##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 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, 2011.
 OR
 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 00051965
 WESTERN IOWA ENERGY, LLC
  Iowa
    
    41-2143913(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)1220 S. Center Street, P.O. Box 399Wall Lake, Iowa
    
    51466(Address of principal executive offices)
    
    (Zip Code)
 (712) 664-2173
 (Former name, former address and former fiscal year, if changed since last report)
 þ o
 o o
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer þ
    
    Smaller Reporting Company o
 o þ




---



##### 



INDEX
 PART I.  FINANCIAL INFORMATION
    
    
    1Item 1. Financial Statements
    
    
    1Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    16Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    24Item 4. Controls and Procedures
    
    
    26PART II  OTHER INFORMATION
    
    
    26Item 1. Legal Proceedings
    
    
    26Item 1A. Risk Factors
    
    
    27Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    27Item 3. Defaults Upon Senior Securities
    
    
    27Item 4. (Removed and Reserved)
    
    
    27Item 5. Other Information
    
    
    27Item 6. Exhibits
    
    
    27Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




---



##### Table of Contents



PART I.  FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements
 WESTERN IOWA ENERGY, LLC
CONDENSED BALANCE SHEETS
 March 31,
    
    
    December 31,2011
    
    
    2010(UNAUDITED)ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    300
    
    
    $
    61,078Trade accounts receivable
    
    
    951,399
    
    
    
    248,928Other receivables
    
    
    102,266
    
    
    
    295,650Incentive receivables
    
    
    224,139
    
    
    
    231,949Inventory
    
    
    6,702,440
    
    
    
    2,612,016Prepaid expenses and other assets
    
    
    616,635
    
    
    
    371,746Total current assets
    
    
    8,597,179
    
    
    
    3,821,367PROPERTY, PLANT AND EQUIPMENTLand and land improvements
    
    
    1,435,928
    
    
    
    1,435,928Office building and equipment
    
    
    662,492
    
    
    
    659,840Plant and process equipment
    
    
    33,946,685
    
    
    
    33,938,749Construction in progress
    
    
    6,280
    
    
    
    Total, at cost
    
    
    36,051,385
    
    
    
    36,034,517Less accumulated depreciation
    
    
    10,461,217
    
    
    
    9,901,503Total property, plant and equipment
    
    
    25,590,168
    
    
    
    26,133,014OTHER ASSETSOther investments
    
    
    128,637
    
    
    
    124,078Loan origination fees, net of amortization
    
    
    46,734
    
    
    
    51,259Total other assets
    
    
    175,371
    
    
    
    175,337TOTAL ASSETS
    
    $
    34,362,718
    
    
    $
    30,129,718LIABILITIES AND MEMBERS EQUITYCURRENT LIABILITIESChecks issued in excess of bank balance
    
    $
    421,068
    
    
    $
    Accounts payable:Trade
    
    
    1,979,687
    
    
    
    1,209,965Related party
    
    
    62,902
    
    
    
    13,838Current portion of long-term debt
    
    
    252,222
    
    
    
    259,722Accrued interest
    
    
    14,639
    
    
    
    6,079Accrued wages and benefits
    
    
    133,722
    
    
    
    61,651Accrued payroll taxes
    
    
    16,794
    
    
    
    2,657Other current liabilities
    
    
    29,774
    
    
    
    25,434Total current liabilities
    
    
    2,910,808
    
    
    
    1,579,346LONG-TERM LIABILITIESLong-term debt, less current portion above
    
    
    6,309,444
    
    
    
    2,195,000Total liabilities
    
    
    9,220,252
    
    
    
    3,774,346COMMITMENTS AND CONTINGENCIES (Note 9, 12 and Note 13)MEMBERS EQUITYContributed capital
    
    
    23,516,376
    
    
    
    23,516,376Retained earnings
    
    
    1,626,090
    
    
    
    2,838,996Total members equity
    
    
    25,142,466
    
    
    
