UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K


þ		Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the fiscal year ended September 30, 2010


o		Transition report under Section 13 or 15(d) of the Exchange Act.

For the transition period from to

Commission file number 000-53039

FIRST UNITED ETHANOL, LLC

(Name of registrant as specified in its charter)


Georgia (State or other jurisdiction of incorporation or organization)		20-2497196 (I.R.S. Employer Identification No.)

4433 Lewis B. Collins Road, Pelham, Georgia (Address of principal executive offices)		31779 (Zip Code)

(229) 522-2822
(Registrant’s telephone number)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes þ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. o Yes þ No

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). o Yes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filed, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer o	Accelerated filer o	Non-accelerated filer o	Smaller reporting company þ
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes þ No

As of March 31, 2010, the aggregate market value of the membership units held by non-affiliates (computed by reference to the most recent offering price of such membership units) was $29,230,362.

As of December 29, 2010, there were 81,984 membership units outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The registrant has incorporated by reference into Part III of this Annual Report on Form 10-K portions of its definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year covered by this Annual Report.

INDEX


	Page

PART I		4

ITEM 1. BUSINESS		4

ITEM 1A. RISK FACTORS		12

ITEM 2. PROPERTIES		14

ITEM 3. LEGAL PROCEEDINGS		14

ITEM 4. REMOVED AND RESERVED		14

PART II		14

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES		14

ITEM 6. SELECTED FINANCIAL DATA		16

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		16

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		27

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA		28

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE		45

ITEM 9A. CONTROLS AND PROCEDURES		45

ITEM 9B. OTHER INFORMATION		46

PART III		46

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE		46

ITEM 11. EXECUTIVE COMPENSATION		46

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS		46

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE		47

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES		47

PART IV		47

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES		47

SIGNATURES		48

Exhibit 10.3
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

FORWARD LOOKING STATEMENTS

Some of the statements in this report may contain forward-looking statements that reflect our current view on future events, future business, industry and other conditions, our future performance, and our plans and expectations for future operations and actions. In some cases you can identify forward-looking statements by the use of words such as “may,” “should,” “anticipate,” “believe,” “expect,” “plan,” “future,” “intend,” “could,” “estimate,” “predict,” “hope,” “potential,” “continue,” or the negative of these terms or other similar expressions. Many of these forward-looking statements are located in this report under Item 1, “Business;” Item 2, “Properties” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but they may appear in other sections as well.

These forward-looking statements are only our predictions and involve numerous assumptions, risks and uncertainties. Important factors that could significantly affect our assumptions, plans, anticipated actions and future financial and other results include, among others, those matters set forth in the section of this report in Item 1A—“Risk Factors.” You are urged to consider all of those risk factors when evaluating any forward-looking statement, and we caution you not to put undue reliance on any forward-looking statements.

You should read this report thoroughly with the understanding that our actual results may differ materially from those set forth in the forward-looking statements for many reasons, including events beyond our control and assumptions that prove to be inaccurate or unfounded. We cannot provide any assurance with respect to our future performance or results. Our actual results or actions may differ materially from these forward-looking statements for many reasons, including the following factors:

•

Changes in our business strategy or capital improvements;

•

Volatility of corn, natural gas, ethanol, unleaded gasoline, oil, distillers grain and other commodities prices;

•

Limitations and restrictions contained in the instruments and agreements governing our indebtedness;

•

Our ability to generate sufficient liquidity to fund our operations, debt service requirements and capital expenditures;

•

The results of our hedging transactions and other risk management strategies;

•

Our anticipated inelastic demand for corn, as it is the only available feedstock for our plant;

•

Changes in the environmental regulations or in our ability to comply with the environmental regulations that apply to our plant site and our operations;

•

The effects of mergers or consolidations in the ethanol industry;

•

Changes in general economic conditions or the occurrence of certain events causing an economic impact in the agriculture, oil or automobile industries;

•

Changes in the availability of credit to support the level of liquidity necessary to implement our risk management activities;

•

Changes in or elimination of federal and/or state laws (including the elimination of any federal and/or state ethanol tax incentives);

•

Overcapacity within the ethanol industry;

•

Limitations on the demand for ethanol resulting from the “blend wall” which limits the amount of ethanol blended into the national gasoline pool based on current 10 percent blend rate in standard vehicles;

•

Changes and advances in ethanol production technology that may make it more difficult for us to compete with other ethanol plants utilizing such technology;

•

Our reliance on key management personnel;

•

The development of infrastructure related to the sale and distribution of ethanol; and

•

Competition in the ethanol industry and from other alternative fuel additives.

Our actual results or actions could and likely will differ materially from those anticipated in the forward-looking statements for many reasons, including the reasons described in this report. We are not under any duty to update the forward-looking statements contained in this report. We cannot guarantee future results, levels of activity, performance or achievements. We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this report. You should read this report and the documents that we reference in this report and have filed as exhibits completely and with the understanding that our actual future results may be materially different from what we currently expect. We qualify all of our forward-looking statements by these cautionary statements.

AVAILABLE INFORMATION

Information about us is also available at our website at www.firstunitedethanol.com, under “Investor Relations,” which includes links to reports we have filed with the Securities and Exchange Commission. The contents of our website are not incorporated by reference in this Annual Report on Form 10-K.

PART I


ITEM 1.		BUSINESS.

Overview

First United Ethanol, LLC (“we,” “us,” “FUEL,” “First United,” or the “Company”) was formed as a Georgia limited liability company on March 9, 2005, for the purpose of raising capital to develop, construct, own and operate a 100 million gallon per year ethanol plant near Camilla, Georgia. Plant operations and the production of ethanol and distillers grains commenced on October 10, 2008. In our second year of plant operation we processed approximately 32 million bushels of corn producing 90 million gallons of denatured fuel grade ethanol, 250,000 tons of dried distillers grains and 75,000 tons of wet distillers grains.

On June 7, 2010 we amended our Senior Credit Agreement and our Accounts Agreement with WestLB. Pursuant to the amended agreements, we are required to maintain a certain level of working capital. In the event we are unable to meet the level of working capital required under the amended loan agreements we will be assessed a five percent (5%) fee on the outstanding loans for any quarter we are not in compliance. The Company did not meet the working capital deficit requirement of ($9,000,000) as of September 30, 2010. The resulting penalty interest of approximately $1,375,000 has been charged as a penalty fee as of September 30, 2010 and included as a long term liability. This fee payment is in addition to the interest we are required to pay on our outstanding debt pursuant to our original loan agreements. This additional interest fee has been accrued and will be due February 2015, the final maturity date our outstanding loans with West LB. Furthermore, and regardless of whether we have maintained the required level or working capital, we will be required to make an additional quarterly principal payment of $150,000 toward our outstanding working capital loan balance. This arrangement is distinct from the borrowing base formula and borrowing base certificates previously utilized to monitor compliance with our working capital loans. This amendment also removed the borrowing base default triggers from the terms of the loan, thereby removing the requirement for waivers. Throughout our fiscal year ended September 30, 2010, we have made every payment of principal or interest to our lender.

In the late summer of 2010, the Company hired an outside 3^rd party to look at the efficiency of the plant and provide suggestions and solutions to increase the operational effectiveness. These studies have been completed and outlined several areas where the Company could make improvements. Some of the improvements were immediately implemented with positive results already being shown. The Company believes that with improvements already implemented and the additional improvement being made, that the operational efficiency of the plant will increase significantly, allowing the plant to run profitably. Additionally, the Company’s profitability is also dependent upon a number of other factors noted elsewhere in these financial statements, including stable and positive crush margins. In addition, the Company is continually exploring different avenues on its working capital line of credit and to ensure enough funding for the debt reserve fund. These options may include negotiating different terms with the lender, raising additional capital or subordinated debt, finding another funding source for working capital or a combination of the above. Management is aggressively looking at its different options and anticipates finding a solution to their liquidity issues. Management believes that once they solve their working capital needs, they will be able to better manage the commodity risk by being able to utilize futures and options more frequently and to lock in positive crush margin. By being able to better take advantage of positive crush margin and with the plant running more efficiently, management believes together this will provide enough cash flow and liquidity for the plant. However, there can be no assurances that such operational efficiencies will provide the Company with sufficient additional cash flow to fund its operations for fiscal year 2011.

Deregistration

We are currently in the process of requesting approval from the Securities and Exchange Commission to engage in a reclassification and reorganization of the Company’s membership units. The proposed transaction will provide for the reclassification of the Company’s membership units into three separate and distinct classes.

If the proposed reclassification is approved by the Securities and Exchange Commission as well as the Company’s members, we expect that each member of record holding 100 or more units will receive one Class A unit for each common equity unit held by such unit holder prior to the reclassification; each member of record holding 21 to 99 units will receive one Class B unit for each common equity unit held by such unit holder immediately prior to the reclassification; and each member of record holding 20 or fewer units will receive one Class C unit for each common equity unit held by such unit holder immediately prior to the reclassification.

If the Company’s members approve the requisite amendment to the Company’s operating agreement and the reclassification is implemented, the Company anticipates having fewer than 300 unit holders of record of its common equity units and fewer than 500 unit holders of record of each of the additional classes, which would enable the Company to voluntarily terminate the registration of its units under the Securities and Exchange Act of 1934.

We expect that the classes of units will be distinguished from one another based on voting rights. If the Company’s members approve the proposed amendment to the Company’s operating agreement and the reclassification is implemented, we expect that Class A unit holders would be entitled to vote on all matters for which unit holder approval is required under the Company’s operating agreement or state law; Class B unit holders would be entitled to vote on the election of the Company’s governors and the voluntary dissolution of the Company; and Class C unit holders would be entitled to vote only on the voluntary dissolution of the Company. With respect to potential future dividends, each membership unit will receive its equal portion of a declared dividend, regardless of its class.

Principal Products and Markets

The principal products we produce are ethanol and distillers grains.

Ethanol

Ethanol is ethyl alcohol, a fuel component made primarily from corn and various other grains, which can be used as: (i) an octane enhancer in fuels; (ii) an oxygenated fuel additive for the purpose of reducing ozone and carbon monoxide vehicle emissions; and (iii) a non-petroleum-based gasoline substitute. Ethanol produced in the United States is primarily used for blending with unleaded gasoline and other fuel products. The principal purchasers of ethanol are generally wholesale gasoline marketers or blenders. The principal markets for our ethanol are petroleum terminals in the continental United States.

Approximately 83% of our total revenue was derived from the sale of ethanol during our fiscal year ended September 30, 2010. Ethanol sales accounted for approximately 82% of our total revenue for our fiscal year ended September 30, 2009.

Distillers Grains

A principal co-product of the ethanol production process is distillers grains, a high protein, high-energy animal feed supplement primarily marketed to the dairy, poultry and beef industries. Distillers grains contain by-pass protein that is superior to other protein supplements such as cottonseed meal and soybean meal. By-pass proteins are more digestible to the animal, thus generating greater lactation in milk cows and greater weight gain in beef cattle. Distillers grains can also be included in the rations of breeder hens, broilers and laying hens which can potentially contain up to 20% distillers grains. Dry mill ethanol processing creates three forms of distillers grains: Distillers Wet Grains (“DWS”), Distillers Modified Wet Grains (“DMWS”) and Distillers Dried Grains with Solubles (“DDGS”). DWS is processed corn mash that contains approximately 70% moisture. DWS has a shelf life of approximately three days and can be sold only to farms within the immediate vicinity of an ethanol plant. DMWS is DWS that has been dried to approximately 50% moisture. DMWS have a slightly longer shelf life of approximately ten days and are often sold to nearby markets. DDGS is DWS that has been dried to approximately 12% moisture. DDGS has a much longer shelf life and may be sold and shipped to any market regardless of its vicinity to an ethanol plant. Currently, 77% of the distillers grains we produce are sold as DDGS and 23% of the distillers grains we produce are sold as “wetcake” or DWS. By selling a percentage of our distillers grains as wetcake we are able increase the capacity of our plant.

Approximately 17% of our total revenue was derived from the sale of distillers grains during our fiscal year ended September 30, 2010. Distillers grains sales accounted for approximately 18% of our total revenue for our fiscal year ended September 30, 2009.

Ethanol and Distillers Grains Markets

As described below in “Distribution of Principal Products”, we market and distribute our ethanol through a third party. Whether or not ethanol or distillers grains produced by our ethanol plant are sold in local markets will depend on the relative prices of the rail market and truck market for our products. We independently market our distillers grains.

Our ethanol and distillers grains are primarily sold in the domestic market, however, as domestic production of ethanol and distillers grains continues to expand, we anticipate increased international sales of our products. Currently, the United States ethanol industry exports a significant amount of distillers grains to Mexico, Canada and China. Management anticipates that demand for distillers grains in the Asian market may continue to increase in the future as distillers grains are used in animal feeding operations in China. During our fourth quarter of 2010, the ethanol industry experienced increased ethanol exports to Europe. These ethanol exports benefited ethanol prices in the United States. We anticipate that ethanol exports will remain steady in our 2011 fiscal year.

Our regional market is within a 450-mile radius of our plant and is serviced by rail. We have a railroad loop track at our plant so we are capable of loading unit trains allowing us to more effectively reach regional and national markets. Our regional markets include large cities that are subject to anti-smog measures such as either carbon monoxide or ozone non-attainment areas. Currently, most of our ethanol and distillers grains are being shipped by truck to local markets.

Distribution of Principal Products

Our ethanol plant is located near Camilla, Georgia in Mitchell County, in southwestern Georgia. We selected the Camilla site because of its proximity to existing ethanol consumption and accessibility to road and rail transportation. It is served by OmniTrax on the Georgia and Florida Railway which provides connections to the CSX Railway and the Norfolk and Southern Railway. Our site is in close proximity to major highways that connect to major petroleum terminals such as Atlanta, Birmingham, Columbia, Jacksonville, Spartanburg, Tallahassee and Tampa. There are approximately 70 terminals within a 250 mile radius of our plant; therefore, we believe we have a competitive advantage over some of our competitors because we are able to truck ethanol to these terminals cheaper than our competitors can transport it by rail to the same terminals.

Ethanol Distribution

We have an ethanol marketing agreement with Eco-Energy, Inc. (“Eco”) for the purpose of marketing and distributing all of the ethanol we produce at the plant. We pay a fee of $0.01 per net gallon of ethanol purchased for rail and $0.012 per net gallon of ethanol purchased for outbound trucks. The term of the agreement was renewed in October 2010 and will continue until October 2012. Under the agreement Eco is responsible for all transportation arrangements for the distribution of ethanol.

