UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, ~~2009~~2010.

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

~~For~~o ~~the~~Transition ~~transition~~report ~~period~~pursuant ~~from~~ to Section 13 or 15(d) of the Securities Exchange Act of 1934.

~~Commission~~For ~~file~~the ~~number~~transition ~~000-51965~~ period from to .

COMMISSION FILE NUMBER 00051965

WESTERN IOWA ENERGY, LLC

(~~Name~~Exact name of registrant as specified in its charter)

Iowa		41-2143913
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
1220 S. CENTER STREET, P.O BOX 399
incorporation or organization)
WALL LAKE, IOWA (Address of principal executive offices)		51466 (Zip Code)
1220 S. Center Street, P.O. Box 399
Wall Lake, Iowa		51466
(Address of principal executive offices)		(Zip Code)

(712) 664-2173 (~~Issuer~~Registrant’s telephone number, including area code)

Securities registered ~~under~~pursuant ~~Section~~to Section 12(b) of the ~~Exchange~~ Act:

None Securities registered pursuant to Section 12(g) of the Act:

~~Securities~~Limited ~~registered~~Liability ~~under~~Company ~~Section~~Membership 12Units (g)Title of ~~the Exchange Act:~~ class)

26Indicate by check mark whether the registrant is a well-known seasoned issuer,~~447~~ as defined in Rule 405 of the Securities Act. o Yes þ No

~~Indicate~~Indicated by check mark if the registrant is anot ~~well-known~~required ~~seasoned~~to ~~issuer,~~file asreports ~~defined~~pursuant into ~~Rule~~Section ~~405~~13 ofor ~~the~~Section ~~Securities~~15(d) of the Act. o Yes þ No

~~Indicate~~Note by— ~~check~~Checking ~~mark if~~ the ~~registrant~~box isabove will not relieve any registrant required to file reports pursuant to Section 13 or ~~Section~~ 15(d) of the Exchange Act. ofrom ~~Yes~~their þobligations Nounder those Sections.

~~Note~~Indicated –by ~~Checking~~check ~~the~~mark ~~box~~whether ~~above~~the ~~will~~registrant ~~not~~(1) has ~~relieve~~filed ~~any~~all ~~registrant~~reports required to ~~file~~be ~~reports pursuant~~filed to by Section 13 or 15(d) of the Securities Exchange Act ~~from~~of ~~their~~1934 ~~obligations~~during ~~under~~the ~~those~~preceding 12 months (or for ~~Sections~~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 ~~(1)~~ has ~~filed~~submitted ~~all~~electronically ~~reports~~and posted on its corporate Web site, if any, every Interactive Data File required to be ~~filed~~submitted byand posted ~~Section 13~~pursuant orto ~~15(d)~~Rule 405 of ~~the~~Regulation S-T (§232.405 ~~Securities Exchange Act~~ of ~~1934~~this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to ~~file~~submit ~~such reports),~~ and ~~(2) has~~post ~~been subject to~~ such ~~filing requirements for the past 90 days~~files). o þ Yes o No

Indicate by check mark ~~whether~~ ~~the~~if ~~registrant~~disclosure ~~has~~of ~~submitted~~delinquent ~~electronically~~filers ~~and~~pursuant ~~posted~~to onItem 405 ~~its~~of ~~corporate~~Regulation S-K ~~Web~~(§229.405 ~~site,~~of ifthis ~~any~~chapter) is not contained herein, ~~every~~and ~~Interactive~~will ~~Data~~not ~~File~~be ~~required~~contained, to bethe ~~submitted~~best ~~and~~of ~~posted~~registrant’s ~~pursuant~~knowledge, toin ~~Rule 405~~definitive ofproxy ~~Regulation S-T~~or ~~during~~information ~~the~~statements ~~preceding 12 months~~incorporated ~~(or~~by ~~for~~reference ~~such~~in Part III ~~shorter~~of ~~period~~this ~~that~~Form ~~the~~10-K ~~registrant~~or ~~was~~any ~~required~~amendment to ~~submit~~ ~~and~~this ~~post~~Form ~~such files)~~10-K. 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 filer, an accelerated filer, 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.

o Large ~~accelerated~~Accelerated ~~filer~~Filer o Accelerated ~~filer~~Filer þo Non-~~accelerated~~Accelerated ~~filer~~Filer oþ Smaller ~~reporting~~Reporting ~~company~~Company ~~(Do not check if a smaller reporting company)~~o

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

The aggregate market value of the membership units held by non-affiliates of the registrant was $123,~~992~~497,~~150~~300 at June 30, ~~2009~~2010. There is no established public trading market for the registrant’s membership units. In addition, no units of the registrant were traded during the fiscal ~~year~~years ended December 31, 2010 and December 31, 2009. The aggregate market value was computed by reference to the average ~~bid and asked~~ price ofat ~~the~~which membership units inwere traded on the registrant’s qualified matching service during the fourth quarter of the registrant’s fiscal year ended December 31, 2008, which is the most recent quarter prior to June 30, 2010 during which the registrant’s units were traded on the qualified matching service.

As of ~~the~~March 1, ~~date of this filing~~2011, there ~~are~~were 26,447 membership units ~~of the registrant~~ outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The information required in Section III of this Annual Report is incorporated herein by reference to the Company’s definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days of the close of the fiscal year ended December 31, ~~2009~~2010.

~~Table of Contents~~INDEX

PART I			34
ITEM 1. BUSINESS			3
Item 1. Business			4
ITEM 1A. RISK FACTORS			19
Item 1A. Risk Factors			18
ITEM 2. PROPERTIES			30
Item 1B. Unresolved Staff Comments			27
ITEM 3. LEGAL PROCEEDINGS			30
Item 2. Properties			27
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS			31
Item 3. Legal Proceedings			27
PART II			31
Item 4. (Removed and Reserved)			28
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES			31
PART II			28
ITEM 6. SELECTED FINANICAL DATA			34
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			28
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			35
Item 6. Selected Financial Data			31
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS			47
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			31
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			F-1
Item 7A. Quantitative and Qualitative Disclosures About Market Risk			41
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS			F-1
Item 8. Financial Statements and Supplementary Data			43
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE			49
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure			59
ITEM 9A. CONTROLS AND PROCEDURES			49
Item 9A. Controls and Procedures			59
ITEM 9B. OTHER INFORMATION			50
Item 9B. Other Information			60
PART III			5060
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT			50
Item 10. Directors, Executive Officers and Corporate Governance			60
ITEM 11. EXECUTIVE COMPENSATION			50
Item 11. Executive Compensation			60
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER MATTERS			50
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			60
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE			50
Item 13. Certain Relationships and Related Transactions, and Director Independence			60
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES			50
Item 14. Principal Accounting Fees and Services			60
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES			51
PART IV			60
SIGNATURES			53
Item 15. Exhibits, Financial Statement Schedules			60
Exhibit 10.20
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

CAUTIONARY STATEMENTS REGARDING FORWARD LOOKING STATEMENTS

This report contains forward-looking statements that involve known and unknown risks and relate to future events, our future financial performance, or our expected future operations and actions. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “future,” “intend,” “could,” “hope,” “predict,” “target,” “potential,” or “continue” or the negative of these terms or other similar expressions. These forward-looking statements are only our predictions based upon current information 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. While it is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by us include, but are not limited to:

•

Changes in federal, state, or local incentives for biodiesel production, including without limitation the federal biodiesel blenders’ tax credit;

•

The availability and adequacy of our cash flow to meet our requirements;

•

Changes to the rules related to the Renewable Fuels Standard and the value of renewable identification numbers (“RINs”);

•

Competition with other manufacturers in the biodiesel industry;

•

Results of our hedging strategies;

•

Changes in interest rates and the availability of credit to support capital improvements, development, expansion, and operations;

•

Changes in the amounts available under our credit facilities with Farm Credit;

•

Our ability to keep up with the latest technology for the production of biodiesel;

•

Decrease in the demand for biodiesel;

•

Changes in plant production capacity or technical difficulties in operating the plant;

•

Actual biodiesel and co-product production varying from expectations;

•

Availability and cost of products and raw materials, particularly soybean oil and animal fats;

•

Changes in the price and market for biodiesel and its co-products;

•

Our ability to market and our reliance on ADM to market our products;

•

Fluctuations in petroleum prices;

•

Our ability to procure and our reliance on ADM to procure feedstock for our plant;

•

Competition from alternative fuels and alternative fuel additives;

•

Changes in our business strategy, capital improvement, or development plans;

•

Consequences of the domestic and global economic downturn and ongoing financial crisis;

•

Our ability to generate free cash flow to invest in our business and service our debt;

•

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

•

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

•

Changes and advances in biodiesel production technology;

•

Our ability to export our biodiesel;

•

Overcapacity within the biodiesel industry resulting in increased competition and costs for feedstock and/or decreased prices for our biodiesel and co-products;

•

Our ability to successfully operate our plant following the period during which the plant was warm-idled;

•

The imposition of tariffs or other duties on biodiesel imported into Europe;

•

Our ability to comply with the financial covenants in our loan agreements;

•

Changes to our operations related to the engagement of ADM as our biodiesel and co-product marketer and feedstock procurer;

•

Our ability to hire and retain qualified personnel to operate the plant; and

•

Other factors described elsewhere in this report.

The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. We undertake no duty to update these forward-looking statements, even though our situation may change in the future. Furthermore, we cannot guarantee future results, events, 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

Our website address is www.westerniowaenergy.com. Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), are available, free of charge, on our website under the link “SEC Compliance,” as soon as reasonably practicable after we electronically file such materials with, or furnish such materials to, 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~~Item 1. ~~BUSINESS.~~Business

General Development of Business

Western Iowa Energy, LLC (“WIE” or the “Company”) is an Iowa limited liability company formed on September 21, 2004, for the purpose of developing, constructing, and operating a biodiesel manufacturing facility in Sac County, Iowa. References to “we,” “us,” and “our” refer to Western Iowa Energy, LLC. ~~Since~~Our ~~May 2006,~~biodiesel ~~we have been engaged in the~~ production ofplant ~~biodiesel~~first ~~and glycerin.~~commenced Weoperations ~~derive~~in ~~our revenues from the sale and distribution of our biodiesel and glycerin~~May 2006.

We derive our revenues from the sale and distribution of our biodiesel, glycerin, and fatty acid. Our plant has a nameplate production capacity of 30 million gallons of biodiesel per year and is able to pre-treat crude vegetable oil and crude animal fats for use in the biodiesel production process. Our pretreatment systems permit us to utilize lower-cost feedstock, such as animal fats, in place of higher-cost feedstock, such as soybean oil, to optimize our profits.

Our plant is BQ-9000 accredited by the National Biodiesel Board and the National Biodiesel Accreditation Committee. BQ-9000 is a voluntary quality-assurance program. BQ-9000 accreditation demonstrates that the quality control processes in place at a plant provide confidence that the biodiesel produced at the facility will consistently meet applicable American Society of Testing and Materials (“ASTM”) biodiesel specifications.

For the fiscal year ended December 31, ~~2009~~2010, we produced a total of 153,~~830~~411,~~562~~080 gallons of biodiesel at our plant. This is significantly less than our annual nameplate production capacity of 30,000,000 gallons ~~(or 2~~,~~500,000~~ ~~gallons per month),~~ and represents a ~~slight~~significant decrease from the fiscal year ended December 31, ~~2008~~ 2009, when we produced 1817,~~035~~276,~~289~~098 gallons of biodiesel. The reduced production ~~schedule~~ in fiscal year ~~2009~~2010 was isa ~~primarily~~result ~~due~~of limited sales related to the ~~lower~~failure ~~price~~ of ~~petroleum~~Congress ~~diesel~~to ~~and~~ extend the ~~current~~federal ~~economic~~blenders’ tax ~~downturn.~~credit Infor ~~January 2010~~biodiesel mixtures, wewhich ~~operated~~expired aton ~~approximately~~December 31, 172009.4% ofAlthough ~~our nameplate~~this ~~capacity,~~tax ~~compared~~credit ~~with~~was reinstated ~~28%~~ in ~~January~~December ~~2009.~~2010 ~~Biodiesel~~and ~~production~~made inretroactive ~~January~~for ~~is historically~~the ~~lower~~2010 ~~than~~calendar atyear, ~~other~~the ~~times~~absence of the credit ~~year~~during ~~due~~2010 tocaused ~~decreased~~many ~~demand~~biodiesel ~~for~~plants ~~biodiesel~~to ~~during~~significantly ~~the~~reduce production or halt ~~winter~~production ~~months~~altogether. WeThe ~~expect~~biodiesel ~~that~~tax wecredit ~~will~~is ~~continue~~set to ~~operate~~expire atagain ~~low~~on ~~production~~December 31, ~~levels~~2011. ~~for~~If Congress ~~the~~fails ~~first quarter~~to ofenact ~~fiscal~~another ~~year~~extension ~~2010~~of asthis credit, we ~~move~~expect ~~out~~that ofdemand ~~the~~for ~~winter~~biodiesel ~~months~~will once again decrease significantly.

OnIn ~~December~~mid-April ~~31,~~2010 ~~2009~~we warm-idled our plant, meaning we reduced staffing levels and maintained the ~~federal~~plant ~~tax~~in ~~credit~~a ~~for~~state ~~biodiesel~~capable ~~expired.~~of ~~Congress~~commencing ~~has~~the ~~not~~production ~~yet enacted~~of anbiodiesel ~~extension~~again within a matter of several ~~the~~days, ~~tax~~due ~~credit~~to limited sales. ~~The~~In ~~failure~~connection ofwith ~~Congress~~our plant warm-idling, we laid off 15 full-time employees to ~~enact~~reduce anoperating ~~extension~~expenses. ofEffective ~~the~~August 13, 2010, we laid off seven ~~biodiesel~~additional ~~tax~~full-time ~~credit~~employees, ~~has~~leaving ~~led~~us towith asix ~~significant~~full-time ~~reduction~~employees. However, since these layoffs we have begun hiring employees again. In September 2010, we hired our General Manager and Operations Manager. We were in ~~demand~~need of employees for ~~biodiesel.~~these Ifpositions ~~Congress~~following ~~fails~~the termination of toour ~~enact~~Management anand ~~extension~~Operational Services Agreement (“MOSA”) with Renewable Energy Group, Inc. (“REG”), discussed below in more detail. Following the reinstatement of the biodiesel tax credit in December 2010, we ~~expect~~began ~~that~~to ~~demand~~hire ~~for~~back ~~biodiesel~~additional ~~will~~employees ~~remain~~as we started operating our ~~low~~biodiesel ~~indefinitely~~plant again.

On May 9, 2005, we entered into a Management and Operational Services Agreement (“MOSA”) with West Central Cooperative. On September 21, 2006, West Central Cooperative assigned its interests in the MOSA to Renewable Energy Group, Inc. (“REG”). Pursuant to the terms of the MOSA, REG manages our plant, procures feed stock and chemical inputs for our plant, and markets our biodiesel and glycerin. On April 7, 2009, REG provided twelve months written notice of its intent to terminate the MOSA. On March 16, 2010, WIE and REG agreed to a one-month extension of the MOSA. The MOSA, as extended, will terminate as of May 3, 2010. For additional information, see “Proposed Consolidation with REG” below.

We expect to fund our operations during the next 12 months using cash flow from continuing operations and our credit facilities. On May 11, 2009, we cancelled our supplemental line of credit with Farm Credit Services of America, FLCA (Farm Credit). Cancellation of the supplemental line of credit was a condition to Farm Credit’s consent to a proposed consolidation with REG, which is discussed below. Although we expect to have sufficient cash flow to fund our operations from our continuing operations and from our remaining credit facilities, we may not have sufficient cash flow as a result of the termination of our supplemental line of credit.

We are subject to industry-wide factors that affect our operating and financial performance. These factors include, but are not limited to, the available supply and cost of animal fats and other feedstocks from which we produce our biodiesel and glycerin; dependence on our biodiesel and glycerin marketer to market and distribute our products; the timely expansion of infrastructure in the biodiesel industry; the intensely competitive nature of the biodiesel industry; possible legislation at the federal, state, and/or local level; the recent expiration of the federal biodiesel tax credit, and the cost of complying with extensive environmental laws that regulate our industry.

Proposed Consolidation with REG

On November 20, 2009, the Company entered into a Second Amended and Restated Asset Purchase Agreement with REG, REG Newco, Inc., a Delaware corporation (“Newco”), and REG Wall Lake, LLC, a wholly-owned subsidiary of Newco and an Iowa limited liability company (“REG Wall Lake”), having an effective date of May 11, 2009 (the “Amended and Restated Asset Purchase Agreement”), which superseded the original Asset Purchase Agreement between the parties dated May 11, 2009 and the Amended and Restated Asset Purchase Agreement between the parties dated August 7, 2009, and pursuant to which the Company proposed to consolidate its business and operations with REG under Newco (the “Transaction”). Since the inception of WIE, REG has provided biodiesel plant management, feedstock procurement, and product marketing services to WIE under the MOSA. The proposed consolidation would have occurred through the acquisition by REG Wall Lake of substantially all of the Company’s assets and certain liabilities. The Amended and Restated Asset Purchase Agreement also contemplated the consolidation of the business and operations of two other biodiesel plants, Central Iowa Energy, LLC (“CIE”) and Blackhawk Biofuels, LLC (“Blackhawk”), under Newco.

The Amended and Restated Asset Purchase Agreement was subject to several closing conditions, including the approval of a majority of the Membership Voting Interests of the Company. The Amended and Restated Asset Purchase Agreement also contemplated the subsequent dissolution of the Company, which was subject to the approval of a 75% majority in interest of the Membership Voting Interests of the Company. On February 24, 2010, the unit holders of WIE voted to reject the proposed consolidation by a vote of 38.04% in favor to 40.07% against, with 0.26% of unitholders abstaining. The unit holders of WIE rejected the proposed dissolution of WIE by a vote of 38.12% in favor to 39.99% against, with 0.26% of unitholders abstaining. Unitholders holding approximately 21.6% of the outstanding units failed to return ballots.

The rejection of the proposed consolidation with REG may have a significant impact on the operations of WIE in 2010 and in future years. Since we began operations of our biodiesel plant, REG has managed and directed the general operations of our plant pursuant to our MOSA. Pursuant to the MOSA, REG provides us with overall management, sales and marketing, and feedstock and chemical procurement services. These services include accounting support, credit review, information technology, and risk management services. We are very reliant on REG for these services, as we have no relationships with any other parties with respect to the performance of these services. On April 7, 2009, we received a letter dated April 3, 2009, in which REG provided twelve months written notice of its intent to terminate the MOSA. Therefore, the MOSA was set to terminate on April 3, 2010. Our earlier disclosure indicated that the MOSA would terminate on May 1, 2010. That disclosure was based on a misunderstanding of the termination provision in the MOSA and should have read “April 3, 2010.” REG indicated that its determination to terminate the MOSA stemmed from changes in the biodiesel market generally that had occurred since the parties originally entered into the MOSA. If the unitholders had approved the proposed consolidation with REG, then REG would have continued to provide the services that it currently provides under the MOSA. On March 16, 2010, WIE and REG adopted an Extension and Second Amendment to the MOSA (the “MOSA Extension”). The MOSA Extension provides for a one-month extension of the MOSA. As a result, the MOSA will now terminate after May 3, 2010. The MOSA Extension also modified REG’s responsibility to provide a general manager and an operations manager for our plant. Under the MOSA Extension, REG will remain obligated to provide the same general services to the plant, but will not be obligated to provide a general manager and an operations manager. Instead, REG will be obligated to provide the services to WIE using various combinations of management personnel at REG’s sole discretion.

~~Since~~On ~~the~~May 11, ~~unitholders rejected the proposed consolidation with REG~~2009, ~~WIE~~we ~~will~~entered ~~either~~into ~~have~~an ~~to negotiate~~Asset aPurchase ~~new~~Agreement ~~contract for these services~~ with REG, ~~identify~~providing ~~alternative~~for ~~providers~~the sale of ~~these services~~substantially ~~and~~all ~~negotiate~~of ~~contracts with~~our ~~these~~assets ~~providers,~~to orREG. ~~begin~~This ~~providing~~agreement ~~these~~was ~~services~~later amended on ~~its~~August 7, ~~own~~2009 ~~prior~~and again toon ~~May~~November 20, 32009. ~~This~~Under isthe ~~a very~~agreement ~~short~~as ~~timeframe~~amended, inREG ~~which~~Wall ~~to make these arrangements~~Lake, ~~and~~LLC ~~each~~would ofhave ~~these options carries~~acquired ~~significant~~substantially ~~risk~~all ~~for~~of ~~the~~our ~~company.~~assets ~~There~~and ~~can~~certain beof noour ~~assurance~~liabilities ~~that~~in ~~the~~exchange ~~Company~~for ~~would~~a becertain ~~able~~amount toof ~~contract~~common ~~with~~and apreferred ~~third~~stock ~~party~~in toREG ~~provide management~~Newco, ~~sales,~~Inc. ~~and~~The ~~marketing~~amended ~~services~~agreement onalso ~~terms~~contemplated ~~favorable~~the toconsolidation ~~the~~of ~~Company, or that~~ the ~~Company~~business ~~would~~and beoperations ~~able~~of totwo ~~hire~~other ~~individuals~~biodiesel toplants, ~~perform~~Central ~~these~~Iowa ~~services.~~Energy, ~~Any~~LLC ~~lack~~and ofBlackhawk aBiofuels, ~~provider~~LLC, ~~for~~under ~~these~~REG ~~services~~Newco, ~~would~~Inc. ~~have~~However, athe ~~negative~~amended ~~impact~~agreement onwas ~~our revenues and could~~subject ~~have~~to aseveral ~~material~~closing ~~adverse~~conditions, ~~effect~~including on the ~~Company.~~approval ~~Accordingly,~~of ~~REG’s~~a ~~termination~~majority of the ~~MOSA~~membership ~~could~~voting ~~adversely~~interests ~~affect~~of ~~the~~WIE. ~~Company’s~~On ~~ability~~February 24, to2010, ~~generate~~our ~~revenues~~unitholders ~~and~~voted against the ~~Company’s~~proposed ~~members~~transaction, meaning ~~could~~that ~~lose some~~we ordid ~~all~~not ofcomplete ~~their~~the ~~investment~~transaction.

REG formerly managed and directed the general operations of our plant pursuant to the MOSA. However, the term of the MOSA, as extended, expired on June 11, 2010. Following the expiration of the MOSA, we continued our working relationship with REG upon the same general terms without a written agreement. During this time, the plant was warm-idled, as discussed above, meaning we were not engaging in the day-to-day production of biodiesel and its co-products and therefore did not require the same level of management, feedstock procurement and product marketing services that would have been required if we were actively operating the plant during that time.

Since we desired to have marketing and feedstock procurement services in place in the event that the federal biodiesel tax credit was reinstated, in September 2010 we finalized three agreements with Archer-Daniels-Midland Company (“ADM”): (i) a Product Marketing Agreement, (ii) a Feedstock Agreement, and (iii) a Services Agreement. Pursuant to the Product Marketing Agreement, ADM will purchase, and we will sell, all of the biodiesel and co-products produced at our biodiesel plant. Under this agreement, we will receive an amount equal to the sales price charged by ADM to third party purchasers for our products (or to be paid by ADM, if there is no underlying third party sale), less ADM’s marketing costs such as freight, fuel surcharges, brokerage fees, off-site storage and any applicable shrink, independent lab fees, and other related costs. Under the Feedstock Agreement, ADM will procure the feedstock for our biodiesel plant. Finally, pursuant to the Services Agreement, ADM will provide us with certain other services, including: (i) annual site audits for BQ 9000, safety, and regulatory and environmental compliance, (ii) ongoing operations assistance, and (iii) annual quality control lab audits and routine round robin lab testing. The initial terms of the Product Marketing Agreement, Feedstock Agreement and Services Agreement are one year, commencing on the first day of the month in which the production of biodiesel resumed at our biodiesel plant, which was January 2011, subject to earlier termination by either party upon thirty days written notice. While our MOSA with REG provided that REG would provide us with certain management personnel and services, our agreements with ADM do not contemplate the provision of management services because we desired to move all management functions in-house. For this reason, we hired our General Manager and Operations Manager in September 2010, as discussed above.

