
    
    282,829Change in market value of interest rate swap
    
    
    1,237,494
    
    
    
    87,088Equity-based compensation
    
    
    5,000
    
    
    
    5,000Changes in assets and liabilitiesAccounts receivable
    
    
    84,826
    
    
    
    (3,214,494
    )Inventory
    
    
    (1,135,282
    )
    
    
    (2,749,122
    )Prepaid expenses
    
    
    20,658
    
    
    
    (13,493
    )Accounts payable
    
    
    (1,225,991
    )
    
    
    3,291,708Accrued expenses
    
    
    2,056,137
    
    
    
    (947,847
    )Net cash provided
by (used in)
operating
activities
    
    
    5,418,139
    
    
    
    (13,507
    )Cash Flows from Investing ActivitiesInvestment in RPMG
    
    
    (192,208
    )
    
    
    Capital expenditures
    
    
    (15,255
    )
    
    
    (993,731
    )Net cash used in
investing
activities
    
    
    (207,463
    )
    
    
    (993,731
    )Cash Flows from Financing ActivitiesDebt repayments
    
    
    (880,939
    )
    
    
    (12,771
    )Proceeds from long-term debt
    
    
    
    
    
    
    3,150,877Net cash provided
by financing
activities
    
    
    (880,939
    )
    
    
    3,138,106Net Increase in Cash and Equivalents
    
    
    4,329,737
    
    
    
    2,130,868Cash and Equivalents  Beginning of Period
    
    
    8,231,709
    
    
    
    421,722Cash and Eqivalents  End of Period
    
    $
    12,561,446
    
    
    $
    2,552,590Supplemental Disclosure of Cash Flow InformationInterest paid
    
    $
    1,365,285
    
    
    $
    977,997SUPPLEMENT DISCLOSURE OF NON-CASHINVESTING AND FINANCING ACTIVITIESCapital expenditures included in accounts payable
    
    $
    
    
    
    $
    2,094,625Investment expenditures included in accounts payable
    
    $
    412,792
    
    
    $
    
  3




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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Nature of Business
  Fiscal Reporting Period
  Accounting Estimates
  Cash and equivalents
   Accounts Receivable and Concentration of Credit Risk
    4




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Derivative Instruments
    Revenue Recognition
   Inventory
  Property and Equipment
  5




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Category
    
    Average LifeLand improvements
    
    20 yearsBuildings
    
    40 yearsPlant equipment
    
    
    7 to 15 yearsRailroad and rail equipment
    
    20 yearsOffice equipment
    
    
    3 to 7 years
  Long-lived Assets
   Debt Issuance Costs
  Fair Value of Financial Instruments
  Grants
   Shipping and Handling
  Income Taxes
   6




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Organizational and Start Up Costs
  Advertising
  Equity-Based Compensation
   Earnings Per Unit
  Environmental Liabilities
  Recently Issued Accounting Pronouncements
   7




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2. CONCENTRATIONS
  3. DERIVATIVE INSTRUMENTS
  8




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4. INVENTORY
  Inventory balances at:
    
    March 31, 2008
    
    
    December 31, 2007Raw materials, including corn, chemicals and supplies
    
    $
    7,746,546
    
    
    $
    5,576,077Work in process
    
    
    953,887
    
    
    
    902,560Finished goods, including ethanol and distillers grains
    
    
    732,205
    
    
    
    1,818,719Total Inventory
    
    $
    9,432,638
    
    
    $
    8,297,356
 5. BANK FINANCING
  As of
    
    March 31, 2008
    
    
    December 31, 2007Notes under loan agreement payable to bank, see details below
    
    $
    52,569,200
    
    
    $
    53,437,367Subordinated notes payable, see details below
    
    
    5,525,000
    
    
    
    5,525,000Capital lease obligations (Note 5)
    
    
    141,175
    
    
    
    153,947Total Long-Term Debt
    
    
    58,235,375
    
    
    
    59,116,314Less amounts due within one year
    
    
    6,565,233
    
    
    