Distillers Grains Distribution

We independently market the distillers grains we produce. We are currently taking advantage of the local truck market for distillers grains.

New Products and Services

On September 1, 2010 Airgas Carbonic, Inc. (“Airgas”) commenced operations at the carbon dioxide facility it has constructed near our plant. Pursuant to our agreement with Airgas, the carbon dioxide facility will purify, liquefy, refine and store carbon dioxide produced as a co-product of our ethanol production process. We expect the new carbon dioxide facility to be another source of revenue for our company.

Sources and Availability of Raw Materials

Corn Supply

The major raw material required for our ethanol plant to produce ethanol and distillers grains is corn. To produce 100 million gallons of ethanol per year, our ethanol plant needs approximately 36 million bushels of corn per year, or approximately 100,000 bushels per day, as the feedstock for our dry milling process. The grain supply for our plant is being obtained primarily from regional and national rail markets through Palmetto, our grain procurement agent.

We are significantly dependent on the availability and price of corn. By purchasing corn from local producers we are able to save freight expense compared to corn delivered to our facility by rail from the Midwest. However, a portion of our freight savings is offset by the stronger basis in our local corn market. We augment our local corn purchases with corn from other areas, such as the eastern Corn Belt states of Indiana, Ohio and Illinois.

Our grain procurement agreement with Palmetto is for a term that runs through December 31, 2010, at which point we anticipate renewing the agreement. Palmetto uses its best efforts in obtaining grain at the lowest possible quotes available in the Midwest rail grain market for our approval. We enter into grain purchase contracts with the third party suppliers identified by Palmetto. Palmetto charges an introducing broker fees to third party suppliers. We have the right to purchase grain in situations where Palmetto is not involved in the transaction and Palmetto cannot charge a brokerage fee to the third party supplier. We expect to continue our partnership with Palmetto on a more limited basis as we develop our in-house grain procurement staff.

On December 10, 2010, the United States Department of Agriculture (“USDA”) released its Crop Production report, which estimated the 2010 grain corn crop at approximately 12.5 billion bushels. The December 2010 estimate of the 2010 corn crop is approximately 4.3% lower than the USDA’s estimate of the 2009 record setting corn crop of 13.1 billion bushels. Corn prices can be volatile as a result of a number of factors, the most important of which are weather, current and anticipated stocks, domestic and export prices and supports and the government’s current and anticipated agricultural policy. The price of corn was volatile during our 2010 fiscal year and we anticipate that it will continue to be volatile in the future. Increases in the price of corn significantly increase our cost of goods sold. If these increases in cost of goods sold are not offset by corresponding increases in the prices we receive from the sale of our products, these increases in cost of goods sold can have a significant negative impact on our financial performance.

Utilities

Natural Gas. Natural gas is an important input commodity to our manufacturing process. We estimate that our annual natural gas usage is approximately 3,400,000 Million British Thermal Units annually and constitutes 10% of our annual total production cost. We use natural gas to produce process steam and to dry our distillers grain products to a moisture content at which they can be stored for long periods of time, and can be transported greater distances, so that we can market the product to broader livestock markets, including poultry and swine markets in the continental United States. We entered into a natural gas facilities agreement and natural gas supply and capacity agreement with the City of Camilla.

Electricity. We require a significant amount of electrical power to operate the plant. We have entered into a contract for electric service and an excess facilities charge agreement with Georgia Power Company (“Georgia Power”). During the term of the contract, we pay monthly charges calculated in accordance with the applicable rules, regulations and rate schedules. Pursuant to the facilities charge agreement, Georgia Power has installed facilities on our premises. We compensate Georgia Power for the cost of installing the facilities in the amount of approximately $2,058,000 in three annual payments of approximately $686,000. The first annual payment became due one year after the installation of permanent meter facilities. We also compensate Georgia Power for the allocated costs of operating and maintaining the facilities and we will pay ongoing annual facilities charges of $95,000.

Water. We obtain water for our plant from two high capacity wells located in close proximity to the site. Our plant requires approximately 900 gallons per minute. That is approximately 1,300,000 gallons per day. In July 2007 we obtained from the State of Georgia a permit to use groundwater in a specified amount exceeding our water usage. As a condition of the permit, we are required to actively implement a water conservation plan approved by the State of Georgia.

Much of the water used in an ethanol plant is recycled back into the process. There are, however, certain areas of production where fresh water is needed. Those areas include boiler makeup water and cooling tower water. Boiler makeup water is treated on-site to minimize all elements that will harm the boiler and recycled water cannot be used for this process. Cooling tower water is deemed non-contact water because it does not come in contact with the mash, and, therefore, can be regenerated back into the cooling tower process. The makeup water requirements for the cooling tower are primarily a result of evaporation.

Patents, Trademarks, Licenses, Franchises and Concessions

We do not currently hold any patents, trademarks, franchises or concessions. We were granted a perpetual and royalty free license by ICM to use certain ethanol production technology necessary to operate our ethanol plant. The cost of the license granted by ICM was included in the amount we paid to Fagen to design and build our ethanol plant and expansion.

Seasonality Sales

We experience some seasonality of demand for our ethanol and distillers grains. Since ethanol is predominantly blended with gasoline for use in automobiles, ethanol demand tends to shift in relation to gasoline demand. As a result, we experience some seasonality of demand for ethanol in the summer months related to increased driving and, as a result, increased gasoline demand. In addition, we experience some increased ethanol demand during holiday seasons related to increased gasoline demand.

Competition

We are competing with numerous other ethanol producers. Ethanol is a commodity product, like corn, which means our ethanol plant competes with other ethanol producers on the basis of price and, to a lesser extent, delivery service. As a destination plant, we believe First United Ethanol is able to compete favorably with other ethanol producers due to our proximity to ethanol markets and multiple modes of transportation. However, we face higher costs for our corn when compared to Midwest ethanol producers with access to corn produced in close proximity to their ethanol plants. Our competitive position in the ethanol industry has been our ability to offset any higher corn costs with increased transportation savings due to our close proximity to blending terminals.

The following table identifies the majority of the largest ethanol producers in the United States along with their production capacities.

U.S. FUEL ETHANOL PRODUCTION CAPACITY
BY TOP PRODUCERS
Producers of Approximately 400

million gallons per year (mmgy) or more


			Under Construction/
	Current Capacity		Expansions
Company	(mmgy)		(mmgy)
POET Biorefining		1,629.0		5.0
Archer Daniels Midland		1,450.0		275
Valero Renewable Fuels		1,130.0
Green Plains Renewable Energy		657.0

Updated: November 11, 2010

Competition from Alternative Fuels

Alternative fuels and ethanol production methods are continually under development by ethanol and oil companies. The major ethanol and oil companies have significantly greater resources than we have to develop alternative products and to influence legislation and public perception of ethanol.

One current trend in ethanol production research is to develop an efficient method of producing ethanol from cellulose-based biomass, such as agricultural waste, forest residue, municipal solid waste, and energy crops. The biomass trend is driven by the fact that cellulose-based biomass is generally cheaper than corn, and producing ethanol from cellulose-based biomass would create opportunities to produce ethanol in areas which are unable to grow corn.

Distillers Grains Competition

Ethanol plants in the Midwest produce the majority of distillers grains and primarily compete with other ethanol producers in the production and sales of distillers grains. Our location in southwest Georgia distinguishes our facility from distillers grains producers in the Midwest. We are taking advantage of our proximity to local livestock, poultry and dairy producers by developing a truck market for our distillers grains.

According to the Renewable Fuels Association’s Ethanol Industry outlook 2010, ethanol plants produced 25 million metric tons of distillers grains in 2008/2009 and estimates production of 29 million metric tons in 2009/2010. The primary consumers of distillers grains are dairy and beef cattle. In recent years, an increasing amount of distillers grains have been used in the swine and poultry markets. With the advancement of research into the feeding rations of poultry and swine, we expect these markets to expand and create additional demand for distillers grains; however, no assurance can be given that these markets will in fact expand, or if they do, that we will benefit from any expansion. The market for distillers grains is generally confined to locations where freight costs allow it to be competitively priced relative to other feed ingredients.

Research and Development

We are continually working to develop new methods of operating the ethanol plant more efficiently. We continue to conduct research and development activities in order to realize these efficiency improvements.

Governmental Regulation and Federal Ethanol Supports

Federal Ethanol Supports

The ethanol industry is dependent on several economic incentives to produce ethanol, including federal tax incentives and ethanol use mandates. One significant federal ethanol support is the Federal Renewable Fuels Standard (the “RFS”). The RFS requires that in each year, a certain amount of renewable fuels must be used in the United States. The RFS is a national program that does not require that any renewable fuels be used in any particular area or state, allowing refiners to use renewable fuel blends in those areas where it is most cost-effective. The RFS requirement increases incrementally each year until the United States is required to use 36 billion gallons of renewable fuels by 2022. Starting in 2009, the RFS required that a portion of the RFS must be met by certain “advanced” renewable fuels. These advanced renewable fuels include ethanol that is not made from corn, such as cellulosic ethanol and biomass based biodiesel. The use of these advanced renewable fuels increases each year as a percentage of the total renewable fuels required to be used in the United States.

The RFS for 2010 was approximately 13 billion gallons, of which corn based ethanol could be used to satisfy approximately 12 billion gallons. The RFS for 2011 is approximately 14 billion gallons, of which corn based ethanol can be used to satisfy approximately 12.6 billion gallons. Current ethanol production capacity exceeds the 2011 RFS requirement which can be satisfied by corn based ethanol.

In February 2010, the EPA issued new regulations governing the RFS. These new regulations have been called RFS2. The most controversial part of RFS2 involves what is commonly referred to as the lifecycle analysis of green house gas emissions. Specifically, the EPA adopted rules to determine which renewable fuels provided sufficient reductions in green house gases, compared to conventional gasoline, to qualify under the RFS program. RFS2 establishes a tiered approach, where regular renewable fuels are required to accomplish a 20% green house gas reduction compared to gasoline, advanced biofuels and biomass-based biodiesel must accomplish a 50% reduction in green house gases, and cellulosic biofuels must accomplish a 60% reduction in green house gases. Any fuels that fail to meet this standard cannot be used by fuel blenders to satisfy their obligations under the RFS program. The scientific method of calculating these green house gas reductions has been a contentious issue. Many in the ethanol industry were concerned that corn based ethanol would not meet the 20% green house gas reduction requirement based on certain parts of the environmental impact model that many in the ethanol industry believed was scientifically suspect. However, RFS2 as adopted by the EPA provides that corn-based ethanol from modern ethanol production processes does meet the definition of a renewable fuel under the RFS program. Many in the ethanol industry are concerned that certain provisions of RFS2 as adopted may disproportionately benefit ethanol produced from sugarcane. This could make sugarcane based ethanol, which is primarily produced in Brazil, more competitive in the United States ethanol market. If this were to occur, it could reduce demand for the ethanol that we produce.

Many in the ethanol industry believe that it will be difficult to meet the RFS requirement in future years without an increase in the percentage of ethanol that can be blended with gasoline for use in standard (non-flex fuel) vehicles. Most ethanol that is used in the United States is sold in a blend called E10. E10 is a blend of 10% ethanol and 90% gasoline. E10 is approved for use in all standard vehicles. Estimates indicate that gasoline demand in the United States is approximately 135 billion gallons per year. Assuming that all gasoline in the United States is blended at a rate of 10% ethanol and 90% gasoline, the maximum demand for ethanol is 13.5 billion gallons per year. This is commonly referred to as the “blend wall,” which represents a theoretical limit where more ethanol cannot be blended into the national gasoline pool. This is a theoretical limit because it is believed that it would not be possible to blend ethanol into every gallon of gasoline that is being used in the United States and it discounts the possibility of additional ethanol used in higher percentage blends such as E85 used in flex fuel vehicles. Many in the ethanol industry believe that we will reach this blending wall in 2011, since the RFS requirement for 2011 is 14 billion gallons, much of which will come from ethanol. The RFS requires that 36 billion gallons of renewable fuels must be used each year by 2022, which equates to approximately 27% renewable fuels used per gallon of gasoline sold. In order to meet the RFS mandate and expand demand for ethanol, management believes higher percentage blends of ethanol must be utilized in standard vehicles.

Recently, the United States Environmental Protection Agency allowed the use of E15, gasoline which is blended at a rate of 15% ethanol and 85% gasoline, in vehicles manufactured in the model year 2007 and later. The EPA is expected to make a ruling on allowing E15 for use in vehicles produced in model year 2001 and later by the end of 2010. However, management believes that many gasoline retailers will refuse to provide E15 due to the fact that not all standard vehicles will be allowed to use E15 and due to the labeling requirements the EPA may impose. The EPA is considering instituting labeling requirements associated with E15 which may unfairly discourage consumers from purchasing E15. As a result, the approval of E15 may not significantly increase demand for ethanol. In addition to E15, the ethanol industry is pushing the use of an intermediate blend of 12% ethanol and 88% gasoline called E12. Management believes that E12 may be more beneficial to the ethanol industry than E15 because many believe that E12 could be approved for use in all standard vehicles. Management believes this will make it easier for retailers to supply E12 compared to E15, unless E15 is approved for use in all standard vehicles. Two lawsuits were filed on November 9, 2010 by representatives of the food industry and the petroleum industry challenging the EPA’s approval of E15. It is unclear what effect these lawsuits will have on the implementation of E15 in the United States retail gasoline market.

In addition to the RFS, the ethanol industry depends on the Volumetric Ethanol Excise Tax Credit (“VEETC”). VEETC provides a volumetric ethanol excise tax credit of 45 cents per gallon of ethanol blended with gasoline. VEETC has been extended and is now scheduled to expire on December 31, 2011. If this tax credit is not renewed beyond the 2011 calendar year, it likely would have a negative impact on the price of ethanol and demand for ethanol in the market. Further, elimination of VEETC may lead to less discretionary blending of ethanol where gasoline blenders use ethanol to reduce the cost of blended gasoline. However, due to the RFS, we anticipate that demand for ethanol will continue to mirror the RFS requirement, even without the VEETC. If the RFS is reduced or eliminated, the decrease in demand for ethanol related to the elimination of VEETC may be more substantial.