We expect to fund our operations during the next 12 months using cash flow from continuing operations and our credit facilities. In May 2010 we agreed with Farm Credit to reduce the amount available under our revolving credit loan from $8,000,000 to $6,000,000 through July 31, 2010. The agreement to reduce this loan was subsequently extended through March 31, 2011. On March 28, 2011, we agreed with Farm Credit to increase the amount available under this loan to $7,000,000 through September 30, 2011. We paid off our term debt in full in December 2010. Although we expect to have sufficient cash flow to fund our operations from our continuing operations and from our remaining credit facilities, it is possible our cash flow may prove to be insufficient.

We are subject to industry-wide factors that affect our operating and financial performance. These factors include, but are not limited to, the available supply and cost of animal fats and other feedstocks from which we produce our biodiesel, glycerin, and fatty acid; dependence on our product marketer to market and distribute our products; the timely expansion of infrastructure in the biodiesel industry; the intensely competitive nature of the biodiesel industry; possible legislation at the federal, state, and/or local level; and the cost of complying with extensive environmental laws that regulate our industry.

Financial Information About Segments

We do not operate any distinct segments, as defined by generally accepted accounting principles.

Principal Products

The principal products that we produce are biodiesel, crude glycerin, and fatty acid.

Biodiesel

Biodiesel is a high-lubricity, clean-burning alternative fuel produced from domestic, renewable resources and is primarily used in compression ignition (diesel) engines and may also be used as home heating oil. Biodiesel provides environmental benefits over petroleum-based diesel, including reduced emissions of carbon dioxide, carbon monoxide, particulate matter, and sulfur. Biodiesel’s physical and chemical properties, as they relate to operation of diesel engines, are similar to petroleum-based diesel fuel. As a result, blends containing 20% biodiesel and 80% petroleum-based diesel may be used in most standard diesel engines without requiring any engine modifications.

We derived approximately 9690.0% of our revenue from the sale of biodiesel during our fiscal year ended December 31, ~~2009~~2010. Biodiesel sales accounted for approximately 96.57% and 9896.15% of our revenue for the fiscal years ended December 31, ~~2008~~2009 and ~~2007~~2008, respectively.

Primary Co-Product — Crude Glycerin

The primary co-product of the biodiesel production process is crude glycerin, which equals approximately 10% of the quantity of biodiesel produced. Crude glycerin is highly stable under typical storage conditions, compatible with a wide variety of other chemicals, and relatively non-toxic. Glycerin possesses a unique combination of physical and chemical properties that are used in a large variety of products. It is an ingredient or processing aid in cosmetics, toiletries, personal care, pharmaceuticals, and food products. In addition, new uses for glycerin are frequently being discovered and developed due to its versatility. Many of these uses, however, require refined glycerin. Our plant only produces crude glycerin and does not have the capability to refine glycerin. Also, glycerin produced from the production of animal fat-based biodiesel cannot be used in pharmaceutical products.

We derived approximately 12.46% of our revenue from the sale of crude glycerin during our fiscal year ended December 31, ~~2009~~2010. Crude glycerin sales accounted for approximately 31.54% and 12.92% of ~~our~~ our revenue for the fiscal years ended December 31, ~~2008~~2009 and ~~2007~~2008, respectively.

Primary Co- Product — Fatty Acid

An additional co-product of the biodiesel production process is fatty acid. Fatty acid is generally used as a component of livestock feed. InWe ~~2008 and 2009, our marketer, REG, engaged in efforts to expand the market for fatty acid. As a result of these efforts, we~~ derived approximately 13.95% of our revenue from the sale of fatty acid during our fiscal year ended December 31, ~~2009~~2010. InFatty ~~previous~~acid ~~years,~~ sales accounted for approximately 1.9% and 1.3% of ~~fatty~~our ~~acid~~revenue ~~constituted~~for athe defiscal ~~minimis~~years ~~portion~~ended ofDecember 31, ~~our~~2009 and ~~total~~2008, ~~revenue~~respectively.

Principal Products Markets

As described below in “Distribution Methods”, we currently market and distribute all of our biodiesel, glycerin, and fatty acid through a ~~professional~~ third-party marketer, ~~REG.~~Archer-Daniels-Midland ~~Our biodiesel,~~Company ~~glycerin, and fatty acid marketer gathers pertinent information on the marketing opportunities for our products and presents those opportunities to our board of directors~~(“ADM”). Our ~~board of directors makes all decisions with regard to where our~~ products are ~~marketed. Our products are~~ primarily sold in the domestic market. A portion of our products have also been sold in international markets, particularly to European customers. In 2009, however, the European Commission imposed anti-dumping and countervailing duties on U.S. biodiesel imported into Europe. These duties significantly increase the price at which we must sell our biodiesel in European markets, making it difficult or impossible for us to compete with European biodiesel producers.

We expect our ~~biodiesel~~product ~~and glycerin~~ marketer to explore all markets for our products, including export markets. However, due to high transportation costs, and the fact that we are not located near a major international shipping port, we expect a majority of our products to continue to be marketed and sold domestically. ~~If we negotiate a new MOSA with REG, we will expect REG to~~ continue exploring all markets for our products. If we negotiate a new marketing contract with a third party, we expect to require the third party to explore all markets for our products. If we are unable to negotiate a new contract with REG or an alternative provider of marketing services, our management will continue to explore all markets for our products. See “BUSINESS — Proposed Consolidation with REG.”

Distribution Methods

We entered into the MOSA with REG for the purposes of marketing and distributing our biodiesel, glycerin, and fatty acid. Pursuant to the MOSA, REG has marketed all biodiesel, glycerin, and fatty acid that we have produced since the inception of our business. We determine the price at which REG sells our products based on marketing information that REG provides to us on no less than a monthly basis. REG markets all of our biodiesel and glycerin in its own name. We pay REG a fee equal to one cent ($0.01) per gallon for all biodiesel marketed from our facility. We also pay REG a fee for marketing our glycerin, which is based on the amount of biodiesel marketed and is equal to one fifth of a cent ($0.002) per gallon of biodiesel. We also pay REG an annual net income bonus equal to 6% of our net income. The amount we paid REG for the annual net income bonus in the fiscal years ended December 31, 2009, 2008, and 2007 was $103,537, $117,620, and $0, respectively.

On April 3, 2009, REG provided twelve months written notice of its intent to terminate the MOSA. We rely exclusively on REG to distribute our biodiesel and glycerin. We do not have relationships with other providers of these services. REG indicated that its decision to terminate the MOSA stemmed from changes in the biodiesel market generally that had occurred since the parties originally entered into the MOSA. The termination also resulted from REG’s anticipation of the proposed consolidation between the Company and REG. In February 2010, the unitholders of WIE rejected the proposed consolidation with REG. Pursuant to the Second Amended and Restated Asset Purchase Agreement, if the unitholders had approved the proposed consolidation, then REG would have continued to provide the services that it currently provides under the MOSA as our parent company. See “BUSINESS — Proposed Consolidation with REG” for more information about the failed consolidation with REG. The MOSA, as extended, will terminate as of May 3, 2010.

Since the MOSA is scheduled to terminate on May 3, 2010, WIE will either have to negotiate a new contract for biodiesel and glycerin distribution services with REG, identify alternative providers of these services and negotiate contracts with these providers, or begin providing these services on its own before the MOSA terminates. This is a very short timeframe in which to make these arrangements, and each of these options carries significant risk for the company. There can be no assurance that the Company will be able to contract with a third party to provide biodiesel and glycerin distribution services on terms favorable to the Company, or that the Company would be able to hire individuals to perform these services. Any lack of a provider for these services would have a negative impact on our revenues and could have a material adverse effect on the Company. Accordingly, REG’s termination of the MOSA could adversely affect the Company’s ability to generate revenues and the Company’s members could lose some or all of their investment.

Distribution Methods

We previously were a party to a Management and Operational Services Agreement (“MOSA”) with Renewable Energy Group, Inc. (“REG”), under which REG marketed and distributed our biodiesel, glycerin, and fatty acid. The term of the MOSA expired on June 11, 2010, although we continued our working relationship with REG for a period of time following that date upon the same general terms without a written agreement. Pursuant to the MOSA, we paid REG a fee equal to one cent ($0.01) per gallon for all biodiesel marketed from our facility. We also paid REG a fee for marketing our glycerin based on the amount of biodiesel marketed, which was equal to one fifth of one cent ($0.002) per gallon of biodiesel. We also paid REG an annual net income bonus equal to 6% of our net income.

Following the expiration of the term of the MOSA, we entered into a Product Marketing Agreement with ADM dated September 21, 2010 pursuant to which ADM purchases from us, and we sell to ADM, all of the biodiesel and co-products produced at our biodiesel plant. Under the Product Marketing Agreement, we receive an amount equal to the sales price charged by ADM to third party purchasers for our products (or to be paid by ADM, if there is no underlying third party sale), less ADM’s marketing costs such as freight, fuel surcharges, brokerage fees, off-site storage and any applicable shrink, independent lab fees, and other related costs. ADM also procures feedstock for our production plant and provides certain other services to us pursuant to separate agreements. The fee we pay to ADM for all such services, including services provided under the Product Marketing Agreement, is a percentage of the net amount we receive for our product sales, plus a percentage of our annual net profit. The initial terms of our Product Marketing Agreement with ADM is one year, commencing on the first day of the month in which we resumed the production of biodiesel following our warm-idle, which was January 2011, subject to earlier termination by either party upon thirty days written notice. The amounts we paid our product marketers for their services in the fiscal years ended December 31, 2010, 2009, and 2008 were $106,099, $676,532, and $751,659, respectively.

Seasonal Demand for Biodiesel

Biodiesel has different cold flow properties depending on the type of feedstock used in its manufacture. Cold flow refers to a fuel’s ability to flow easily at colder temperatures and is an important consideration in producing and blending biodiesel for use in colder climates. The cloud point is the temperature at which small solid crystals are visually observed as the fuel is cooled. When air temperatures fall below the cloud point, these crystals may plug fuel filters or drop to the bottom of a storage tank; however, fuels can usually be pumped at temperatures below the cloud point. The “pour point” for a fuel is the temperature at which the fuel contains so many crystals that it is essentially a gel and will no longer flow. Therefore, a lower cloud point and pour point means that the fuel flows better in colder temperatures. To provide biodiesel with an acceptable cloud point and pour point in cold weather, we need to blend our biodiesel with petroleum-based diesel. Generally, biodiesel that is used in blends of 2% to 20% provides acceptable cold flow properties for the Iowa market. We expect that our biodiesel distributor will sell our biodiesel throughout the nation, and potentially abroad. Cold flow additives can also be used seasonally to provide a higher level of cold weather protection, similar to the current practice with conventional diesel fuel. Demand for our biodiesel typically diminishes in colder climates and during the colder fall and winter months as a result of cold flow concerns. Animal fat-based biodiesel has a higher pour point temperature than other types of biodiesel. Accordingly, demand for this type of biodiesel may fluctuate by season more than demand for biodiesel made from other types of feedstock.

General Demand for Biodiesel

The biodiesel industry is still relatively new and unknown especially when compared to the ethanol industry. ~~The~~In 2010, the Renewable Fuels Association reported that ~~the U.S. ethanol industry produced~~ a record ~~of more than 10~~13.7523 billion gallons of ethanol inwere ~~2009.~~produced Byin ~~contrast,~~ the ~~National Biodiesel~~United ~~Board~~States. ~~estimates~~However, ~~that~~ the ~~U.S.~~ biodiesel industry produced only approximately ~~490~~315 million gallons of biodiesel in ~~2009~~2010, constituting only a small part of the ~~53-billion-gallon-per-year~~ U.S. diesel fuel market and a fraction of the amount of ~~2009~~2010 ethanol production. Total ~~2009 biodiesel~~2010 biodiesel production is also significantly less than that produced in 2009, which was approximately 545 million gallons. Biodiesel production overall is currently less than current national biodiesel production capacity. The ~~National~~ Biodiesel ~~Board~~Magazine website estimates that as of ~~June~~January 2227, ~~2009 (the latest date for which information is available)~~2011, national biodiesel production capacity totaled approximately 2.6984 billion gallons per year. ~~Some~~According to the Biodiesel Magazine website there are 169 plants already operational; of these, some are currently ~~closed~~not producing biodiesel and some do not currently operate at full capacity due to this excess production capacity and other economic factors. ~~The National Biodiesel Board~~ ~~estimates that production capacity could increase by another 427.8 million gallons once the plants currently under construction or engaged in expansion, if completed, begin production.~~

Several factors could lead to an increase in biodiesel demand. Biodiesel has received attention from consumers and policymakers in recent years for several reasons. Biodiesel is made from renewable sources and provides environmental benefits over petroleum-based diesel, including reduced emissions of carbon dioxide, carbon monoxide, particulate matter, and sulfur. In addition, a 2007 study by the U.S. Department of Energy (DOE) and the U.S. Department of Agriculture (USDA) found that biodiesel has a positive energy balance: for every unit of energy consumed in the supply chain and production process for biodiesel, there are 3.5 units of energy produced. Biodiesel mixes easily with diesel fuel at rates between 2% and 100%, and it improves the lubricity of petroleum-based diesel fuel at levels as low as 3%. The increased lubricity reduces friction of petroleum-based diesel fuel and may result in longer equipment life and protection of fuel injectors. Further, the Environmental Protection Agency (EPA) Ultra Low Sulfur Diesel Mandate seeks to reduce sulfur emissions through regulations that take effect over the next several years. Because low-sulfur diesel and ultra-low-sulfur diesel have lubricity problems, biodiesel can be an attractive alternative to satisfying the requirements of the mandate. Future biodiesel demand will vary directly on the basis of any changes that are made to EPA regulations.

We also anticipate that the Renewable Fuel Standard (RFS), expanded by the Energy Independence and Security Act of 2007, as described below under Government Regulation and Federal Supports, may increase demand for biodiesel, as it sets a minimum usage requirement for biodiesel and other types of biomass-based diesel. There can be no assurance that the RFS will increase the current demand for biodiesel, however, because it is estimated that current biodiesel production capacity already exceeds the 2012 RFS biomass-based diesel mandate.

While there has been some uncertain or negative public opinion regarding biodiesel, in July 2008 there was a change to the ASTM standards which allows up to 5% biodiesel to be blended in with petroleum diesel and the product to still be labeled as petroleum diesel. This may continue to provide demand for biodiesel, especially in conjunction with the renewed biodiesel tax credit and RFS2, discussed below under “Government Regulation and Federal Biodiesel Supports,” and offset some of the negative public opinions the biodiesel industry has faced.

Financial Information about Geographic Areas

All of our operations are domiciled in the United States. All of the products sold to our customers for fiscal years 2010, 2009 and 2008 were produced in the United States and all of our long-lived assets are domiciled in the United States. We have engaged a third party marketer to market our biodiesel and co-products. Our marketer may decide to sell our products in countries other than the United States.

Sources and Availability of Raw Materials

Feedstock Procurement

~~Under~~We ~~the~~entered ~~MOSA~~into a Feedstock Agreement with ~~REG~~ADM in September 2010, ~~REG~~under ~~has~~which ~~been~~ADM ~~responsible~~procures the feedstock for ~~arranging~~our ~~the~~biodiesel ~~purchase~~plant. ~~and~~The ~~procurement~~ inability of ~~the~~ADM ~~feedstock~~to ~~and~~obtain ~~chemical~~adequate ~~inputs~~feedstock ~~necessary~~for toour facility ~~produce~~at ~~biodiesel~~economical prices, or at ~~our~~all, ~~plant~~could ~~since~~have ~~the inception~~significant ofnegative ~~operations~~impacts aton our ~~plant.~~ability ~~Specifically,~~to produce ~~the~~biodiesel ~~MOSA~~and ~~requires~~on ~~REG~~our ~~to:~~revenues.

• Provide analysis and audit of feedstock suppliers; • Purchase feedstock at competitive prices meeting specifications and in quantities adequate to satisfy the production schedule of our plant; • Negotiate for discounts on feedstock, where obtainable; • Arrange for transportation, logistics, and scheduling of feedstock deliveries; • Provide analysis and audit of bulk transportation providers; • Perform due diligence requirements for investigation of suppliers of the chemical inputs; • Provide analysis and audit of chemical suppliers; • Purchase chemical inputs at competitive prices meeting specifications for use in our plant; • Negotiate for discounts on the purchase of chemical inputs, where obtainable; • Procure adequate chemical inputs to meet our production schedules; and • Arrange for transportation, logistics, and scheduling services for chemical input deliveries by suppliers.

The inability of REG to obtain adequate feedstock for our facility at economical prices, or at all, could have significant negative impacts on our ability to produce biodiesel and on our revenues. We pay REG a fee equal to one cent ($0.01) per gallon for all biodiesel marketed from our facility. In addition, we pay REG a fee for marketing our glycerin, which is based on the amount of biodiesel marketed and is equal to one fifth of a cent ($0.002) per gallon of biodiesel. We also pay REG an annual net income bonus equal to 6% of our net income. The amount we paid REG for the annual net income bonus in the fiscal years ended December 31, 2009, 2008, and 2007 was $103,537, $117,620, and $0, respectively.

As described above, the MOSA, as extended, will terminate on May 3, 2010. Prior to that date, WIE will either have to negotiate a new contract for feedstock procurement services with REG, identify alternative providers of these services and negotiate contracts with these providers, or begin providing these services on its own. This is a very short timeframe in which to make these arrangements, and each of these options carries significant risk for the company. There can be no assurance that the Company will be able to contract with a third party to provide feedstock procurement services on terms favorable to the Company, or that the Company would be able to hire individuals to perform these services. Any lack of a provider for these services would have a negative impact on our revenues and could have a material adverse effect on the Company. If the Company is unable to acquire feedstock, it will be unable to produce biodiesel and glycerin and will be unable to make any sales of these products. If the Company is unable to sell biodiesel and glycerin, then it will have no revenue and the value of its membership units may decline and the Company’s members could lose some or all of their investment. See “BUSINESS — Proposed Consolidation with REG.”

Feedstock Cost and Supply

The cost of feedstock is the largest single component of the cost of biodiesel production, accounting for 70% to 90% of the overall cost of producing biodiesel. As a result, increased prices for feedstock greatly impact the biodiesel industry. Soybean oil is the most abundant and widely used feedstock available in the United States. Our plant is capable of pretreating animal fats ~~and~~ and crude vegetable oil, including soybean oil and corn oil, and utilizing these feedstocks to ~~produce~~ produce biodiesel. Our plant is also capable of pretreating used cooking oils. Animal fat has ~~typically~~ typically been less expensive to acquire than soybean oil and, accordingly, we attempt to use as much animal fat feedstock as possible when producing our biodiesel when such use would return greater profit margins. Demand for animal fat-based biodiesel, however, typically declines in the colder fall and winter months and, accordingly, our use of animal fats may decline during those months. Most of the feedstock used in our biodiesel production in fiscal year ~~2009~~2010 was animal fats. In ~~fiscal~~the ~~year~~past ~~2009,~~ we have also ~~began~~utilized ~~utilizing a small amount of used~~ cooking oils as a lower-cost feedstock alternative to soybean oil. ~~Due to legislation that took effect on January 1,~~ 2009 that permits used cooking oils to qualify for the $1.00 per gallon biodiesel tax credit, rather than a reduced 50-cent tax credit under previous law, the economic viability of using used cooking oil improved in 2009. We anticipate that we may continue to use used cooking oils as a feedstock source for so long as its use returns greater profit margins as compared to soybean oil.

In the event we cannot obtain adequate supplies of feedstock at affordable prices, our ability to operate profitably may be materially impaired. Increased feedstock costs may ~~continue to~~ reduce our revenues and the value of our units.

Animal Fats and Other Alternative Feedstocks

Our plant is capable of utilizing animal fats to produce biodiesel. In 2010, approximately 75.8% of our total feedstock usage consisted of a particular animal fat, choice white grease, as compared to 2009 and 2008, when 68.8% and 57.0%, respectively, of our total feedstock usage consisted of choice white grease. Animal fat prices peaked in the summer of 2008 and then fell as domestic and global economic conditions worsened. More recently animal fat prices have risen again and remain above their historical average. We have also used small amounts of bacon fat, beef tallow, poultry fat, lard, yellow grease, and used cooking oil as feedstocks for our biodiesel.

It takes approximately 7.75 pounds of choice white grease to make a gallon of biodiesel. In 2010, the average price we paid for choice white grease was 28.32 cents per pound. By contrast, we paid an average of 24.92 and 39.50 cents per pound for choice white grease in 2009 and 2008, respectively.

~~Animal~~The ~~Fats~~charts below show U.S. lard and ~~Other~~edible ~~Alternative~~tallow ~~Feedstocks~~prices over the past ten years and for each month from February 2010 to January 2011.

~~Our~~Lard plant is capable of utilizing animal fats to produce biodiesel. The primary animal fat that we used as a feedstock in 2009 was choice white grease. In 2009, approximately 68.8% of our total feedstock usage consisted of a particular animal fat, choice white grease. The percentage of our total feedstock usage that consists of choice white grease has increased significantly over the past three years. In fiscal years 2008 and ~~2007,~~Edible ~~choice~~Tallow ~~white~~Prices ~~grease comprised approximately 57% and 6.7% of our total feedstock usage, respectively. As a result of increased demand~~ for ~~animal fats, animal fat prices have increased over~~ the ~~past several years. Animal fat prices peaked in~~Past ~~the~~10 ~~summer of 2008, and have since fallen as domestic and global economic conditions have worsened.~~Years Although prices for animal fats have declined from their peak, animal fat prices remain above their historical average. We have also used small amounts of bacon fat, beef tallow, poultry fat, lard, yellow grease, and used cooking oil as feedstocks for our biodiesel.

It takes approximately 7.75 pounds of choice white grease to make a gallon of biodiesel. In 2009, the average price we paid for choice white grease was 24.92 cents per pound. By contrast, we paid an average of 36.92 and 25.85 cents per pound for choice white grease in 2008 and 2007, respectively. The chart below shows the average price of choice white grease for each month during the previous twelve-month period.


	Lard Price			Edible Tallow
Marketing Year	(cents/lb.)			Price (cents/lb.)
2001/2002		13.55			13.87
2002/2003		18.13			17.80
2003/2004		26.13			22.37
2004/2005		21.80			18.48
2005/2006		21.74			18.16
2006/2007		28.43			27.32
2007/2008		40.85			41.68
2008/2009		26.72			25.47
2009/2010		31.99			32.26
2010/2011		44.5-48.5	⁽¹⁾		45.0-49.0	⁽¹⁾

~~Choice~~Lard ~~White~~and ~~Grease~~Edible Tallow Prices for Preceding Twelve-Month Period

	Price
	Lard Price			Edible Tallow
Month	(cents ~~per~~ /lb.)			Price (cents/lb.)
March 2009		22.62
February 2010		28.25			29.42
April 2009		19.46
March 2010		32.95			33.73
May 2009		24.84
April 2010		33.95			35.14
June 2009		29.06
May 2010		34.24			35.33
July 2009		28.77
June 2010		32.98			35.72
August 2009		28.79
July 2010		31.42			32.50
September 2009		28.71
August 2010		33.33			33.54
October 2009		24.27
September 2010		43.59			35.02
November 2009		22.53
October 2010		46.64			37.00
December 2009		23.68
November 2010		37.32			41.75
January 2010		17.95
December 2010		38.30			45.00
February 2010		26.79
January 2011		48.50	(1)		50.10	(1)


⁽¹⁾		Preliminary Price

Source: USDA, Oil Crops Outlook Report, February 10, 2011

Soybean Oil

Like many other biodiesel plants, our plant is capable of producing biodiesel from crude vegetable oils, including soybean oil. Due to the recent high cost of soybean oil, however, we ~~have~~ have significantly limited our use of soybean oil. ~~Between~~After ~~1980~~peaking ~~and~~in ~~2008,~~ the ~~average~~summer ~~price for soybean oil was approximately 23.5 cents per pound. Following a period~~ of ~~significant~~2008 ~~volatility~~and insharply declining thereafter, soybean oil prices ~~in 2008, the price~~ remained relatively stable throughout ~~fiscal year~~ 2009. ~~In fiscal~~and ~~year 2009,~~ the first ~~price~~nine ofmonths ~~soybean oil ranged from a low~~ of 282010.23 ~~cents per pound in March 2009~~However, tomore ~~a high of 36.81 cents per pound in December 2009~~recently, ~~according~~soybean tooil ~~USDA’s~~prices ~~February 2010~~have ~~Oil Crops~~again ~~Outlook~~risen ~~report~~sharply. ~~That report also indicates that the average January 2010 soybean oil price~~ ~~was~~This ~~approximately~~increase ~~34.88~~is ~~cents~~likely ~~per~~attributable ~~pound.~~to ~~The~~projected ~~relative~~decreases ~~stability~~ in soybean oil ~~prices likely resulted from changing global economic conditions triggered by the sharp decline in petroleum prices~~stock, ~~the~~combined ~~failure of various major U.S. financial institutions, the tightening of credit markets,~~with ~~and~~increasing ~~the~~demand ~~economic~~from ~~downturn~~export ~~experienced by the U~~markets.S. ~~and other countries.~~ The charts below show U.S. soybean oil prices over the past ten years and for ~~the~~each ~~past~~month ~~twelve~~from ~~months:~~February 2010 to January 2011.