    6,578,004Total Long-Term Debt Less Amounts Due Within One Year
    
    $
    51,670,142
    
    
    $
    52,538,310
  Estimated maturities for the twelve months ended March 31,2009
    
    $
    6,565,2332010
    
    
    4,890,5132011
    
    
    5,097,9002012
    
    
    5,396,0232013
    
    
    36,285,706Thereafter
    
    
    Total
    
    $
    58,235,375
  Construction Loan
  9




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Fixed Rate Note
  Variable Rate Note
  Long-Term Revolving Note
  December 2007 Fixed Rate Note
  Revolving Line of Credit
  Interest Rate Swap Agreements
    10




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Letters of Credit
  Subordinated Debt
  6. FAIR VALUE MEASUREMENTS
     Fair Value Measurement UsingCarrying Amount as
    
    
    Fair Value as ofof March 31, 2008
    
    
    March 31, 2008
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Money market funds
    
    $
    10,502,663
    
    
    $
    10,502,663
    
    
    $
    10,502,663
    
    
    $
    
    
    
    $
    Corn and ethanol related
    
    $
    3,031,241
    
    
    $
    3,031,241
    
    
    $
    3,031,241
    
    
    $
    
    
    
    $
    derivative instrumentsInterest rate swap liability
    
    $
    2,281,685
    
    
    $
    2,281,685
    
    
    $
    
    
    
    $
    2,281,685
    
    
    $
    
  11




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7. LEASES
   March 31, 2008
    
    
    December 31, 2007Equipment
    
    $
    216,745
    
    
    $
    216,745Accumulated amortization
    
    
    28,971
    
    
    
    23,296Net equipment under capital lease
    
    $
    187,774
    
    
    $
    193,449
  Operating
    
    
    CapitalLeases
    
    
    Leases2009
    
    $
    489,660
    
    
    $
    61,7012010
    
    
    489,660
    
    
    
    61,7012011
    
    
    489,660
    
    
    
    29,9322012
    
    
    448,535
    
    
    
    1,2192013
    
    
    347,000
    
    
    
    0Total minimum lease commitments
    
    $
    2,264,515
    
    
    
    154,553Less amount representing interest
    
    
    
    
    
    
    13,378Present
value of minimum lease commitmenets included in the
preceding long-term liabilities
    
    
    
    
    
    $
    141,175
 8. MEMBERS EQUITY
  9. EQUITY-BASED COMPENSATION
 2006 Equity-Based Incentive Plan
  12




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10. COMMITMENTS AND CONTINGENCIES
 Design-Build
Agreement
  Marketing Agreements
   Leases
  11. RELATED-PARTY TRANSACTIONS
  13




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March 31, 2008
    
    
    December 31, 2007Balance SheetAccounts receivable
    
    $
    5,216,731
    
    
    $
    2,757,476Accounts payable
    
    
    1,516,922
    
    
    
    2,088,561Notes payable
    
    
    1,525,000
    
    
    
    1,525,000
 For the three
    
    
    For the threemonths ended
    
    
    months endedMarch 31, 2008
    
    
    March 31, 2007Statement of OperationsRevenues
    
    $
    31,438,601
    
    
    $
    17,679,576Cost of goods sold
    
    
    621,675
    
    
    
    7,746General and administrative
expenses
    
    
    388,008
    
    
    
    Inventory Purchases
    
    $
    1,549,298
    
    
    $
    2,283,208
 12. SUBSEQUENT EVENTS
  
    
    Also as mentioned in Note 9 above, the Company entered into an assignment and assumption
agreement with CSC to assume a rail car lease with Trinity Industries. The rail cars are
used to ship DDGs.
  
    
    The Company is in the final stages of negotiating a fixed price contract in the amount
of $1.75 million related to the construction of a coal unloading facility (the Facility)
adjacent to its Plant site.
    
    The Company is in the final stages of negotiating a two year agreement with M BAR D, LLC
(MBD) for coal inventory management services including unloading and stockpiling coal at
the Facility as well as transporting the coal to the Plant site. Under the terms of the
agreement, the Company would pay MBD $3.95 per ton of coal processed. We anticipate our
coal needs will be approximately 100,000 tons per year.
    