    26,355,372TOTAL LIABILITIES AND MEMBERS EQUITY
    
    $
    34,362,718
    
    
    $
    30,129,718
   3




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
CONDENSED STATEMENTS OF OPERATIONS
 Three Months Ended
    
    
    Three Months EndedMarch 31, 2011
    
    
    March 31, 2010REVENUESRelated parties
    
    $
    
    
    
    $
    3,539,041Unrelated parties
    
    
    8,886,323
    
    
    
    Total revenues
    
    
    8,886,323
    
    
    
    3,539,041COST OF SALES
    
    
    9,627,913
    
    
    
    3,996,213Gross loss
    
    
    (741,590
    )
    
    
    (457,172
    )OPERATING EXPENSESConsulting and professional fees
    
    
    136,807
    
    
    
    183,377Office and administrative expenses
    
    
    317,738
    
    
    
    326,701Total operating expenses
    
    
    454,545
    
    
    
    510,078OTHER INCOME (EXPENSE)Interest income
    
    
    202
    
    
    
    1,836Interest expense
    
    
    (37,376
    )
    
    
    (31,640
    )Patronage dividends
    
    
    20,403
    
    
    
    66,252Total other income (expense)
    
    
    (16,771
    )
    
    
    36,448NET LOSS
    
    $
    (1,212,906
    )
    
    $
    (930,802
    )BASIC AND DILUTED LOSS PER UNIT
    
    $
    (45.86
    )
    
    $
    (35.19
    )WEIGHTED AVERAGE UNITS OUTSTANDING,BASIC AND DILUTED
    
    
    26,447
    
    
    
    26,447
   4




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
CONDENSED STATEMENTS OF CASH FLOWS
 Three Months Ended
    
    
    Three Months EndedMarch 31, 2011
    
    
    March 31, 2010CASH FLOWS FROM OPERATING ACTIVITIESNet (loss)
    
    $
    (1,212,906
    )
    
    $
    (930,802
    )Adjustments to reconcile net (loss) to net cash
provided by (used in) operating activitiesDepreciation and amortization
    
    
    564,238
    
    
    
    566,733Non cash portion of patronage dividends
    
    
    (4,559
    )
    
    
    (16,880
    )Effects of changes in operating assets and liabilitiesMargin deposits
    
    
    
    
    
    
    (193,290
    )Trade accounts receivable
    
    
    (702,471
    )
    
    
    3,079,009Other receivables
    
    
    193,384
    
    
    
    318,149Incentive receivables
    
    
    7,810
    
    
    
    2,946,499Inventory
    
    
    (4,090,424
    )
    
    
    (2,745,916
    )Derivative instruments
    
    
    
    
    
    
    165,316Prepaid expenses and other assets
    
    
    (244,889
    )
    
    
    337,713Accounts payable
    
    
    818,786
    
    
    
    (240,089
    )Accrued interest
    
    
    8,560
    
    
    
    (13,221
    )Accrued wages and benefits
    
    
    72,071
    
    
    
    (7,266
    )Accrued payroll taxes
    
    
    14,137
    
    
    
    1,802Accrued expenses  related party
    
    
    
    
    
    
    (17,735
    )Other current liabilities
    
    
    4,340
    
    
    
    (16,814
    )Net cash provided by (used in) operating activities
    
    
    (4,571,923
    )
    
    
    3,233,208CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment, including
construction in progress
    
    
    (16,868
    )
    
    
    (105,865
    )CASH FLOWS FROM FINANCING ACTIVITIESNet increase (decrease) in checks issued in excess of bank balance
    
    
    421,068
    
    
    
    (333,008
    )Proceeds from long-term debt
    
    
    5,085,000
    
    
    
    1,150,000Payments on long-term debt
    
    
    (978,055
    )
    
    
    (3,908,056
    )Net cash provided by (used in) financing activities
    
    
    4,528,013
    
    
    
    (3,091,064
    )NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (60,778
    )
    
    
    36,279CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    61,078
    
    
    
    300CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    300
    
    
    $
    36,579
   5




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
March 31, 2011
 NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Use of Estimates in Preparing Financial Statements
  Basis of Accounting
  Revenue Recognition
   Cash and Cash Equivalents
    6




