##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the fiscal quarter ended March 31, 2008.
 OR
 o
    
    Transition report under Section 13 or 15(d) of the Exchange Act.
 For the transition period from  to  .
 COMMISSION FILE NUMBER 000-51965
 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 399
Wall Lake, Iowa 51466
 (712) 664-2173
  þ o
 o þ
    Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer þ
    
    Smaller Reporting Company o




---



##### 



INDEX
 PART I  FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis or Plan of Operation
    
    
    14Item 3. Controls and Procedures
    
    
    22PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    23Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    24Item 3. Defaults Upon Senior Securities
    
    
    24Item 4. Submission of Matters to a Vote of Security Holders
    
    
    24Item 5. Other Information
    
    
    25Item 6. Exhibits
    
    
    25Exhibit 3.2.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 WESTERN IOWA ENERGY, LLC
BALANCE SHEETS
 ASSETS
    
    March 31,
    
    
    December 31,2008
    
    
    2007(UNAUDITED)CURRENT ASSETSCash and cash equivalents
    
    $
    284,913
    
    
    $
    32,048Margin deposits
    
    
    85,481
    
    
    
    1,427,218Trade accounts receivable  related

party, net of allowance for doubtful accounts
    
    
    4,853,935
    
    
    
    5,816,085Other receivables
    
    
    4,366
    
    
    
    5,997Incentive receivable
    
    
    931,564
    
    
    
    317,225Inventory
    
    
    8,473,926
    
    
    
    9,098,351Prepaid expenses and other

assets
    
    
    406,747
    
    
    
    188,362Total current assets
    
    
    15,040,932
    
    
    
    16,885,286PROPERTY, PLANT AND

EQUIPMENTLand and land improvements
    
    
    1,364,842
    
    
    
    1,364,842Office building and equipment
    
    
    643,705
    
    
    
    643,705Plant and process equipment
    
    
    33,311,503
    
    
    
    33,308,507Construction in progress
    
    
    10,649
    
    
    
    Total, at cost
    
    
    35,330,699
    
    
    
    35,317,054Less accumulated depreciation
    
    
    3,807,283
    
    
    
    3,261,429Total property, plant and

equipment
    
    
    31,523,416
    
    
    
    32,055,625OTHER ASSETSLand options
    
    
    596
    
    
    
    596Other investments
    
    
    80,895
    
    
    
    33,810Loan origination fees, net of

accumulated amortization
    
    
    101,023
    
    
    
    105,547Total other assets
    
    
    182,514
    
    
    
    139,953TOTAL ASSETS
    
    $
    46,746,862
    
    
    $
    49,080,864LIABILITIES AND

MEMBERS EQUITYCURRENT LIABILITIESAccounts payable:Trade
    
    $
    1,921,004
    
    
    $
    1,747,007Related party
    
    
    740,105
    
    
    
    2,061,742Revolving line of credit
    
    
    3,250,000
    
    
    
    3,800,000Current portion of long-term

debt
    
    
    2,583,717
    
    
    
    1,909,722Derivative instruments
    
    
    85,698
    
    
    
    1,936,375Accrued interest
    
    
    87,703
    
    
    
    100,542Accrued wages and benefits
    
    
    102,073
    
    
    
    56,689Accrued payroll taxes
    
    
    6,658
    
    
    
    3,255Other accrued expenses
    
    
    19,294
    
    
    
    12,864Accrued expenses  related

party
    
    
    72,000
    
    
    
    Total current liabilities
    
    
    8,868,252
    
    
    
    11,628,196LONG-TERM LIABILITIESLong-term debt, less current portion

above
    
    
    11,664,616
    
    
    
    12,366,667Total liabilities
    
    
    20,532,868
    
    
    
    23,994,863MEMBERS EQUITYContributed capital
    
    
    23,516,376
    
    
    
    23,516,376Retained earnings
    
    
    2,697,618
    
    
    
    1,569,625Total members equity
    
    
    26,213,994
    
    
    
    25,086,001TOTAL LIABILITIES AND MEMBERS

EQUITY
    
    $
    46,746,862
    
    
    $
    49,080,864
   3




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
STATEMENTS OF OPERATIONS (UNAUDITED)
 Three Months Ended
    
    
    Three Months EndedMarch 31, 2008
    
    
    March 31, 2007REVENUESRelated parties
    
    $
    14,901,869
    
    
    $
    13,617,712Incentive funds
    
    
    3,127,673
    
    
    
    637,26818,029,542
    
    
    
    14,254,980COST OF SALES
    
    
    16,245,228
    
    
    