Effect of Governmental Regulation

The government’s regulation of the environment changes constantly. We are subject to extensive air, water and other environmental regulations and we have been required to obtain a number of environmental permits to construct and operate the plant. It is possible that more stringent federal or state environmental rules or regulations could be adopted, which could increase our operating costs and expenses. It also is possible that federal or state environmental rules or regulations could be adopted that could have an adverse effect on the use of ethanol. Plant operations are governed by the Occupational Safety and Health Administration (“OSHA”). OSHA regulations may change such that the costs of operating the plant may increase. Any of these regulatory factors may result in higher costs or other adverse conditions effecting our operations, cash flows and financial performance.

In late 2009, California passed a Low Carbon Fuels Standard (LCFS). The California LCFS requires that renewable fuels used in California must accomplish certain reductions in green house gases which is measured using a lifecycle analysis, similar to RFS2. Management believes that this lifecycle analysis is based on unsound scientific principles that unfairly harms corn based ethanol. Management believes that these new regulations will preclude corn based ethanol from being used in California. California represents a significant ethanol demand market. If we are unable to supply ethanol to California, it could significantly reduce demand for the ethanol we produce. Currently, several lawsuits have been filed challenging the California LCFS.

United States ethanol production is currently benefited by a 54 cent per gallon tariff imposed on ethanol imported into the United States. However, the 54 cent per gallon tariff is set to expire at the end of the 2011 calendar year. Elimination of the tariff could lead to the importation of ethanol produced in other countries, especially in areas of the United States that are easily accessible by international shipping ports. Ethanol imported from other countries may be a less expensive alternative to domestically produced ethanol and may affect our ability to sell our ethanol profitably.

Employees

We currently have 60 full-time employees. Approximately nine of our employees are involved primarily in management and administration, and the remaining fifty-one are involved primarily in plant operations.

Dependence on a Few Major Customers

As discussed above, we have entered into an ethanol marketing agreement with EcoEnergy. We rely on EcoEnergy for the sale and distribution of our ethanol. Therefore, we are highly dependent on EcoEnergy for the successful marketing of our ethanol. Any loss of EcoEnergy as our marketing agent for our ethanol could have a negative impact on our revenues during the transition to a new marketing firm.

Costs and Effects of Compliance with Environmental Laws

We are subject to extensive air, water and other environmental regulations and we require a number of environmental permits to operate the plant. We have an in-house environmental permitting technician to oversee our environmental permit compliance.

Alcohol Fuel Producer’s Permit. We are required to comply with applicable Alcohol and Tobacco Tax and Trade Bureau (formerly the Bureau of Alcohol, Tobacco and Firearms) regulations. We have obtained the requisite alcohol fuel producer’s permit. The term of the permit is indefinite until terminated, revoked or suspended. The permit also requires that we maintain certain security measures and secure an operations bond. There are other taxation requirements related to special occupational tax and a special stamp tax.

SPCC and RMP. We have prepared and are implementing our spill prevention control and countermeasure (“SPCC”) plan. This plan addresses pollution prevention regulations and has been reviewed and certified by a professional engineer. The SPCC must be reviewed and updated every five years.

Pursuant to the Clean Air Act, stationary sources, such as our plant, with processes that contain more than a threshold quantity of regulated substances, such as anhydrous ammonia, are required to prepare and implement a risk management plan (“RMP”). Since we use anhydrous ammonia, we have established a plan to prevent spills or leaks of the ammonia and an emergency response program in the event of spills, leaks, explosions or other events that may lead to the release of the ammonia into the surrounding area.

Air Permits. Our plant is considered a minor source of regulated air pollutants. There are a number of emission sources that require permitting. These sources include the boiler, ethanol process equipment, storage tanks, scrubbers, and baghouses. We have received an air quality permit issued by the Georgia Environmental Protection Division as well as a conditional use permit approved by the Mitchell County Planning Commission and the Mitchell County Board of Commission. The types of regulated pollutants emitted from our plant include particulate matter (“PM10”), carbon monoxide (“CO”), nitrous oxides (“NOx”) and volatile organic compounds (“VOCs”).

We are subject to oversight activities by the Environmental Protection Agency (“EPA”). There is always a risk that the EPA may enforce certain rules and regulations differently than Georgia’s environmental administrators. Georgia or EPA rules are subject to change, and any such changes could result in greater regulatory burdens on plant operations. We could also be subject to environmental or nuisance claims from adjacent property owners or residents in the area arising from possible foul smells or other air or water discharges from the plant. Such claims may result in an adverse result in court if we are deemed to engage in a nuisance that substantially impairs the fair use and enjoyment of real estate. We had no environmental or nuisance claims during our first two years of plant operations.

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 operation.

Risks Relating to Our Business

If the Federal Volumetric Ethanol Excise Tax Credit (“VEETC”) expires on December 31, 2011, it could negatively impact our profitability. The ethanol industry is benefited by VEETC which is a federal excise tax credit of 45 cents per gallon of ethanol blended with gasoline. This excise tax credit is set to expire on December 31, 2011. We believe that VEETC positively impacts the price of ethanol. If VEETC is allowed to expire, it could negatively impact the price we receive for our ethanol and could negatively impact our profitability.

We have a significant amount of debt, and our existing debt financing agreements contain, and our future debt financing agreements may contain, restrictive covenants that limit distributions and impose restrictions on the operation of our business. The use of debt financing makes it more difficult for us to operate because we must make principal and interest payments on the indebtedness and abide by covenants contained in our debt financing agreements. The level of our debt may have important implications on our operations, including, among other things: (a) limiting our ability to obtain additional debt or equity financing; (b) placing us at a competitive disadvantage because we may be more leveraged than some of our competitors; (c) subjecting all or substantially all of our assets to liens, which means that there may be no assets left for unit holders in the event of a liquidation; and (d) limiting our ability to make business and operational decisions regarding our business, including, among other things, limiting our ability to pay dividends to our unit holders, make capital improvements, sell or purchase assets or engage in transactions we deem to be appropriate and in our best interest.

Our financial performance is significantly dependent on corn and ethanol prices and generally we will not be able to pass on increases in input prices to our customers. Our results of operations and financial condition are significantly affected by the cost and supply of corn and the market price of ethanol. Changes in the relative prices of corn and ethanol are subject to and determined by market forces over which we have no control.

The spread between ethanol and corn prices can vary significantly. Our gross margins depend principally on the spread between ethanol prices and corn prices. The spread between the price of a gallon of ethanol and the cost of corn required to produce a gallon of ethanol will likely continue to fluctuate. A protracted reduction in the spread between ethanol and corn prices, whether a result of an increase in corn prices or a reduction in ethanol prices, would adversely affect our results of operations and financial condition.

Risks Related to Ethanol Industry

The California Low Carbon Fuel Standard may decrease demand for corn based ethanol which could negatively impact our profitability. Recently, California passed a Low Carbon Fuels Standard (LCFS). The California LCFS requires that renewable fuels used in California must accomplish certain reductions in greenhouse gases which are measured using a lifecycle analysis. Management believes that these new regulations could preclude corn based ethanol produced in the Midwest from being used in California. California represents a significant ethanol demand market. If the ethanol industry is unable to supply ethanol to California, it could significantly reduce demand for the ethanol we produce. Any decrease in ethanol demand could negatively impact ethanol prices which could reduce our revenues and negatively impact our ability to profitably operate the ethanol plant.

Overcapacity within the ethanol industry could cause an oversupply of ethanol and a decline in ethanol prices. Excess capacity in the ethanol industry would have an adverse impact on our results of operations, cash flows and general financial condition. Excess capacity may also result or intensify from increases in production capacity coupled with insufficient demand. If the demand for ethanol does not grow at the same pace as increases in supply, we would expect the price for ethanol to decline.

Risks Related to Regulation and Governmental Action

Changes in environmental regulations or violations of the regulations could be expensive and reduce our profitability. We are subject to extensive air, water and other environmental laws and regulations. In addition, some of these laws require our plant to operate under a number of environmental permits. These laws, regulations and permits can often require expensive pollution control equipment or operation changes to limit actual or potential impacts to the environment. A violation of these laws and regulations or permit conditions can result in substantial fines, damages, criminal sanctions, permit revocations and/or plant shutdowns. In the future, we may be subject to legal actions brought by environmental advocacy groups and other parties for actual or alleged violations of environmental laws or our permits. Additionally, any changes in environmental laws and regulations, both at the federal and state level, could require us to spend considerable resources in order to comply with future environmental regulations. The expense of compliance could be significant enough to reduce our profitability and negatively affect our financial condition.


ITEM 2.		PROPERTIES.

Our plant is located on an approximately 267 acre site in Mitchell County Georgia. The plant’s address is 4433 Lewis B. Collins Road, Pelham Georgia 31779. As of our fiscal year end on September 30, 2010, we completed our second year of plant operations. The plant consists of the following buildings:

•

A process building, which contains processing equipment, laboratories, a control room and offices;

•

A water treatment building containing equipment for water supply and treatment;

•

A grain receiving and shipping building; and

•

An administrative building, along with furniture and fixtures, office equipment and computer and telephone systems.

The site also contains improvements such as a loop track, paved access road, grain silos and ethanol storage tanks. Our plant was placed in service on October 10, 2008 and is in excellent condition and is capable of functioning at 100 percent of its production capacity.

All of the tangible and intangible property, real and personal, owned by either First United or its wholly owned subsidiary, Southwest Georgia, serves as the collateral for the debt financing with WestLB, which is described below under “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.”


ITEM 3.		Legal Proceedings.

As of the date of this quarterly report, we are not aware of any material pending legal proceeding to which we are a party or of which any of our property is subject, other than ordinary routine litigation, if any, that is incidental to our business.


ITEM 4.		REMOVED AND RESERVED.

PART II


ITEM 5.		MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS ISSUER PURCHASES OF EQUITY SECURITIES.

As of September 30, 2010, we had 81,984 membership units outstanding and approximately 800 unit holders of record. There is no public trading market for our units.

However, in November 2008, we established a Unit Trading Bulletin Board, a private online matching service, in order to facilitate trading among our members. The Unit Trading Bulletin Board consists of an electronic bulletin board on our website that provides a list of interested buyers and a list of interested sellers, along with their non-firm price quotes. The Unit Trading Bulletin Board does not automatically effect matches between potential sellers and buyers and it is the sole responsibility of sellers and buyers to contact each other to make a determination as to whether an agreement to transfer units may be reached. We do not become involved in any purchase or sale negotiations arising from our Unit Trading Bulletin Board and have no role in effecting transactions beyond approval, as required under our operating agreement, and the issuance of new certificates. We do not give advice regarding the merits or shortcomings of any particular transaction. We do not receive, transfer or hold funds or securities as an incident of operating the Unit Trading Bulletin Board. In advertising our Unit Trading Bulletin Board, we do not characterize First United Ethanol as being a broker or dealer or an exchange. We do not use the Unit Trading Bulletin Board to offer to buy or sell securities other than in compliance with the securities laws, including any applicable registration requirements.

There are detailed timelines that must be followed under the Unit Trading Bulletin Board rules and procedures with respect to offers and sales of membership units, with which all transactions must comply. In addition, all transactions must comply with our operating agreement, and are subject to approval by our board of directors.

The following table contains historical information by quarter for the past two years regarding the actual unit transactions that were completed by the Company’s unit-holders during the periods specified. The Company believes providing this information is the way to most accurately represent the current trading value of the Company’s units. As of October 1, 2010, unit trading on our qualified matching service bulletin board was halted until further notice. However, it is our intent to resume unit trading once our currently pending deregistration process is complete.


							# of
Quarter	Low Price		High Price		Average Price		Units Traded
2009 1^st	$	—	$	—	$	—		—
2009 2^nd	$	—	$	—	$	—		—
2009 3^rd	$	—	$	—	$	—		—
2009 4^th	$	—	$	—	$	—		—
2010 1^st	$	—	$	—	$	—		—
2010 2^nd	$	700	$	700	$	700		50
2010 3^rd	$	650	$	650	$	650		20
2010 4^th	$	500	$	500	$	500		50

The following table contains the bid and asked prices that were posted on the Company’s qualified matching service bulletin board and includes some transactions that were not completed. The Company believes the table above more accurately describes the trading value of its units as the bid and asked prices below include some offers that never resulted in completed transactions. The information was compiled by reviewing postings that were made on the Company’s qualified matching service bulletin board.


							# of
Sellers Quarter	Low Price		High Price		Average Price		Units Listed
2009 1^st	$	1,000.00	$	1,000.00	$	1,000.00		50
2009 2^nd	$	—	$	—	$	—		—
2009 3^rd	$	—	$	—	$	—		—
2009 4^th	$	770.00	$	770.00	$	770.00		50
2010 1^st	$	1,000.00	$	1,000.00	$	1,000.00		100
2010 2^nd	$	—	$	—	$	—		—
2010 3^rd	$	800.00	$	1,000.00	$	900.00		215
2010 4^th	$	1,000.00	$	1,000.00	$	1,000.00		60

							# of
Buyers Quarter	Low Price		High Price		Average Price		Units Listed
2009 1^st	$	—	$	—	$	—		—
2009 2^nd	$	—	$	—	$	—		—
2009 3^rd	$	—	$	—	$	—		—
2009 4^th	$	—	$	—	$	—		—
2010 1^st	$	—	$	—	$	—		—
2010 2^nd	$	—	$	—	$	—		—
2010 3^rd	$	—	$	—	$	—		—
2010 4^th	$	—	$	—	$	—		—

As a limited liability company, we are required to restrict the transfers of our membership units in order to preserve our partnership tax status. Our membership units may not be traded on any established securities market or readily traded on a secondary market (or the substantial equivalent thereof). All transfers are subject to a determination that the transfer will not cause First United Ethanol to be deemed a publicly traded partnership.

Our Board of Directors has adopted a Membership Unit Option Plan (the “Plan”). The Plan permits the company to grant unit options and units to its employees for up to two percent (2%) of the total number of units outstanding at the close of our registered offering, or 1,532 units. We believe that the awards will better align the performance goals of its employees with those of its members. Option awards are generally granted with an exercise price of $1,000 per unit, and they generally vest over three to five years of continuous service and have ten-year contractual terms. Certain option awards may provide for accelerated vesting if there is a change in control of the Company or the employee is terminated without cause. The following table summarizes the outstanding units pursuant to the option agreements, as of the date of this report:

Number of securities

remaining available

for future issuance

Number of securities to

Weighted-average

under equity

be issued upon exercise

exercise price of

compensation plans

of outstanding options,

outstanding options,

(excluding securities

warrants and rights

reflected in column (a))

(a)

(b)

(c)

Equity compensation plans approved by security holders

Equity compensation plans not approved by security holders

951

1,000

581

Total

951

1,000

581

We have not declared or paid any distributions on our units. Our board of directors and our lending syndicate control the timing and amount of distributions to our unit holders, however, our operating agreement requires the board of directors to endeavor to make cash distributions at such times and in such amounts as will permit our unit holders to satisfy their income tax liability in a timely fashion. Our expectations with respect to our ability to make future distributions are discussed in greater detail under “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.”