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
March 31, 2011
 Accounts Receivable
   Derivative Instruments and Hedging Activities
 Derivatives and Hedging,
 Inventories
  Property, Plant, and Equipment
   YearsLand improvements
    
    20-40Office building
    
    5-40Office equipment
    
    5-20Plant and process equipment
    
    10-40
   7




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
March 31, 2011
  Loan Origination Fees
  Other Investments
  Income Taxes
  Loss per Unit
  Cost of Sales
    8




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
March 31, 2011
 Shipping and Handling Costs
  Environmental Liabilities
  Fair Value of Financial Instruments
  Current assets and current liabilities
 Long-term debt
 NOTE 2  INCENTIVE PAYMENTS AND RECEIVABLE
    9




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
March 31, 2011
 NOTE 3  INVENTORY
  March 31,
    
    
    December 31,2011
    
    
    2010Raw material
    
    $
    2,384,687
    
    
    $
    1,976,460Work in process
    
    
    1,490,304
    
    
    
    31,278Finished goods
    
    
    2,827,449
    
    
    
    604,278Total
    
    $
    6,702,440
    
    
    $
    2,612,016
 NOTE 4  DEBT AND FINANCING
 Long-Term Debt
  March 31,
    
    
    December 31,2011
    
    
    2010Note payable to Farm Credit Services of America and
CoBank under reducing revolving credit note  see
details below.
    
    $
    5,960,000
    
    
    $
    1,825,000Note payable to the Iowa Department of Economic Development  see details below.
    
    
    170,000
    
    
    
    177,500Note payable to Glidden Rural Electric Cooperative  see details below
    
    
    431,666
    
    
    
    452,222Total
    
    
    6,561,666
    
    
    
    2,454,722Less current portion
    
    
    252,222
    
    
    
    259,722Long-term portion
    
    $
    6,309,444
    
    
    $
    2,195,000
  2012
    
    $
    252,2222013
    
    
    842,2222014
    
    
    1,882,2222015
    
    
    1,882,2222016
    
    
    1,682,222Thereafter
    
    
    20,556Total
    
    $
    6,561,666
  10




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
March 31, 2011
     NOTE 5  MEMBERS EQUITY
   11




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
March 31, 2011
 NOTE 6  CASH FLOW DISCLOSURES
  Three Months
    
    
    Three MonthsEnded
    
    
    EndedMarch 31,
    
    
    March 31,2011
    
    
    2010Cash paid for interest
    
    $
    28,816
    
    
    $
    44,861
 NOTE 7  RELATED PARTY TRANSACTIONS
    NOTE 8  MAJOR CUSTOMER AND COMMITMENTS
   12




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
March 31, 2011
 NOTE 9  LEASE COMMITMENTS
  NOTE 10  RETIREMENT AND SAVINGS PLAN
  NOTE 11  DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
 Derivatives and Hedging
 Objectives and Strategies for Holding Derivative Instruments
  Commodity Risk Management
  Accounting for Derivative Instruments and Hedging Activities
   13




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
March 31, 2011
  Derivative (Gain) Loss
    
    
    Derivative (Gain) LossThree Months Ended
    
    
    Three Months EndedMarch 31, 2011
    
    
    March 31, 2010Statement of
    
    
    
    
    
    Statement ofOperations
    
    
    
    
    
    OperationsLocation
    
    (Gain) Loss
    
    
    Location
    
    (Gain) LossCommodity contracts -
Heat oil swaps
    
    Cost of sales
    
    $
    
    
    
    Cost of sales
    
    $
    20,027
 NOTE 12  UNCERTAINTIES
     14




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
March 31, 2011
 NOTE 13  GAIN CONTINGENCIES
  NOTE 14  SUBSEQUENT EVENTS
   15




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations.
  Cautionary Statements Regarding Forward Looking Statements
  
    
    Changes in federal, state, or local incentives for biodiesel production, including
without limitation the federal biodiesel blenders tax credit;
 