U.S. Soybean Oil Prices for the Past10 Years

Marketing	Price
Year	(cents)
1999/00		15.60
2000/01		14.15
2001/02		16.46
2002/03		22.04
2003/04		29.97
2004/05		23.01
2005/06		23.41
2006/07		31.02
2007/08		52.03
2008/09		32.16
2009/10		33.5-36.5	(1)

U.S. Soybean Oil Pricesfor Preceding Twelve-MonthPeriod

	Price
Month	(cents)
February		28.93
March		28.23
April		32.76
May		36.06
June		35.66
July		31.08
August		33.69
September		30.96
October		33.15
November		36.59
December		36.81
January		34.88	(1)

(1) Preliminary Price

Source: USDA, Oil Crops Outlook Report, February 16, 2010

~~It takes more than seven pounds of soybean oil to make a gallon of biodiesel~~U. ~~Increases in soybean oil costs significantly reduce the potential profit margin on each gallon of biodiesel we sell produced from soybean oil~~S. ~~Any~~Soybean ~~increase~~Oil inPrices the price of soybean oil without a corresponding increase in the price of biodiesel will negatively impact our ability to generate revenues and profits. Due to high soybean oil prices, we have been using alternative forms of feedstock as substitutes for ~~soybean oil to~~ the ~~greatest extent possible. These substitutes include animal fat~~Past ~~and~~10 ~~used cooking oil, as discussed above. However, prices for these alternative feedstocks have~~Years tended to increase along with the cost of soybean oil. Accordingly, we will continue to explore additional low-cost feedstocks. In 2009, only 8.5% of our total feedstock used consisted of soybean oil, which is a significant decrease from 2008 and 2007, in which 29.3% and 87.4%, respectively, of our total feedstock used was soybean oil.


	Price
Marketing Year	(cents/lb.)
2001/2002		16.46
2002/2003		22.04
2003/2004		29.97
2004/2005		23.01
2005/2006		23.41
2006/2007		31.02
2007/2008		52.03
2008/2009		32.16
2009/2010		35.95
2010/2011		51.0-55.0	⁽¹⁾

U.S. Soybean Oil Prices
for Preceding Twelve-Month
Period


	Price
Month	(cents/lb.)
February 2010		34.69
March 2010		36.39
April 2010		37.11
May 2010		35.41
June 2010		34.47
July 2010		35.07
August 2010		37.57
September 2010		39.21
October 2010		44.02
November 2010		47.62
December 2010		51.51
January 2011		53.84	⁽¹⁾


⁽¹⁾		Preliminary Price

Source: USDA, Oil Crops Outlook Report, February 10, 2011

It takes more than seven pounds of soybean oil to make a gallon of biodiesel. Increases in soybean oil costs significantly reduce the potential profit margin on each gallon of biodiesel we sell produced from soybean oil. Any increase in the price of soybean oil without a corresponding increase in the price of biodiesel will negatively impact our ability to generate revenues and profits. Due to high soybean oil prices, we have been using alternative forms of feedstock as substitutes for soybean oil to the greatest extent possible. These substitutes include animal fat and used cooking oil, as discussed above. However, prices for these alternative feedstocks have tended to increase along with the cost of soybean oil. In 2010, only a de minimis amount of our total feedstock used consisted of soybean oil, which is a significant decrease from 2009 and 2008, in which 8.4% and 29.3%, respectively, of our total feedstock used was soybean oil.

In the event we cannot obtain adequate supplies of feedstock at affordable costs for sustained periods of time, then we may be forced to shut down the plant temporarily or permanently. Shut downs and increased feedstock costs may reduce our revenues from operations which could decrease or eliminate the value of our units.

Feedstock Cold Flow Properties

Because biodiesel has different cold flow properties depending on the type of feedstock used in its manufacture, cold flow also becomes a primary factor in determining the type of feedstock to use. “Cold flow” refers to a fuel’s ability to flow easily at colder temperatures and is an important consideration in producing and blending biodiesel for use in colder climates and in colder seasons. The “cloud point” is the temperature at which small solid crystals are visually observed as the fuel is cooled. When air temperatures fall below the cloud point, these crystals may plug fuel filters or drop to the bottom of a storage tank; however, fuels can usually be pumped at temperatures below the cloud point. The “pour point” for a fuel is the temperature at which the fuel contains so many crystals that it is essentially a gel and will no longer flow. Therefore, a lower pour point temperature means the fuel flows better in colder temperatures. The following table represents the cloud points and pour points for different types of fuels:


Type of Fuel	Cloud Point		Pour Point
Soy-based Biodiesel (B100)		32ºF		25ºF
Choice white grease-based Biodiesel (B100)		48ºF		42ºF
Beef tallow-based Biodiesel (B100)		61ºF		59ºF
No. 2 Ultra Low Sulfur Petroleum Diesel		6ºF		-30ºF
B2 Soy Blend with No. 2 Diesel		7ºF		-25ºF

To provide biodiesel with acceptable cloud points and pour points in cold weather, we will need to blend our biodiesel with petroleum-based diesel. Generally, biodiesel that is used in blends of 2% to 20% will provide acceptable cold weather properties for the Iowa market. However, we expect that our biodiesel marketer will sell our biodiesel throughout the nation, and potentially abroad. Cold flow additives can also be used seasonally to provide a higher level of cold weather protection, similar to the current practice with conventional diesel fuel. Demand for our biodiesel may diminish in colder climates and during the colder months as a result of cold flow concerns. We are currently producing biodiesel from animal fats, ~~soybean oil,~~ and ~~used~~soybean ~~cooking~~ oil. ~~Approximately~~ ~~91.5%~~Nearly all of our biodiesel sales for fiscal year ~~2009~~2010 were animal fat biodiesel blends, which is aan ~~significant~~ increase over the previous two years. In fiscal years ~~2008~~2009 and ~~2007~~2008, approximately 6991.85% and 969.78% of our biodiesel sales were animal fat biodiesel blends. ~~We have also~~ produced a minimal amount of biodiesel from used cooking oil during fiscal 2009 and 2008. Since used cooking oil is a vegetable oil, biodiesel produced from used cooking oil has similar cold-flow properties to biodiesel produced from other vegetable oils, such as soybean oil. As a result, biodiesel produced from used cooking oil may be used in colder temperatures.

Hedging

Due to fluctuations in the price and supply of feedstock, we utilize forward contracting and hedging strategies to manage our commodity risk exposure and to optimize finished product pricing and supply. Hedging means protecting the price at which we buy feedstock and the price at which we will sell our products in the future. It is a way to attempt to reduce the risk caused by price fluctuations that result from our purchase of feedstock in the agricultural market and the sale of our biodiesel in the energy market. These markets are largely unrelated, so an increase in feedstock costs does not generally translate into an increase in the price of our biodiesel. The effectiveness of such hedging activities is dependent upon, among other things, the cost of feedstock and our ability to sell sufficient amounts of biodiesel. Although we attempt to link hedging activities to sales plans and pricing activities, such hedging activities can themselves result in costs because price movements in feedstock contracts are highly volatile and are influenced by many factors that are beyond our control. We may incur such costs and they may be significant. The market for soybean oil trades 18 months into the future. The animal grease ~~market~~ market has no futures trade. However, there is a quoting system through the USDA that provides for ~~price~~ price discovery for animal grease. There is not enough volume of biodiesel currently produced to ~~justify~~ justify a futures market. As such, there is no spot biodiesel price, making current price ~~discovery~~ discovery limited. In late 2007, our Board of Directors formed a Risk Management Committee, which ~~has~~ enacted a ~~strict~~ policy, intended to balance our hedging activities.

Pretreatment Costs

Crude vegetable oils, such as crude soy and corn oil, and all animal fats need to be pretreated before being processed into biodiesel. Pretreatment removes the impurities from crude vegetable oils, crude animal fats, and waste greases, and prepares the feedstock to go through the biodiesel production process. Some types of feedstock need more treatment than others. For example, virgin soybean oil can be easier and cheaper to pretreat than turkey fat, and turkey fat can be easier and cheaper to pretreat than beef tallow. The cost of the process is driven by the structure of the feedstock and the impurities in the feedstock.

For soybean oil, the pretreatment process results in refined and bleached (RB) oil. The price differential between RB oil and crude soy oil ~~varied~~is ~~between~~ordinarily 12approximately ~~and~~5 15 cents per pound ~~in 2009~~. Our processing plant has pretreatment capabilities allowing us to utilize crude vegetable oil and many types of fat or grease as feedstock in our facility. This added flexibility allows us to choose the feedstock that will produce biodiesel in the most cost-effective manner possible.

Utilities, Energy & Infrastructure

Our biodiesel plant requires a significant and uninterrupted supply of electricity, natural gas, and water to operate. We entered into agreements with providers of these utilities as follows:

Electricity. Our plant requires a continuous supply of electricity. We entered into an an Electrical Services Agreement with Sac County Electric Cooperative (now known as Raccoon Valley Electric Cooperative) to supply our electricity. Under the agreement, we pay Sac County Electric Cooperative a facility charge of $2,100 per month, plus regular rates for delivery of electricity to our plant. Our current delivery rate is $0.~~0567~~0686 per kilowatt.

Water. We require a significant supply of water—approximately 100,000 gallons of water per day. The City of Wall Lake drilled a well on the property adjacent to the plant to supply process water for our use. The City of Wall Lake has run a line from its pretreatment plant to our site to supply us with potable water. The rate currently charged by the City of Wall Lake for both process water and potable water is $1.00 per 1,000 gallons.

Natural Gas. Natural gas is a significant input to our manufacturing process. During the ~~2009~~2010 fiscal year, our natural gas usage was approximately ~~109~~43,~~204~~852 million British thermal units (“mmBTU”). Because the volume of animal fat processed through our plant has a large impact on the volume of gas we use, we estimate a usage between ~~100~~120,000 mmBTU and ~~120~~160,000 mmBTU for the ~~2010~~2011 fiscal year. ~~We anticipate that we will average between 7,000 and 11,000 mmBTU per month.~~ In fiscal year ~~2009~~2010, the average price that we paid for natural gas was $68.4230 per mmBTU. Although the price we will pay for our natural gas during the ~~2010~~2011 fiscal year is uncertain, management expects that the cost will increase from the cost we experienced in ~~2009~~2010.

Patent, Trademarks and Licenses.

As part of our design-build agreement with REG, REG agreed to provide us a perpetual and irrevocable license to use any and all of its technology and propriety property related to or incorporated into the plant in connection with our operation, maintenance, and repair of the plant. Since this license is irrevocable, weneither dothe ~~not~~expiration ~~expect~~of ~~REG’s~~the ~~termination~~term of the MOSA ornor the rejection of the proposed consolidation with REG is expected to affect our license of the REG proprietary technology that has been incorporated into the plant.

Working Capital

In order to protect the price of our finished biodiesel, we enter into hedging transactions that are designed to limit our exposure to decreases in the price of biodiesel. In 2009 and 2010, we sought to minimize the risks from fluctuations in the price of biodiesel by using derivative instruments such as cash, futures, and option contracts for home heating oil. There is currently no futures market for biodiesel. Instead, we used home heating oil derivatives. Home heating oil is high sulfur diesel, which is the closest commodity to biodiesel for which there is a futures market. More recently, we have entered into flat price future sales contracts with our product marketer, ADM, to limit our exposure to decreases in the price of biodiesel. These flat price sales contracts allow us to lock in a margin at the time that we purchase the feedstock utilized to produce the biodiesel that we have contracted for future sale. This risk management practice has allowed us to avoid dedicating cash to margin calls associated with derivative instruments.

We are also subject to volatility with respect to the prices of our inputs, including feedstock and natural gas. Currently, we are unable to manage our price risk for animal fats as there are no futures contracts available for animal fats, and animal fats suppliers are, to date, unwilling to enter into long-term contracts for animal fats. Volatility in feedstock and natural gas prices can significantly impact the cash we have available for working capital.

Government Regulation and Federal Biodiesel Supports

The biodiesel industry is dependent on economic incentives to produce biodiesel, including federal biodiesel supports. The American Jobs Creation Act of 2004, the Energy Policy Act of 2005, and the Energy Independence and Security Act of 2007 have established the groundwork for biodiesel market development.

Renewable Fuels Standard

The Energy Policy Act of 2005 created the Renewable Fuel Standard (“RFS”) which required refiners to use 7.5 billion gallons of renewable fuels by 2012. The Energy Independence and Security Act of 2007 (“EISA”) expanded the existing RFS (often referred to as “RFS2”) to require the use of 9 billion gallons of renewable fuel in 2008, increasing to 36 billion gallons of renewable fuel by 2022. The ~~EISA~~RFS2 ~~provides~~requires ~~that~~ 600 million gallons of renewable fuel ~~used~~ in 2009 ~~must~~ ~~come~~to come from advanced biofuels other than corn-based ethanol, such as ethanol derived from cellulose, sugar or crop residue, and biomass-based diesel (which includes biodiesel and renewable diesel), increasing to 21 billion gallons in 2022. The ~~EISA~~RFS2 further ~~includes~~included a requirement that 500 million gallons of biodiesel and biomass-based diesel fuel be blended into the national diesel pool in in 2009, gradually increasing to one billion gallons by 2012. In 2008, however, the EPA announced ~~that~~ that the RFS program in 2009 would be applicable to producers and importers of gasoline only, which meant that the 500 million gallons of biomass-based diesel required by the RFS2 ~~under EISA~~ was not required to be blended into U.S. fuel supplies in 2009. This was due to the fact that the regulatory structure of the original RFS program ~~does~~did not provide a mechanism for implementing the ~~EISA~~ RFS2 requirement for the use of 500 million gallons of biomass-based diesel. On February 3, 2010 the EPA issued final rules under RFS2. The final rules addressed this issue by combining the 2010 biomass-based diesel requirement of 0.65 billion gallons with the 2009 biomass-based diesel requirement of 0.5 billion gallons to require that obligated parties meet a combined 2009/2010 requirement of 1.15 billion gallons by the end of the 2010 compliance year. We anticipate that some of the cellulosic requirements that cannot be achieved due to lack of technology may be allowed to be filled by biodiesel. Thus, we anticipate that biodiesel requirements under the 2011 RFS2 may exceed the stated 800 million gallon requirement.

RFS2 required that advanced biofuels reduce life-cycle greenhouse gas emissions by 50% relative to gasoline sold or distributed for transportation. In ~~February~~May ~~2010~~2009, the EPA ~~published~~proposed ~~final~~rules that ~~regulations~~took tointo ~~implement~~account ~~the~~indirect ~~RFS2~~land ~~program.~~use ~~The~~changes ~~new~~when calculating greenhouse gas emissions. Based ~~rules~~on ~~set~~the ~~volume~~EPA’s ~~standards~~preliminary ~~with~~findings, ~~respect~~soy-based biodiesel was found to ~~the~~reduce ~~amount~~greenhouse ofgas ~~specific~~emissions by ~~categories~~only of22%, ~~renewable~~which ~~fuels~~would disqualify it from counting towards the RFS2. Biodiesel from animal fat was found to reduce greenhouse gas emissions by approximately 80%. In ~~particular~~February 2010, the EPA published ~~combined~~new ~~the~~rules ~~2010~~to ~~biomass-based~~confirm ~~diesel~~that ~~requirement~~biodiesel ofmade ~~650 million~~from ~~gallons~~soy oil complies with the ~~2009~~50% ~~biomass-based~~threshold ~~diesel~~for reduction ~~requirement~~in ofgreenhouse ~~500 million~~gas ~~gallons~~emissions and therefore soy-based biodiesel qualifies to ~~require~~count toward the ~~use~~RFS2 ~~of 1~~requirement.~~15 billion gallons~~ ofThe ~~biomass-based~~EPA ~~diesel~~cautioned bythat it is committed to reassess these determinations as the ~~end~~state of ~~2010~~scientific knowledge continues to evolve.

~~EISA~~The ~~required~~RFS2 asprogram ~~part~~recently ofgained additional certainty when on December 21, 2010, a lawsuit challenging the RFS2 regulations was dismissed. We anticipate that ~~advanced~~the ~~biofuels~~RFS2 ~~reduce~~may ~~life-cycle~~increase ~~greenhouse~~demand ~~gas~~for ~~emissions~~biodiesel byin ~~50%~~the ~~relative~~long-term, toas ~~gasoline~~it ~~sold~~sets ora ~~distributed~~minimum usage requirement for ~~transportation.~~biodiesel Inand ~~May 2009~~other types of biomass-based diesel. However, there can be no assurances that the ~~EPA~~price of biodiesel will be ~~proposed~~increased ~~rules~~by ~~that~~the ~~took~~RFS2. ~~into~~As ~~account~~of ~~indirect~~January 27, ~~land~~2011, ~~use~~the ~~changes~~Biodiesel ~~when~~Magazine ~~calculating~~website ~~greenhouse~~estimated ~~gas~~that ~~emissions~~national biodiesel production capacity was approximately 2.84 billion ~~Based~~gallons onper year, which already exceeds the ~~EPA’s~~2012 ~~preliminary~~biodiesel ~~findings,~~and ~~soy~~biomass-based ~~biodiesel~~diesel ~~was~~use ~~found~~mandate torequired ~~reduce~~by RFS2. ~~greenhouse~~Accordingly, ~~gas~~there ~~emissions~~is byno ~~only~~assurance ~~22%,~~that ~~which~~additional ~~would~~production ~~disqualify~~of itbiodiesel ~~from~~and ~~counting~~biomass-based ~~towards~~diesel will ~~the~~not continually outstrip any additional demand for biodiesel that might be created by RFS2. We ~~Biodiesel~~also ~~from~~anticipate ~~animal~~that ~~fat~~the ~~was~~expanded ~~found~~RFS2 towill ~~reduce~~be ~~greenhouse~~primarily ~~gas~~satisfied ~~emissions~~ by ~~approximately~~ethanol, ~~80%.~~including Inboth ~~February 2010,~~corn-based ~~the~~and ~~EPA~~other ~~published~~types ~~new~~of ~~rules~~ethanol. toThe ~~confirm~~amount ~~that~~of ~~biodiesel~~corn-based ~~made~~ethanol ~~from~~that ~~soy~~may ~~oil~~be ~~complies with~~used to satisfy the ~~50%~~RFS2 ~~threshold~~requirements ~~for~~is ~~reduction~~capped at 15 billion gallons starting in ~~greenhouse~~2015 ~~gas~~and, ~~emissions~~accordingly, other types of ethanol, including cellulose-based ethanol, will likely be used to satisfy any requirements over and ~~therefore~~above ~~soy~~the 15 billion gallon corn-based ~~biodiesel~~ethanol cap. Furthermore, we have not ~~qualifies~~yet tosignificantly ~~count~~benefited ~~toward~~from RFS2 because the biodiesel tax credit was expired when the final RFS2 ~~requirement~~regulations were released. ~~The~~Because ~~EPA~~the ~~cautioned~~biodiesel ~~that~~tax itcredit iswas ~~committed~~only toreinstated ~~reassess~~and extended ~~these~~in ~~determinations~~December 2010, aswe ~~the~~are ~~state~~still ofnot ~~scientific~~certain ~~knowledge~~if ~~continues~~this measure will be enough to ~~evolve~~re-stimulate the biodiesel market.

The RFS may increase demand for biodiesel in the long-term, as it sets a minimum usage requirement for biodiesel and other types of biomass-based diesel. There can be no assurances, however, that demand for biodiesel will be increased by the RFS or RFS2. As of June 22, 2009, the National Biodiesel Board estimated that national biodiesel production capacity was approximately 2.69 billion gallons per year, which already exceeds the 2012 biodiesel and biomass-based diesel use mandate contained in EISA. Accordingly, there is no assurance that additional production of biodiesel and biomass-based diesel will not continually outstrip any additional demand for biodiesel that might be created by the RFS program. Furthermore, any additional delays in the EPA’s implementation of the RFS2 biomass-based diesel rules could hinder the stimulation of additional biodiesel demand.

The RFS system will be enforced through a system of registration, recordkeeping and reporting requirements for obligated parties and renewable fuel producers (“RIN generators”), as well as any party that procures or trades renewable identification numbers, either as part of their renewable fuel purchases or separately. Any person who violates any prohibition or requirement of the RFS program may be subject to civil penalties for each day of each violation. For example, a failure to acquire sufficient RINs to meet a party’s renewable fuels obligation would constitute a separate day of violation for each day the violation occurred during the annual averaging period. The enforcement provisions are necessary to ensure the RFS program goals are not compromised by illegal conduct in the creation and transfer of RINs. The EPA has assigned “equivalence values” to each type of renewable energy fuel in order to determine compliance with the RFS. The equivalence values used ethanol as the base-line measurement (such that one gallon of ethanol is equivalent to one credit towards RFS compliance) and assigned biodiesel an equivalence value of 1.5, such that each gallon of biodiesel used by an obligated party will be equal to one and one-half gallons credit towards its RFS compliance.

Production of biofuels, including both biodiesel and ethanol, may continue to increase at a faster pace than the RFS2 requirements. Should the supply of biofuels increase more rapidly than demand for biofuels, including biodiesel, it may lead to decreases in the selling price of biodiesel.

Federal Biodiesel Supports and Programs

The Energy Policy Act of 2005 provided for a tax subsidy for small agri-biodiesel producers with total annual production capacities of 60 million gallons or less. The subsidy is applicable to the first 15 million gallons of biodiesel produced annually and is available through December 31, 2010. The subsidy is equivalent to a 10 cent credit per gallon of biodiesel produced annually and the maximum annual subsidy per biodiesel producer is $1.5 million. This tax credit may foster additional growth and increase competition among biodiesel producers whose plant capacity does not exceed 60 million gallons per year. Because we are organized as a limited liability company, this credit passes through to our members and may be used as a credit against their federal income tax liability, subject to various limitations.

The American Jobs Creation Act of 2004 originally created the biodiesel mixture tax credits, including the excise tax credit and the income tax credit (collectively, the “blenders’ credit). That legislation, as amended, provides an excise tax credit of $1.00 per gallon and an income tax credit of $1.00 per gallon for biodiesel mixtures. The two credits are coordinated so that a taxpayer cannot claim both credits for the same biodiesel. The biodiesel blenders’ credit may be claimed in both taxable and nontaxable markets, including exempt fleet fuel programs and off-road diesel markets. The desired effect of the blenders’ credit is to streamline the use of biodiesel and encourage petroleum blenders to blend biodiesel as far upstream as possible, which will allow more biodiesel to be used in the marketplace. The American Jobs Creation Act also streamlined the tax refund system for below-the-rack blenders to allow a tax refund of the blenders’ credit on each gallon of biodiesel blended with diesel (dyed or undyed) to be paid within 20 days of blending. Below-the-rack blenders are those blenders that market fuel that is for ground transportation engines and is not in the bulk transfer system. The biodiesel blenders’ credit expired on December 31, 2009. On December 9, 2009, the U.S. House of Representatives passed an extension of the blenders’ credit. That legislation would extend the blenders’ credit for one-year, through December 31, 2010. It would also make the extension retroactive to cover sales of biodiesel that occur after December 31, 2009. The Senate included an identical extension in legislation that it passed on March 10, 2010, but the Senate legislation must now be reconciled with the version passed by the House. It remains unclear if and when this reconciliation process will occur. The loss of the blenders’ credit decreases our revenue and has a significant adverse impact on our ability to generate a profit. Therefore, the expiration of this vital incentive could reduce the value of your investment.