    13,688,681Gross profit
    
    
    1,784,314
    
    
    
    566,299OPERATING EXPENSESConsulting and professional fees
    
    
    103,222
    
    
    
    82,208Office and administrative expenses
    
    
    434,837
    
    
    
    355,787Total operating expenses
    
    
    538,059
    
    
    
    437,995OTHER INCOME (EXPENSE)Interest income
    
    
    1,727
    
    
    
    9,149Interest expense
    
    
    (276,393
    )
    
    
    (354,068
    )Patronage dividends
    
    
    156,404
    
    
    
    74,056Total other income (expense)
    
    
    (118,262
    )
    
    
    (270,863
    )NET INCOME (LOSS)
    
    $
    1,127,993
    
    
    $
    (142,559
    )BASIC AND
DILUTED EARNINGS (LOSS) PER UNIT
    
    $
    42.65
    
    
    $
    (5.39
    )WEIGHTED
AVERAGE UNITS OUTSTANDING, BASIC
AND DILUTED
    
    
    26,447
    
    
    
    26,447DISTRIBUTIONS PER UNIT DECLARED AND PAID
    
    $
    
    
    
    $
    80.21
   4




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
STATEMENTS OF CASH FLOWS (UNAUDITED)
 Three Months Ended
    
    
    Three Months EndedMarch 31, 2008
    
    
    March 31, 2007CASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)
    
    $
    1,127,993
    
    
    $
    (142,559
    )Adjustments to reconcile net income (loss)
to net cash provided by operating activitiesDepreciation and amortization
    
    
    550,378
    
    
    
    544,523Non cash portion of patronage dividends
    
    
    (47,085
    )
    
    
    Effects of changes in operating assets and liabilitiesMargin deposits
    
    
    1,341,737
    
    
    
    51,196Trade accounts receivable  related party
    
    
    962,150
    
    
    
    (61,837
    )Other receivables
    
    
    1,631
    
    
    
    (4,511
    )Incentive receivables
    
    
    (614,339
    )
    
    
    (774,182
    )Inventory
    
    
    624,425
    
    
    
    (1,212,927
    )Derivative instruments
    
    
    (1,850,677
    )
    
    
    427,978Prepaid expenses and other assets
    
    
    (218,385
    )
    
    
    (54,122
    )Accounts payable
    
    
    (1,147,640
    )
    
    
    2,218,329Accrued interest
    
    
    (12,839
    )
    
    
    22,371Accrued wages and benefits
    
    
    45,384
    
    
    
    15,184Accrued payroll taxes
    
    
    3,403
    
    
    
    (27,130
    )Other current liabilities
    
    
    6,430
    
    
    
    Accrued expenses  related party
    
    
    72,000
    
    
    
    Net cash provided by operating activities
    
    
    844,566
    
    
    
    1,002,313CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment,
including construction in progress
    
    
    (13,645
    )
    
    
    (865,058
    )CASH FLOWS FROM FINANCING ACTIVITIESNet borrowings (payments) on line of credit
    
    
    (550,000
    )
    
    
    2,000,000Proceeds from long-term debt
    
    
    
    
    
    
    3,209,472Payments on long-term debt
    
    
    (28,056
    )
    
    
    (1,957,500
    )Distributions to members
    
    
    
    
    
    
    (2,121,314
    )Net cash provided by (used in) financing activities
    
    
    (578,056
    )
    
    
    1,130,658NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    252,865
    
    
    
    1,267,913CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    32,048
    
    
    
    28,322CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    284,913
    
    
    $
    1,296,235
   5




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2008
 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
   6




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2008
    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
   7




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2008
 INCOME TAXES
  EARNINGS (LOSS) PER UNIT
  COST OF SALES
  SHIPPING AND HANDLING COSTS
  ENVIRONMENTAL LIABILITIES
  NEW ACCOUNTING STANDARDS
 Fair Value Measurements
 Disclosures about Derivative Instruments and Hedging
Activities (SFAS No. 161)
  8




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2008
 NOTE
2  INCENTIVE PAYMENTS AND RECEIVABLE
  NOTE
3  INVENTORY
  March 31,
    
    
    December 31,2008
    
    
    2007(Unaudited)Raw material
    
    $
    1,487,678
    
    
    $
    2,168,644Work in process
    
    
    1,411,114
    
    
    
    1,382,679Finished goods
    
    
    5,575,134
    
    
    
    5,547,028Total
    
    $
    8,473,926
    
    
    $
    9,098,351
 NOTE
4  LAND OPTION
  NOTE
5  DEBT AND FINANCING
 Revolving line of credit
   9




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2008
 Long-term debt
  March 31,
    
    
    December 31,2008
    
    
    2007(Unaudited)Note payable to Farm Credit Services of America and
CoBank under term note agreement  see details
below.
    