    
    The availability and adequacy of our cash flow to meet our requirements;
 
    
    Changes to the rules related to the Renewable Fuels Standard and the value of
renewable identification numbers (RINs);
 
    
    Competition with other manufacturers in the biodiesel industry;
 
    
    Results of our hedging strategies;
 
    
    Changes in interest rates and the availability of credit to support capital
improvements, development, expansion, and operations;
 
    
    Changes in the amounts available under our credit facilities with Farm Credit;
 
    
    Our ability to keep up with the latest technology for the production of biodiesel;
 
    
    Decrease in the demand for biodiesel;
 
    
    Changes in plant production capacity or technical difficulties in operating the
plant;
 
    
    Actual biodiesel and co-product 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 ADM to market our products;
 
    
    Fluctuations in petroleum prices;
 
    
    Our ability to procure and our reliance on ADM to procure feedstock for our plant;
 
    
    Competition from alternative fuels and alternative fuel additives;
 
    
    Changes in our business strategy, capital improvement, or development plans;
 
    
    Consequences of the domestic and global economic downturn and ongoing financial
crisis;
 
    
    Our ability to generate free cash flow to invest in our business and service our
debt;
 
    
    Changes in general economic conditions or the occurrence of certain events causing
an economic impact in the agriculture, oil, or transportation industries;
 
    
    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;
 
    
    Our ability to export our biodiesel;
 
    
    Overcapacity within the biodiesel industry resulting in increased competition and
costs for feedstock and/or decreased prices for our biodiesel and co-products;
  16




---



##### Table of Contents




    
    Our ability to successfully operate our plant following the period during which the
plant was warm-idled;
 
    
    The imposition of tariffs or other duties on biodiesel imported into Europe;
 
    
    Our ability to comply with the financial covenants in our loan agreements;
 
    
    Changes to our operations related to the engagement of ADM as our biodiesel and
co-product marketer and feedstock procurer;
 
    
    Our ability to hire qualified personnel to operate the plant; and
 
    
    Other factors described elsewhere in this report.
  Overview
  Liquidity and Capital Resources  Indebtedness .
   17




---



##### Table of Contents



Results of Operations for the Three Months Ended March 31, 2011 and 2010
  Three Months Ended
    
    
    Three Months EndedMarch 31, 2011
    
    
    March 31, 2010(Unaudited)
    
    
    (Unaudited)Statement of Operations Data
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %Revenues
    
    $
    8,886,323
    
    
    
    100.00
    %
    
    $
    3,539,041
    
    
    
    100.00
    %Cost of Sales
    
    $
    9,627,913
    
    
    
    108.35
    %
    
    $
    3,996,213
    
    
    
    112.92
    %Gross Profit (Loss)
    
    $
    (741,590
    )
    
    
    (8.35
    %)
    
    $
    (457,172
    )
    
    
    (12.92
    %)Operating Expenses
    
    $
    454,545
    
    
    
    5.12
    %
    
    $
    510,078
    
    
    
    14.41
    %Other Income (Expense)
    
    $
    (16,771
    )
    
    
    (0.19
    %)
    
    $
    36,448
    
    
    
    1.03
    %Net Income (Loss)
    
    $
    (1,212,906
    )
    
    
    (13.65
    %)
    
    $
    (930,802
    )
    
    
    (26.30
    %)
 Revenues
  Three Months Ended
    
    
    Three Months EndedMarch 31, 2011
    
    
    March 31, 2010% of
    
    
    
    
    
    
    % ofRevenue Sources
    
    Amount
    
    
    Revenues
    
    
    Amount
    
    
    RevenuesBiodiesel Sales
    
    $
    8,080,132
    
    
    
    90.93
    %
    
    $
    3,040,322
    
    
    
    85.91
    %Glycerin Sales
    
    $
    318,099
    
    
    
    3.58
    %
    
    $
    135,338
    
    
    
    3.82
    %Fatty Acid Sales,
Soapstock Sales and
Substrate Sales
    
    $
    474,545
    
    
    