The Energy Policy Act of 2005 also created an incentive for alternative fuel refueling stations. The provision permits taxpayers to claim a 30% credit (up to $30,000) for the cost of installing clean-fuel vehicle refueling property to be used in a trade or business of the taxpayer, or installed at the principal residence of the taxpayer. Under the provision, clean fuels are any fuel that is at least 85% ethanol, natural gas, compressed natural gas, liquefied natural gas, liquefied petroleum gas, or hydrogen, and any mixture of diesel fuel containing at least 20% biodiesel. The provision is effective for property placed in service after December 31, 2005 and before January 1, 2010. Most recently, the American Recovery and Reinvestment Act of 2009 increased the credit to 50% (up to $50,000) for refueling property placed in service in 2009 or 2010. While it is unclear how this credit will affect the demand for biodiesel in the short-term, it may help raise consumer awareness of alternative sources of fuel and could positively impact future demand for biodiesel.

The ~~Farm,~~RFS2 ~~Nutrition~~system ~~and~~is ~~Bioenergy~~enforced ~~Act~~through a system of ~~2008~~registration, ~~reauthorized~~recordkeeping ~~the~~and ~~Commodity~~reporting requirements ~~Credit~~for ~~Corporation~~obligated parties and renewable fuel producers, as well as any party that procures or ~~CCC~~trades renewable identification numbers (“RINs”), ~~Bioenergy~~either ~~Program~~as part of their renewable fuel purchases or separately. ~~The~~Any person who violates any prohibition or requirement of the RFS program may ~~provides~~be ~~$55.0 million~~subject into ~~mandatory~~civil ~~funding~~penalties infor each day of ~~2009 and~~each ~~2010~~violation. For example, ~~$85.0 million~~a infailure ~~funding~~to inacquire sufficient ~~2011,~~RINs ~~and~~to ~~$105.0 million~~meet ina ~~funding~~party’s inrenewable ~~2012~~fuels ~~for~~obligation ~~producers~~would constitute a separate day of ~~advanced~~violation ~~biofuels~~for ~~derived~~each ~~from~~day ~~renewable~~the ~~biomass,~~violation ~~including~~occurred ~~biodiesel,~~during ~~other~~the ~~than~~annual ~~corn~~averaging ~~kernel~~period. The enforcement ~~Biodiesel~~provisions ~~producers~~are ~~must~~necessary ~~apply~~to ~~for~~ensure ~~this~~the ~~credit~~RFS ~~and~~program ~~will~~goals beare ~~paid~~not ~~based~~compromised onby illegal conduct in the ~~quantity~~creation and ~~duration~~ transfer of ~~advanced~~RINs. ~~biofuel~~The ~~production~~EPA ~~and~~has onassigned ~~net~~“equivalence ~~nonrenewable~~values” ~~energy~~to ~~content~~each type of renewable ~~the~~energy ~~advanced~~fuel ~~biofuel~~in order to determine compliance with the RFS. The equivalence values used ~~Funding~~ethanol toas athe ~~single~~base-line ~~eligible~~measurement ~~producer~~(such ~~may~~that beone ~~limited~~gallon of ethanol is equivalent to ~~ensure~~one ~~equitable~~credit towards ~~distribution~~RFS compliance) and assigned biodiesel an equivalence value of ~~funding~~1. ~~Producers~~5, ~~with~~such ~~production~~that ~~capacity~~each gallon of ~~less~~biodiesel ~~than~~used ~~150 million~~by ~~gallons~~an obligated party will be ~~eligible~~equal ~~for~~to ~~95%~~one ofand ~~the~~one-half gallons credit towards ~~funds~~its ~~provided~~RFS ~~under~~compliance. A market has established in the ~~program~~petroleum diesel industry for trading these RINs. AsThus, the value of ~~December 31,~~the ~~2009,~~RINs ~~WIE~~can ~~had~~sometimes ~~received~~offset ~~$298~~higher biodiesel pricing,~~476~~ ~~under~~which ~~the~~can make ~~program~~biodiesel more competitive on the market with petroleum diesel.

Other Federal Biodiesel Supports and Programs

The Energy Policy Act of 2005 provided for a tax subsidy for small agri-biodiesel producers with total annual production capacities of 60 million gallons or less. The subsidy is applicable to the first 15 million gallons of biodiesel produced annually and is available through December 31, 2011. The subsidy is equivalent to a 10 cent credit per gallon of biodiesel produced annually and the maximum annual subsidy per biodiesel producer is $1.5 million. This tax credit may foster additional growth and increase competition among biodiesel producers whose plant capacity does not exceed 60 million gallons per year. Because we are organized as a limited liability company, this credit passes through to our members and may be used as a credit against their federal income tax liability, subject to various limitations.

The American Jobs Creation Act of 2004 originally created the biodiesel mixture tax credits, including the excise tax credit and the income tax credit (collectively, the “blenders’ credit”). That legislation, as amended, provides an excise tax credit of $1.00 per gallon and an income tax credit of $1.00 per gallon for biodiesel mixtures. The two credits are coordinated so that a taxpayer cannot claim both credits for the same biodiesel. The biodiesel blenders’ credit may be claimed in both taxable and nontaxable markets, including exempt fleet fuel programs and off-road diesel markets. The desired effect of the blenders’ credit is to streamline the use of biodiesel and encourage petroleum blenders to blend biodiesel as far upstream as possible, which will allow more biodiesel to be used in the marketplace. The American Jobs Creation Act also streamlined the tax refund system for below-the-rack blenders to allow a tax refund of the blenders’ credit on each gallon of biodiesel blended with diesel (dyed or undyed) to be paid within 20 days of blending. Below-the-rack blenders are those blenders that market fuel for ground transportation engines and not in the bulk transfer system. The blenders’ credit expired on December 31, 2009. Only in December 2010 was the credit reinstated retroactively for 2010 and extended through December 31, 2011. Due to the recent nature of this change, it remains uncertain whether a one-year extension of the blenders’ credit will be sufficient to stimulate demand for biodiesel. We do not anticipate benefitting very much from the retroactive application of the biodiesel tax credit in 2010 due to our limited sales during the year.

The Farm, Nutrition and Bioenergy Act of 2008 reauthorized the Commodity Credit Corporation, or CCC, Bioenergy Program. The program provides $55.0 million in mandatory funding in each of 2009 and 2010, $85.0 million in funding in 2011, and $105.0 million in funding in 2012 for producers of advanced biofuels derived from renewable biomass, including biodiesel. Biodiesel producers must apply for this credit and are paid based on the quantity and duration of advanced biofuel production and on net nonrenewable energy content of the advanced biofuel. Funding to a single eligible producer may be limited to ensure equitable distribution of funding. Producers with production capacity of less than 150 million gallons are eligible for 95% of the funds provided under the program. We received approximately $298,476 in funds pursuant to the CCC Bioenergy Program in 2009 and approximately $210,509 during 2010.

State Legislation

Several states, including Iowa, are currently researching and considering legislation to increase the amount of biodiesel used and produced in their states. Minnesota was the first state to mandate biodiesel use. The Minnesota legislation, which became effective in September 2005, required that all diesel fuel sold in the state contain a minimum of 2% biodiesel. ~~Effective~~In ~~May 1~~2008, ~~2009,~~Minnesota ~~the~~passed ~~Minnesota mandate~~additional ~~increased~~legislation to increase ~~5%.~~biodiesel ~~The~~content 5%of ~~soy~~diesel ~~biodiesel~~fuel ~~blend~~sold ~~has~~in ~~nearly~~ the ~~same~~state ~~cold~~from ~~flow properties as No.~~ 2% ~~petroleum~~to ~~diesel~~20%, which ~~allows~~is itthe tohighest ~~be used~~ in ~~Minnesota’s colder climate much~~ the ~~same~~nation, ~~as petroleum~~by ~~diesel throughout the year~~2015. In ~~January 2010~~2009, ~~however, due to extreme cold temperatures in~~ Minnesota ~~and~~increased ~~reports~~its ofbiodiesel ~~clogged~~blend ~~fuel~~requirements ~~filters,~~to ~~the~~mandate ~~Minnesota Department of Commerce temporarily~~all ~~waived the requirement that No. 1~~ diesel fuel becontain ~~blended~~a ~~with~~minimum of 5% biodiesel~~. The waiver was effective from January 15~~, ~~2010~~however; tothe ~~March 15,~~state ~~2010.~~has ~~The~~occasionally ~~waiver~~had ~~did not apply~~ to ~~No. 2 diesel fuel.~~suspend ~~The~~this ~~Minnesota~~requirement ~~biodiesel~~during ~~mandate~~winter ~~will~~months, ~~increase~~due to ~~10%~~cold inflow ~~2012 and to 20% in 2015~~concerns. ~~The~~Similarly, ~~increases~~ in ~~2012~~ ~~and 2015 are subject to the satisfaction of certain statutory conditions. In~~ July 2008, Massachusetts ~~enacted~~signed a law that requires all home heating oil and diesel fuel in the state to consist of 2% biodiesel by 2010 and 5% biodiesel by 2013. ~~The~~However, the Massachusetts Department of ~~Energy~~ Energy Resources ~~has~~will ~~announced~~be entitled to delay those requirements if it determines that ~~the~~fuels ~~mandate~~are ~~will~~not available ~~begin~~to onmeet ~~July 1,~~these ~~2010~~requirements.

In May 2006, ~~several~~Iowa ~~laws~~passed ~~were~~legislation ~~passed~~(later updated in ~~Iowa~~2009) ~~for~~that ~~the~~creates ~~purpose~~a ofrenewable ~~expanding~~fuels standard ~~and~~that ~~funding consumer~~requires ~~access~~10% toof ~~biodiesel~~the ~~and~~fuel ~~ethanol-blended~~used ~~fuels~~in ~~through~~Iowa ato ~~RFS~~be ~~and~~from arenewable ~~series~~sources ofby ~~retail~~2009 ~~tax~~and ~~credits.~~increasing ~~These~~the ~~laws~~renewable ~~provide~~fuel ~~retailers~~standard ~~with~~to an25% ~~opportunity~~by ~~for~~2021. ~~cost-sharing~~While ~~grants.~~this Indoes ~~addition~~not require biodiesel use, ~~the~~it ~~laws~~may ~~provide~~significantly ~~certain~~increase ~~incentives~~renewable ~~such~~fuels asuse anin Iowa, ~~RFS~~which ~~starting~~may atinclude ~~10%~~increased biodiesel use in ~~2009~~Iowa. ~~and~~The ~~increasing~~Iowa ~~to 25%~~legislation byincludes ~~2019;~~tax acredits ~~retail~~to ~~tax~~help ~~credit~~retailers ~~for~~meet ~~biodiesel~~this ~~blends~~requirement, such as an incentive of $0.03 per gallon of biodiesel sold for retailers ~~whose diesel~~who ~~sales~~sell ~~include~~at least 50% ~~or greater~~ biodiesel blends;. ~~and~~This anincentive, ~~expanded~~known ~~infrastructure~~as ~~program designed~~the toBiodiesel ~~help~~Blended ~~retailers~~Fuel ~~and~~Tax ~~wholesalers~~Credit, ~~offset~~is ~~the~~also ~~cost~~expected to ofsupport ~~bringing~~biodiesel ~~E85~~sales and ~~biodiesel blends to customers~~production. ~~While this~~This ~~legislation~~incentive ~~does~~is ~~not~~set ~~specifically~~to ~~require~~expire ~~increased use of biodiesel, it encourages renewable fuels usage~~ in ~~Iowa, including increased biodiesel consumption~~2012.

Other states have enacted legislation to encourage (but not require) biodiesel production and use. Several states provide tax incentives and grants for biodiesel-related studies and biodiesel production, blending, and use. In addition, several governors have issued executive orders directing state agencies to use biodiesel blends to fuel their fleets.

Effect of Government Incentives and Regulation

The biodiesel industry and our business depend upon continuation of the state and federal biodiesel supports discussed above. These incentives have supported a market for biodiesel that might disappear without the incentives, as demonstrated in 2010 following the expiration of the federal biodiesel blenders tax credit. Alternatively, the incentives may be continued at lower levels than the levels at which they currently exist. The elimination or reduction of such state and federal biodiesel supports would make it more costly for us to produce our biodiesel and negatively impact our future financial performance.

Furthermore, environmental regulations that may affect our company change frequently. It is possible that the government could adopt more stringent federal or state environmental rules or regulations, which could increase our operating costs and expenses. The government could also ~~adopt~~ adopt federal or state environmental rules or regulations that may have an adverse effect on the use of biodiesel. ~~Furthermore,~~The ~~the~~ Occupational Safety and Health Administration (“OSHA”) ~~governs~~ oversees our plant operations. 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 materially adverse ~~conditions~~ conditions affecting our operations, cash flows, and financial performance. These adverse effects ~~could~~ could decrease or eliminate the value of our units.

Competition with Other Biodiesel Producers

We operate in a very competitive environment. Because biodiesel is a relatively uniform commodity, competition in the marketplace is predominately based on variables other than the product itself, such as price, consistent quality and, to a lesser extent, delivery service. Accordingly, the uniform nature of the product limits the competitive advantage that may be gained based upon unique or improved product features. Nevertheless, the consistent high-quality biodiesel produced by BQ-9000 certified plants is becoming the standard in the industry.

As of the end of calendar year ~~2009~~2010, the ~~National~~U.S. ~~Biodiesel~~Census ~~Board~~ estimates that approximately ~~490~~ 315 million gallons of biodiesel were produced in the United States. As of ~~June~~January 2227, ~~2009~~2011 (the latest date for which data is available), the National Biodiesel Board reported that there were ~~173 operating~~169 operating biodiesel plants in the United States with a total annual production capacity of 2.69 84 billion gallons. ~~One of these plants was undergoing expansion to increase its annual production capacity.~~ Another 2911 plants were reported to be in the planning stages or under construction as of ~~June~~January ~~2009~~2011. The additional combined capacity of these plants under construction or expansion is estimated at ~~427~~385.850 million gallons per year. Accordingly, biodiesel supply may already far exceed demand for biodiesel. Currently, there are 1512 existing biodiesel plants in Iowa, including our plant. However, several of these plants may not be operating, may not be operating at full capacity, or may never begin operations due to economic and market conditions. We expect that additional biodiesel producers may enter the market if the demand for biodiesel increases. As additional biodiesel plants are constructed and brought on line, we expect the supply of biodiesel to increase. The absence of increased demand may cause prices for biodiesel to decrease. We may not be able to compete successfully or such competition may reduce our ability to generate the profits necessary to operate our plant.

We must compete with other biodiesel producers in the industry not just in the sale of our biodiesel, but also in the acquisition of animal fats, soybean oil, and other feedstocks and raw materials. A majority of biodiesel plants, including many of the largest biodiesel producers, utilize soybean oil. This may change over time as high soybean oil prices are encouraging biodiesel producers to find ways to utilize alternative and less costly types of feedstock. Furthermore, producers may design their plants with the capability to use multiple feedstocks. Nonetheless, we expect that increased biodiesel production will continue to increase the demand and cost of not only soybean oil, but also animal fats and other inputs. We expect this will make it more expensive for us to produce our biodiesel from soybean oil alternatives, such as animal fat, and will reduce our profit margins from biodiesel. This is because there is little or no correlation between the cost of feedstock and the market price of biodiesel. Therefore, we cannot pass along increased feedstock costs to our biodiesel customers. In order to stay competitive in the diesel industry, biodiesel must be competitively priced with petroleum-based diesel. Therefore, biodiesel prices fluctuate more in relation to petroleum-based diesel market prices than with feedstock market prices. As a result, increased feedstock costs may result in decreased profit margins when we are engaged in ordinary biodiesel production.

Many current plants are capable of using only vegetable oil for feedstock. Our plant is able to use both vegetable oils and animal fats to produce biodiesel, allowing us to use whichever types of feedstock provide the greatest return at any given time. This is beneficial because the cost of feedstock is the highest cost associated with biodiesel production. Our ability to utilize animal fats is also significant because animal fat-based biodiesel has some favorable advantages over soybean oil-based biodiesel, such as better lubricity, lower nitrogen oxide (NOx) emissions, and higher cetane values. The tendency of animal-fat based biodiesel to gel at higher temperatures than soybean oil-based biodiesel, however, limits our ability to sell animal fat-based biodiesel during winter months.

Although most biodiesel plants are not equipped to process raw materials (such as soybeans) into feedstock (such as soybean oil), several of our competitors have soy-crushing facilities and are therefore not reliant upon third parties for their feedstock supply like we are. As a result, we face a competitive challenge from biodiesel plants owned and operated by the companies that supply our inputs, such as Cargill, Inc., Ag Processing, Inc. (AGP), and ADM. Cargill, AGP and ADM have significant crush capabilities throughout North America and are large suppliers of soybean oil and own and operate their own biodiesel plants in the Midwest. Cargill, Inc. owns a 37.5 million gallon plant in Iowa Falls, Iowa and AGP owns a 30 million gallon per year plant in Sergeant Bluff, Iowa, both of which process soy oil into biodiesel. ADM has constructed an 85 million gallon plant in Velva, North Dakota that processes canola oil into biodiesel. Although Maple River Energy, LLC, recently commenced operation of a soy-crushing facility and biodiesel plant near Galva, Iowa, which is capable of crushing 3 million bushels of soybeans and producing 5 million gallons of biodiesel each year, that plant recently suspended operation. Increasing feedstock costs have spurred, and will likely continue to spur, additional development of crush facilities throughout the country. Such vertical integration provides these plants with greater control over their feedstock supplies, thereby providing them with a competitive advantage over plants like ours that do not have soy-crushing capabilities, especially as prices and competition for soybean oil and other feedstocks have increased.

~~Furthermore,~~We we must compete with ~~REG,~~other biodiesel producers in the ~~entity~~industry ~~that~~not ~~currently~~just ~~manages~~in ~~our~~the ~~plant~~sale ~~and~~of ~~markets~~ our biodiesel, ~~products.~~but ~~REG~~also ~~owns~~in athe ~~plant~~acquisition ~~located~~of inanimal ~~Ralston~~fats, ~~Iowa~~soybean ~~which~~oil, ~~produces~~and ~~biodiesel~~other ~~primarily~~feedstocks ~~from~~and raw ~~feedstock~~materials. ~~produced~~A atmajority ~~its~~of biodiesel plants, including many of the largest biodiesel producers, utilize soybean ~~crushing~~oil. ~~facility~~This ~~and~~may ~~has~~change anover ~~annual~~time ~~production~~as ~~capacity~~high ofsoybean 12oil prices are encouraging biodiesel ~~million~~producers ~~gallons.~~to ~~Additionally,~~find inways ~~June 2008,~~to ~~REG~~utilize ~~acquired~~alternative aand ~~35 million~~less ~~gallon~~costly ~~per~~types ~~year~~of ~~plant~~feedstock. ~~in Houston~~Furthermore, producers ~~Texas,~~may ~~which~~design ~~now~~their ~~operates~~plants ~~under~~with the ~~name~~capability ~~REG~~to ~~Houston.~~use Inmultiple ~~September 2009~~feedstocks. Nonetheless, ~~REG acquired~~we ~~the~~expect ~~assets~~that ofas ~~Nova~~biodiesel ~~Biofuels~~production ~~Seneca~~increases, ~~LLC~~the ~~and~~demand ~~Nova~~for, ~~Biosource~~and ~~Technologies,~~cost ~~LLC~~of, ~~including~~soybean aoil, ~~biodiesel~~animal ~~plant~~fats ~~capable~~and ofother ~~producing~~inputs ~~60 million~~will ~~gallons~~also ofincrease. ~~biodiesel~~We ~~per~~expect ~~year.~~this ~~REG~~will ~~has~~make ~~placed~~it ~~its~~more ~~previous plans~~expensive tofor ~~construct~~us ~~two~~to produce ~~additional~~our biodiesel ~~plants~~from insoybean ~~Kansas~~oil ~~and~~alternatives, ~~Louisiana~~such onas ~~hold~~animal ~~due~~fat, ~~to unfavorable~~and ~~economic~~will ~~and~~reduce ~~industry~~our ~~conditions~~profit margins from biodiesel. InThis ~~February 2010,~~is ~~REG~~because ~~acquired Central~~there ~~Iowa~~is ~~Energy,~~little ~~LLC,~~or ~~located~~no incorrelation ~~Newton,~~between ~~Iowa,~~the ~~and~~cost ~~merged~~of feedstock ~~with~~and ~~Blackhawk~~the ~~Biofuels,~~market ~~located~~price ~~in Danville,~~of ~~Illinois~~biodiesel. ~~Accordingly~~Therefore, we ~~are~~cannot inpass ~~direct~~along ~~competition~~increased ~~with~~feedstock costs ~~REG~~to ~~for~~our biodiesel customers. In order to stay competitive in the ~~acquisition~~diesel ofindustry, biodiesel ~~inputs~~must ~~and~~be ~~the~~competitively ~~sale~~priced ofwith ~~our~~petroleum-based ~~products~~diesel. ~~Our~~Therefore, ~~MOSA~~biodiesel ~~does~~prices ~~not~~fluctuate more ~~prohibit~~in ~~REG~~relation ~~from~~to ~~competing~~petroleum-based diesel market prices than with usfeedstock ormarket ~~from~~prices. As a ~~providing~~result, ~~marketing~~increased ~~and~~feedstock ~~sales~~costs ~~services~~may toresult ~~our~~in ~~competitors~~decreased profit margins.

~~There~~Many plants are currently 8capable ~~other~~of ~~active~~using ~~biodiesel~~only ~~plants~~vegetable ~~currently~~oil ~~producing~~for ~~biodiesel~~feedstock. inOur ~~Iowa,~~plant is able ~~other~~to ~~than~~use ~~our~~both ~~plant~~vegetable oils and animal fats to produce biodiesel, allowing us to use whichever types of feedstock provide the ~~REG~~greatest return at any given time. This is beneficial because the cost of feedstock is the highest cost associated with biodiesel production. Our ability to utilize animal fats is also significant because animal fat-~~owned~~based ~~plants~~biodiesel has some favorable advantages over soybean oil-based biodiesel, such as better lubricity, lower nitrogen oxide (NOx) emissions, and higher cetane values. ~~These~~The ~~plants~~tendency ~~are~~of ~~listed~~animal-fat ~~below~~based biodiesel to gel at higher temperatures than soybean oil-based biodiesel, however, limits our ability to sell animal fat-based biodiesel during winter months.

•We Agcompete ~~Processing~~with ~~Inc~~large, multi-product companies and other biodiesel plants with varying capacities. ~~(AGP)~~Some inof ~~Sergeant~~our ~~Bluff~~competitors have greater resources than we currently have or will have in the future. ~~This~~Large ~~facility~~plants ~~produces~~with ~~biodiesel~~which ~~from~~we ~~refined~~compete ~~bleached~~include ~~and~~the ~~deodorized~~85 million ~~soybean~~gallon ~~oil~~per ~~produced~~year atArcher Daniels ~~its~~Midland ~~solvent~~Co ~~extraction~~(ADM) canola-based ~~processing~~plant in Velva, North Dakota; the 90 million gallon per year Green Earth Fuels multi-feedstock plant in ~~Eagle~~Galena ~~Grove~~Park, ~~Iowa.~~Texas; ~~AGP~~the ~~has~~100 million ~~completed~~gallon anper ~~expansion~~year multi-feedstock ofImperium ~~its~~Grays Harbor plant in Grays Harbor, ~~increasing~~Washington; ~~its~~the ~~production~~100 million ~~capacity~~gallon toper year 30multi-feedstock plant in Las Vegas, Nevada; and the 180 million ~~gallons~~gallon per year multi-feedstock RBF Port Neches plant in Port Neches, Texas. As discussed previously, ADM currently markets our products and procures our feedstock pursuant to agreements we entered into with ADM in September 2010. Our agreements with ADM do not prohibit ADM from competing with us or from providing marketing and sales services to our competitors.