    In April 2008, the Company entered into an agreement to purchase 10 acres of land
adjacent to the Plant site for $50,000. The land was purchased from a member of the
Company and will be used as the location of the Facility.
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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  
 DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
    
    
    Projected growth, overcapacity or contraction in the ethanol market in which we operate;
    
    Fluctuations in the price and market for ethanol and DDGs;
    
    Changes in Plant production capacity, variations in actual ethanol and
distillers grains production from expectations or technical
difficulties in operating the Plant;
    
    Availability and costs of products and raw materials, particularly corn and coal;
    
    Changes in our business strategy, capital improvements or development
plans for expanding, maintaining or contracting our presence in the
market in which we operate;
    
    Costs of equipment;
    
    Changes in interest rates and the availability of credit to support
capital improvements, development, expansion and operations;
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
    
    Our ability to market and our reliance on third parties to market our products;
    
    Our ability to distinguish ourselves from our current and future competition;
    
    Changes to infrastructure, including:
 
    
    expansion of rail capacity;
    
    possible future use of ethanol dedicated pipelines for transportation;
    
    increases in truck fleets capable of transporting ethanol within localized markets;
    
    additional storage facilities for ethanol, expansion of refining and blending facilities to handle ethanol;
    
    growth in service stations equipped to handle ethanol fuels; and
    
    growth in the fleet of flexible fuel vehicles capable of using E85 fuel;
 
    
    Changes in or elimination of governmental laws, tariffs, trade or
other controls or enforcement practices such as:
 
    
    national, state or local energy policy;
    
    federal ethanol tax incentives;
    
    legislation mandating the use of ethanol or other oxygenate additives;
    
    state and federal regulation restricting or banning the use of MTBE;
    
    environmental laws and regulations that apply to our plant operations and their enforcement; or
    
    reduction or elimination of tariffs on foreign ethanol.
 
    
    Increased competition in the ethanol and oil industries;
    
    Fluctuations in U.S. oil consumption and petroleum prices;
    
    Changes in general economic conditions or the occurrence of certain
events causing an economic impact in the agriculture, oil or
automobile industries;
    
    Anticipated trends in our financial condition and results of operations;
    
    The availability and adequacy of our cash flow to meet our requirements, including the repayment of debt;
    
    Our liability resulting from litigation;
    
    Our ability to retain key employees and maintain labor relations;
    
    Changes and advances in ethanol production technology; and
    
    Competition from alternative fuels and alternative fuel additives.
 Summary
  16




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Results of Operations
  2008
    
    
    2007For the three months ended March 31,
    
    (Unaudited)
    
    
    (Unaudited)Amount
    
    Percent
    
    Amount
    
    PercentRevenuesEthanol, net of loss on derivative instruments
    
    $
    28,496,987
    
    
    
    85.27
    %
    
    $
    17,034,537
    
    
    
    89.96
    %Distillers grains
    
    
    4,923,018
    
    
    
    14.73
    %
    
    
    1,900,338
    
    
    
    10.04
    %Total Revenue
    
    
    33,420,005
    
    
    
    100.00
    %
    
    
    18,934,875
    
    
    
    100.00
    %Cost of Goods SoldCost of Goods Sold
    
    
    26,251,476
    
    
    
    78.55
    %
    
    
    13,713,255
    
    
    
    72.42
    %Depreciation
    
    
    1,415,746
    
    
    
    4.24
    %
    
    
    1,404,910
    
    
    
    7.42
    %Total Cost of Goods Sold
    
    
    27,667,222
    
    
    
    82.79
    %
    
    
    15,118,165
    
    
    
    79.84
    %Gross Margin
    
    
    5,752,783
    
    
    
    17.21
    %
    
    
    3,816,710
    
    
    
    20.16
    %General and Administrative
    
    
    746,596
    
    
    
    2.23
    %
    
    
    793,586
    
    
    