ITEM 6.		SELECTED FINANCIAL DATA

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.


ITEM 7.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This report contains forward-looking statements that involve future events, our future performance and our expected future operations and actions. In some cases you can identify forward-looking statements by the use of words such as “may,” “will,” “should,” “anticipate,” “believe,” “expect,” “plan,” “future,” “intend,” “could,” “estimate,” “predict,” “hope,” “potential,” “continue,” or the negative of these terms or other similar expressions. These forward-looking statements are only our predictions and involve numerous assumptions, risks and uncertainties. Our actual results or actions may differ materially from these forward-looking statements for many reasons, including the reasons described in this report. We are not under any duty to update the forward-looking statements contained in this report. We cannot guarantee future results, levels of activity, performance or achievements. We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this report. You should read this report and the documents that we reference in this report and have filed as exhibits, completely and with the understanding that our actual future results may be materially different from what we currently expect. We qualify all of our forward-looking statements by these cautionary statements.

Results of Operations

Comparison of Fiscal Years Ended September 30, 2010 and 2009


	2010						2009
Income Statement Data	Amount			%			Amount			%
Revenues	$	203,485,521			100.0	%	$	166,561,773			100.0	%

Cost of Goods Sold	$	192,493,946			94.60	%	$	178,695,057			107.3	%


Gross Profit (Loss)	$	10,991,575			5.40	%	$	(12,133,284	)		(7.3	)%

General and Administrative Expenses	$	4,521,297			2.22	%	$	5,123,484			3.1	%


Operating Income (Loss)	$	6,470,278			3.18	%	$	(17,256,768	)		(10.4	)%

Other (Expense)	$	(8,645,471	)		(4.25	)%	$	(11,208,202	)		(6.7	)%


Net (Loss)	$	(2,175,193	)		(1.07	)%	$	(28,464,970	)		(17.1	)%

Revenues

Our revenues from operations come from two primary sources: sales of fuel ethanol and sales of distillers grains.

The following table shows the sources of our revenue for the fiscal year ended September 30, 2010 and 2009.


	Fiscal Year End					Fiscal Year End
	September 30, 2010					September 30, 2009
Revenue Source	Amount		% of Revenues			Amount		% of Revenues
Ethanol Sales	$	168,892,332		83.00	%	$	135,876,057		81.58	%
Dried Distillers Grains Sales		32,668,542		16.05	%		29,947,009		17.98	%
Wet Distillers Grains Sales		1,622,821		.80	%		370,878		0.23	%
Other		301,826		.15	%		367,829		0.21	%
Total Revenues	$	203,485,521		100.0	%	$	166,561,773		100.0	%

During our 2010 fiscal year, our total revenue increased significantly compared to our 2009 fiscal year. Management attributes this increase in total revenue primarily with a significant increase in the average price we received per gallon of ethanol sold during the 2010 fiscal year. Our ethanol revenue was approximately $168,892,000 for the fiscal year ended September 30, 2010 and $135,876,000 for the fiscal year ended September 30, 2009. We sold approximately 89,000,000 gallons of ethanol during the fiscal year September 30, 2010 compared to 79,500,000 gallons of ethanol for the same period in 2009. The average price was $1.90 per gallon for the fiscal year ended September 30, 2010 and the average price for the same period in 2009 was $1.71 per gallon.

Ethanol

The total gallons of ethanol that we sold during our 2010 fiscal year was approximately 12% more than during our 2009 fiscal year. Management attributes this increase in ethanol sales with the fact that we are now able to operate the plant at a higher run-rate than during the 2009 fiscal year. Our total ethanol production during our 2010 fiscal year was approximately 15% higher compared to our 2009 fiscal year. This disparity in our year over year production is primarily due to mechanical issues that curtailed our ethanol production during our 2009 fiscal year. In addition to the increase in the number of gallons of ethanol we sold was an increase in the average price we received per gallon of ethanol sold during our 2010 fiscal year compared to our 2009 fiscal year of approximately 11%. Management attributes this increase in the average price we received per gallon of ethanol with higher gasoline and corn prices and increased ethanol exports during our 2010 fiscal year. These increases in ethanol exports and corn prices mostly occurred during our fourth quarter of 2010.

Management anticipates that ethanol prices will remain steady during our 2011 fiscal year given that the VEETC blenders’ credit has been renewed. The ethanol industry relies on the VEETC to reduce the cost of ethanol to fuel blenders. This results in increased demand for ethanol related to what is called discretionary blending. Discretionary blending is where fuel blenders use ethanol to increase octane in the fuels that are produced as well as reduce the price of gasoline. However, when the price of ethanol increases relative the price of gasoline, after taking into account the VEETC, the amount of discretionary blending by fuel blenders decreases thereby decreasing ethanol demand. As a result, if the VEETC is not renewed past December 31, 2011, management anticipates that the price of ethanol will decrease. Management anticipates ethanol production will be steady during our 2011 fiscal year provided the ethanol industry can maintain current ethanol prices. However, in the event ethanol prices decrease significantly, we may be forced to reduce ethanol production during times when our operating margins are unfavorable. Further, our operating margins also depend on corn prices which can affect the spread between the price we receive for our ethanol and our raw material costs. In times when this spread decreases or becomes negative, we may reduce or terminate ethanol production until these spreads become more favorable.

Distillers Grains

We produce distillers grains for sale primarily in two forms, distillers dried grains with solubles (DDGS) and wet distillers grains (WDG). During our 2010 fiscal year, we experienced a shift in the mix of distillers grains we sold in the form of DDGS versus WDG compared to the previous year. During our 2010 fiscal year, we sold approximately 77% of our total distillers grains in the form of DDGS and approximately 23% of our total distillers grains in the form of WDG. During our 2009 fiscal year, we sold approximately 95% of our total distillers grains in the form of DDGS and approximately 5% of our total distillers grains in the form of WDG. Management attributes this shift in the mix of our distillers grains sales with an increase in local demand for WDG during our 2010 fiscal year compared to our 2009 fiscal year. As more of our distillers grains are shipped inside of our local market, we sell more of our distillers grains in the wet form since it is less expensive to produce the WDG. Market factors dictate whether we sell more DDGS versus WDG.

Despite the shift toward WDG, we sold approximately 17% more tons of DDGS during our 2010 fiscal year compared to our 2009 fiscal year. Management attributes this increase in DDGS sales with increased production of ethanol during the 2010 fiscal year compared to our 2009 fiscal year. As we produce more ethanol, the total tons of distillers grains that we produce also increases. Offsetting the increase in DDGS sales was a decrease of approximately 2% in the average price we received per ton of DDGS sold during our 2010 fiscal year compared to our 2009 fiscal year. During our 2009 fiscal year, uncertainty existed regarding the supply of distillers grains in the market due to the fact that many ethanol producers were reducing production during late 2008 and early 2009. Management believes this resulted in higher distillers grains prices due to increasing demand and lower supplies during our 2009 fiscal year. Further, management believes that distillers grains prices lag behind corn prices. As a result, distillers grains prices during our 2010 fiscal year may not have fully benefited from recent increases in corn prices that we experienced in the second half of our 2010 fiscal year. Management believes corn prices affect the market price of distillers grains since distillers grains are typically used as a feed substitute for corn.

Management anticipates demand for distillers grains will remain steady or increase, especially if corn prices trend higher during our 2011 fiscal year. Management believes that increased revenue from distillers grains sales during times when corn prices are high helps us to somewhat offset our increased cost of goods sold from the higher corn prices.

Carbon Dioxide

Cost of Goods Sold

Our two primary costs of producing ethanol and distillers grains are corn costs and natural gas costs. We experienced a decrease in our per gallon cost of goods sold for our 2010 fiscal year compared to our 2009 fiscal year.

Our largest cost associated with the production of ethanol and distillers grains is corn costs. Our per gallon cost of for corn during our 2010 fiscal year was approximately 5% lower than the amount we paid during our 2009 fiscal year. Our lower per gallon cost of corn is primarily due to increased production levels which led to a 6% increase in ethanol yield at our facility. The total bushels of corn that we purchased during our 2010 fiscal year was approximately 8% greater compared to our 2009 fiscal year. This increase in corn purchases was due to our increased ethanol and distillers grains production during our 2010 fiscal year compared to our 2009 fiscal year. Offsetting this increase in the total bushels of corn we purchased was a decrease in our average cost per bushel of corn. However, market corn prices started to increase during our 2010 fiscal year starting in July and continuing into the middle of December 2010. Management attributes this increase in corn prices with uncertainty regarding weather factors that resulted in decreased yields in some parts of the United States. This led to fears regarding an imbalance between corn supply and demand which had a negative impact on corn prices. Management anticipates that corn prices will continue to be volatile until corn planting and thereafter will be subject to weather factors that may influence corn prices during the 2011 growing season.

Management anticipates that natural gas prices will remain steady during our 2011 fiscal year unless demand significantly increases due to improved global economic conditions. Management anticipates that our natural gas consumption may increase during our 2011 fiscal year due to increased ethanol and distillers grains production compared to 2010 and 2009.

Our other costs of goods sold include denaturant, process chemicals, electricity, transportation, depreciation, hedging activity and direct labor. Together these costs represent approximately 16% of our cost of goods sold for our 2010 fiscal year. We do not anticipate these costs to be as volatile as our corn and natural gas expenses. However, our transportation, electrical and denaturant costs are directly tied to the price of energy generally and, therefore, may fluctuate along with the price of petroleum based energy products.

General and Administrative Expenses

Our general and administrative expenses as a percentage of revenues were 2.2% for the fiscal year ended September 30, 2010 compared to 3.1% for the fiscal year ended September 30, 2009. General and administrative expenses consist primarily of payroll, employee benefits, and professional fees. During our fiscal year ended September 30, 2009, we incurred significant professional fees in connection with the management of our credit agreement.

Other (Expense)

We had total other expense for the fiscal year ended September 30, 2010 of approximately $8,645,000 compared to September 30, 2009 of approximately $11,200,000, resulting primarily from our interest expense for the period. Interest expense for the period was approximately $9,768,000 which was offset by an unrealized gain of approximately $1,115,000 for the change in fair value of our interest rate swap agreement.

Net (Loss)

Our net loss from operations for the fiscal year ended September 30, 2010 was approximately 1.07% of our revenues, compared to 17.1% of our revenues for the same period ended 2009. This loss is primarily a result of slim operating margins and multiple operating issues faced at the plant. We experienced a significant power disruption that negatively impacted the plant for an extended period of time during the month of July 2010. We have corrected the mechanical failures and improved staffing to ensure that the plant will run properly in the future.

Since commencing operations in October 2008, we have successfully created robust demand in our local markets and are now selling 95 percent of our ethanol and 100 percent of our distillers grains to the truck market in the southeastern United States. The development of these local markets for our products, our use of an increasing amount of local corn and a rebounding national demand for gasoline and ethanol have created favorable operating margins for our company in the first quarter of our fiscal year ending September 30, 2011.

Additional Information

The following table shows additional data regarding production and price levels for our primary inputs and products for the fiscal year ended September 30, 2010 and 2009.


	Twelve Months ended		Twelve Months ended
	September 30, 2010		September 30, 2009
Production:
Ethanol sold (gallons)		89,013,569		79,537,767
Dried distillers grains sold (tons)		250,789		214,039
Wet distillers grains sold (tons)		75,667		7,342
Revenues:
Ethanol average price per gallon		1.897		1.708
Dried distillers grains revenue per gallon of ethanol sold		.367		.376
Wet distillers grains revenue per gallon of ethanol sold		.018		.005
Other		.007		.005
Total revenue per gallon of ethanol sold		2.289		2.094
Costs:
Corn cost per gallon of ethanol sold (including freight)		1.582		1.657
Overhead and other direct costs per gallon of ethanol sold		.510		.589
Total cost per gallon of ethanol sold		2.092		2.246

Three Month Period Ended September 30, 2010 and 2009

The following table shows the results of our operations and the percentage of revenues, cost of goods sold, operating expenses and other items to total revenues in our statement of operations for the three months ended September 30, 2010 and 2009.


	Quarter Ended						Quarter Ended
	September 30, 2010						September 30, 2009
Income Statement Data	Amount			%			Amount			%
Revenues		51,480,330			100.00	%		46,337,542			100.00	%

Cost of Goods Sold		50,224,044			97.56	%		47,657,806			102.85	%


Gross (Loss)		1,256,286			2.44	%		(1,320,264	)		(2.85	)%

General and Administrative Expenses		1,354,157			2.63	%		1,270,453			2.74	%


Operating (Loss)		(97,871	)		(0.19	)%		(2,590,717	)		(5.59	)%

Other (Expense)		(3,246,304	)		(6.31	)%		(1,925,519	)		(4.16	)%


Net (Loss)		(3,344,175	)		(6.50	)%		(4,516,236	)		(9.75	)%

The following table shows additional data regarding the percentage of change from September 30, 2010 from September 30, 2009, in production and price levels for our primary inputs and products.


	Percentage of Increase (Decrease) for
	comparison of Three Months Ended
	September 30, 2010 to
	September 30, 2009
Production:
Ethanol sold (gallons)	2.1	%
Dried distillers grains sold (tons)	16.7	%
Wet distillers grains sold (tons)	376.2	%
Revenues:
Ethanol average price per gallon	8.7	%
Dried distillers grains revenue per gallon of ethanol sold	13.4	%
Wet distillers grains revenue per gallon of ethanol sold	180.0	%
Other Revenue	(17.7	%)
Total revenue per gallon of ethanol sold	8.9	%
Costs:
Corn cost per gallon of ethanol sold (including freight)	.6	%
Overhead and other direct costs per gallon of ethanol sold	12.7	%
Total cost per gallon of ethanol sold	3.6	%

Changes in Financial Condition for Fiscal Years Ended September 30, 2010 and 2009

We experienced an increase in our current assets at September 30, 2010 compared to our fiscal year ended September 30, 2009. We had approximately $586,000 more cash on hand at September 30, 2010 compared to September 30, 2009. We also experienced an increase of approximately $2,241,000 in inventory at September 30, 2010 compared to September 30, 2009. Additionally, at September 30, 2010 we had accounts receivable of approximately $5,088,000 compared to $4,081,000 accounts receivable at September 30, 2009.