•Although most biodiesel plants are not equipped to process raw materials (such as soybeans) into feedstock (such as soybean oil), there are several of our competitors that have soy-crushing facilities and are therefore not reliant upon third parties for their feedstock supply like we are. As a result, we face a competitive challenge from biodiesel plants owned and operated by the companies that supply our inputs, such as Cargill, Inc., ~~located~~Ag inProcessing, ~~Iowa Falls~~Inc. (AGP) and ADM. Cargill’s, ~~facility~~AGP ~~has~~and anADM ~~annual~~have ~~production~~significant ~~capacity~~crush capabilities throughout North America and are large suppliers of soybean oil that own and operate their own biodiesel plants in the Midwest. Cargill owns a 37.5 million gallon plant in Iowa Falls, Iowa and AGP owns a 30 million ~~gallons~~gallon per year plant in Sergeant Bluff, Iowa, both of which process soy oil into biodiesel. ~~Cargill~~ADM’s ~~uses~~85 million gallon ~~soybean~~plant in Velva, North Dakota processes canola oil asinto ~~its~~biodiesel. ~~primary~~Increasing feedstock costs have spurred, and ~~its~~may ~~biodiesel~~continue ~~plant~~to isspur, ~~located~~additional ~~adjacent~~development toof ~~its~~crush facilities throughout the country. Such vertical integration provides these plants with greater control over their feedstock supplies, thereby providing them with a competitive advantage over plants like ours that do not have soy-crushing capabilities, especially as prices and competition for soybean ~~crush~~oil ~~facility~~and other feedstocks increase.

• Clinton County BioEnergy, L.L.C., located in Clinton, Iowa. This facility has capacity to produce 10 million gallons of biodiesel annually and uses soybean oil as its primary feedstock.

• Iowa Renewable Energy, LLC, located in Washington, Iowa. The facility has capacity to produce 30 million gallons of biodiesel per year from either vegetable oil or animal fat. This biodiesel plant was constructed by REG and is currently managed by REG.

• Riksch Biofuels L.L.C., located in Crawfordsville, Iowa, is capable of producing 10 million gallons of biodiesel each year.

• Sioux Biochemical, Inc., located in Sioux Center, Iowa, is capable of producing 2.0 million gallons of biodiesel each year.

• Soy Solutions of Iowa, LLC, located in Milford, Iowa. This is a “stand-alone” facility that purchases soybean oil from the market. The facility has capacity to produce approximately 2 million gallons of biodiesel annually, and utilizes virgin soybean oil as its sole feedstock.

• Western Dubuque Biodiesel, LLC, located near Farley, Iowa. Western Dubuque Biodiesel has the capacity to produce 30 million gallons of biodiesel per year. It primarily utilizes soybean oil and is not capable of pretreating animal fats for use in the production process. This biodiesel plant was constructed by REG and is currently managed by REG.

A complete listing of all commercial biodiesel production plants is available on the National Biodiesel Board’s public website.

Competition from Other Fuel Sources and Additives

The biodiesel industry competes with the diesel fuel segment of the petroleum industry. Historically, biodiesel prices have correlated to the prices of petroleum-based diesel. Over the past several years, according to the Energy Information Administration, the price of diesel reached record high prices in July 2008 of approximately $4.70 per gallon for No. 2 ultra low sulfur diesel. Since that time, however, diesel fuel prices have trended downward as oil prices have plummeted and the recent U.S. economic downturn and credit crisis have contributed to a decrease in demand for fuel in general. According to the Energy Information Administration, the average sales price of No. 2 ultra low sulfur diesel fuel in fiscal year 2009 was $2.47 per gallon, compared with an average sales price of $3.81 per gallon in fiscal year 2008. Diesel fuel prices per gallon remain at levels below or equal to the price of biodiesel. Following the trend of diesel prices, biodiesel prices declined from their peak in the summer of 2008. As of February 19, 2010, USDA’s National Weekly Ag Energy Round-Up reports that B100 biodiesel prices in Iowa ranged from $3.23 to $3.52 per gallon, which is up from a range of $2.60 to $2.95 per gallon in February 2008, but lower than the peak prices reached during the summer of 2008. If the diesel fuel industry is able to produce petroleum-based diesel fuel with acceptable environmental characteristics, we may find it difficult to compete with diesel fuel. In addition, other more cost-efficient domestic alternative fuels may be developed and displace biodiesel as an environmentally-friendly alternative. If diesel prices do not continue to increase or a new fuel is developed to compete with biodiesel, it may be difficult to market our biodiesel, which could result in the loss of some or all of our ability to operate profitably.

AtCompetition least one large oil company has recently conducted a pilot program to produce renewable diesel, another form of diesel with which we may be required to compete. Renewable diesel has characteristics similar to that of petroleum-based diesel fuel and can be co-processed at traditional petroleum refineries from ~~vegetable~~Other ~~oils~~Fuel orSources animal fats mixed with crude oil through a thermal de-polymerization process. As a result of an Internal Revenue Service interpretation of the application of certain biodiesel tax credits created under the Energy Policy Act of 2005, renewable diesel processed in traditional petroleum-refining equipment is currently eligible for the blenders’ tax credit. Opponents of the IRS interpretation argue that the blenders’ tax credit was intended for specific, limited production technologies, including the methyl ester biodiesel production process, and ~~that the IRS interpretation will allow a large subsidy of conventional~~Additives petroleum refinery capacity at the expense of free-standing producers of biodiesel. However, the biodiesel blenders’ tax credit, as amended by the Emergency Economic Stabilization Act, reduced the credit available for biodiesel co-processed with petroleum feedstock from $1.00 to 50 cents per gallon. In 2007, ConocoPhillips and Tyson Foods announced a pilot program using animal fat from a Tyson processing plant as a feedstock to produce renewable diesel. In late 2008, however, ConocoPhillips and Tyson suspended the project due to unfavorable economics. Since renewable diesel is eligible for the 50 cent per gallon blenders’ tax credit, other large oil companies may decide to add production capacity for renewable diesel. These large petroleum refiners likely have greater financial resources than we do and may be able to devote greater production capacity to the production of renewable diesel than the typical biodiesel plant, which on average has an annual production capacity of 30 million gallons. Accordingly, if renewable diesel proves to be more cost-effective than biodiesel, our revenues and our ability to operate profitably may be adversely affected.

InThe ~~addition,~~biodiesel industry is in competition with the ~~EPA~~diesel ~~has~~fuel ~~issued~~segment ~~regulations~~of tothe ~~reduce~~petroleum industry. Historically, biodiesel prices have correlated to the ~~amount~~prices of ~~sulfur~~petroleum-based indiesel. According to the Energy Information Administration, the price of diesel fuel insteadily increased ~~order~~until toreaching ~~improve~~record ~~air~~high ~~quality.~~prices ~~The~~in ~~removal~~July 2008 of ~~sulfur~~approximately ~~from~~$4.70 per gallon for No. 2 ultra low sulfur diesel, ~~fuel~~and ~~also~~thereafter ~~reduces~~declined ~~its~~sharply ~~lubricity~~to approximately $2.00 per gallon in March 2009. ~~which~~More ~~must~~recently, bethe ~~corrected~~price ~~with~~of diesel fuel ~~additives~~has risen again, ~~such~~to asapproximately ~~biodiesel,~~$3.90 ~~which~~per ~~has~~gallon ~~inherent~~as ~~lubricating~~of ~~properties~~March 2011. WeAlthough ~~expect~~the toprice ~~compete~~of ~~with~~diesel ~~producers~~fuel ofhas ~~other~~increased ~~diesel~~over ~~additives~~the ~~made~~past ~~from~~several ~~raw~~months, ~~materials~~diesel ~~other~~fuel ~~than~~prices ~~soybean~~per ~~oil~~gallon ~~having~~remain ~~similar~~at ~~lubricity~~levels ~~values~~below asor equal to the price of biodiesel. As of March 11, ~~such~~2011, asthe ~~petroleum-based~~National ~~lubricity~~Weekly ~~additives.~~Ag ~~Some~~Energy ~~major~~Roundup ~~oil~~reports ~~companies~~that ~~produce~~B100 ~~these petroleum-based~~biodiesel ~~lubricity~~prices ~~additives~~in ~~and~~Iowa ~~strongly~~ranged ~~favor~~from $4.70 ~~their~~to ~~use~~$5.06 ~~because~~per ~~they~~gallon, ~~may~~an beincrease ~~used~~from ina ~~lower concentrations~~range ~~than~~of ~~biodiesel~~$3.25 Into ~~addition,~~$3.45 ~~much~~approximately ofone year ago. If the ~~infrastructure~~diesel infuel ~~place~~industry is ~~for~~ able to produce petroleum-based ~~additives.~~diesel Asfuel awith ~~result~~acceptable environmental characteristics, ~~petroleum-based~~we ~~additives~~ may befind it difficult to compete with diesel fuel. In addition, other more cost-~~effective~~efficient ~~than~~ domestic alternative fuels may be developed and displace biodiesel as an environmentally-friendly alternative. ~~Therefore~~If diesel prices do not continue to increase or a new fuel is developed to compete with biodiesel, it may be difficult to market our biodiesel ~~as a lubricity additive~~, which ~~could~~ could result in the loss of some or all of our ~~members’~~ability ~~investment~~to operate profitably.

At least one large oil company has previously announced its intent to produce renewable diesel, another form of diesel with which we may be required to compete. Renewable diesel has characteristics similar to that of petroleum-based diesel fuel and can be co-processed at traditional petroleum refineries from vegetable oils or animal fats mixed with crude oil through a thermal de-polymerization process. However, as a result of an Internal Revenue Service interpretation of the application of certain biodiesel tax credits, renewable diesel processed in traditional petroleum-refining equipment is eligible for the federal biodiesel blenders’ tax credit, but only at a reduced rate of 50 cents per gallon. Because renewable diesel is currently eligible for this credit (although only at the reduced credit amount), other large oil companies may also decide to add production capacity for renewable diesel. These large petroleum refiners likely have greater financial resources than we do and may be able to devote greater production capacity to the production of renewable diesel than the typical biodiesel plant, which on average has an annual production capacity of 30 million gallons. Accordingly, if renewable diesel proves to be more cost-effective than biodiesel, our revenues and our ability to operate profitably may be adversely affected.

The EPA has issued regulations to reduce the amount of sulfur in diesel fuel in order to improve air quality. The removal of sulfur from diesel fuel also reduces its lubricity which must be corrected with fuel additives, such as biodiesel, which has inherent lubricating properties. We expect to compete with producers of other diesel additives made from raw materials other than soybean oil having similar lubricity values as biodiesel, such as petroleum-based lubricity additives. Some major oil companies produce these petroleum-based lubricity additives and strongly favor their use because they may be used in lower concentrations than biodiesel. In addition, much of the infrastructure in place is for petroleum-based additives. As a result, petroleum-based additives may be more cost-effective than biodiesel. Therefore, it may be difficult to market our biodiesel as a lubricity additive.

Research and Development

We do not conduct any research and development activities associated with the development of new technologies for use in producing biodiesel, glycerin, and ~~glycerin~~fatty acid.

Dependence on One or a Few Major Customers

We ~~are~~have ~~highly~~entered ~~dependent~~into ~~upon~~a ~~REG~~Product ~~for~~Marketing ~~the~~Agreement ~~successful~~with ~~marketing~~ADM ofto ~~our~~market ~~products~~all ~~and the procurement~~ of ~~adequate supplies of the inputs needed to produce~~ our products. ~~Pursuant~~Any failure by ADM to ~~the~~comply ~~MOSA~~ with ~~REG,~~the ~~REG~~terms ~~has marketed all~~ of the ~~biodiesel~~Product ~~and~~Marketing ~~glycerin~~Agreement ~~produced~~could atnegatively impact our ~~biodiesel~~ability ~~facility~~to ~~and has~~generate ~~procured~~revenues. ~~all~~The ofProduct ~~the~~Marketing ~~feedstock~~Agreement ~~and~~does ~~chemical~~not ~~inputs~~prohibit ~~necessary~~ADM ~~for~~from providing ~~the~~services ~~production~~to ~~of biodiesel at~~ our ~~facility.~~competitors, ~~See~~and ~~“Sources~~its ~~and~~does ~~Availability~~not ofprovide ~~Raw~~any ~~Materials~~procedures —as ~~Feedstock~~to ~~Procurement”~~how ~~and~~ADM will ~~“Distribution~~address any conflicts of ~~Principal~~interest ~~Products”~~that ~~above~~may ~~for~~arise aduring ~~description~~ADM’s ofservice ~~the~~to ~~services~~our ~~REG~~plant ~~currently~~and ~~provides~~ADM’s own usplants ~~pursuant~~or toother ~~the~~competitor ~~MOSA~~plants. ~~The~~If ~~MOSA,~~ADM asplaces ~~extended,~~the ~~will~~interests ~~terminate~~of onits ~~May 3,~~own ~~2010.~~biodiesel ~~See~~plants ~~“BUSINESS~~or —other ~~Proposed~~biodiesel ~~Consolidation~~plants ~~with~~which ~~REG”~~it ~~and~~manages ~~“RISK~~ahead ~~FACTORS”~~of ~~for~~our ainterests, ~~discussion~~our ofprofitability ~~the~~may ~~termination~~be ~~of the~~negatively ~~MOSA~~impacted.

We do not have our own sales force or any other agreements with any third party for the marketing and sale of our products or the procurement of inputs. Prior to the termination of the MOSA, WIE will either have to negotiate a new contract for biodiesel and glycerin distribution services with REG, identify alternative providers of these services and negotiate contracts with these providers, or begin providing these services. This is a very short timeframe in which to make these arrangements, and each of these options carries significant risk for the company. There can be no assurance that the Company will be able to contract with a third party to provide biodiesel and glycerin distribution services on terms favorable to the Company, or that the Company would be able to hire individuals to perform these services. Any lack of a provider for these services would have a negative impact on our revenues and could have a material adverse effect on the Company. Accordingly, REG’s termination of the MOSA could adversely affect the Company’s ability to generate revenues and the Company’s members could lose some or all of their investment.

Furthermore, we are in direct competition with REG due to its ownership and management of other existing biodiesel plants, including the two plants that REG recently acquired in connection with our failed consolidation with REG, and any failure by REG to comply with the terms of our MOSA could negatively impact our ability to generate revenues. The MOSA does not prohibit REG from competing with us or from providing services to our competitors, and it does not provide any procedures as to how REG will address any conflicts of interest that may arise during REG’s service to our plant and competitor plants. If REG places the interests of other biodiesel plants which it owns or manages ahead of our interests, our profitability may be negatively impacted. See “DESCRIPTION OF BUSINESS — Competition” and “RISK FACTORS.”

Costs and Effects of Compliance with Environmental Laws

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. We have obtained all of the necessary permits to conduct plant operations, including air emissions permits, a NPDES permit, and boiler permits. We ~~also~~previously entered into an agreement with the City of Des ~~Moines~~ Moines for the discharge of our wastewater into its wastewater reclamation facility.; Wehowever, ~~recently entered into a one-year extension of~~ this agreement, ~~which~~expired ~~will now expire~~ on March 1, 2011. We ~~are~~ now ~~subject~~ tosell ~~ongoing environmental regulation and testing. Thompson Environmental Consulting, Inc. assisted us in obtaining all of~~ our ~~required~~wastewater ~~permits and continues~~ to ~~assist~~a usprivate inenergy-recycling ~~ongoing permitting matters~~firm. ~~Although we have been successful in obtaining all of the permits currently~~ required, any retroactive change in environmental regulations, either at the federal or state level, could require us to obtain additional or new permits or spend considerable resources on complying with such regulations. We estimate that we will spend approximately $50,000 to comply with federal, state, and local environmental laws over the next twelve months.

We are subject to ongoing environmental regulation and testing. Thompson Environmental Consulting, Inc. assisted us in obtaining all of our required permits and continues to assist us in ongoing permitting matters. Although we have been successful in obtaining all of the permits currently required, any retroactive change in environmental regulations, either at the federal or state level, could require us to obtain additional or new permits or spend considerable resources on complying with such regulations. We estimate that we will spend approximately $25,000 to comply with federal, state, and local environmental laws over the next twelve months.

The government’s regulation of the environment changes constantly. It is possible that more stringent federal or state environmental rules or regulations could be adopted, which would 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 biodiesel. There is always a risk that the EPA may enforce certain rules and regulations differently than Iowa’s environmental administrators. Iowa 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.

Employees

As of December 31, ~~2009~~2010, we had 2820 full-time employees. Weand dono ~~not~~part-time ~~expect to hire any more~~ employees ~~in the near future~~. ~~The~~We ~~chart~~have since ~~below~~increased ~~summarizes~~our ~~the~~workforce ~~type~~to ~~and~~27 ~~number~~full-time ofemployees ~~positions~~as ~~that~~ we ~~employ~~ ashave ofincreased ~~December 31,~~biodiesel ~~2009~~production.

JOB TITLE	NUMBER EMPLOYEES
Process Operator		16
Accounting Manager		1
Maintenance Supervisor		1
Maintenance Technicians		2
Administrative / Accounting Assistant		1
Shipping/Receiving		3
Operations Supervisor		1
Quality Assurance Coordinator		1
Laboratory Coordinator		1
Compliance Coordinator		1
Total		28


Item 1A.		Risk Factors.

Our current general manager and operations manager are employed by REG and placed at our facility pursuant to our MOSA as extended by the Extension on Second Amendment to the MOSA dated March 16, 2010. Our current general manager, Larry Breeding, and operations manager, Joe Reed, were both hired by REG. We directly employ all other employees and have sole responsibility for the terms and conditions of their employment. Pursuant to the MOSA, as extended, REG is obligated to provide operations management at our facility. The specific services that REG must provide include the following:

The functions of the general manager under our management and operational services agreement are to:

• Planning and scheduling biodiesel production to meet customer needs and marketing goals;

• Monitor and maintain quality control processes;

• Oversee facility and equipment maintenance;

• Assist with regulatory affairs monitoring and compliance;

• Assist with budgeting and the monitoring of labor and other expenses in the operation;

• Development of an annual budget for presentation to and approval of Western Iowa Energy’s board of managers (“Board”);

• Attend meetings of the Board and provide information upon its request;

• Work with Western Iowa Energy’s Board to formulate Western Iowa Energy’s mission and goals;

• Work towards achievement of such mission and goals;

• Hire, terminate and replace Biodiesel Facility personnel as necessary; and

• Such other duties as may be agreed between REG Services Iowa Energy.

As a result of REG’s termination of the MOSA, and the subsequent rejection by our unitholders of a proposed consolidation with REG, we may lose the services of our general manager and operations manager. We will either have to negotiate a new contract with REG for management services, identify alternative providers of these services and negotiate contracts with these providers, or hire a general manager and operations manager prior to May 3, 2010. This is a very short timeframe in which to make these arrangements, and each of these options carries significant risk for the company. There can be no assurance that the Company will be able to negotiate a new contract with REG or to contract with a third party to provide management services on terms favorable to the Company. There can also be no assurance that the Company would be able to identify and hire qualified individuals to perform these services. If WIE hires individuals for these positions, these individuals may encounter a steep learning curve. Any lack of management would have a negative impact on our revenues and could have a material adverse effect on the Company. Accordingly, REG’s termination of the MOSA could adversely affect the Company’s ability to generate revenues and the Company’s members could lose some or all of their investment. See “BUSINESS — Proposed Consolidation with REG” and “RISK FACTORS.”

ITEM 1A. RISK FACTORS.

You should carefully read and consider the risks and uncertainties below and the other information contained in this report. The risks and uncertainties described below are not the only ones we may face. The following risks, together with additional risks and uncertainties not currently known to us or that we currently deem immaterial could impair our financial condition and results of operations.

Risks Related to Our Business

Declines in the prices of biodiesel and glycerin will have a significant negative impact on our financial performance. Our revenues will be greatly affected by the price at which we can sell our biodiesel and its primary co-product, glycerin. These prices can be volatile as a result of a number of factors over which we have no control. These factors include the overall supply and demand of biodiesel and glycerin, the price of diesel fuel, the level of government support, the availability and price of competing products, and domestic and global economic conditions. The total production capacity of biodiesel remains significantly above the level of demand for biodiesel, which may lead to lower prices. Any lowering of biodiesel prices may negatively impact our ability to generate profits.

~~During~~In ~~the fiscal year ended December 31~~addition, ~~2009, we operated~~ at ~~approximately~~times ~~52.8%~~during ofwhich ~~our nameplate~~biodiesel ~~capacity.~~production ~~During~~has ~~January and February 2010~~increased, wethis ~~were~~has ~~operating~~led atto increased ~~approximately~~supplies ~~23.5%~~ of ~~our~~ ~~nameplate~~co-products ~~capacity~~from ~~due to decline in~~ the ~~demand~~production ~~for~~of biodiesel~~. Historically~~, ~~the~~such ~~demand~~as ~~for biodiesel follows a seasonal trend and demand decreases in colder months~~glycerin. ~~We believe that the~~These ~~recent~~increased ~~U.S.~~supplies ~~recession and global financial market turmoil may also depress biodiesel demand and prices. Biodiesel prices~~ have ~~significantly~~led ~~declined over the past two years. We expect that we will operate at similar low production levels throughout the first quarter of the 2010 fiscal year due~~ to ~~decreased~~lower ~~biodiesel~~prices ~~demand.~~for ~~Continued operations at less than full capacity will have a negative impact on our revenues~~glycerin. If ~~Congress~~the ~~fails~~price ~~to enact an extension~~ of ~~the~~glycerin ~~$1.00~~declines, ~~federal tax~~our ~~credit~~revenue ~~for~~from ~~biodiesel,~~glycerin wemay ~~expect~~substantially ~~that we will continue to operate at significantly less than full capacity indefinitely~~decrease.

~~In addition, increased biodiesel production capacity has lead to increased supplies of~~18 co-products from the production of biodiesel, such as glycerin. These increased supplies have led to lower prices for glycerin. If the price of glycerin declines, our revenue from glycerin may substantially decrease. Increased expenses and decreased sales prices for our products will result in decreased revenues.

Our business is sensitive to feedstock costs. Changes in the prices and availability of our feedstock may hinder our ability to generate revenue. Our results of operations and financial condition are significantly affected by the cost and supply of feedstock. Biodiesel production at our plant requires significant amounts of feedstock. Changes in the price and supply of feedstock are subject to and determined by market forces over which we have no control. Because there is little or no correlation between the costs of feedstock and the price of biodiesel, we cannot pass along increased feedstock costs to our biodiesel customers. As a result, increased feedstock cost may result in decreased profits. If we experience a sustained period of high or volatile feedstock costs, such pricing may reduce our ability to generate revenues and our profit margins will decrease, and these decreases may be significant.

Our biodiesel plant processes primarily animal fats and a small amount of soybean oil, and the cost of feedstock represents approximately 70%-90% of our cost of production. In 2009, the cost of our primary feedstock, choice white grease, decreased by approximately 32.5% compared to 2008 and remained relatively consistent throughout the year. In 2008, by contrast, there was significant price volatility in the market for choice white grease, which was our primary feedstock. In July 2008, the price that we paid for choice white grease reached a record level of 50.75 cents per pound; however, the price dropped to 12.66 cents per pound in December 2008. If the cost of choice white grease increases as it did during most of fiscal year 2008, the cost advantages of utilizing choice white grease as a primary feedstock may diminish and our profits will be negatively affected.

The price for animal fats, including choice white grease, tends to move in relation to the price of other feedstocks, such as soybean oil. Accordingly, as soybean oil prices increase, animal fat prices generally tend to increase. Soybean oil prices were generally consistent throughout the fiscal year ended December 31, 2009. According to the USDA’s Oil Crops Outlook report for February 2010, the average price for soybean oil during the twelve-month period ending December 31, 2009 was 33.01 cents per pound. By contrast, soybean oil prices during the fiscal year ended December 31, 2008 were extremely volatile, spiking to approximately 62.43 cents per pound in June 2008 and subsequently dropping to 29.30 cents per pound in December 2008. The USDA forecasted that soybean oil prices during the period from October 2009 to September 2010 would be between 33.5 cents per pound and 36.5 cents per pound.