    $
    5,950,000
    
    
    $
    5,950,000Note payable to Farm Credit Services of America and
CoBank under reducing revolving credit note  see
details below.
    
    
    7,260,000
    
    
    
    7,260,000Note payable to the Iowa Department of Economic Development  see details below.
    
    
    360,000
    
    
    
    367,500Note payable to Glidden Rural Electric Cooperative  see details below
    
    
    678,333
    
    
    
    698,889Total
    
    
    14,248,333
    
    
    
    14,276,389Less current portion
    
    
    2,583,717
    
    
    
    1,909,722Long-term portion
    
    $
    11,664,616
    
    
    $
    12,366,667
  2009
    
    $
    2,583,7172010
    
    
    1,912,2222011
    
    
    1,788,2272012
    
    
    2,054,7222013
    
    
    1,882,222Thereafter
    
    
    4,027,223Total
    
    $
    14,248,333
    10




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2008
      NOTE
6  MEMBERS EQUITY
  NOTE 7  CASH FLOW DISCLOSURES
  2008
    
    
    2007Cash paid for interest
    
    $
    289,210
    
    
    $
    331,008
  2008
    
    
    2007Sales tax refund on plant construction costs
included in other receivables
    
    $
    
    
    
    $
    443,535
  11




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2008
 NOTE
8  RELATED PARTY TRANSACTIONS
    NOTE
9  LEASE COMMITMENTS
  2009
    
    $
    35,6272010
    
    
    35,6272011
    
    
    35,6272012
    
    
    8,906Total
    
    $
    115,787
  NOTE
10  RETIREMENT AND SAVINGS PLAN
  NOTE
11  FAIR VALUE OF FINANCIAL INSTRUMENTS
  
    
    Level 1Unadjusted quoted prices for identical assets and liabilities in active
markets;
    
    Level 2Quoted prices for similar assets and liabilities in active markets (other
than those included in Level 1) which are observable for the asset or liability, either
directly or indirectly; and
    
    Level 3Valuations derived from valuation techniques in which one or more significant
inputs or significant value drivers are unobservable.
  12




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2008
  SignificantQuoted Prices in
    
    
    Other
    
    
    SignificantActive Markets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    InputsMarch 31, 2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)(Unaudited)Financial assets:Cash equivalents
    
    $
    513,479
    
    
    $
    513,479
    
    
    $
    
    
    
    $
    Financial liabilities:Commodity derivatives
    
    $
    85,698
    
    
    $
    
    
    
    $
    85,698
    
    
    $
    
  NOTE
12  UNCERTAINTY
  
  13




---



##### Table of Contents



Item 2. Managements Discussion and Analysis or Plan of Operation.
  Cautionary Statements Regarding Forward Looking Statements
  
    
    The availability and adequacy of our cash flow to meet our requirements;
 
    
    Changes in interest rates and the availability of credit to support capital
improvements, development, expansion and operations;
 
    
    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 and
animal fats;
 
    
    Changes in the price and market for biodiesel and its co-products;
 
    
    Our ability to market and our reliance on third parties to market our products;
 
    
    Fluctuations in petroleum prices;
 
    
    Changes in our business strategy, capital improvement or development plans;
 
    
    Changes in general economic conditions or the occurrence of certain events causing
an economic impact in the agriculture, oil or automobile industry;
 
    
    Changes in plant production capacity or technical difficulties in operating the
plant;
 
    
    Changes in the environmental regulations or in our ability to comply with the
environmental regulations that apply to our plant operations;
 
    
    Changes and advances in biodiesel production technology; and
 
    
    Other factors described elsewhere in this report.
   14




---



##### Table of Contents



Overview
        15




---



##### Table of Contents



Results of Operations for the Three Months Ended March 31, 2008 and 2007
  Three Months Ended
    
    
    Three Months EndedMarch 31, 2008
    
    
    March 31, 2007(Unaudited)
    
    
    (Unaudited)Statement of Operations Data
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %Revenues
    
    $
    18,029,542
    
    
    
    100
    %
    
    $
    14,254,980
    
    
    
    100
    %Cost of Sales
    
    $
    16,245,228
    
    
    
    90.10
    %
    
    $
    13,688,681
    
    
    