Our net property and equipment was slightly lower at September 30, 2010 compared to September 30, 2009 as a result of additions of property and equipment, offset by our current year depreciation.

We experienced an increase in our total current liabilities at September 30, 2010 compared to September 30, 2009. We experienced an increase of approximately $1,877,000 in the current portion of our long-term debt at September 30, 2010 compared to September 30, 2009. Accounts payable and accrued expenses also increased by approximately $2,736,000 at September 30, 2010 compared to September 30, 2009.

We experienced a decrease in our long-term liabilities as of September 30, 2010 compared to September 30, 2009, primarily as a result of decreases in our long-term notes payable. At September 30, 2010, we had approximately $94,482,000 outstanding in the form of long-term loans, compared to approximately $103,325,000 at September 30, 2009. This decrease is attributed to payments on our long-term loans.

Liquidity and Capital Resources

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the year ending September 30, 2010, the Company has generated losses of approximately $2,175,000 and has experienced liquidity restraints due to limits on its working capital line of credit. These liquidity restraints raise concern about whether the Company will continue as a going concern.

On June 7, 2010 we amended our Senior Credit Agreement and our Accounts Agreement with WestLB. Pursuant to the amended agreements, we are required to maintain a certain level of working capital. In the event we are unable to meet the level of working capital required under the amended loan agreements we will be assessed a five percent (5%) fee on the outstanding loans for any quarter we are not in compliance. The Company did not meet the working capital deficit requirement of ($9,000,000) as of September 30, 2010. The resulting penalty interest of approximately $1,375,000 has been charged to interest expense as of September 30, 2010 and included as a long term liability. This fee payment is in addition to the interest we are required to pay on our outstanding debt pursuant to our original loan agreements. This additional interest fee has been accrued and will be due February 2015, the final maturity date our outstanding loans with West LB. Furthermore, and regardless of whether we have maintained the required level or working capital, we will be required to make an additional quarterly principal payment of $150,000 toward our outstanding working capital loan balance. This arrangement is distinct from the borrowing base formula and borrowing base certificates previously utilized to monitor compliance with our working capital loans. This amendment also removed the borrowing base default triggers from the terms of the loan, thereby removing the requirement for waivers. Throughout our fiscal year ended September 30, 2010, we have made every payment of principal or interest to our lender.

The following table shows cash flows for the fiscal years ended September 30, 2010 and 2009:


	Year ended September 30,
	2010			2009
Net cash from (used for) operating activities	$	7,896,288		$	(23,157,338	)
Net cash (used for) investing activities	$	(75,804	)	$	(5,284,882	)
Net cash provided by (used for) financing activities	$	(7,234,018	)	$	20,756,242

Cash Flow From (Used For) Operations

We experienced a significant increase in net cash from operating activities of approximately $31,000,000 during our fiscal year ended September 30, 2010 as compared to the same period of 2009. This change in cash from our operating activities resulted primarily from a positive swing of approximately $23,000,000 in our gross margin for our 2010 fiscal year compared to our 2009 fiscal year and an increase in our accounts payable. During our 2010 fiscal year, our capital needs were being adequately met primarily through cash from our credit facilities and through our operating activities.

Cash Flow Used For Investing Activities

We experienced a decrease in the cash we used for investing activities during our 2010 fiscal year compared to our 2009 fiscal year primarily due to less property and equipment purchased for our 2010 fiscal year and less funding of the cash reserve fund.

Cash Flow From (Used In) Financing Activities

We received significantly less cash for financing activities during our 2010 fiscal year compared to our 2009 fiscal year primarily as a result of our long-term debt obligations being finalized during our fiscal year ended September 30, 2009. Our cash used for activities during our 2010 fiscal year primarily related to paying down our long-term debt.

Financial Results

During our fiscal year ended September 30, 2010 we incurred a net loss of approximately $2,200,000. This loss was after our payment of interest expense of approximately $9,768,000. From fiscal year ended September 30, 2009 to the fiscal year ended September 30, 2010, we generated approximately $203,500,000 revenue from operations. Our net loss for the fiscal year ended September 30, 2010 is primarily a consequence of slim operating margins in conjunction with significant interest expense associated with our existing debt obligations.

As of September 30, 2010, we have total assets of approximately $170,700,000 consisting primarily of inventory and property and equipment. Our current assets for the same period are approximately $16,600,000, consisting primarily of accounts receivable and inventory. As of September 30, 2010, we have current liabilities of approximately $40,200,000 consisting primarily of accounts payable, a revolving line of credit, accrued expenses, and accrued interest. Our current liabilities for the same period in 2009 were $34,800,000. Our long-term debt obligations total approximately $94,500,000, excluding the current portion of our long-term debt. For the same period in 2009, our long-term debt obligations were $103,000,000. Total members’ equity as of September 30, 2010, was approximately $32,500,000 compared to $34,500,000 for the same period in 2009.

Senior Credit Facility

On November 20, 2007, First United and Southwest Georgia Ethanol, LLC (“SWGE”), our wholly owned subsidiary, entered into a senior credit agreement with WestLB that provides for (1) a construction loan facility in an aggregate amount of up to $100,000,000, which converted to a term loan on February 20, 2009 (“Conversion Date”) that matures on February 20, 2015 (the “Final Maturity Date”); and (2) a working capital loan in an aggregate amount of up to $15,000,000 which matures February 20, 2011. The primary purpose of the credit facility was to finance the construction and operation of the Company’s ethanol plant.

The principal amount of the term loan facility is payable in quarterly payments ranging from $1,500,000 to $1,600,000 beginning September 30, 2009, and the remaining principal amounts are fully due and payable on February 20, 2015. Interest is payable quarterly. SWGE has the option to select between two floating interest rate loans under the terms of the senior credit agreement: Base Rate Loans bear interest at the Administrative Agent’s base rate (which is the higher of the federal funds effective rate plus 0.50% and the Administrative Agent’s prime rate) plus 2.75% per annum. Eurodollar Loans bear interest at LIBOR plus 3.75%. The Company has entered into an interest rate swap with WestLB to effectively convert a portion of the variable rate interest into a fixed rate, with the LIBOR component fixed at 4.04% (See Note 1).

Under the terms of the senior credit agreement, SWGE has agreed to pay a quarterly commitment fee equal to 0.50% per annum on the unused portion of the construction loan/term loan and .20% per annum on the unused portion of the working capital loan. SWGE’s obligations under the senior credit agreement are secured by a first-priority security interest in all of the Company’s assets, including its equity interest in SWGE.

The senior credit agreement also required SWGE to enter into an accounts agreement among SWGE, Amarillo National Bank, as the Accounts Bank and Securities Intermediary, and WestLB as the collateral agent and administrative agent. Among other things, the accounts agreement establishes certain special, segregated project accounts and establishes procedures for the deposits and withdrawals of funds into these accounts. Substantially all cash of SWGE is required to be deposited into the project accounts subject to security interests to secure obligations in connection with the senior credit. Funds are released from the project accounts in accordance with the terms of the accounts agreement.

As of September 30, 2010 and 2009, the Company had drawn $13,784,129 on the $15,000,000 working capital loan.

On June 7, 2010, the Company executed the Sixth amendment to its Senior Credit Agreement and its Fourth amendment to its Accounts Agreement with WestLB. Pursuant to the amended agreements, the Company is required to maintain a certain level of working capital. Pursuant to the amended loan agreements the Company is required to have a working capital deficit of ($9,000,000) or less as of September 30, 2010, and ($7,000,000) or less as of December 31, 2010. Subsequent to December 31, 2010, the working capital deficit requirement will remain at ($7,000,000) for the term of the loan.

The Company did not meet the working capital deficit required of ($9,000,000) as of September 30, 2010. The resulting penalty interest of approximately $1,375,000 has been charged to interest expense as of September 30, 2010 and included as a long term liability.

Subordinated Debt

The Company has a subordinated debt financing arrangement pursuant to which the Mitchell County Development Authority issued $10,000,000 of revenue bonds that were placed with Wachovia Bank. The Company signed a promissory note, which is collateralized by the Company’s assets and the proceeds were placed in a Bond Trustee account with Regions Bank. The interest rate for this note is 7.5%. The Company is required to maintain a debt service reserve with the Bond Trustee of at least $1,180,000. This note is subordinated to the West LB debt agreement, which currently prohibits the Company from making any debt service payments. As a result, the Bond Trustee made the annual interest and principal payment to the bond holders of approximately $1,339,000 in December 2009 from the debt service reserve. The funds held in the Bond Trustee account are classified as non-current restricted cash and cash equivalents in the Company’s consolidated balance sheet. The subordinated debt is a 15 year note with annual principal payments each December due to the bond holders in 2010 of $635,000, in 2011 of $530,000, in 2012 of $570,000, in 2013 of $615,000, in 2014 of $660,000 and $6,240,000 thereafter. The $635,000 due in 2010 has been classified as a current maturity of long-term debt per the agreement. However any payment will come from the debt service fund due to the subordination.

On June 30, 2009, SWGE entered into a subordinated promissory note agreement in the amount of $3,977,545 due Fagen, Inc., a related party, for the remaining design-build contract balance. The note bears interest at 4% through June 30, 2010 and 8% thereafter through maturity on June 30, 2011. Interest is payable quarterly. The first principal payment of $500,000 was due as of September 30, 2009 along with an annual principal payment of $1,738,772 that was due June 30, 2010. The final payment of $1,738,772 is due June 30, 2011. This note is subordinated to the West LB debt agreement, which currently prohibits the Company from making the principal payments on the schedule described above. The note of $3,977,545 is included in current maturities of long-term debt per the agreement. However, the earliest any payment will likely be made is in 2014.

Other Notes Payable

The Company financed the acquisition of certain equipment through two identical notes payable to John Deere Credit. The notes amortize over four years (maturity in August 2012) with monthly principal and interest payments and are secured by the equipment. The interest rate is 5.3%. The combined outstanding balance on these two notes payable is $136,244 and $202,050 as of September 30, 2010 and 2009, respectively.

Our long-term debt outstanding as of September 30, 2010 is summarized as follows:


	September 30,			September 30,
	2010			2009
West LB Construction Loan, variable interest rates from 4.00% to 4.28%	$	92,200,000			98,500,000
Subordinated Fagen Note, interest rate of 4.0% through June 20, 2010 and 8% thereafter		3,977,545			3,977,545
Subordinated debt facility, interest rate of 7.5%		9,250,000			9,850,000
Notes payable John Deere Credit, interest rate of 5.3%		136,244			202,050
		115,563,789			112,529,595
Less current portion		(11,081,911	)		(9,204,578	)
Long-term debt outstanding as of September 30:	$	94,481,878			103,325,017

Critical Accounting Estimates

Our financial statements are prepared in conformity with accounting principles generally accepted in the United States of America and follow general practices within the industries in which we operate. This preparation requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, actual results could differ from the estimates, assumptions, and judgments reflected in the financial statements. Certain policies inherently have a greater reliance on the use of estimates, assumptions, and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. Management believes the following policies are both important to the portrayal of our financial condition and results of operations and require subjective or complex judgments; therefore, management considers the following to be critical accounting policies.

Revenue Recognition

The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement, delivery has occurred, the sales price is fixed or determinable, and collection is reasonably assured.

Revenue from the production of ethanol and related products is recorded at the time title and all risks of ownership transfer to customers, which is typically upon loading and shipping of the product shipment from the facility. Commissions are included in cost of goods sold. In addition, shipping and handling costs incurred by the Company for the sale of ethanol and related products are included in cost of goods sold.

Interest income is recognized as earned.

Investment in Commodities Contracts, Derivative Instruments and Hedging Activities

The Company adopted new disclosure requirements, which require entities to provide greater transparency in interim and annual financial statements about how and why the entity uses derivative instruments, how the instruments and related hedged items are accounted for, and how the instruments and related hedged items affect the financial position, results of operations, and cash flows of the entity

The Company is exposed to certain risks related to its ongoing business operations. The primary risks that the Company manages by using forward or derivative instruments are price risk on anticipated purchases of corn and natural gas.

The Company is subject to market risk with respect to the price and availability of corn, the principal raw material we use to produce ethanol and ethanol by-products. In general, rising corn prices result in lower profit margins and, therefore, represent unfavorable market conditions. This is especially true when market conditions do not allow the Company to pass along increased corn costs to our customers. The availability and price of corn is subject to wide fluctuations due to unpredictable factors such as weather conditions, farmer planting decisions, governmental policies with respect to agriculture and international trade and global demand and supply.

Certain contracts that literally meet the definition of a derivative may be exempted from derivative accounting as normal purchases or normal sales. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal purchases or sales are documented as such and exempted from the accounting and reporting requirements of derivative accounting.

The Company enters into firm-price purchase commitments every month with its natural gas suppliers under which they agree to buy natural gas at a price set in advance of the actual delivery of that natural gas to us. Under these arrangements, the Company assumes the risk of a price decrease in the market price of natural gas between the time this price is fixed and the time the natural gas is delivered. We account for these transactions as normal purchases, and accordingly, do not mark these transactions to market nor do we record the commitment on the balance sheet.

The Company enters into short-term cash, options and futures contracts as a means of securing corn for the ethanol plant and managing exposure to changes in commodity prices. The Company maintains a risk management strategy that uses derivative instruments to minimize significant, unanticipated earnings fluctuations caused by market fluctuations. The Company’s specific goal is to protect the Company from large moves in commodity costs. All derivatives will be designated as non-hedge derivatives for accounting purposes and the contracts will be accounted for at fair value. Although the contracts will be effective economic hedges of specified risks, they are not designated as and accounted for as hedging instruments.

As part of its trading activity, the Company uses futures and option contracts offered through regulated commodity exchanges to reduce risk and is exposed to risk of loss in the market value of inventories. To reduce that risk, the Company generally takes positions using cash and futures contracts and options.