~~Soybean~~Our ~~prices~~business ~~may~~is ~~also~~sensitive beto ~~affected~~feedstock bycosts. ~~other~~Changes ~~market~~in ~~sectors,~~the asprices ~~soybeans~~and ~~are~~availability ~~comprised~~ of ~~80%~~our ~~protein~~feedstock ~~meal~~may ~~and~~hinder ~~only~~our ~~20%~~ability ~~oil.~~to ~~Soybean~~generate ~~oil~~revenue. isOur aresults ~~co-product~~ of ~~processing,~~operations orand ~~“crushing,” soybeans~~financial ~~for~~condition ~~protein~~are ~~meal~~significantly ~~used~~affected ~~for~~by ~~livestock feed. Soybean meal demand drives~~ the ~~prices~~cost weand ~~pay~~supply ~~for~~of ~~soybean oil~~feedstock. ~~Currently,~~Biodiesel ~~soybean~~production ~~crush capacity is concentrated among four companies, Cargill, Inc., Bunge,~~at ~~ADM,~~our ~~and~~plant Agrequires ~~Processing~~significant ~~Inc.,~~amounts ~~which represent more than 80%~~ of ~~crushing~~feedstock. ~~operations~~Changes in the ~~United States.~~price ~~These~~and ~~companies~~supply ~~typically~~of ~~crush~~feedstock are ~~soybeans~~subject ~~based~~to ~~upon demand for livestock feed~~ and ~~they will~~determined ~~not~~by ~~likely~~market ~~increase~~forces ~~the~~over ~~amount~~which ofwe ~~soybeans~~have ~~crushed~~no ~~for~~control. ~~soybean~~Because ~~oil unless~~ there is little anor ~~equal increase~~no incorrelation ~~demand~~between ~~for~~the ~~livestock~~costs ~~feed.~~of ~~Accordingly,~~feedstock and the ~~amount~~price of ~~soybean~~biodiesel, ~~crushing~~we ~~could~~cannot ~~create~~pass ~~uncertainty~~along ~~and~~increased ~~price~~feedstock ~~volatility~~costs into ~~the~~our ~~soybean~~biodiesel ~~oil market~~customers. WeAs ~~also~~a ~~expect~~result, ~~that~~increased ~~competition~~feedstock ~~for~~cost ~~raw~~may ~~soy~~result ~~oil,~~in ~~animal~~decreased ~~fats~~profits. ~~and~~If ~~other~~we ~~feedstocks~~experience ~~from~~a ~~other~~sustained ~~biodiesel~~period ~~producers~~of ~~may~~high ~~increase~~or ~~our~~volatile ~~cost~~feedstock ofcosts, ~~feedstock~~such ~~and~~pricing ~~harm~~may ~~our financial performance and~~ reduce our ~~profits.~~ability ~~Any inability~~ to ~~obtain adequate~~generate ~~quantities~~revenues ofand ~~feedstock~~our atprofit ~~economical~~margins ~~prices~~ will decrease, ~~result in increased costs~~ and these decreases in ~~our~~may ~~profit~~be ~~margins~~significant.

~~Increases in the price of natural gas could reduce our profitability.~~ Our ~~results~~biodiesel ~~of operations~~plant ~~and~~processes ~~financial~~primarily ~~condition~~animal ~~are~~fats ~~significantly affected by the cost~~ and ~~supply~~a ofsmall ~~natural gas.~~amount ~~Changes in the price and supply~~ of ~~natural~~soybean ~~gas~~oil, ~~are subject to~~ and ~~determined by market forces over which we have no control. The average price we paid for natural gas during~~ the ~~fiscal year~~ ~~ended~~cost ~~December 31,~~of ~~2009~~feedstock ~~was~~represents approximately ~~39.1~~70%-90% ~~less~~of ~~than~~our ~~the~~cost ~~average~~of ~~price we paid for natural gas during the fiscal year ended December 31, 2008~~production. In ~~2008,~~late ~~natural gas prices significantly exceeded historical averages. According to the Energy Information Administration~~2010, the cost ~~industrial price~~ of ~~natural~~ ~~gas~~our ~~averaged~~primary ~~$9.58~~feedstock, ~~per~~choice ~~thousand~~white ~~cubic feet in 2008~~grease, ~~reaching~~increased ~~a peak price of $13~~substantially.05 ~~per thousand~~If ~~cubic feet in July 2008. In 2009, by contrast,~~ the ~~Energy~~cost ~~Information~~of ~~Administration~~choice ~~Reports~~white ~~that~~grease ~~the~~continues ~~industrial~~to ~~price of natural gas averaged $5.27 per thousand cubic feet~~increase, ~~ranging from~~the acost ~~low~~advantages of ~~$3.81~~utilizing tochoice awhite ~~high~~grease ofas ~~$7.43. A correlation can be made between high energy prices,~~a ~~which~~primary ~~increase~~feedstock ~~our~~may ~~profitability~~diminish and ~~at the same time increase~~ our ~~energy~~profits ~~input costs. Conversely, when energy prices are low, our profit margins may decrease but the energy input costs~~ will ~~also~~ be ~~lower.~~ ~~Any~~negatively ~~increases in the price of natural gas will increase our cost of goods sold~~affected.

The price for animal fats, including choice white grease, tends to move in relation to the price of other feedstocks, such as soybean oil. Accordingly, as soybean oil prices increase, animal fat prices generally tend to increase. Soybean oil prices have recently increased substantially. Soybean prices may also be affected by other market sectors, as soybeans are comprised of 80% protein meal and only 20% oil. Soybean oil is a co-product of processing, or “crushing,” soybeans for protein meal used for livestock feed. Soybean meal demand drives the prices we pay for soybean oil. Currently, soybean crush capacity is concentrated among four companies, Cargill, Inc., Bunge, ADM, and Ag Processing Inc., which represent more than 80% of crushing operations in the United States. These companies typically crush soybeans based upon demand for livestock feed and they will not likely increase the amount of soybeans crushed for soybean oil unless there is an equal increase in demand for livestock feed. Accordingly, the amount of soybean crushing could create uncertainty and price volatility in the soybean oil market. We also expect that competition for raw soy oil, animal fats and other feedstocks from other biodiesel producers may increase our cost of feedstock and harm our financial performance and reduce our profits. Any inability to obtain adequate quantities of feedstock at economical prices will result in increased costs and decreases in our profit margins.

Increases in the price of natural gas could reduce our profitability. Our results of operations and financial condition are significantly affected by the cost and supply of natural gas. Changes in the price and supply of natural gas are subject to and determined by market forces over which we have no control. The average price we paid for natural gas during the fiscal year ended December 31, 2010 was approximately 36.0% more than the average price we paid for natural gas during the fiscal year ended December 31, 2009. In 2008, natural gas prices significantly exceeded historical averages. According to the Energy Information Administration, the industrial price of natural gas averaged $9.58 per thousand cubic feet in 2008, reaching a peak price of $13.05 per thousand cubic feet in July 2008. Since that time, natural gas prices have decreased substantially, and as of December 2010 averaged $5.42.

The price we pay for natural gas affects our costs of production. The prices for and availability of natural gas are subject to volatile market conditions. These market conditions often are affected by factors beyond our control such as higher prices as a result of colder than average weather conditions, natural disasters, overall economic conditions, and foreign and domestic governmental regulations and relations. Significant disruptions in the supply of natural gas could impair our ability to manufacture biodiesel for our customers. Furthermore, increases in natural gas prices or changes in our natural gas costs relative to natural gas costs paid by competitors may adversely affect our results of operations and financial condition.

We are in competition with ~~REG~~ADM, our current ~~plant~~product ~~manager~~marketer and ~~product~~feedstock ~~marketer~~procurer, which ~~could~~ could place us at a competitive disadvantage and cause a conflict of interest for ~~REG~~ADM. We have contracted with ~~REG~~ADM for ~~management,~~ feedstock procurement, and marketing services for our plant. We are highly dependent upon ~~REG~~ADM to procure our inputs and market our products. We are also highly dependent upon ~~REG~~ ADM’s experience and relationships in the biodiesel industry ~~and its knowledge regarding the operation of the plant, as REG was also the design-builder of our plant~~.

~~REG operates its own biodiesel production facilities in Ralston, Iowa and Houston, Texas and~~19 anticipates increasing its biodiesel production through wholly-owned and third-party managed biodiesel plants in the future. REG recently acquired two additional biodiesel plants, one in Newton, Iowa, and the other in Danville, Illinois. This means that REG, our current plant manager and product marketer, is in competition with us in many aspects of our business, including feedstock procurement and biodiesel production and marketing. We also have to compete with REG for employees. Because REG operates its own biodiesel production facilities and competes with us in many aspects of our business, REG may have a conflict of interest in managing our plant and marketing our products. Although we have entered into a management and operational services agreement with REG for management and marketing services, there is no assurance that REG’s performance of these services is not compromised by its own biodiesel production operations. As a result of REG’s termination of the MOSA, and the subsequent rejection by our unitholders of a proposed consolidation with REG, REG may no longer be bound by the restrictions contained in the MOSA.

IfADM weowns, ~~are~~wholly ~~unable~~or ~~to negotiate a new agreement with REG~~jointly, webiodiesel ~~may~~production befacilities ~~placed at a greater competitive disadvantage~~ in ~~the biodiesel industry. Pursuant to our MOSA with REG~~Missouri, ~~REG~~North ~~has provided management~~Dakota, ~~feedstock procurement, marketing,~~ and ~~distribution services for our plant~~ ~~since~~other weplaces ~~began~~around ~~operation. We are highly dependent upon REG’s experience and relationships in~~ the ~~biodiesel~~ ~~industry~~world. WeThis ~~particularly~~means ~~benefit from the economies of scale~~ that ~~result~~ADM ~~from~~is ~~REG’s status~~in ascompetition awith ~~major~~us ~~buyer~~in ofmany ~~feedstock~~aspects ~~and other inputs and as a major distributor~~ of ~~biodiesel. We~~our ~~also benefit from REG’s reputation in the biodiesel industry for providing quality products. On April 3~~business, ~~2009,~~including ~~REG~~feedstock ~~provided~~procurement ~~twelve months written notice of its intent~~ (to ~~terminate~~ the ~~MOSA.~~extent ~~In February 2010,~~that ~~the~~we ~~unitholders~~utilize ofsoybean ~~WIE~~oil ~~rejected a proposed consolidation with REG. The MOSA,~~ as ~~extended,~~ ~~will terminate as of May 3, 2010. If we are unable to negotiate~~ a ~~new agreement with~~ ~~REG,~~feedstock) weand ~~will~~biodiesel ~~have~~production ~~to obtain the services of alternative providers of these services or hire~~and ~~employees to carry out these responsibilities~~marketing. ~~Without~~Because ~~the~~ADM ~~economies~~operates ofits ~~scale~~own ~~that~~biodiesel ~~REG~~production ~~provides, we~~facilities ~~may be unable to purchase feedstock~~ and ~~other~~competes ~~inputs~~with ~~on the same terms that we currently~~us ~~purchase~~in ~~these~~many ~~inputs.~~aspects ~~Biodiesel~~of ~~buyers~~our ~~generally~~business, ~~want~~ADM amay ~~supplier~~have ~~that can deliver~~ a ~~significant volume~~conflict of ~~biodiesel~~interest ~~at a consistent high quality~~ in ~~order~~marketing toour ~~protect their brands~~products. ~~REG has proven~~ ~~that~~Although itwe ~~can~~have ~~deliver~~entered ~~both~~into ~~volume~~marketing and ~~quality~~feedstock toprocurement ~~these~~agreements ~~buyers, and therefore has strong relationships~~ with ~~many of these buyers. Through our current relationship with REG~~ADM, wethere ~~are~~is ~~part of a larger~~no ~~network~~assurance that ~~can~~ADM’s ~~fulfill~~performance ~~these requirements~~ of ~~biodiesel buyers. Without the involvement of REG and operating as a stand-alone plant, however, we may be unable to satisfy~~ these ~~demands~~services ~~of biodiesel buyers. Furthermore, we~~ will benot ~~in direct competition with REG in the biodiesel market. Therefore, we may~~ be ~~unable~~compromised toby ~~market~~its ~~our~~own biodiesel ~~and glycerin on the competitive terms that we~~ ~~have~~production ~~received pursuant to the MOSA~~operations. ~~This may have a material adverse effect on our financial~~ ~~position and our members could lose some or all of their investment.~~

WeOur ~~may~~exclusive bereliance ~~unable~~on ADM to ~~hire~~procure aour ~~qualified~~inputs ~~general~~and ~~manager~~market orour ~~operations~~products ~~manager~~could ~~for~~damage our ~~plant.~~ ~~Pursuant~~profitability toif ~~our~~ADM ~~MOSA~~fails ~~with~~to ~~REG,~~perform ~~REG~~its ~~has~~obligations ~~provided~~under ~~a general manager and an operations manager for~~ our ~~plant~~ ~~since~~agreements wewith ~~began operation~~ADM. OnWe ~~April 3,~~are ~~2009,~~highly dependent ~~REG~~upon ~~provided~~ADM ~~twelve months written notice of its intent~~ to ~~terminate~~procure ~~the~~our ~~MOSA.~~inputs Inand ~~February 2010,~~market ~~the~~our ~~unitholders of WIE rejected a proposed consolidation with REG~~products. ~~The MOSA, as extended, will terminate as of May 3, 2010.~~ We do not have ~~any~~ ~~personnel~~a ~~who~~soy ~~are~~crushing facility ~~trained~~ to ~~fill~~supply ~~these~~our ~~roles~~own ifraw wesoybean ~~are~~oil ~~unable~~and towe ~~negotiate~~do anot ~~new~~have ~~agreement with~~any ~~REG~~arrangements ~~following~~with ~~the~~other ~~termination~~ suppliers of ~~the MOSA~~feedstock. IfRather, we ~~are~~depend ~~unable~~upon ADM to ~~negotiate~~acquire aour ~~new~~feedstock ~~agreement~~from ~~with REG,~~third weparties. ~~may~~If beADM is unable to ~~negotiate~~provide anus ~~agreement~~ with anadequate ~~alternative~~feedstock ~~provider~~or ofother ~~plant~~inputs, ~~management services or~~ we may behave ~~unable~~ to ~~identify~~decrease ~~and~~or ~~hire new employees to fill the roles of general~~halt ~~manager and~~ operations ~~manager~~which ~~during the short period of time before the MOSA terminates. In addition, any new management personnel~~ would ~~require~~adversely aaffect ~~period~~our ofability ~~training~~ to ~~learn~~generate ~~about~~profits ~~our plant~~ and ~~our~~adversely ~~operations.~~affect ~~This may have a material adverse effect on~~ our financial ~~position and our~~obligations ~~members could lose some or all of their investment.~~

WeIn ~~may~~addition, bewe ~~unable~~do tonot ~~market~~have ~~and distribute our biodiesel and glycerin as~~ a ~~result~~sales offorce ~~REG’s termination~~ of ~~the~~our ~~MOSA.~~own ~~Pursuant~~ to ~~our~~market ~~MOSA with REG, REG has marketed and distributed~~ our biodiesel and glycerin ~~since~~and will webe ~~began~~highly ~~operation.~~dependent Weupon doADM ~~not~~to ~~have~~market ~~relationships with~~ our ~~customers since~~products. weIf ~~rely~~ADM onbreaches ~~REG’s~~the ~~relationships~~terms ~~with purchasers~~ of ~~biodiesel~~our agreement ~~and~~or ~~glycerin,~~does ~~nor~~not ~~do we~~ have ~~experience~~ inthe ~~marketing~~ability ~~and~~to ~~distributing~~market ~~biodiesel~~all ~~and glycerin. On April 3, 2009, REG provided twelve months written notice~~ of ~~its intent to terminate~~ the ~~MOSA.~~biodiesel Inand ~~February 2010,~~glycerin ~~the unitholders~~we ~~of WIE rejected a proposed consolidation with REG. The MOSA~~produce, ~~as extended, will~~we ~~terminate~~will ~~as of May 3, 2010. We do~~ not have any ~~personnel~~readily ~~who~~available ~~are~~means ~~trained~~ to ~~market~~sell ~~and~~our ~~distribute~~ biodiesel and glycerin. ifOur welack ~~are~~of ~~unable to negotiate~~ a ~~new agreement with REG following the~~sales ~~termination~~force ofand ~~the~~reliance ~~MOSA.~~on IfADM ~~we are unable~~ to ~~negotiate~~sell ~~a new agreement with REG, we may be unable to negotiate an agreement with an alternative biodiesel~~ and ~~glycerin~~market ~~marketer~~our orproducts ~~distributor, or we~~ may beplace ~~unable~~us toat ~~identify~~a ~~and~~competitive ~~hire new employees to carry out these responsibilities~~disadvantage. If ~~the~~and ~~new~~when ~~provider~~we orrecommence ~~new~~producing ~~employees lack experience in the~~ biodiesel ~~industry~~, ~~they~~our ~~may~~failure ~~require a period of training~~ to ~~learn~~sell ~~about~~our ~~the industry and to develop relationships with purchasers of~~ biodiesel and glycerin. ~~This~~products may ~~have~~result ~~a material~~in ~~adverse~~less ~~effect~~income onfrom ~~our~~sales, ~~financial~~reducing ~~position and~~ our ~~members~~revenue, which could ~~lose~~adversely affect ~~some~~our orfinancial ~~all of their investment~~position.

WeIf ~~may~~ADM bedoes ~~unable~~not toperform ~~procure~~its ~~feedstock~~obligations ~~for our plant~~ as ~~a result of REG’s termination of the MOSA. Pursuant to our MOSA with REG~~agreed, ~~REG has procured all feedstock for our plant, including animal fats and soybean oil, since~~ we ~~began~~may ~~operation.~~be Weunable doto ~~not~~specifically ~~have relationships with suppliers~~enforce of our ~~feedstock~~agreement. ~~since~~Additionally, ~~we rely on REG~~ADM’s ~~relationships~~right ~~with~~to ~~these~~terminate ~~suppliers.~~its Onagreements ~~April 3,~~with ~~2009,~~us ~~REG provided~~upon ~~twelve~~thirty ~~months written~~ days’ notice ofcould ~~its~~place ~~intent~~us toat ~~terminate~~a ~~the~~competitive ~~MOSA~~disadvantage. InAny ~~February 2010,~~loss ~~the unitholders~~ of ~~WIE~~our ~~rejected~~relationship ~~a proposed consolidation~~ with ~~REG.~~ADM ~~The~~may result ~~MOSA,~~in asthe ~~extended,~~failure ~~will terminate as~~ of ~~May 3,~~our ~~2010~~business. WeSignificant docosts ~~not~~and ~~have~~delays ~~any~~would ~~personnel~~likely ~~who~~result ~~are~~from ~~trained to purchase feedstock if~~the weneed ~~are unable~~ to ~~negotiate~~find aother ~~new~~feedstock ~~agreement~~suppliers, ~~with~~consultants ~~REG~~or ~~following~~product ~~the termination of the MOSA~~marketers. IfIn ~~we are unable to negotiate a new agreement with REG~~addition, weany ~~may be unable to negotiate an agreement with~~failure anby ~~alternative~~ADM ~~supplier of feedstock, or we may be unable~~ to ~~identify~~perform ~~and~~under ~~hire~~our ~~new~~agreements ~~employees to carry out these responsibilities. If the new provider or new employees lack experience in the biodiesel industry, they~~ may ~~require~~reduce aour ~~period~~ability ~~of training~~ to ~~learn~~generate ~~about~~revenue ~~the industry~~ and tomay ~~develop~~significantly ~~relationships~~damage ~~with suppliers of~~ our ~~feedstock.~~competitive ~~This~~position ~~may~~in ~~have~~the abiodiesel ~~material~~industry ~~adverse~~such ~~effect~~that on our ~~financial position and our~~ members could lose ~~some~~all or substantially all of their investment.

22Reductions in the amounts available under our credit facilities with Farm Credit may cause us to be unable to meet our capital needs. The expiration of the blenders’ tax credit on December 31, 2009 and our subsequent decision to warm-idle our plant led to discussions with CoBank, as administrative agent of Farm Credit, regarding certain changes to our credit facilities. In particular, we agreed with Farm Credit to reduce the amount available under our revolving credit loan from $8,000,000 to $6,000,000 (inclusive of our $490,000 irrevocable letter of credit in favor of Glidden Rural Electric Cooperative) and reduce the amount of minimum working capital required pursuant to our loan covenants. On March 28, 2011, we entered into an agreement with Farm Credit increasing the amount available under this loan to $7,000,000 through September 30, 2011 and reducing the minimum net worth we are required to maintain pursuant to our loan covenants through that same date. If Farm Credit again reduces the amounts available under our credit facilities, we may be unable to meet our capital needs. This may have a material adverse effect on our ability to operate the plant and may cause our members to lose some or all of their investment.

Liquidity constraints could impact our operations. There is a delay between the time we purchase our raw materials and the time we receive payment for sales of our finished products. Rising input costs tend to increase the amount of working capital we need to finance our operations, particularly in light of the delay between our raw material acquisition and the date we receive payment for finished products. In May 2010 we agreed with Farm Credit to reduce the amount available under our revolving credit loan from $8,000,000 to $6,000,000. On March 28, 2011, we agreed with Farm Credit to increase the amount available under this loan to $7,000,000 through September 30, 2011. While we currently expect our cash from operations and the amounts available under our revolving credit loan to be sufficient to fund our operations, our cash flow may prove to be insufficient to fund our ongoing operations. Should we not be able to secure the cash we require to operate the plant and pay our obligations as they become due, we may have to reduce or cease our operations, which may decrease or eliminate the value of our units.

Our ~~exclusive~~loan ~~reliance~~agreement oncontains ~~REG~~restrictive covenants that we may be unable to ~~manage~~satisfy. ~~our~~Our ~~plant,~~loan agreement ~~procure~~with ~~our~~Farm ~~inputs~~Credit ~~and~~contains ~~market~~restrictive ~~our~~covenants ~~products~~that require us to maintain minimum ~~could~~levels ~~damage~~of ~~our~~working ~~profitability~~capital ifand ~~REG~~net ~~fails~~worth, toas ~~perform~~well ~~its~~as ~~obligations~~to ~~under~~meet ~~the~~a ~~remaining~~minimum ~~term~~debt ~~of the~~service ~~MOSA.~~coverage ratio. We ~~are~~were ~~highly~~not ~~dependent~~in ~~upon~~compliance ~~REG~~with toour ~~manage~~restrictive covenant regarding our ~~plant~~debt service coverage ratio at December 31, ~~procure~~2010; ~~our~~however, ~~inputs~~we received a waiver from CoBank, ~~and~~as ~~market~~administrative ~~our~~agent for Farm Credit, regarding this covenant violation. A failure ~~products~~to ~~during~~comply with our covenants in the ~~remaining~~future ~~term~~may constitute an event of default under our ~~MOSA,~~loan agreements which, ~~will~~at ~~continue~~the ~~until~~election ~~May 3~~of Farm Credit, ~~2010.~~could Weresult doin ~~not~~the acceleration of the unpaid ~~have~~principal aloan ~~soy~~balance ~~crushing~~and ~~facility~~accrued interest owed to ~~supply~~Farm Credit, or the loss of our ~~own~~assets ~~raw~~securing the ~~soybean~~loan ~~oil~~in ~~and~~the weevent doFarm ~~not~~Credit ~~have~~elected ~~any~~to ~~arrangements with~~foreclose ~~other~~its ~~suppliers~~lien ofor ~~feedstock~~security interest in such assets. ~~Rather,~~While weFarm ~~depend~~Credit ~~upon~~granted ~~REG~~us a waiver for failing to ~~acquire~~comply with our ~~feedstock~~debt ~~from~~service ~~third~~coverage ~~parties~~ratio at December 31, 2010, Farm Credit might not grant a waiver for future covenant violations. If an ~~REG~~event isof ~~unable~~default occurs and Farm Credit elects to ~~provide~~accelerate usthe ~~with~~amounts ~~adequate~~due ~~feedstock~~to it or ~~other~~foreclose on ~~inputs~~our assets, wethis may have ~~to decrease~~a ormaterial ~~halt~~adverse ~~operations~~effect ~~which~~on ~~would adversely affect~~ our ability to ~~generate~~operate ~~profits~~the plant and may ~~adversely~~cause ~~affect~~ our ~~financial~~members ~~obligations~~to lose some or all of their investment.

In addition, we do not have a sales force of our own to market our biodiesel and glycerin and are highly dependent upon REG to market our products. If REG breaches the terms of the MOSA or does not have the ability, for financial or other reasons, to market all of the biodiesel and glycerin we produce, we will not have any readily available means to sell our biodiesel and glycerin. Our lack of a sales force and reliance on REG to sell and market our products may place us at a competitive disadvantage. Our failure to sell all of our biodiesel and glycerin products may result in less income from sales, reducing our revenue, which could adversely affect our financial position. If REG does not perform its obligations as agreed, we may be unable to specifically enforce our agreement. Our reliance on REG may place us at a competitive disadvantage

We have limited experience in the biodiesel industry, which increases the risk of our inability to operate the biodiesel plant. We organized our company in September 2004 and commenced production of biodiesel at our plant in May 2006. Accordingly, we have a limited operating history from which you can evaluate our business and prospects. We are presently, and will likely continue to be, dependent upon our directors to govern the business of the biodiesel plant. Most of our directors are experienced in business generally but have limited or no prior experience in operating a biodiesel plant or in governing and operating a public company. Most of our directors had no prior expertise in the biodiesel industry. In addition, certain directors on our board of directors are presently engaged in business and other activities that impose substantial demands on the time and attention of such directors.