    96.03
    %Gross Profit
    
    $
    1,784,314
    
    
    
    9.90
    %
    
    $
    566,299
    
    
    
    4.04
    %Operating Expenses
    
    $
    538,059
    
    
    
    2.98
    %
    
    $
    437,995
    
    
    
    3.13
    %Other Expense
    
    $
    (118,262
    )
    
    
    0.66
    %
    
    $
    (270,863
    )
    
    
    1.90
    %Net Income (Loss)
    
    $
    1,127,993
    
    
    
    6.25
    %
    
    $
    (142,559
    )
    
    
    1.01
    %
 Revenues
  March 31, 2008
    
    
    March 31, 2007% of
    
    
    
    
    
    
    % ofRevenue Sources
    
    Amount
    
    
    Revenues
    
    
    Amount
    
    
    RevenuesBiodiesel Sales
    
    $
    17,254,479
    
    
    
    95.70
    %
    
    $
    13,992,517
    
    
    
    98.15
    %Glycerin Sales
    
    $
    632,361
    
    
    
    3.50
    %
    
    $
    151,336
    
    
    
    1.06
    %Fatty Acid Sales and Soapstock Sales
    
    $
    142,702
    
    
    
    0.79
    %
    
    $
    111,127
    
    
    
    0.79
    %Total Revenues
    
    $
    18,029,542
    
    
    
    100
    %
    
    $
    14,254,980
    
    
    
    100
    %
    Plan of Operations for the Next 12 Months.
  16




---



##### Table of Contents



Cost of Sales
    Operating Expense
  Other Expenses
   17




---



##### Table of Contents



Changes in Financial Condition for the Three Months Ended March 31, 2008
  March 31,
    
    
    December 31,2008
    
    
    2007Current Assets
    
    $
    15,040,932
    
    
    $
    16,885,286Current Liabilities
    
    $
    8,868,252
    
    
    $
    11,628,196Long-Term Debt
    
    $
    11,664,616
    
    
    $
    12,366,667Members Equity
    
    $
    26,213,994
    
    
    $
    25,086,001
 Current Assets
 Current Liabilities
 Long-Term Debt
 Members Equity
 Plan of Operations for the Next 12 Months
       18




---



##### Table of Contents



Operating Budget and Financing of Plant Operations
  Liquidity and Capital Resources
  Critical Accounting Estimates
  Inventories.
 Long-Lived Assets.
   19




---



##### Table of Contents



Liquidity and Capital Resources
  Sources of Funds
  Short-Term Debt Sources
       Long-Term Debt Sources
    20




---



##### Table of Contents



Grants and Government Programs
  Off-Balance Sheet Arrangements
   21




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risks.
 Accounting for
Derivative Instruments and Hedging Activities
 Interest Rate Risk
 Item 2  Managements
Discussion and Analysis of Financial Condition and Results of Operations .
 Commodity Price Risk
      22




---



##### Table of Contents



Item 4T. Controls and Procedures.
  Internal Control  Integrated Framework
 
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  Item 1A. Risk Factors
 MANAGEMENTS DISCUSSION AND
ANALYSIS
  23




---



##### Table of Contents



Doubts about our ability to continue as a going concern may make it difficult to obtain
additional funds in the future.
 We are experiencing liquidity issues which could require us to cease operations.
 Our reliance upon REG could damage our profitability if REG is unable to continue its
business.
 
 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.
   Votes For
    
    Votes Against
    
    Abstentions6,728
    
    885
    
    182
  Name
    
    Votes For
    
    Votes Against
    
    AbstentionsWarren Bush
    
    6,666
    
    1,001
    
    78Kevin Ross
    
    7,378
    
    339
    
    78
   24




---



##### Table of Contents



Name
    
    Term ExpirationBill Horan
    
    
    2009John Geake
    
    
    2009Dennis Mauser
    
    
    2009Wayne Seaman
    
    
    2010Nile Ramsbottom
    
    
    2010
 
 Item 5. Other Information.
  
 Item 6. Exhibits.
 Exhibit No.
    
    Exhibit3.2.1

    
    
    First Amendment to Amended and Restated Operating Agreement31.1
    
    
    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. § 1350.32.2
    
    
    Certificate Pursuant to 18 U.S.C. § 1350.
 
 SIGNATURES
  WESTERN IOWA ENERGY, LLC/s/ William J. HoranMay 15, 2008
    William J. HoranChairman, President and Director

(Principal Executive Officer)/s/ Denny MauserMay 15, 2008
    Denny MauserTreasurer and Director(Principal Financial and Accounting Officer)  25