    4.19
    %Operating Income
    
    
    5,006,187
    
    
    
    14.98
    %
    
    
    3,023,124
    
    
    
    15.97
    %Interest Expense
    
    
    2,439,805
    
    
    
    7.30
    %
    
    
    1,203,738
    
    
    
    6.36
    %Other Income (Expense), net
    
    
    169,817
    
    
    
    0.51
    %
    
    
    (46,078
    )
    
    
    -0.24
    %Net Income
    
    $
    2,736,199
    
    
    
    8.19
    %
    
    $
    1,773,308
    
    
    
    9.37
    %
 Three Months
    
    Three Months
    
    Twelve Monthsended
    
    ended
    
    endedAdditional Data
    
    March 31, 2008
    
    March 31, 2007
    
    March 31, 2008Ethanol sold (thousands of gallons)
    
    
    14,427
    
    
    
    8,753
    
    
    
    55,079Dried distillers grains sold (tons)
    
    
    24,636
    
    
    
    5,095
    
    
    
    109,464Modified distillers grains sold (tons)
    
    
    34,524
    
    
    
    30,622
    
    
    
    98,679Ethanol average price per gallon (net
of hedging activity)
    
    $
    1.98
    
    
    $
    1.95
    
    
    $
    1.84Dried distillers grains average price
per ton
    
    $
    127.31
    
    
    $
    128.31
    
    
    $
    94.23Modified distillers grains average
price per ton
    
    $
    51.47
    
    
    $
    35.85
    
    
    $
    45.36Corn costs per bushel (net of hedging
activity)
    
    $
    4.00
    
    
    $
    3.63
    
    
    $
    3.87
 Results of Operations for the Three Months Ended March 31, 2008 as Compared to the Three Months
Ended March 31, 2007
 Revenues
  Ethanol revenue
  17




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Distillers grains revenue
   Revenues  Prospective Information
  Cost of Sales
  
    
    Corn costs  our corn costs per gallon, excluding hedging activities, were
approximately $0.04 per gallon higher in the first quarter of 2008 as compared to the first
quarter of 2007 ($1.55 per gallon vs. $1.51 per gallon ). This is a direct reflection of
how corn costs have risen during the past year. Including our corn hedging gains, our corn
costs per gallon were actually $.03 lower when comparing the same periods as we recognized
gains from hedging activities for the quarters ended March 31, 2008 and 2007 of
approximately $2 million and $650,000, respectively. To date, our risk management strategy
has been successful in lowering our corn costs.
    
    Other cost of goods sold, excluding depreciation  our other cost of goods sold, the
main components of which are energy and utilities, chemicals, and labor, for the quarters
ended March 31, 2008 and 2007 were $0.34 per gallon and $0.38 per gallon, respectively. We
believe this decrease is primarily due to the Plant running at, or near, full capacity
during the first quarter of 2008.
 Cost of Sales and Gross Margin  Prospective Information
  18




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Corn cost
  Energy and chemical needs
  Coal cost
  Chemical and Denaturant costs
  General and Administrative
  Interest Expense
   Other Income (Expense), Net
  19




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Liquidity and Capital Resources
 Statement of Cash Flows for the three months ended
    
    March 31, 2008
    
    
    March 31, 2007Cash flows provided by (used in) operating activities
    
    $
    5,418,139
    
    
    $
    (13,507
    )Cash flows used in investing activities
    
    
    (207,463
    )
    
    
    (993,731
    )Cash flows provided by (used in) financing activities
    
    
    (880,939
    )
    
    
    3,138,106
 Cash Flows
 Operating activities
   
    
    An increase in net income of approximately $950,000. See above discussion related to
the results of operations for an explanation.
    
    An increase in the value of the liability related to the market value of our interest
rate swaps of approximately $1 million due to a decline in interest rates during the first
quarter of 2008.
    