Our operating results could fluctuate significantly in the future as a result of a variety of factors. Many of these factors are outside of our control. As a result of these factors, our operating results may not be indicative of future operating results and you should not rely on them as indications of our future performance. There is no assurance that our future financial performance will improve. In addition, our prospects must be considered in light of the risks and uncertainties encountered by an early-stage company and in rapidly growing industries, such as the biodiesel industry, where supply and demand may change substantially in a short amount of time. Some of these risks relate to our potential inability to effectively manage our business and operations; recruit and retain key personnel; develop new products that complement our existing business; and obtain sufficient amounts of credit and capital to support our business operations. If we cannot successfully address these risks, our business, future results of operations and financial condition may be materially adversely affected.

We engage in hedging transactions which involve risks that can harm our business. We are exposed to market risk from changes in commodity prices. Exposure to commodity price risk results from our dependence on commodities in the biodiesel production process, such as soybean oil and home heating oil. Hedging activities ~~themselves~~ can result in increased costs because price movements in soybean oil contracts, home heating oil contracts, and other commodity contracts are ~~highly~~ highly volatile and are influenced by many factors that are beyond our control. There are several variables that could affect the extent to which our derivative instruments are impacted by price fluctuations in the cost of soybean oil, home heating oil and other commodities. However, it is likely that commodity cash prices will have the greatest impact on the derivative instruments with delivery dates nearest the current cash price. We may incur such costs and they may be significant. If we realize losses with respect to our derivative instruments, our net income could decrease.

The effectiveness of our hedging strategies with respect to soybean oil is dependent upon the cost of soybean oil and other commodities and our ability to sell sufficient amounts of our products to use all of the soybean oil for which we have futures contracts. There is no assurance that our hedging activities will successfully reduce the risk caused by price fluctuation which may leave us vulnerable to high soybean oil prices. Alternatively, we may choose not to engage in hedging transactions. As a result, our results of operations and financial conditions may also be adversely affected during periods in which soybean oil prices increase.

We compete with other biofuels plants for key management and other personnel who are critical to our success. ~~Pursuant~~In toSeptember 2010 ~~the~~we ~~MOSA,~~successfully ~~REG~~ hired ~~Larry~~a ~~Breeding~~General toManager ~~be general manager~~ and ~~Joe~~a ~~Reed to~~Plant ~~be operations manger of our plant~~Manager. However, ~~each~~if ofthese ~~whom~~or ~~has~~other ~~experience~~employees ~~with~~leave ~~biofuels~~our ~~production facilities. As a result of REG’s termination of the MOSA~~employment, we may be forced to identify and hire new individuals to fill these positions or to contract with ~~another~~a provider of plant management services. There are a limited number of individuals with expertise in this area. In addition, we may have difficulty in attracting other competent personnel to relocate to Iowa in the event that such personnel ~~are~~leave ~~not~~our ~~retained~~employment. Our failure to attract and retain such individuals could limit or or eliminate any profit that we might make and could result in our failure.

2321

Our business is not diversified. Our success depends largely on our ability to profitably operate our biodiesel plant. We do not have any other lines of business or other sources of revenue if we are unable to operate our biodiesel plant and manufacture biodiesel and glycerin. If economic or political factors adversely affect the market for biodiesel, we have no other line of business to fall back on. Our business would also be significantly harmed if our biodiesel plant does not operate at full capacity for any extended period of time.

If it is necessary to temporarily cease operating our biodiesel plant for sustained periods of time for any reason, we might not be able to meet our current liabilities and may experience losses. If we are forced to temporarily cease operations at our biodiesel plant, either due to our inability to sell the biodiesel we are producing, increased feedstock costs, our lack of working capital and available credit, defects in our equipment at the plant, violations of environmental law, or any other reason, our ability to produce revenue would be aversely affected. We do not have any source of revenues other than production of biodiesel and glycerin at our biodiesel plant. If our plant were to cease production, we would not generate any revenue and we might not be able to pay our debts as they become due, including payments required under our loan agreements with our lender. Failure to make the payments required under our loan agreements would constitute an event of default, entitling our lender to exercise any number of remedies, including foreclosure on its security interest in all of our assets. If the plant ceases to operate for enough time, we might not be able to re-start operations at the plant and our members could lose some or all of their investment.

We are at a disadvantage in marketing our glycerin because our plant does not produce pharmaceutical grade glycerin, thereby decreasing the market for the glycerin we produce. A major use of glycerin is in the production of drugs. The glycerin our plant produces, however, is not pharmaceutical grade glycerin. This limits our ability to market the glycerin produced by our biodiesel plant. The glycerin we produce has to be purified in order for it to be used in pharmaceutical applications. However, any glycerin produced from the production of animal fat-based biodiesel cannot be used in such pharmaceutical applications. Since the market in which we can sell our glycerin is limited, we might not be able to sell all of the glycerin we produce or we may not be able to sell our glycerin at a favorable price. If we cannot sell all of the glycerin we produce or cannot sell it at a favorable price, our ability to operate our biodiesel plant profitably might be adversely affected, which could decrease the value of our units.

Concerns about fuel quality may impact our ability to successfully market our biodiesel. Industry standards impose quality specifications for biodiesel fuel. Actual or perceived problems with quality control in the industry may lead to a lack of consumer confidence in the product and hinder our ability to successfully market our biodiesel. An inability to successfully market our biodiesel will lead to decreased revenues and may adversely impact our ability to operate at all.

Cold weather may cause biodiesel to gel, which could have an adverse impact on our ability to successfully market our biodiesel. The “cloud point” is the temperature at which small solid crystals are visually observed as a fuel is cooled. When air temperatures fall below the cloud point, these crystals may plug fuel filters or drop to the bottom of a storage tank. The “pour point” for a fuel is the temperature at which the fuel contains so many crystals that it is essentially a gel and will no longer flow. The cloud point of 100% soy-based biodiesel is approximately 32ºF and the pour point is approximately 25ºF. The cloud point and pour point for No. 2 ultra low sulfur petroleum diesel fuel, the non-biodiesel fuel currently used in machines, are approximately 6ºF and -30ºF, respectively. When diesel is mixed with soy-based biodiesel to make a 2% biodiesel blend, the cloud point and pour point are 7ºF and -25ºF, respectively. Therefore, we believe we will need to blend soy-based biodiesel and animal fat-based biodiesel with petroleum diesel in order to provide a biodiesel product that will have an acceptable cloud point and pour point in cold weather. Generally, biodiesel that is used in blends of 2% to 20% is expected to provide acceptable cold flow properties for colder markets comparable to the No. 2 petroleum diesel cold flow properties. In colder temperatures, lower blends are recommended to avoid fuel system plugging. This may cause the demand for our biodiesel in northern markets to diminish during the colder months.

The tendency of biodiesel to gel in colder weather may also result in long-term storage problems. At low temperatures, fuel may need to be stored in a heated building or heated storage tanks. This may result in a decrease in demand for our product in colder climates due to increased storage costs.

~~There are doubts about our ability to continue to generate positive cash flow and if we are~~22 unable to continue our business, our units may have little or no value. As discussed in Note 14 to the accompanying financial statements, the biodiesel industry has faced numerous challenges since we commenced production, including significant volatility in the cost of its inputs. Although input costs have declined somewhat from their peaks during the summer of 2008, the price of biodiesel has also declined, which may result in lower profit margins since unlike many industries, historically, we have not been able to pass along increased input costs to our customers. A sustained narrow spread or any further reduction in the spread between biodiesel and feedstock prices, whether as a result of sustained high or increased feedstock prices or sustained low or decreased biodiesel prices, would adversely affect our results of operations and financial position.

We may be unable to generate positive cash flow, and if we are unable to continue our business, our units may have little or no value. As discussed in Note 14 to the accompanying financial statements, the biodiesel industry has faced numerous challenges since we commenced production, including significant volatility in the cost of its inputs. Unlike many industries, historically, we have not been able to pass along increased input costs to our customers. A sustained narrow spread or any further reduction in the spread between biodiesel and feedstock prices, whether as a result of sustained high or increased feedstock prices or sustained low or decreased biodiesel prices, would adversely affect our results of operations and financial position. Additionally, the future expiration of the federal blenders’ tax credit on December 31, 2011 has led our auditor to raise doubts about our ability to continue as a going concern. If we are unable to continue as a going concern, our units may have little or no value.

Technological advances could significantly decrease the cost of producing biodiesel or result in the production of higher-quality biodiesel, and if we are unable to adopt or incorporate technological advances into our operations, our plant could become uncompetitive or obsolete. We expect that technological advances in the processes and procedures for processing biodiesel will continue to occur. It is possible that those advances could make the processes and procedures that we utilize at our plant less efficient or obsolete, or cause the biodiesel we produce to be of a lesser quality. Advances and changes in the technology of biodiesel production are expected to occur. These advances could also allow our competitors to produce biodiesel at a lower cost than cost at which we produce biodiesel. Our plant is a single-purpose facility and has no use other than the production of biodiesel and associated products. Much of the cost of the plant is attributable to the cost of production technology which may be impractical or impossible to update. If we are unable to adopt or incorporate technological advances, our biodiesel production methods could be less efficient than our competitors, which could cause our plant to become uncompetitive or obsolete. If our competitors develop, obtain, or license technology that is superior to ours or that makes our technology obsolete, we may be required to incur significant costs to enhance or acquire new technology so that our biodiesel production remains competitive. Alternatively, we may be required to seek third-party licenses, which could also result in significant expenditures. We cannot guarantee or assure you that third-party licenses will be available or, once obtained, will continue to be available on commercially reasonable terms, if at all. These costs could negatively impact our financial performance by significantly increasing our operating costs, as well as reducing our net income.

Risks Related to the Biodiesel Industry

The economic recession and tightening of credit markets has caused demand for biodiesel to decline, which may adversely affect our ability to generate revenues. The collapse of various major financial institutions and the federal government’s bailout and takeover of troubled financial institutions and corporations ~~over~~since the ~~past~~Fall ~~year~~of 2008 have caused significant economic stress and upheaval in the ~~United~~financial ~~States~~ and ~~abroad.~~credit ~~The~~markets in the United States, isas ~~currently~~well inas anabroad. ~~economic~~Credit markets ~~recession~~have tightened and ~~credit~~lending ~~markets~~requirements ~~remain constricted~~have become more stringent. We believe that these economic factors have contributed to a decrease in demand for fuel in general, including biodiesel, which may persist throughout all or parts of fiscal year ~~2010~~ 2011. It is uncertain for how long and to what extent these economic troubles may negatively affect biodiesel demand in the future. If demand for biodiesel ~~remains low or~~ declines ~~further~~, we may be forced to temporarily or permanently cease operations and you may lose some or all of your investment.

~~The~~A decline in crude oil and diesel prices may affect our ability to sell biodiesel at profitable prices. The price for biodiesel is correlated to the price for diesel, as biodiesel is used primarily as a diesel additive. The price of biodiesel tends to increase as the price of diesel increases, and the price of biodiesel tends to decrease as the price of diesel decreases. Diesel prices are typically influenced by crude oil prices. ~~The global economic downturn has resulted in a rapid decline in crude oil and diesel prices.~~ In January 2009, crude oil prices fell to their lowest level in more than four years, dropping to $31.76 per barrel. However, ~~down from~~ more ~~than~~ ~~$130~~recently, ~~per~~crude ~~barrel in July 2008. Crude~~ oil prices ~~have~~ rebounded ~~somewhat~~ to ~~approximately~~more than $75100 per barrel asin ofearly ~~February~~March ~~26, 2010~~2011. ~~Additionally, average retail diesel prices have declined by approximately 40% since July 2008. Following the trend of crude oil and diesel prices, biodiesel prices have also fallen since July 2008.~~ If crude oil and diesel prices ~~remain low or~~ decline ~~even further~~, biodiesel prices will also likely ~~remain low or~~ decline ~~further~~. This could make it difficult for us to produce and sell biodiesel at a profit and you could lose some or all of your investment as a result.

25The downturn in the U.S. economy may limit our customers’ ability to pay for our biodiesel and co-products, which may adversely affect our ability to generate revenues In 2008, one of our customers defaulted on its contract with us for the purchase of biodiesel as a result of poor economic conditions. As a result, we sold the biodiesel to another customer for a lower price. We and other biodiesel producers who sold biodiesel to this customer remain in arbitration to resolve this dispute. Under our current product marketing agreement, we sell our biodiesel to our product marketer, ADM. Although this provides us with protection with respect to payment risk, if for some reason we do not receive payment for the biodiesel we produce, we may be forced to reduce production, and you may lose some or all of your investment.

The recent downturn in the U.S. economy may limit our customer’s ability to pay for our biodiesel and co-products, which may adversely affect our ability to generate revenues In 2008, one of our customers defaulted on its contract with us for the purchase of biodiesel as a result of the current economic conditions. As a result, we sold the biodiesel to another customer for a lower price. We and other biodiesel producers who sold biodiesel to this customer remain in arbitration to resolve this dispute. If more of our customers become unable to pay for the biodiesel we produce, we may be forced to reduce production, and you may lose some or all of your investment.

The European Commission has imposed definitive anti-dumping and countervailing duties on biodiesel imported into Europe, which may negatively impact biodiesel demand and our revenues. In March 2009, the European Commission imposed anti-dumping and anti-subsidy tariffs on biodiesel produced in the United States. These tariffs have reduced European demand for biodiesel produced in the United States. In July 2009, the European Commission decided to extend these tariffs beyond their July 2009 expiration until 2014. These duties significantly increase the price at which U.S. biodiesel producers may be able to sell biodiesel in European markets, making it difficult or impossible to compete with European biodiesel producers and thereby increasing the supply and reducing overall demand for biodiesel produced in the United States. Accordingly, these duties on U.S. biodiesel imported into Europe could significantly harm our financial performance.

~~The~~If ~~RFS~~demand ~~may~~for ~~not~~biodiesel ~~result~~fails into ~~increased~~grow ~~demand~~at ~~for~~the ~~biodiesel~~same ~~since~~rate ~~existing~~as ~~biodiesel~~planned ~~production~~supply, the excess production capacity ~~already~~will ~~exceeds~~adversely ~~the~~impact ~~RFS~~our ~~requirement~~financial condition. ~~The~~In ~~EPA~~2010, ~~recently~~approximately ~~published~~315 million ~~regulations~~gallons of biodiesel were produced in the United States, according to ~~implement~~ the ~~Renewable~~National Biodiesel ~~Fuel~~Board. ~~Standard~~Our ~~program~~biodiesel asplant italone ~~was~~could ~~expanded~~produce inapproximately 9.5% of the ~~Energy~~2010 ~~Independence~~domestic production ~~and~~if ~~Security~~we ~~Act of~~operated ~~2007~~at ~~(often~~our ~~referred~~annual tonameplate asproduction ~~“RFS2”)~~capacity. ~~Pursuant~~The toNational Biodiesel Board estimates the ~~new~~current ~~regulations~~dedicated U.S. biodiesel production capacity of existing biodiesel plants as of January 27, ~~RFS2~~2011 ~~requires~~is ~~that~~approximately 12.15 84 billion gallons per year. Thus the current annual production capacity of ~~biomass-based~~existing ~~diesel~~plants befar ~~blended~~exceeds ~~into~~2010 ~~the~~annual ~~national~~biodiesel ~~fuel~~consumption, ~~pool~~and bywill likely ~~the~~far ~~end~~exceed of2011 ~~2010~~biodiesel consumption. As production capacity increases, our competition ~~which~~with ~~amount~~other ~~combines~~biodiesel producers for the ~~requirements~~sale of ~~2009~~our ~~and~~products ~~2010~~increases, especially if there is not a corresponding increase in demand for biodiesel. InMany ~~2011,~~biodiesel atplants ~~least~~do ~~800 million~~not ~~gallons~~operate ofat full ~~biomass-based~~capacity ~~diesel~~due ~~must~~to bethe ~~blended~~discrepancy ~~into~~between ~~the~~annual ~~nation’s~~domestic ~~fuel~~biodiesel ~~pool;~~consumption and inannual ~~2012~~U.S. biodiesel production capacity, atamong ~~least~~other ~~1 billion~~factors. Several biodiesel plants have even been forced ~~gallons~~to ofcompletely ~~biomass-based~~shut ~~diesel~~down ~~must~~or bedeclare ~~blended~~bankruptcy, ~~into~~which ~~the~~may ~~national~~be ~~fuel~~due ~~pool.~~in Inpart ~~each~~to ~~year thereafter,~~an ~~EPA~~increase ~~must~~in ~~determine~~national excess ~~the~~production ~~level~~capacity ofwithout ~~biomass-based~~a ~~diesel~~corresponding ~~required,~~increase ~~which~~in ~~amount~~biodiesel ~~cannot~~demand bein combination with ~~less~~the ~~than~~worsening ~~1 billion~~economic ~~gallons~~conditions. AtIf ~~this~~biodiesel ~~time~~production itcapacity iscontinues ~~unclear~~to ~~what~~expand ~~impact,~~at ifits current ~~any~~pace, and demand does not grow to meet the ~~RFS~~available ~~will~~supply, ~~have~~we onmay be forced to suspend ~~biodiesel~~production ~~demand~~at ~~since~~our ~~national~~plant ~~biodiesel~~and ~~production~~the ~~capacity~~value ~~already~~of ~~exceeds~~your ~~these~~units ~~requirements~~could be decreased or eliminated.

Excess production capacity in the biodiesel industry could make it difficult for us to market our products at profitable prices. The National Biodiesel Board estimates that current dedicated biodiesel production capacity of existing plants as of June 22, 2009 (the most recent date for which data is available) was about 2.69 billion gallons per year, which is up from approximately 1.85 billion gallons per year as of September 2007. The National Biodiesel Board also estimates that plants under construction and expansion as of June 22, 2009 could add another 427.8 million gallons to U.S. biodiesel production capacity, for a total annual production capacity of 3.12 billion gallons. Despite these significant increases in production capacity, the National Biodiesel Board has reported that only 700 million gallons of biodiesel were produced in 2008 and estimates that only 490 million gallons were produced in 2009. Many biodiesel plants do not operate at full capacity due in part to the fact that total production capacity significantly exceeds demand. If the demand for biodiesel does not grow at the same pace as increases in supply, we expect the price for biodiesel to decline in the long-term, which could adversely affect our profits.

If demand for biodiesel fails to grow at the same rate as planned supply, the excess production capacity will adversely impact our financial condition. In 2008, approximately 700 million gallons of biodiesel were produced in the United States, according to the National Biodiesel Board. Our biodiesel plant alone could produce almost 4% of the 2008 domestic production if we operated at our annual nameplate production capacity. The National Biodiesel Board estimates the current dedicated U.S. biodiesel production capacity of existing biodiesel plants as of June 22, 2009 (the latest date for which information is available) is approximately 2.69 billion gallons per year. Further, plants under construction and expansion as of June 22, 2009, if completed, are expected to result in another 427.8 million gallons of annual U.S. biodiesel production capacity, for total annual production capacity of approximately 3.12 billion gallons. Thus the current annual production capacity of existing plants far exceeds 2008 annual biodiesel consumption, and will likely far exceed 2009 biodiesel consumption. As production capacity increases, our competition with other biodiesel producers for the sale of our products increases, especially if there is not a corresponding increase in demand for biodiesel. Many biodiesel plants do not operate at full capacity due to the discrepancy between annual domestic biodiesel consumption and annual U.S. biodiesel production capacity, among other factors. Several biodiesel plants have even been forced to completely shut down or declare bankruptcy, which may be due in part to an increase in national excess production capacity without a corresponding increase in biodiesel demand in combination with the worsening economic conditions. If biodiesel production capacity continues to expand at its current pace, and demand does not grow to meet the available supply, we may be forced to suspend production at our plant and the value of your units could be decreased or eliminated.

Excess capacity in the biodiesel industry may cause increased competition for inputs and decreased market prices for biodiesel. Biodiesel production at our plant requires significant amounts of animal fats and other inputs. If overproduction of biodiesel occurs, we will face increased competition for inputs which means we may be either unable to acquire the inputs that we need or unable to acquire them at profitable prices. In addition, if excess capacity occurs, we may also be unable to market our products at profitable prices. If the demand for biodiesel does not grow at the same pace as increases in supply, we would expect the price for biodiesel to decline. Any decrease in the price at which we can sell our biodiesel will negatively impact our future revenues. Increased expenses and decreased sales prices for biodiesel will result in decreased revenues and increased losses.

Excess production of glycerin, a co-product of the biodiesel production process, may cause the price of glycerin to decline, thereby adversely affecting our ability to generate revenue from the sale of glycerin. It is estimated that every million gallons of biodiesel produced adds approximately another one hundred thousand gallons of crude glycerin into the market. As biodiesel production has increased ~~in recent years~~, the glycerin market has become increasingly saturated, resulting in significant declines in the price of glycerin. ~~The~~In ~~Jacobsen~~2006, ~~Company~~glycerin ~~reported~~prices ~~average~~dropped ~~glycerin~~dramatically, with ~~prices~~crude ofglycerin 5prices tohovering 6around 2 cents inper ~~February 2010~~pound or less. However, ifmore recently there has been a steady, gradual increase in glycerin prices. If the price of glycerin declines ~~further~~again, our ~~revenues~~ revenues will be adversely affected and we could even be forced to pay to dispose of our glycerin. ~~Any~~ Any further excess glycerin production capacity may limit our ability to market our glycerin co-product and could negatively impact our future revenues.

The biodiesel manufacturing industry is a feedstock limited industry. As more plants ~~are developed and~~ go into production there may not be an adequate supply of feedstock to supply the demands of the industry, which could threaten the viability of our plant. ~~The~~As ~~number~~more of biodiesel ~~manufacturing~~ plants ~~either in production or in the planning or construction phase continues to increase. As more plants are developed and~~ go into production, following ~~and~~the asreinstatement ~~more~~of ~~existing~~the ~~plants~~federal ~~expand their~~blenders’ ~~production capacities~~credit, there may not be an adequate supply of feedstock to supply the demand of the biodiesel industry. Consequently, the price of feedstock may rise to the point where it threatens the viability of our plant. This is because there is little or no correlation between the price of feedstock and the market price of biodiesel and, therefore, we cannot pass along increased feedstock costs to our biodiesel customers. We cannot pass along increased feedstock costs to our biodiesel customers because in order to stay competitive in the diesel industry, biodiesel must be competitively priced with petroleum-based diesel. Therefore, biodiesel prices fluctuate more in relation to petroleum-based diesel market prices than with feedstock market prices. As a result, increased feedstock costs may result in decreased profit margins. If we experience a sustained period of high feedstock costs, such pricing may significantly decrease or eliminate our profit margins. ~~Furthermore,~~ REG currently owns and operates two biodiesel plants and recently acquired two additional biodiesel plants. This means that our current plant manager and product marketer, REG and its affiliates, are competitors for a limited supply of feedstock.

~~The biodiesel industry is becoming increasingly competitive and we compete with some larger,~~24 better financed entities which could impact our ability to operate profitably. We face a competitive challenge from larger biodiesel plants and from biodiesel plants owned and operated by the companies that supply our inputs. We also expect to compete with plants that are capable of producing significantly greater quantities of biodiesel than the amount we expect to produce. Moreover, some of these plants may not face the same competition we do for inputs as the companies that own them are suppliers of the inputs. Such competition could result in lower prices for biodiesel, which would adversely affect our ability to generate profits and adversely affect our financial obligations.

Competition from other sources of fuel may decrease the demand for our biodiesel. Although the price of diesel fuel has increased over the last several years and reached near record high prices in the summer of 2008 before sharply decreasing in the fall and winter of 2008, diesel fuel prices per gallon remain at levels below or equal to the price of biodiesel. In addition, other more cost-efficient domestic alternative fuels may be developed and displace biodiesel as an environmentally-friendly alternative. If diesel prices do not increase or a new fuel is developed to compete with biodiesel, it may be difficult to market our biodiesel, which could result in decreased revenues.