The Company has also managed a portion of its floating interest rate exposure through the use of interest rate derivative contracts. The Company’s forward LIBOR-based contract reduces risk from interest rate movements as gains and losses on the contract offset portions of the interest rate variability of our variable-rate debt. The notional amount of the swap at September 30, 2010 and 2009 was $25,182,610 and $47,508,877, respectively. The effect of the swap is to limit the interest rate exposure on the LIBOR component to a fixed rate of 4.04% compared to a variable interest rate. The swap’s notional amount will decrease quarterly to $0 by the termination date of December 31, 2011. The counterparty to the contracts is a large commercial bank, and the Company does not anticipate their nonperformance. The swap is designated as a non-hedge derivative and is accounted for as mark to market. The estimated fair value of this agreement at September 30, 2010 and 2009, was a liability of approximately $657,000 and $1,772,000, respectively.

Derivatives not designated as hedging instruments at September 30, 2010 and 2009 were as follows:


	Balance Sheet	September 30,			September 30,
	Classification	2010			2009

Futures and options contracts	(Current Liabilities)	$	—		$	(61,325	)
Interest rate swap	(Current Liabilities)		(525,658	)		(817,718	)
Interest rate swap	(Non-Current Liabilities)		(131,414	)		(954,004	)


	Statement of Operations	September 30,			September 30,
	Classification	2010			2009
Net realized and unrealized gains (losses) related to futures and options contracts — ethanol	Revenues	$	(13,780	)	$	—
Net realized and unrealized gains related to futures and options contracts — corn	Cost of Goods Sold		51,203			1,078,187
Net realized and unrealized (losses) related to the interest rate swap	Other non-operating (expense)		(373,490	)		(2,485,401	)

Inventories

Ethanol and related products are stated at net realizable value. Raw materials and work-in-process are valued using methods which approximate the lower of cost (first-in, first-out) or market. In the valuation of inventories and purchase and sale commitments, market is based on current replacement values except that it does not exceed net realizable values and is not less than net realizable values reduced by allowances for approximate normal profit margin.

Property and Equipment

Property and equipment is stated at cost. Construction in progress is comprised of costs related to constructing the plant. Depreciation is computed using the straight-line method over the following estimated useful lives:


Buildings		20 Years
Plant and Process Equipment		5-20 Years
Office Furniture and Equipment		3-10 Years

Maintenance and repairs are charged to expense as incurred; major improvements and betterments are capitalized. The present value of capital lease obligations are classified as long-term debt and the related assets are included in property and equipment/construction in progress. Amortization of assets under capital lease is included in depreciation expense.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows from operations are less than the carrying value of the asset group. An impairment loss would be measured by the amount by which the carrying value of the asset exceeds the fair value of the asset. In accordance with Company policies, management has evaluated the plant for possible impairment based on projected future cash flows from operations. Management has determined that its projected future cash flows from operations exceed the carrying value of the plant and that no impairment exists at September 30, 2010.

Fair Value of Financial Instruments

Financial instruments include cash and cash equivalents, derivative instruments, trade and other receivables, accounts payable, accrued expenses and long-term debt. Management believes the fair value of each of these financial instruments approximates their carrying value in the balance sheet as of the balance sheet date. The fair value of current financial instruments is estimated to approximate carrying value due to the short-term nature of these instruments. The fair value of derivative financial instruments is based on quoted market prices. The fair value of the long-term debt is estimated based on anticipated interest rates which management believes would currently be available to FUEL for similar issues of debt, taking into account the current credit risk of FUEL and the other market factors.

Employees

We currently have 60 full-time employees. Approximately nine of our employees are involved primarily in management and administration, and the remainder will be involved primarily in plant operations.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements other than derivatives.


ITEM 7A.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.


ITEM 8.		FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Members
First United Ethanol, LLC

We have audited the accompanying consolidated balance sheets of Advanced First United Ethanol, LLC and subsidiary as of September 30, 2010 and 2009, and the related consolidated statements of operations, changes in members’ equity and cash flows for each of the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of First United Ethanol, LLC and subsidiary as of September 30, 2010 and 2009, and the results of their operations and their cash flows for each of the years then ended in conformity with United States generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 10 to the financial statements, the Company has suffered losses from operations. This has created liquidity restraints due to limits on its working capital line of credit, which together raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 10. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ McGladrey & Pullen, LLP

Des Moines, Iowa
December 29, 2010

FIRST UNITED ETHANOL, LLC AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS


	September 30, 2010			September 30, 2009
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	586,466		$	—
Trade receivables, net of allowance for doubtful accounts of approximately $30,000 and $53,500, respectively		5,088,073			4,080,745
Due from broker		457			109,700
Inventory		9,859,841			7,619,273
Other assets		1,100,281			75,714


Total current assets		16,635,118			11,885,432


PROPERTY AND EQUIPMENT
Office building, furniture and equipment		1,103,781			808,949
Land and improvements		2,508,148			1,000,000
Plant buildings and equipment		161,482,167			163,069,329

		165,094,096			164,878,278
Less accumulated depreciation		(17,553,797	)		(8,840,707	)

		147,560,299			156,037,571

RESTRICTED CASH AND CERTIFICATES OF DEPOSIT		2,779,643			4,269,662

FINANCING COSTS, net of amortization of $2,894,432 and $1,876,558		3,723,702			4,483,577


TOTAL ASSETS	$	170,698,762		$	176,676,242


LIABILITIES AND MEMBERS’ EQUITY

CURRENT LIABILITIES
Excess of outstanding checks over bank balance	$	—		$	81,555
Revolving line of credit		13,634,129			13,784,129
Current portion of long-term debt		11,081,911			9,204,578
Current portion of capital lease obligations		1,706,620			1,019,029
Current portion of interest rate swap liability		525,658			817,718
Accounts payable and accrued expenses		11,979,176			9,243,647
Accrued interest		847,363			615,625
Deferred revenue		411,423			—
Derivative financial instruments		—			61,325


Total current liabilities		40,186,280			34,827,606


INTEREST RATE SWAP LIABILITY		131,414			954,004

CAPITAL LEASE OBLIGATIONS		2,007,748			3,073,996

ACCRUED INTEREST		1,374,686			—

LONG-TERM DEBT		94,481,878			103,325,017


TOTAL LIABILITIES		183,182,006			142,180,623

COMMITMENTS AND CONTINGENCIES

MEMBERS’ EQUITY
Membership contributions, 81,984 units issued and outstanding		77,422,691			77,226,361
Accumulated deficit		(44,905,935	)		(42,730,742	)

Total members’ equity		32,516,756			34,495,619


TOTAL LIABILITIES AND MEMBERS’ EQUITY	$	170,698,762		$	176,676,242

See Notes to Consolidated Financial Statements.

FIRST UNITED ETHANOL, LLC AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS


	Year ending			Year ending
	September 30, 2010			September 30, 2009

Revenues	$	203,485,521		$	166,561,773
Cost of goods sold		192,493,946			178,695,057

Gross profit (loss)		10,991,575			(12,133,284	)

General and administrative expenses		4,521,297			5,123,484


Operating income (loss)		6,470,278			(17,256,768	)

Other income (expense)
Unrealized gain (loss) on interest rate swap		1,114,650			(1,140,395	)
Interest expense		(9,767,774	)		(10,077,221	)
Interest income		7,653			9,414

		(8,645,471	)		(11,208,202	)

Net loss	$	(2,175,193	)	$	(28,464,970	)


Net loss per unit (Basic and Diluted)	$	(26.53	)	$	(361.82	)


Weighted average units outstanding		81,984			78,671

See Notes to Consolidated Financial Statements.

FIRST UNITED ETHANOL, LLC AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS


	Year ending			Year ending
	September 30, 2010			September 30, 2009

CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss)	$	(2,175,193	)	$	(28,464,970	)
Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities:
Depreciation		8,698,530			8,800,499
Amortization		1,017,875			1,002,161
Non-cash compensation expense		196,330			146,175
Loss on sale of equipment		5,815			—
Unrealized (gain) loss on interest rate swap		(1,114,650	)		1,140,395
Provision (recovery) of doubtful receivables		(7,500	)		53,468
Changes in assets and liabilities:
(Increase) in trade receivables		(999,828	)		(4,134,213	)
(Increase) decrease in due from broker		109,243			(109,700	)
(Increase) in inventory		(2,240,568	)		(3,077,174	)
(Increase) decrease in other assets		(1,024,567	)		1,166,696
Increase in accounts payable and accrued expenses		3,474,279			572,693
Increase (decrease) in accrued interest payable		1,606,424			(314,693	)
Increase in deferred revenue		411,423			—
Increase (decrease) in derivative financial instruments		(61,325	)		61,325


Net cash provided by (used in) operating activities		7,896,288			(23,157,338	)


CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of certificates of deposit		(50,000	)		—
Proceeds received from sale of euipment		755			—
Purchase of property and equipment, net of returns		(227,828	)		(2,259,314	)
Release (funding) of restricted cash balance		201,269			(3,025,568	)


Net cash (used in) investing activities		(75,804	)		(5,284,882	)


CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt		—			18,988,632
Payment of financing costs		(258,000	)		—
Repayment of long-term debt and capital lease obligations		(6,744,463	)		(2,235,624	)
Proceeds from revolving line of credit		—			2,384,129
Payments on revolving line of credit		(150,000	)		(500,000	)
Proceeds from sale of units		—			2,037,550
Excess of outstanding checks over bank balance		(81,555	)		81,555


Net cash provided by (used in) financing activities		(7,234,018	)		20,756,242


Increase (decrease) in cash and cash equivalents		586,466			(7,685,978	)

Cash and cash equivalents, beginning of period		—			7,685,978


Cash and cash equivalents, end of period	$	586,466		$	—


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	$	7,143,475		$	9,389,753

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Repayment of notes and interest payable paid by Bond Trustee	$	1,338,750		$	900,000
Assets acquired under capital lease or financing arrangement		—			4,612,472
Accrued expenses reclassed to subordinated debt		—			3,977,544
Deferred revenue applied to property & equipment		—			50,000

See Notes to Consolidated Financial Statements.

FIRST UNITED ETHANOL, LLC AND SUBSIDIARY
STATEMENT OF CHANGES IN MEMBERS’ EQUITY

Membership

Accumulated

Units

contributions

(deficit)

Total

Balance, September 30, 2008

76,610

75,042,636

(14,265,772

)

60,776,864

Unit-based compensation expense for unit options to employees

146,175

—

146,175

Membership units issued

5,369

2,032,550

—

2,032,550

Membership unit options exercised

5,000

—

5,000

Net loss for the year ended September 30, 2009

—

(28,464,970

)

(28,464,970

)

Balance, September 30, 2009

81,984

77,226,361

(42,730,742

)

34,495,619

Unit-based compensation expense for unit options to employees

196,330

—

196,330

Net loss for the year ended September 30, 2010

—

(2,175,193

)

(2,175,193

)

Balance, September 30, 2010

81,984

77,422,691

(44,905,935

)

32,516,756

See Notes to Consolidated Financial Statements.

FIRST UNITED ETHANOL, LLC AND SUBSIDIARY

Notes to Consolidated Financial Statements

NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

First United Ethanol, LLC and subsidiary (the “Company”) is located near Camilla, Georgia. The Company operates a 100 million gallon name plate capacity ethanol plant with distribution within the United States. The Company formally began ethanol operations in October 2008.

The Company was formally organized as a limited liability company on March 9, 2005 under the name Mitchell County Research Group, LLC. In September 2005, the Company formally changed its name to First United Ethanol, LLC. In November 2007, the Company’s wholly owned subsidiary, Southwest Georgia Ethanol, LLC (“SWGE”) was formed in conjunction with the debt financing agreement with West LB. First United Ethanol, LLC transferred the majority of its assets and liabilities to Southwest Georgia Ethanol, LLC.

Basis of Presentation

The consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its 100% owned subsidiary. All material inter-company accounts and transactions are eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements, in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosures of contingent assets and liabilities and other items, as well as the reported revenues and expenses. Actual results could differ from those estimates.

Cash and Cash Equivalents and Restricted Cash and Certificates of Deposit

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company’s cash balances are maintained in bank depositories and periodically exceed federally insured limits. The Company has not experienced losses in these accounts. The Company segregates cash held in escrow, cash restricted and certificates of deposit restricted for use by debt agreements as non-current.

Trade Accounts Receivable

Trade accounts receivable are recorded at original invoice amounts less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering customers financial condition, credit history and current economic conditions. Receivables are written off when deemed uncollectible. Recoveries of receivables written off are recorded when received.

Inventories

Ethanol and related products, raw materials and work-in-process are valued using methods which approximate the lower of cost (first-in, first-out) or market. In the valuation of inventories and purchase and sale commitments, market is based on current replacement values except that it does not exceed net realizable values and is not less than net realizable values reduced by allowances for approximate normal profit margin.

Financing Costs

Financing costs associated with the loans discussed in Note 7 and are recorded at cost and include expenditures directly related to securing debt financing. The Company is amortizing these costs using the effective interest method over the term of the agreement. The financing costs are included in interest expense in the statement of operations.

FIRST UNITED ETHANOL, LLC AND SUBSIDIARY

Notes to Consolidated Financial Statements

Property and Equipment

Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the following estimated useful lives:


Buildings		20 Years
Plant and Process Equipment		5-20 Years
Office Furniture and Equipment		3-10 Years

Maintenance and repairs are charged to expense as incurred; major improvements and betterments are capitalized. The present value of capital lease obligations are classified as long-term debt and the related assets are included in property and equipment. Amortization of assets under capital lease is included in depreciation expense.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows from operations are less than the carrying value of the asset group. An impairment loss would be measured by the amount by which the carrying value of the asset exceeds the fair value of the asset. In accordance with Company policies, management has evaluated the plant for possible impairment based on projected undiscounted future cash flows from operations. Management has determined that its projected undiscounted future cash flows from operations exceed the carrying value of the plant and that no impairment exists at September 30, 2010.

Investment in Commodities Contracts, Derivative Instruments and Hedging Activities

The Company enters into firm-price purchase commitments every month with its natural gas suppliers under which they agree to buy natural gas at a price set in advance of the actual delivery of that natural gas to us. Under these arrangements, the Company assumes the risk of a price decrease in the market price of natural gas between the time this price is fixed and the time the natural gas is delivered. The Company accounts for these transactions as normal purchases, and accordingly, does not mark these transactions to market nor does the Company record the commitment on the balance sheet.

The Company enters into short-term cash, options and futures contracts as a means of securing corn pricing for the ethanol plant and managing exposure to changes in commodity prices. The Company maintains a risk management strategy that uses derivative instruments to minimize significant, unanticipated earnings fluctuations caused by market fluctuations. The Company’s specific goal is to protect the Company from large moves in commodity costs. All derivatives will be designated as non-hedge derivatives for accounting purposes and the contracts will be accounted for at fair value. Although the contracts will be effective economic hedges of specified risks, they are not designated as and accounted for as hedging instruments.