    A net increase in cash flow provided of approximately $4 million related to changes in
working capital items. The Plant became operational in the first quarter of 2007 which
resulted in a net use of cash for working capital items such as accounts receivable and
inventory and conversely resulted in net cash provided by items such as accounts payable.
The change in the first quarter of 2008 resulted from normal operational fluctuations in
working capital items.
 Investing activities
  Financing activities
   Capital Expenditures
  20




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Capital Resources
 Short-term Debt Sources
  Long-Term Debt Sources
  Fixed Rate Note
  Variable Rate Note
  Long-Term Revolving Note
  December 2007 Fixed Rate Note
   21




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
    
    Providing the Bank with current and accurate financial statements;
    
    Maintaining certain financial ratios, minimum net worth, and working capital;
    
    Maintaining adequate insurance;
    
    Not making, or allowing to be made, any significant change in our business tax
structure; and
    
    Limit our ability to make distributions to members.
   Interest Rate Swap Agreements
    Letters of Credit
  Subordinated Debt
  Contractual Obligations and Commercial Commitments
  Contractual Obligations
    
    Total
    
    
    Less than 1 Yr
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    More than 5 YrsLong-term debt obligations
    
    $
    73,842,212
    
    
    $
    10,905,131
    
    
    $
    17,302,713
    
    
    $
    45,634,368
    
    
    $
    Capital leases
    
    
    154,553
    
    
    
    61,701
    
    
    
    91,633
    
    
    
    1,219
    
    
    
    Operating lease obligations
    
    
    2,264,515
    
    
    
    489,660
    
    
    
    979,320
    
    
    
    795,535
    
    
    
    Coal purchases
    
    
    2,284,425
    
    
    
    1,288,800
    
    
    
    995,625
    
    
    
    
    
    
    
    Water purchases
    
    
    3,486,000
    
    
    
    398,400
    
    
    
    796,800
    
    
    
    796,800
    
    
    
    1,494,000
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##### Table of Contents



Grants
  North Dakota Ethanol Incentive Program
  Corn Price
 
    
    For every cent that the average quarterly price per bushel of corn exceeds $1.80, the
state shall add to the amounts payable under the program $.001 multiplied by the number of
gallons of ethanol produced by the facility during the quarter.
    
    If the average quarterly price per bushel of corn is exactly $1.80, the state shall not
add anything to the amount payable under the program
    
    For every cent that the average price per bushel of corn is below $1.80, the state shall
subtract from the amounts payable under the program $.001 multiplied by the number of
gallons produced by the facility during the quarter.
 Ethanol Price
 
    
    For every cent that the average quarterly rack price per gallon of ethanol is above
$1.30, the state shall subtract from the amounts payable under the program $.002 multiplied
by the number of gallons of ethanol produced by the facility during the quarter.
    
    If the average quarterly price per gallon of ethanol is exactly $1.30, the state shall
not add anything to the amount payable under the program.
    
    For every cent that the average quarterly rack price per gallon of ethanol is below
$1.30, the state shall add to the amounts payable under the program $.002 multiplied by the
number of gallons of ethanol produced by the facility during the quarter.
  Critical Accounting Estimates
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##### Table of Contents



Off-Balance Sheet Arrangements
  Contractual Obligations
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate Risk
  Commodity Price Risk
   24




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ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls
  25




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PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  The Company has withheld $3.9 million from its Plant design-builder, Fagen, Inc., related to the
coal combustor.
  We have received Notice of Violation Letters from the North Dakota Department of Health (NDDH).
 
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
  26




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SIGNATURES
  RED TRAIL ENERGY, LLCDate: May 15, 2008
    By:
    /s/ Mick J. MillerMick J. MillerPresident and Chief Executive Officer 27




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EXHIBIT INDEX
 RED TRAIL ENERGY, LLC
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2008
 10.1*      Assignment and Assumption Agreement dated April 1, 2008, by and
between Commodity Specialist Company and Red Trail Energy, LLC.31.1*      Certification by Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 (Rules 13a-14 and 15d-14 of the
Securities Exchange Act of 1934).31.2*      Certification by Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 (Rules 13a-14 and 15d-14 of the
Securities Exchange Act of 1934).32.1*      Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2*      Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith. 28