    5.34
    %
    
    $
    227,450
    
    
    
    6.43
    %Custom Processing
and Storage
    
    $
    
    
    
    
    
    %
    
    $
    135,931
    
    
    
    3.84
    %Other Revenue
    
    $
    13,546
    
    
    
    0.15
    %
    
    $
    
    
    
    
    
    %Total Revenues
    
    $
    8,886,322
    
    
    
    100.00
    %
    
    $
    3,539,041
    
    
    
    100.00
    %
   18




---



##### Table of Contents



Cost of Sales
    19




---



##### Table of Contents



Operating Expense
   Other Income (Expenses)
  Changes in Financial Condition for the Three Months Ended March 31, 2011
  March 31, 2011
    
    
    December 31, 2010Current Assets
    
    $
    8,597,179
    
    
    $
    3,821,367Current Liabilities
    
    $
    2,910,808
    
    
    $
    1,579,346Long-Term Debt
    
    $
    6,309,444
    
    
    $
    2,195,000Members Equity
    
    $
    25,142,466
    
    
    $
    26,355,372
 Current Assets
 Current Liabilities
 Long-Term Debt
 Members Equity
  20




---



##### Table of Contents



Liquidity and Capital Resources
 Cash Flows
  2011
    
    
    2010Net cash provided by (used in) operating activities
    
    $
    (4,571,923
    )
    
    $
    3,233,208Net cash used in investing activities
    
    $
    (16,868
    )
    
    $
    (105,865
    )Net cash provided by (used in) financing activities
    
    $
    4,528,013
    
    
    $
    (3,091,064
    )Net increase (decrease) in cash and cash equivalents
    
    $
    (60,778
    )
    
    $
    36,279
 Operating Cash Flows
  Liquidity
and Capital Resources  Indebtedness .
 Investing Cash Flows
  Financing Cash Flows
  Indebtedness
 Short-Term Debt Sources
   21




---



##### Table of Contents



Long-Term Debt Sources
       22




---



##### Table of Contents



Short-Term Debt Sources.
  Other
   23




---



##### Table of Contents



Subsequent Events
  Critical Accounting Estimates
  Inventories.
 Long-Lived Assets.
  Off-Balance Sheet Arrangements
  
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk.
 Derivatives and Hedging
  Interest Rate Risk
 Item 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS  Liquidity and Capital Resources, Indebtedness.
  24




---



##### Table of Contents



Outstanding Variable
    
    
    Interest Rate at
    
    
    Interest Rate Following
    
    
    Annual Adverse ChangeRate Debt at 3/31/11
    
    
    March 31, 2011
    
    
    10% Adverse Change
    
    
    to Income$
    5,960,000
    
    
    
    3.25
    %
    
    
    3.58
    %
    
    $
    19,370
 Commodity Price Risk
      25




---



##### Table of Contents



Effect ofHypotheticalAdverse Change -Fair Value
    
    
    Market RiskMarch 31, 2011
    
    $
    0
    
    
    $
    0March 31, 2010
    
    $
    2,490,936
    
    
    $
    249,094
 
 Item 4.
    
    Controls and Procedures.
 Disclosure Controls and Procedures
  Changes in Internal Controls
  
 PART II  OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings.
    26




---



##### Table of Contents



Item 1A.
    
    Risk Factors.
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3.
    
    Defaults Upon Senior Securities.
  
 Item 4.
    
    (Removed and Reserved).
 
 Item 5.
    
    Other Information.
  
 Item 6.
    
    Exhibits.The following exhibits are included herein:
 Exhibit No.
    
    Exhibit31.1
    
    
    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.
  27




---



##### Table of Contents



SIGNATURES
  WESTERN IOWA ENERGY, LLCDate: May 13, 2011
    /s/ William J. HoranWilliam J. HoranChairman, President and Director

(Principal Executive Officer)Date: May 13, 2011
    /s/ Bradley D. WilsonBradley D. WilsonChief Financial Officer

(Principal Financial and Accounting Officer)  28