FIRST UNITED ETHANOL, LLC AND SUBSIDIARY

Notes to Consolidated Financial Statements

To ensure an adequate supply of corn to operate the plant, the Company enters into contracts to purchase corn from local farmers and its major suppliers. At September 30, 2010, the Company had fixed price contracts totaling approximately $6,594,000 based upon the average per bushel price.

Derivatives not designated as hedging instruments at September 30, 2010 and 2009 were as follows:


	Balance Sheet	September 30,			September 30,
	Classification	2010			2009

Futures and options contracts	(Current Liabilities)	$	—		$	(61,325	)
Interest rate swap	(Current Liabilities)		(525,658	)		(817,718	)
Interest rate swap	(Non-Current Liabilities)		(131,414	)		(954,004	)


	Statement of
	Operations	September 30,			September 30,
	Classification	2010			2009

Net realized and unrealized (Losses) related to futures and options contracts — ethanol	Revenue	$	(13,780	)	$	—

Net realized and unrealized gains related to futures and options contracts — corn	Cost of Goods Sold		51,203			1,078,187
Net realized and unrealized (losses) related to the interest rate swap	Other non-operating (expense)		(373,490	)		(2,485,401	)

Revenue Recognition

Revenue from the production of ethanol and related products is recorded at the time title and all risks of ownership transfer to customers, which is typically upon loading and shipping of the product from the facility. Commissions are included in cost of goods sold. In addition, shipping and handling costs incurred by the Company for the sale of ethanol and related products are included in cost of goods sold.

FIRST UNITED ETHANOL, LLC AND SUBSIDIARY

Notes to Consolidated Financial Statements

Revenue Recognition

Revenue by product is as follows for the years ending September 30, 2010 and 2009:


	2010		2009
Ethanol	$	168,878,551	$	135,876,057
Distillers’ Grain		34,291,364		30,317,887
Other		315,606		367,829

Total	$	203,485,521	$	166,561,773

Interest income is recognized as earned.

Net Loss per Membership Unit

For purposes of calculating basic and diluted net loss per member unit, units subscribed and issued by the Company are considered outstanding on the effective date of issue and are weighted by days outstanding.

Income Taxes

The Company is organized as a partnership for federal and state income tax purposes and generally does not incur income taxes. Instead, the Company’s earnings and losses are included in the income tax returns of the members. Therefore, no provision or liability for federal or state income taxes has been included in these financial statements.

Management has evaluated the Company’s tax positions under the Financial Accounting Standards Board issued guidance on accounting for uncertainty in income taxes and concluded that the Company has taken no uncertain tax positions that require adjustment to the financial statements to comply with the provisions of this guidance. With few exceptions, the Company is no longer subject to income tax examinations by the U.S. Federal, state or local authorities for the years before 2007.

Fair Value of Financial Instruments

Financial instruments include cash and cash equivalents, derivative instruments, trade receivables, accounts payable, accrued expenses. Management believes the fair value of each of these financial instruments approximates their carrying value on the balance sheet as of the balance sheet date. The fair value of current financial instruments is estimated to approximate carrying value due to the short-term nature of these instruments. The Company believes it is not practical to estimate the fair value of the long-term debt.

Risks and Uncertainties

The Company has certain risks and uncertainties that it will experience during volatile market conditions, which can have a severe impact on operations. The Company’s revenues are derived from the sale and distribution of ethanol and distiller grains to customers primarily located in the United States. Corn for the production process is supplied to the plant primarily from local agricultural producers and from purchases on the open market.

The Company’s operating and financial performance is largely driven by the prices at which we sell ethanol and the net expense of corn. The price of ethanol is influenced by factors such as supply and demand, weather, government policies and programs, and unleaded gasoline and the petroleum markets, although since 2005 the prices of ethanol and gasoline began a divergence with ethanol selling for less than gasoline at the wholesale level. Excess ethanol supply in the market, in particular, puts downward pressure on the price of ethanol. Our largest cost of production is corn. The cost of corn is generally impacted by factors such as supply and demand, weather, government policies and programs, and our risk management program used to protect against the price volatility of these commodities.

The current U.S. economic condition has reduced the nation’s demand for energy. In addition, the VEETC credit of $0.45 is set to expire in December 2011, creating additional uncertainty to the future of ethanol production. The ethanol boom of recent years has spurred overcapacity in the industry and production capacity is currently exceeding the RFS mandates. As such, the Company may need to evaluate whether crush margins will be sufficient to operate the plant and generate enough debt service. In the event crush margins become negative for an extended period of time, the Company may be required to reduce capacity or shut down the plant. The Company will continue to evaluate crush margins on a regular basis. Based on the Company’s operating plan and the borrowing capacity, management believes it has the capital to meet its obligations throughout the next twelve month period.

FIRST UNITED ETHANOL, LLC AND SUBSIDIARY

Notes to Consolidated Financial Statements

NOTE 2. INVENTORIES

A summary of inventories at September 30, 2010 and September 30, 2009 is as follows:


	September 30,		September 30,
	2010		2009

Corn	$	4,943,188	$	3,958,543
Denaturant and chemical supplies		432,434		287,640
Work in process		1,902,712		1,095,000
Ethanol		1,618,807		1,649,895
Distiller grains		962,700		628,195

Total	$	9,859,841	$	7,619,273

NOTE 3. MEMBERS’ EQUITY

As specified in the Company’s Operating Agreement, voting rights are one vote for each voting unit registered in the name of such Member as shown on the Membership Registration maintained by the Company. Income and losses of the Company shall be allocated among the Members in proportion to each Member’s respective percentage of Units when compared with the total Units issued. The Company’s cash flow shall first be applied to the payment of the Company’s operating expenses (including debt service) and then to maintenance of adequate cash reserves as determined by the Board of Directors in its sole discretion, shall be distributed from time to time to the Members in proportion to their respective percentage Units. No member has the right to demand and receive any distribution from the Company other than in cash. No distribution shall be made if, as a result thereof, the Company would be in violation of any loan agreement, or if the Company’s total assets would be less than the sum of its total liabilities.

Transfer, disposition or encumbrance of membership units are subject to certain significant restrictions, including a restriction that prohibits disposals without approval by the Board of Directors.

Initial investors purchased 600 units at $333.33 per unit in March 2005 and 2,000 units at $500 per unit in September 2005. In conjunction with a filing with the U.S. Securities and Exchange Commission, the Company issued 74,010 units at an offering price of $1,000 per unit closing in June 2007. In May 2009, the Company issued 5,369 units at an offering price of $500 per unit for investments up to $1,000,000 and an offering price of $333 per unit for investments exceeding $1,000,000 in conjunction with a private placement. Also during the year ending September 30, 2009, 5 units were issued upon the partial exercise of a unit option under the Company’s Unit Option Plan (see Note 5).

In August 2010, the Board of Directors voted to begin the process of reclassification and reorganization of the Company’s membership units. The Company filed a definitive proxy statement with the SEC on October 15, 2010 giving notice to the unit holders of a special meeting in which they will be asked to approve a proposed Third Amended and Restated Operating Agreement. The result of such amendment and restatement will be the reclassification of the Company’s units into newly authorized Class A, Class B and Class C Units. If the transaction is completed, the units of the Company’s unit holders of record who hold 100 or more of common equity units will be renamed as Class A Units. Unit holders of record who hold at least 99 units but no more than 21 units will receive one Class B Unit for each common equity unit held by such unit holders immediately prior to the effective time of the reclassification. Unit holders of record who hold 20 or fewer units will receive one Class C Unit for each common equity unit held by such unit holders immediately prior to the effective time of the reclassification. The effect of the reclassification will be to reduce the recorded number of unit holders of the Company’s common equity units to less than 300. This would enable the Company to voluntarily terminate the registration of its units under the Securities and Exchange Act of 1934 and remove its public reporting obligations.

FIRST UNITED ETHANOL, LLC AND SUBSIDIARY

Notes to Consolidated Financial Statements

NOTE 4. RELATED PARTIES

An entity which has common ownership with Fagen, Inc., the Company’s principal vendor in the construction of the ethanol facility, is also a Member of the Company and holds approximately 1.2% of the outstanding units. In addition, the Company has a subordinated promissory note due Fagen, Inc. in the amount of $3,977,545 as of September 30, 2010 and 2009.

The Company purchased corn at market prices in the amount of $1,990,862 and $1,432,101 for the years ending September 30, 2010 and 2009, respectively, from certain Directors in the normal course of business.

NOTE 5. UNIT OPTION PLAN

The Company adopted the First United Ethanol, LLC Membership Unit Option Plan (the Plan) during April 2007. The Plan permits the grant of unit options and units to its employees for up to 1,532 units. The Company believes that such awards better align the interests of its employees with those of its members. Option awards are generally granted with an exercise price equal to the market price of the Company’s units at the date of grant; those option awards generally vest over three to five years of continuous service and have ten-year contractual terms. Certain option awards provide for accelerated vesting if there is a change in control or termination without cause (as defined in the Plan).

Accounting standards require an entity to measure the cost of employee services received in exchange for the award of equity instruments based on the fair value of the award on the date of grant. The expense is to be recognized over the period during which an employee is required to provide services in exchange for the award.

The Company uses a Black-Scholes option-pricing model in order to calculate the compensation costs of employee stock-based compensation. Such model requires the use of subjective assumptions, including the expected life of the option, the expected volatility of the underlying unit, and the expected dividend on the unit as discussed below. There were no options granted during the year ending September 30, 2010 and 383 units granted during the year ending September 30, 2009.

Because the Company did not have specific historical or implied volatility information available due to beginning operations in October 2008, expected volatility was based on the historical, or implied volatility of similar entities with publicly available share or option prices. The expected term represents the estimated average period of time that the options remain outstanding using the “simplified” method. The risk-free rate of return reflects the weighted average interest rate offered for zero coupon treasury bonds over the expected term of the options.

Accounting standards require forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Based on historical experience, the Company estimated future non-vested option forfeitures at 0% as of September 30, 2010 and 2009. The fair value of options granted for the year ended September 30, 2009 for the awards granted in 2009 was approximately $600 per unit based on the following assumptions in the Black Scholes Model:


	2009

Expected volatility		66	%
Expected dividends		—
Expected term (in years)		6
Risk-free interest rate		2.96	%

FIRST UNITED ETHANOL, LLC AND SUBSIDIARY

Notes to Consolidated Financial Statements

A summary of option activity under the Plan as of September 30, 2010 and 2009, and changes during the years then ended is presented below:


						Weighted-
				Weighted-		Average
				Average		Remaining
				Exercise		Contractual
Options	Units			Price		Term

Outstanding at September 30, 2008		573			1,000		9.25
Granted		383			1,000		10
Exercised		(5	)		1,000		—
Forfeited		—			—		—

Outstanding at September 30, 2009		951			1,000		8.80


Outstanding at September 30, 2010		951			1,000		7.80


Exercisable at September 30, 2010		682		$	1,000	$	—

As of September 30, 2010, there was approximately $170,000 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a period of 2 years.

NOTE 6. LEASES

The Company leases operating machinery under a lease agreement with De Lage Landen which is accounted for as a capital lease. The lease will expire in 2013. The assets have a capitalized cost of $157,664 included in property and equipment as of September 30, 2010 and 2009. Accumulated depreciation totaled $31,532 and $15,766 for the years ending September 30, 2010 and 2009, respectively.

The Company entered into an Excess Facilities Charge Agreement with Georgia Power Company in which Georgia Power installed a power substation to augment the Company’s power system. The cost of the substation is charged to the Company over a three year period requiring annual payments of principal and interest totaling $686,309 beginning June 30, 2009. The Company has accounted for this agreement as a capital lease. The present value of future payments due under the lease of $1,834,512 is included in property and equipment as of September 30, 2010 and 2009. Accumulated depreciation totaled $183,451 and $91,726 for the years ending September 30, 2010 and 2009, respectively.

The Company also entered into a Natural Gas Facilities Agreement with the City of Camilla for a high pressure gas main to serve the plant and purchase natural gas from the City of Camilla. The City of Camilla owns and operates the gas main and leases its usage to the Company. The agreement calls for a monthly facilities charge, in addition to the normal consumption charges, equal to the cost of the installation of the gas main over an 80 month period beginning June 2009 and requiring principal and interest payments of approximately $43,000 each month. The Company has accounted for the facilities lease charges as a capital lease. The present value of future payments under the lease of $2,777,960 is included in as an asset in property and equipment as of September 30, 2010 and 2009. Accumulated depreciation totaled $277,796 and $138,898 for the years ending September 30, 2010 and 2009, respectively.


	September 30,			September 30,
	2010			2009

De Lage Landen Financial Services, 60 months, interest rate of 7.5%	$	96,778		$	126,327
Georgia Power Substation lease, 36 months, interest rate of 5.85%		1,299,364			1,299,364
Natural Gas Facilities lease, 80 months, interest rate of 6.59%		2,318,226			2,667,334

		3,714,368			4,093,025
Less current portion		(1,706,620	)		(1,019,029	)

	$	2,007,748		$	3,073,996

FIRST UNITED ETHANOL, LLC AND SUBSIDIARY
Notes to Consolidated Financial Statements

Future minimum payments, by year, under the capital lease are due as follows:


Year ending September 30:
2011	$	1,927,359
2012		554,743
2013		548,406
2014		516,722
2015		516,722
Thereafter		167,593

Total future minimum lease payments		4,231,545
Amounts representing interest		(517,177	)

Present value of future net minimum lease payments	$	3,714,368

The Company also entered into operating leases with Trinity Industries Leasing Company for the use of rail cars and tanker cars. The tanker car lease expires November 2017 and the rail car lease expires February 2012. During the year ending September 30, 2009, the Company determined that a portion of the tanker cars under the non-cancelable lease will not be utilized and have no future benefit. Accordingly, the Company recorded a liability and a charge to income in the amount $745,000 for the future lease payments associated with the unused tanker cars. The remaining accrual as of September 30, 2010 and 2009 was $149,000 and $745,000, respectively. In February and March 2010, the Company signed sublease agreements for a portion of the tanker cars through December 2010 and March 2012 and recorded sublease income for the year ending September 30, 2010 of approximately $294,000. The total remaining minimum lease commitments under non-cancelable operating leases are as follows:


Year ending September 30:
2011	$	1,874,000
2012		1,042,000
2013		447,000
2014		447,000
2015		447,000
Thereafter		522,000

Total minimum operating lease payments	$	4,779,000

NOTE 7. DEBT FINANCING ARRANGEMENTS

The Company’s long-term debt outstanding as of September 30, 2010 and 2009 is summarized as follows:


	September 30,			September 30,
	2010			2009

West LB Term Loan, variable interest rates from 4.00% - 4.28%	$	92,200,000		$	98,500,000
Subordinated Fagen note, 4% through June 30, 2010 and 8% thereafter		3,977,545			3,977,545
Subordinated debt facility, interest rate of 7.5%, described below		9,250,000			9,850,000
Notes payable John Deere Credit, interest rate of 5.3%, described below		136,244			202,050

		105,563,789			112,529,595
Less current portion		(11,081,911	)		(9,204,578	)

	$	94,481,878		$	103,325,017

FIRST UNITED ETHANOL, LLC AND SUBSIDIARY
Notes to Consolidated Financial Statements

The maturities of long-term debt at September 30, 2010 are as follows:


Year ending September 30:
2011	$	11,081,911
2012		6,996,878
2013		6,970,000
2014		6,715,000
2015		67,560,000
Thereafter		6,240,000

Total	$	105,563,789

West LB Credit Arrangement — Senior Debt

SWGE entered into a senior credit agreement that provided for (1) a construction loan facility in an aggregate amount of up to $100,000,000, which converted to a term loan on February 20, 2009 (“Conversion Date”) that matures on February 20, 2015 (the “Final Maturity Date”); and (2) a working capital loan in an aggregate amount of up to $15,000,000 which matures February 20, 2011. The primary purpose of the credit facility was to finance the construction and operation of the Company’s ethanol plant.

As of September 30, 2010 and 2009, the Company had drawn $13,784,129 on the $15,000,000 working capital loan.

On June 7, 2010, the Company executed the Sixth amendment to its Senior Credit Agreement and its Fourth amendment to its Accounts Agreement with WestLB. Pursuant to the amended agreements, the Company is required to maintain a certain level of working capital. Pursuant to the amended loan agreements, the Company is required to have a working capital deficit of ($9,000,000) or less as of September 30, 2010, and ($7,000,000) or less as of December 31, 2010. Subsequent to December 31, 2010, the working capital deficit requirement will remain at ($7,000,000) for the term of the loan.

FIRST UNITED ETHANOL, LLC AND SUBSIDIARY
Notes to Consolidated Financial Statements

In the event the Company is unable to meet the level of working capital required under the amended loan agreements the Company will be assessed a five percent (5%) interest fee on the outstanding loans for any quarter for which it is not in compliance. This fee payment is in addition to the interest the Company is required to pay on its outstanding debt pursuant to the original loan agreements. This additional interest fee will be accrued and due February 2015, the final maturity date for the Company’s outstanding term loan with West LB. Furthermore, and regardless of whether the Company has maintained the required level of working capital, the Company will be required to make an additional quarterly principal payment of $150,000 toward its outstanding working capital loan balance for each quarter beginning September 30, 2010. This arrangement is distinct from the borrowing base formula and borrowing base certificates previously utilized to monitor compliance with the Company’s working capital loan. This amendment also removes the borrowing base financial covenant from the terms of the loan, thereby removing the requirement for waivers.

The Company did not meet the working capital deficit of ($9,000,000) required as of September 30, 2010. The resulting penalty fee of approximately $1,375,000 has been charged to interest expense as of September 30, 2010 and included as a long term liability.

Subordinated Debt Facility

The Company has a subordinated debt financing arrangement pursuant to which the Mitchell County Development Authority issued $10,000,000 of revenue bonds that were placed with Wachovia Bank. The Company signed a promissory note, which is collateralized by the Company’s assets and the proceeds were placed in a Bond Trustee account with Regions Bank. The interest rate for this note is 7.5%. The Company is required to maintain a debt service reserve with the Bond Trustee of at least $1,180,000. This note is subordinated to the West LB debt agreement, which currently prohibits the Company from making any debt service payments. As a result, the Bond Trustee made the annual interest and principal payment to the bond holders of approximately $1,339,000 in December 2009 from the debt service reserve. The funds held in the Bond Trustee account are classified as non-current restricted cash and cash equivalents in the Company’s consolidated balance sheet. The subordinated debt is a 15 year note with annual principal payments each December due to the bond holders in 2010 of $635,000, in 2011 of $530,000, in 2012 of $570,000, in 2013 of $615,000, in 2014 of $660,000 and $6,240,000 thereafter. The $635,000 due in 2010 has been classified as a current maturity of long-term debt per the agreement. However any payment will likely come from the debt service fund due to the subordination.

Subordinated Fagen Note

On June 30, 2009, SWGE entered into a subordinated promissory note agreement in the amount of $3,977,545 due Fagen, Inc., a related party, for the remaining design-build contract balance. The note bears interest at 4% through June 30, 2010 and 8% thereafter through maturity on June 30, 2011. Interest is payable quarterly. The first principal payment of $500,000 was due as of September 30, 2009 along with an annual principal payment of $1,738,772 that was due June 30, 2010. The final payment of $1,738,772 is due June 30, 2011. This note is subordinated to the West LB debt agreement, which currently prohibits the Company from making the principal and interest payments on the schedule described above. The note of $3,977,545 is included in current maturities of long-term debt per the agreement. However, the earliest any payment will likely be made is in 2014.

Other Notes Payable

NOTE 8. FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods including market, income and cost approaches. Based on these approaches, the Company often utilized certain assumptions that participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observable inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy.

FIRST UNITED ETHANOL, LLC AND SUBSIDIARY
Notes to Consolidated Financial Statements

The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:


• Level 1 Observable inputs -		unadjusted quoted prices in active markets for identical assets and liabilities;

• Level 2 Observable inputs -		other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data; and

• Level 3 Unobservable inputs -		includes amounts derived from valuation models where one or more significant inputs are unobservable.

The Company has classified its investments in marketable securities and derivative instruments into these levels depending on the inputs used to determine their fair values. The Company’s investments in marketable securities consist of money market funds restricted by the bond holders which are based on quoted prices and are designated as Level 1. The Company’s derivative instruments consist of commodity positions. The fair value of the commodity positions are based on quoted prices on the commodity exchanges and are designated as Level 1 and the fair value of the interest rate swap is based on quoted prices on similar assets or liabilities in active markets and discounts to reflect potential credit risk to lenders and are designated as Level 2.

The following table summarizes fair value measurements by level at September 30, 2010:


	Level 1		Level 2		Level 3		Total

Assets:
Investments in marketable securities, included in restricted cash	$	258,476	$	—	$	—	$	258.476


Total assets	$	258,476	$	—	$	—	$	258,476


Liabilities:
Derivative instruments:
Interest rate swap	$	—	$	657,072	$	—	$	657,072


Total liabilities	$	—	$	657,072	$	—	$	657,072

The following table summarizes fair value measurements by level at September 30, 2009:


	Level 1		Level 2		Level 3		Total

Assets:
Investments in marketable securities, included in restricted cash	$	1,597,109	$	—	$	—	$	1,597,109


Total assets	$	1,597,109	$	—	$	—	$	1,597,109


Liabilities:
Derivative instruments:
Commodity positions	$	61,325	$	—	$	—	$	61,325
Interest rate swap		—		1,771,722		—		1,771,722


Total liabilities	$	61,325	$	1,771,722	$	—	$	1,833,047

FIRST UNITED ETHANOL, LLC AND SUBSIDIARY
Notes to Consolidated Financial Statements

Certain financial assets and liabilities are measured at fair value on a non-recurring basis; that is the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, for example, when there is evidence of impairment.

NOTE 9. COMMITMENTS AND CONTINGENCIES

Liquidity

Our liquidity, results of operations and financial performance will be impacted by many variables, including the market price for commodities such as, but not limited to, corn, ethanol and other energy commodities, as well as the market price for any co-products generated by the facility and the cost of labor and other operating costs. Assuming future relative price levels for corn, ethanol and distillers grains remain consistent with the relative price levels as of September 30, 2010, we expect operations to generate adequate cash flows to maintain operations. The assumptions assume that we will be able to sell all the ethanol that is produced at the plant.

Commitments and Major Customers

The Company has an agreement with an unrelated entity and major customer for marketing, selling, and distributing all of the ethanol produced by the Company. Under the agreement, the Company will pay the entity $.01 per net gallon for each gallon of ethanol sold via railcar and $.012 per net gallon for ethanol sold via truck. For the years ending September 30, 2010 and 2009, the Company expensed approximately $1,125,000 and $870,000, respectively, under this agreement. Revenues with this customer were approximately $168,879,000 and $135,876,000 for the years ending September 30, 2010 and 2009, respectively. Trade accounts receivable of approximately $2,028,000 and $2,134,000 were due from the customer as of September 30, 2010 and 2009, respectively. This agreement was effective through October 2010, at which time it will automatically renew for an additional two years without written notice.

The Company also has an agreement with an unrelated entity for marketing, selling and distributing the distillers grains with solubles “DDGS” to the rail market and for the supply of grain to the Company. Under the agreement, the Company will pay the entity $.50 per ton for DDGS sold and $.0025 per bushel of grain supplied. In addition, the Company is required to pay the marketer $0.01 per bushel for non-brokered corn purchases. For the years ending September 30, 2010 and 2009, the Company expensed approximately $115,000 and $117,000, respectively, under this agreement. There were no revenues with this customer for the years ending September 30, 2010 and 2009 and no trade accounts receivable due from this customer as of September 30, 2010 and 2009 as the marketer acts purely in the broker capacity.

NOTE 10. GOING CONCERN


ITEM 9.		CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.


ITEM 9A.		CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

Management of First United Ethanol is responsible for maintaining disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. In addition, the disclosure controls and procedures must ensure that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial and other required disclosures.

Our management, including our Chief Executive Officer, Murray Campbell, along with our Chief Financial Officer, Larry Kamp, have reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a — 15(e) and Rule 15d — 15(e) under the Exchange Act of 1934, as amended) as of September 30, 2009. Based upon this review and evaluation, these officers have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods required by the forms and rules of the Securities and Exchange Commission; and to ensure that the information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management including our principal executive and principal financial officers, or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting

Inherent Limitations Over Internal Controls

The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that:

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors; and

(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Management, including the Company’s Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management’s Annual Report on Internal Control Over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting based on the criteria set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this evaluation, management has concluded that the Company’s internal control over financial reporting was effective as of September 30, 2010.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

Changes in Internal Control Over Financial Reporting.

There were no changes in our internal control over financial reporting during the fourth quarter of our 2010 fiscal year, which were identified in connection with management’s evaluation required by paragraph (d) of rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


ITEM 9B.		OTHER INFORMATION.

None.

PART III.

Pursuant to General Instruction G(3), we omit Part III, Items 10, 11, 12, 13 and 14 and incorporate such items by reference to an amendment to this Annual Report on Form 10-K or to a definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year covered by this Annual Report (September 30, 2010).


ITEM 10.		DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

The information required by this Item is incorporated by reference from the definitive proxy statement for our 2011 Annual Meeting of Members to be filed with the Securities and Exchange Commission within 120 days after the end of our 2010 fiscal year.


ITEM 11.		EXECUTIVE COMPENSATION


ITEM 12.		SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


ITEM 13.		CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE


ITEM 14.		PRINCIPAL ACCOUNTING FEES AND SERVICES

PART IV


ITEM 15.		EXHIBITS, FINANCIAL STATEMENT SCHEDULES

The following exhibits are filed as part of, or are incorporated by reference into, this report:


Exhibit			Method of
No.		Description	Filing

	10.1	Fourth Amendment to Accounts Agreement between Southwest Georgia Ethanol, LLC and WestLB Ag dated June 7, 2010.		1

	10.2	Sixth Amendment to Senior Credit Agreement between Southwest Georgia Ethanol, LLC and WestLB Ag dated June 7, 2010.		1

	10.3	Grain Brokerage Agreement between Southwest Georgia Ethanol, LLC and Palmetto Grain Brokerage, LLC dated December 15, 2009.		*

	31.1	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 to Exhibit of the same number filed with our quarterly report on Form 10-Q filed with the Securities and Exchange Commission on August 16, 2010.

(*)		Filed herewith.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	FIRST UNITED ETHANOL, LLC
Date: December 29, 2010	/s/ Murray Campbell
	Murray Campbell
	Chief Executive Officer and Director

Date: December 29, 2010	/s/ Lawrence Kamp
	Lawrence Kamp
	Chief Financial Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Date: December 29, 2010	/s/ Murray Campbell
	Murray Campbell
	Chief Executive Officer and Director

Date: December 29, 2010	/s/ Lawrence Kamp
	Lawrence Kamp
	Chief Financial Officer

Date: December 29, 2010	/s/ Miley Adams
	Miley Adams, Director

Date: December 29, 2010	/s/ Steve Collins
	Steve Collins, Treasurer and Director

Date:
	Mark Glass, Director

Date: December 29, 2010	/s/ Donald Shirah
	Donald Shirah, Director

Date: December 29, 2010	/s/ Tommy Hilliard
	Tommy Hilliard, Vice Chairman and Director

Date: December 29, 2010	/s/ Thomas H. Dollar, II
	Thomas H. Dollar, II, Chairman and Director

Date: December 29, 2010	/s/ Robert L. Holden, Sr.
	Robert L. Holden, Sr., Director

Date: December 29, 2010	/s/ Kenneth Jack Hunnicutt
	Kenneth Jack Hunnicutt, Director

Date:
	Ralph Powell, Director

EXHIBIT INDEX


Exhibit			Method of
No.		Description	Filing

	10.1	Fourth Amendment to Accounts Agreement between Southwest Georgia Ethanol, LLC and WestLB Ag dated June 7, 2010.		1

	10.2	Sixth Amendment to Senior Credit Agreement between Southwest Georgia Ethanol, LLC and WestLB Ag dated June 7, 2010.		1

	10.3	Grain Brokerage Agreement between Southwest Georgia Ethanol, LLC and Palmetto Grain Brokerage, LLC dated December 15, 2009.		*

	31.1	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 to Exhibit of the same number filed with our quarterly report on Form 10-Q filed with the Securities and Exchange Commission on August 16, 2010.

(*)		Filed herewith.

FIRST UNITED ETHANOL LLC 10-K