Asian soybean rust and other plant diseases may decrease our ability to obtain a sufficient feedstock supply. Our feedstock supply is partially dependent upon the availability and price of soybeans. Asian soybean rust is a plant fungus that attacks certain plants including soybean plants. Asian soybean rust is abundant in certain areas of South America, and is present in the United States. Although soybean rust has not found in Iowa, in 2009, it was found in 16 states, including as far north as Illinois. Left untreated, it can reduce soybean harvests by as much as 80%. Although it can be killed with chemicals, the treatment increases production costs for farmers by approximately 20%. Increases in production costs and reduced soybean supplies could cause the price of soybeans to rise and increase the cost of soybean oil as a feedstock to our plant. Such increase in cost would increase the cost of producing our biodiesel.

The biodiesel industry is becoming increasingly competitive and we compete with some larger, better financed entities which could impact our ability to operate profitably. We face a competitive challenge from larger biodiesel plants and from biodiesel plants owned and operated by the companies that supply our inputs. We also expect to compete with plants that are capable of producing significantly greater quantities of biodiesel than the amount we expect to produce. Moreover, some of these plants may not face the same competition we do for inputs as the companies that own them are suppliers of the inputs. Such competition could result in lower prices for biodiesel, which would adversely affect our ability to generate profits and adversely affect our financial obligations.

Competition from other sources of fuel may decrease the demand for our biodiesel. Diesel fuel prices per gallon remain at levels below or equal to the price of biodiesel, making it difficult for the biodiesel industry to compete with the diesel fuel industry without government support programs. In addition, other more cost-efficient domestic alternative fuels may be developed and displace biodiesel as an environmentally friendly alternative. If diesel prices do not continue to increase or a new fuel is developed to compete with biodiesel, it may be difficult to market our biodiesel, which could result in increased losses for our company.

Automobile manufacturers and other industry groups have expressed reservations regarding the use of biodiesel, which could negatively impact our ability to market our biodiesel. Because it is a relatively new product, the research on biodiesel use in automobiles and its effect on the environment is ongoing. Some industry groups, including the World Wide Fuel Charter, have recommended that blends of no more than 5% biodiesel be used for automobile fuel due to concerns about fuel quality, engine performance problems and possible detrimental effects of biodiesel on rubber components and other parts of the engine. Although some manufacturers have encouraged use of biodiesel fuel in their vehicles, cautionary pronouncements by others may impact our ability to market our product.

In addition, studies have shown that nitrogen oxide emissions increase by 10% when pure biodiesel is used. Nitrogen oxide is the chief contributor to ozone or smog. New engine technology is available and is being implemented to eliminate this problem. However, these emissions may decrease the appeal of our product to environmental groups and agencies who have been historic supporters of the biodiesel industry, which may result in our inability to market our biodiesel.

Competition from other diesel fuel lubricity additives for ultra low sulfur diesel may be a less expensive alternative to our biodiesel, which would cause us to lose market share and adversely affect our ability to generate revenues. The Environmental Protection Agency (EPA) has issued regulations to reduce the amount of sulfur in diesel fuel in order to improve air quality. These regulations affect all diesel fuel available for retail sale since October 2006. The removal of sulfur from diesel fuel also reduces its lubricity which must be corrected with fuel additives, such as biodiesel which has inherent lubricating properties. Our biodiesel plant is expected to compete with producers of other diesel additives made from raw materials other than soybean oil having similar lubricity values as biodiesel, such as petroleum-based lubricity additives. Many major oil companies produce these petroleum-based lubricity additives and strongly favor their use because they may be used in lower concentrations than biodiesel. In addition, much of the infrastructure in place is for petroleum-based additives. As a result, petroleum-based additives may be more cost-effective than biodiesel. Therefore, it may be difficult to market our biodiesel as a lubricity additive, which could adversely affect our ability to generate revenues.

Several biofuels companies throughout the country have ~~recently~~ filed for ~~Chapter 1l~~ bankruptcy due to industry and economic conditions. Several biofuels companies have ~~recently~~ filed for ~~Chapter 11~~ bankruptcy. Unfavorable worldwide economic conditions, the decreasing availability of credit, ~~and~~ volatile biofuels prices and input costs and the expiration of the federal blenders’ credit for most of 2010 have likely contributed to the necessity of these bankruptcy filings. If biodiesel prices drop to extremely low levels or feedstock prices increase significantly, we may find ourselves in a similar situation to these other biofuels plants.

~~Risks Related to Regulation and Governmental Action~~25

Loss of or ineligibility for favorable tax benefits for biodiesel production could hinder our ability to operate at a profit and reduce the value of our units. The biodiesel industry and our business are assisted by various federal biodiesel incentives. One such incentive is the blenders’ tax credit for biodiesel mixtures, which has provided a tax credit of $1.00 per gallon of biodiesel. On December 31, 2009, the $1.00 federal tax credit expired and Congress has so far failed to enact an extension of this incentive for biodiesel production. Management expects that the expiration of the federal tax credit will negatively impact our ability to sell biodiesel. If Congress fails to enact an extension of the tax credit, it may be uneconomical for refiners of petroleum-based diesel to blend biodiesel with petroleum-based diesel fuel due to the higher cost of biodiesel. Unless the federal tax credit is extended, we believe that a decreased demand for biodiesel will result, which could depress biodiesel markets and negatively impact our financial performance.

Risks Related to Regulation and Governmental Action

Loss of or ineligibility for favorable tax benefits for biodiesel production could hinder our ability to operate at a profit and reduce the value of our units. The biodiesel industry and our business are assisted by various federal biodiesel incentives. One such incentive is the blenders’ tax credit for biodiesel mixtures, which has provided a tax credit of $1.00 per gallon of biodiesel. On December 31, 2009, the $1.00 federal tax credit expired and only in December 2010 was it extended for 2011 and made retroactive for 2010. These tax incentives for the biodiesel industry may not continue, or, if they continue, the incentives may not be at the same level. The elimination or reduction of tax incentives to the biodiesel industry, including the biodiesel tax credit, could significantly reduce the market for biodiesel and could materially impair our ability to profitably produce and sell biodiesel. The loss or reduction of the biodiesel tax credit would make it more costly or difficult to produce and sell biodiesel and we could be forced to take significant cost savings measures or temporarily or permanently cease production at our plant. If the federal tax incentives are eliminated or sharply curtailed, we believe that a continued decreased demand for biodiesel will result, which could further depress biodiesel markets and negatively impact our financial performance.

A change in environmental regulations or violations thereof could be expensive and increase our costs. We are subject to extensive air, water, and other environmental 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 impact 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. To the best of our knowledge, we have at all times been in complete compliance with these laws, regulations, or permit conditions and we have all permits required to operate our business. Additionally, any changes in environmental laws and regulations, both at the federal and state level, could require us to invest or spend considerable resources in order to comply with future environmental regulations. The expense of compliance could be significant enough to increase our operating costs and decrease our profits, negatively affecting our financial condition.

Risks Related to Conflicts of Interest

WeOur directors may have ~~conflicts~~relationships ~~of interest~~ with ~~REG~~individuals, ~~which~~companies ~~may~~or ~~cause~~organizations ~~difficulty~~which may result in ~~enforcing~~conflicts ~~claims against~~of ~~REG~~interest. There Wemay ~~expect~~be ~~that~~business ~~one~~relationships between orour ~~more~~directors ~~employees~~and orother ~~associates~~individuals, ofcompanies ~~REG~~or ~~will~~organizations ~~continue to advise our~~that ~~directors~~may ~~throughout~~pose ~~the~~potential ~~remaining~~conflicts ~~term~~ of ~~our~~interest ~~MOSA~~ with ~~REG~~us. WeFor ~~anticipate~~example, ~~REG~~two ~~will~~of ~~continue to be~~our ~~involved~~directors, inWarren ~~substantially~~Bush ~~all~~and ~~material~~Denny ~~aspects~~Mauser, ofcurrently ~~our~~serve ~~operations~~on ~~throughout~~ the ~~remaining~~board ~~term~~ of ~~our~~directors ~~MOSA.~~of ~~Pursuant~~another tocompany ~~our~~engaged ~~MOSA~~in ~~with~~biodiesel ~~REG~~production, ~~REG~~Western ~~acquires feedstock and the basic chemicals necessary~~Dubuque ~~for our operation~~Biodiesel, ~~and~~LLC. ~~performs~~These ~~the sales~~ and ~~marketing functions for~~ our ~~plant.~~other ~~There~~directors ismay ~~no assurance~~serve ~~that~~on ~~our~~other ~~arrangements~~boards ~~with~~of directors ~~REG~~in ~~are~~the asfuture ~~favorable~~or ~~to us as they could~~ have ~~been~~relationships ifwith ~~obtained from~~other ~~unaffiliated third parties. In addition~~individuals, ~~because~~companies or oforganizations ~~the extensive roles~~ that ~~REG~~may ~~has~~result in ~~the operation~~conflicts of ~~the~~interest ~~plant,~~with itrespect ~~may~~to transactions bebetween ~~difficult or impossible for~~ us toand ~~enforce~~the ~~claims~~other ~~that~~individuals, wecompanies ~~may~~or ~~have~~organizations ~~against~~if ~~REG.~~our ~~REG~~directors isand ~~also~~officers ~~one~~put oftheir ~~our~~interests ~~unitholders.~~in ~~Such~~other ~~conflicts~~companies ofor ~~interest~~their own ~~may~~personal ~~negatively~~relationships ~~affect~~ahead ~~our~~of ~~financial~~what ~~performance~~is ~~and~~best ~~reduce the~~for ~~value of~~ our ~~units~~company.

REG and its affiliates may also have conflicts of interest because employees or agents of REG are involved as owners, creditors and in other capacities with other biodiesel plants in the United States. We cannot require REG to devote its full time or attention to our activities. As a result, REG may have conflicts of interest in allocating personnel, materials and other resources to our biodiesel plant.

On April 3, 2009, REG provided twelve months written notice of its intent to terminate the MOSA. In February 2010, the unitholders of WIE rejected a proposed consolidation with REG. The MOSA, as extended, will terminate as of May 3, 2010. As a result, REG may no longer have a significant interest in the success of our plant. Instead, REG may devote its primary efforts to its wholly owned biodiesel plants, including the two biodiesel plants that REG acquired in connection with the proposed consolidation with WIE. In addition, we may be unable to negotiate a new agreement with REG on terms that are as favorable as the terms under our current MOSA.

Risks Related to Tax Issues in a Limited Liability Company

We expect to continue to be taxed as a partnership,; however, if we are taxed as a corporation we would be subject to corporate level taxes which would decrease our net income and decrease the amount of cash available to distribute to our members. We expect that our company will continue to be taxed as a partnership. This means that our company does not pay any company-level taxes. Instead, the members are allocated any income generated by our company based on the member’s ownership interest, and would pay taxes on the member’s share of our income. If we are not taxed as a partnership, our company would be liable for corporate level taxes which would decrease our net income which may decrease the cash we have to distribute to our members.

We may be unable to make any distributions to our members to satisfy tax obligations unless we obtain the approval of our lender. On June 5, 2008, we executed an amendment to our Master Loan Agreement with our lender. Pursuant to this amendment, we agreed to a negative covenant prohibiting us from distributing any profits to our members unless the proposed distribution is agreed to in writing by our lender. As a result of this amendment, we may be unable to make future distributions to our members, including distributions to satisfy members’ income tax obligations, and members would have to satisfy any tax liability resulting from the ownership of our units using their personal funds.

Members may be allocated a share of our taxable income that exceeds any cash distributions received, therefore members may have to pay this tax liability using their personal funds. We expect to continue to be taxed as a partnership. This means members are allocated a percentage of our taxable income or losses based on their ownership interest in our company. Members may have tax liability based on their allocation of this income. We may make distributions that are less than the amount of tax members owe based on their allocated percentage of our taxable income, or we may not make any distributions at all. If this is the case, members would have to satisfy this tax liability using their personal funds.

2926

If we are audited by the IRS resulting in adjustments to our tax returns, this could cause the IRS to audit members’ tax returns, which could lead to additional tax liability for our members. The IRS could audit our tax returns and could disagree with tax decisions we have made on our returns. This could lead to the IRS requiring us to reallocate items of income, gain, losses, deductions, or credits that could change the amount of our income or losses that is allocated to members. This could require adjustments to members’ tax returns and could lead to audits of members’ tax returns by the IRS. If adjustments are required to members’ tax returns, this could lead to additional tax liabilities for members as well as penalties and interest being charged to members.

~~Even~~Item ~~if we operate profitably, our lender may not approve future distributions of profits to our members~~1B. WeUnresolved ~~have~~Staff ~~produced a net income of $1,622,075 as of our fiscal year ended December 31, 2009~~Comments. Pursuant to our agreement with our lender, however, we must secure the prior written approval of our lender before declaring any distribution of profits. Accordingly, members may not receive distributions on their units and, in the event that members incur any tax liability as a result of their ownership of units in the company, members may be required to satisfy such liability with their personal funds.

~~ITEM 2~~None. ~~PROPERTIES~~


Item 2.		Properties.

Our property consists primarily of the plant and the real estate upon which the plant sits in Wall Lake, Iowa in Sac County. The plant is located on an approximately 38.3-acre site near both US Highway 20 and US Highway 30. We commenced plant operations in May 2006. Our plant has the capacity to produce a total of 30 million gallons of biodiesel per year.

The completed plant consists of the following buildings:

•

Principal office building

•

Processing building

•

Pretreatment building

•

Loading/receiving building

•

Storage warehouse

•

Storage tank farm

•

Iron treatment facility

In December 2009, the Company exercised an option to purchase approximately 35 acres of land adjacent to the property on which the plant is situated. The purchase was completed in January 2010 for a total cost of $70,496. Substantially all of our property, real and personal, serves as the collateral for our debt financing with Farm Credit Services of America, FLCA. Money borrowed under an Iowa Department of Economic Development loan is also secured by substantially all of the Company’s assets, but is subordinate to the agreements with Farm Credit Services of America, FLCA. See “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Liquidity and Capital Resources.”

~~ITEM~~Item 3. ~~LEGAL~~Legal ~~PROCEEDINGS~~Proceedings.

From time to time in the ordinary course of business, WIE may be named as a defendant in legal proceedings related to various issues, including without limitation, workers’ compensation claims, tort claims, or contractual disputes. Other than the arbitration matter described below, we are not currently involved in any material legal proceedings, directly or indirectly, and we are not aware of any claims pending or threatened against us or any of the directors that could result in the commencement of legal proceedings.

In 2008, ~~one~~a ofcustomer ~~our~~allegedly ~~customers~~ defaulted on its contract with usour biodiesel marketer for the purchase of biodiesel due to revocation of the customer’s letter of credit after weour marketer shipped the biodiesel for exporting. As a result, weour marketer sold the biodiesel to another purchaser ~~customer~~ for a lower price. WeOur former marketer, on behalf of WIE and other biodiesel ~~producers~~ producers who sold biodiesel to ~~this~~the allegedly defaulting customer, ~~are~~is now in continued arbitration to resolve this dispute. The arbitration is being conducted in London, UK under the system of arbitration and appeals of the Federation of Oils, Seeds, and Fats Associations (FOSFA). The parties to the arbitration proceeding are an affiliate of our former marketer, REG Marketing and Logistics Group LLC, and Avista Trade Oy, a Finnish entity. On September 28, 2010, the arbitrators issued an award to our former marketer in an amount of approximately $3.25 million, plus interest dating from November 1, 2008, plus certain fees, costs and legal expenses. However, Avista Trade Oy has appealed this award to the FOFSA Board of Appeal. Because WIE produced and marketed approximately one-third (1/3) of the total quantity of biodiesel for which payment default is alleged in this arbitration proceeding, we estimate that WIE will be entitled to approximately one-third (1/3) of any award, judgment, settlement, or other monies collected by our former marketer arising from this dispute.

3027

~~ITEM~~Item 4. ~~SUBMISSION~~(Removed OFand ~~MATTERS TO A VOTE OF SECURITY HOLDERS~~Reserved).

Reserved.

PART II

~~ITEM~~Item 5. ~~MARKET~~Market ~~FOR~~for ~~REGISTRANT~~Registrant’Ss ~~COMMON~~Common ~~EQUITY~~Equity, ~~RELATED~~Related ~~STOCKHOLDER~~Stockholder ~~MATTERS~~Matters ~~AND~~and ~~ISSUER~~Issuer ~~PURCHASES~~Purchases OFof ~~EQUITY~~Equity ~~SECURITIES~~Securities.

Market Information

There is no public trading market for our membership units. We have created a qualified online matching service in order to facilitate trading of our units. Our online matching service consists of an electronic bulletin board that provides information to prospective sellers and buyers of our units. The Company does not receive any compensation for creating or maintaining the matching service. The Company does not become involved in any purchase or sale negotiations arising from our qualified matching service. In advertising our qualified matching service, we do not characterize the Company as being a broker or dealer or an exchange. 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 online matching service. We do not use the bulletin board to offer to buy or sell securities other than in compliance with the securities laws, including any applicable registration requirements. We have no role in effecting the transactions beyond approval, as required under our operating agreement, and the issuance of new certificates. So long as we remain a publicly reporting company, information about the Company will be publicly available through the SEC’s filing system. However, if at any time we cease to be a publicly reporting company, we anticipate continuing to make information about the Company publicly available on our website in order to continue operating the QMS.

Effective on May 18, 2009, the Company suspended trading on its qualified online matching service in connection with the proposed consolidation with REG. Following rejection of the ~~proposed~~ proposed consolidation by the unitholders of the Company, ~~and~~ the ~~subsequent termination of the Second Amended and Restated Asset Purchase Agreement by REG, the~~ Company resumed operation of the ~~matching~~ matching service on March 29, 2010.

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, during periods for which there are trades, this most accurately represents the current trading value of the Company’s units. The information was compiled by reviewing the completed unit transfers that occurred on our qualified matching ~~service~~ service bulletin board during the quarters indicated. No units were traded on our qualified matching service bulletin board during the years ended December 31, 2010 and December 31, 2009.

							# of
	Low		High		Average		# of Units
Quarter	~~Low~~ Price		~~High~~ Price		~~Average~~ Price		~~Units~~ Traded
2008 1st	$	—	$	—	$	—		0
2009 1st		—		—		—		0
2008 2nd	$	750	$	750	$	750		20
2009 2nd		—		—		—		0
2008 3rd	$	—	$	—	$	—		0
2009 3rd		—		—		—		0
2008 4th	$	950	$	950	$	950		10
2009 4th		—		—		—		0
2009 1st	$	—	$	—	$	—		0
2010 1st		—		—		—		0
2009 2nd	$	—	$	—	$	—		0
2010 2nd		—		—		—		0
2009 3rd	$	—	$	—	$	—		0
2010 3rd		—		—		—		0
2009 4th	$	—	$	—	$	—		0
2010 4th		—		—		—		0

31The 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, during periods for which there are trades, that 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.

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.


	Low		High		Average		# of Units
Sellers Quarter	Price		Price		Price		Listed
2009 1^st	$	750	$	750	$	750		20
2009 2^nd		—		—		—		0
2009 3^rd		—		—		—		0
2009 4^th		—		—		—		0
2010 1^st	$	1,650	$	1,900	$	1,775		30
2010 2^nd	$	800	$	800	$	800		5
2010 3^rd		—		—		—		—
2010 4^th		—		—		—		—

							# of
	Low		High		Average		# of Units
Sellers Quarter	Low Price		High Price		Average Price		Units Listed
Buyers Quarter	Price		Price		Price		Listed
2008 1st	$	750	$	1,050	$	900		31
2009 1st		—		—		—		0
2008 2nd	$	1,000	$	1,100	$	1,050		45
2009 2nd		—		—		—		0
2008 3rd	$	1,000	$	1,250	$	1,125		30
2009 3rd		—		—		—		0
2008 4th	$	—	$	—	$	—		0
2009 4th		—		—		—		0
2009 1st	$	750	$	750	$	750		20
2010 1st		—		—		—		—
2009 2nd	$	—	$	—	$	—		0
2010 2nd	$	200.00	$	200.00	$	200.00		20
2009 3rd	$	—	$	—	$	—		0
2010 3rd		—		—		—		—
2009 4th	$	—	$	—	$	—		0
2010 4th		—		—		—		—

							# of
Buyers Quarter	Low Price		High Price		Average Price		Units Listed
2008 1st	$	—	$	—	$	—		0
2008 2nd	$	—	$	—	$	—		0
2008 3rd	$	—	$	—	$	—		0
2008 4th	$	—	$	—	$	—		0
2009 1st	$	—	$	—	$	—		0
2009 2nd	$	—	$	—	$	—		0
2009 3rd	$	—	$	—	$	—		0
2009 4th	$	—	$	—	$	—		0

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 the Company to be deemed a publicly traded partnership.

Unit Holders

As of February 28, 2010, there were approximately ~~746~~748 holders of our membership units.

Distributions

Distributions are payable at the sole discretion of our board of directors, subject to the provisions of the Iowa Revised Uniform Limited Liability Company Act and our operating agreement. Under our operating agreement, we may distribute a portion of the net profits generated from plant operations to our unit holders in proportion to the number of units held by each unit holder. A unit holder’s distribution is determined by dividing the number of units owned by such unit holder by the total number of units outstanding. Our unit holders are entitled to receive distributions of cash or property if and when a distribution is declared by our board of directors. However, there can be no assurance as to our ability to declare or pay distributions in the future or that past distributions (described below) will be indicative of future distributions.

Our operating agreement requires our 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. However, under our Master Loan Agreement, we are required to make additional loan payments based on excess cash flow. In addition, on June 5, 2008, we executed an amendment to our Master Loan Agreement, pursuant to which we agreed to an additional negative covenant prohibiting us from distributing any profits to the our members unless the proposed distribution is agreed to in writing by our lender. These loan covenants and restrictions are described in greater detail under “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Indebtedness.” As a result of our loan covenants and restrictions, we may be unable to make future distributions to our members, including for income tax purposes. Accordingly, if our lender does not allow us to make distributions on our units and our unit holders incur any tax liability as a result of unit ownership, our unit holders may be required to satisfy such liability with their personal funds.

~~We did not declare or pay any distributions during the fiscal years ended December 31, 2009~~29 ~~and December 31, 2008.~~

We did not declare or pay any distributions during the fiscal years ended December 31, 2010 and December 31, 2009.

Performance Graph

The following graph shows a comparison of cumulative total member return since December 31, ~~2005~~2006, calculated on a dividend reinvested basis, for WIE, the NASDAQ Composite Index (the “NASDAQ”) and an index of other companies that have the same SIC code as WIE (the “Industry Index”). The graph assumes $100 was invested in each of our units, the NASDAQ, and the Industry Index on January ~~December 31~~1, 2006. Data points on the graph are annual. Note that historic stock price performance is not necessarily indicative of future unit price performance.

COMPARISON OF CUMULATIVE TOTAL RETURN

Pursuant to the rules and regulations of the Securities and Exchange Commission, the performance graph and the information set forth therein shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, and shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Equity Compensation Plans

We do not have any equity compensation plans under which equity securities of WIE are authorized for issuance.

Sale of Unregistered Securities

We did not make any sales of equity securities that were unregistered during the fiscal year ended December 31, ~~2009~~2010.

Repurchases of Equity Securities

Neither we, nor anyone acting on our behalf, has repurchased any of our outstanding units.

~~ITEM~~Item 6. ~~SELECTED~~Selected ~~FINANCIAL~~Financial ~~DATA~~Data.

The following table sets forth selected consolidated financial data of the Company, which is derived from the audited financial statements for the periods indicated. The information below is only a summary. This information should be read in conjunction with “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” and our audited financial statements included in this annual report. Our past performance may not be indicative of future financial condition or results of operations for many reasons, including the risks described in “Item 1A—Risk Factors” and elsewhere in this annual report.

Statement of
Statement of Operations Data:	2010			2009			2008			2007			2006
Operations Data:	2009			2008			2007			2006			2005
Revenues	$	11,601,444		$	50,109,924		$	79,782,833		$	78,676,998		$	31,991,876
Revenues	$	50,109,924		$	79,782,833		$	78,676,998		$	31,991,876		$	—
Cost of Goods Sold	$	12,338,018		$	46,475,116		$	75,431,492		$	78,253,820		$	23,715,252
Cost of Goods Sold	$	46,475,116		$	75,431,492		$	78,253,820		$	23,715,252		$	—
Gross Profit (Loss)	$	(736,574	)	$	3,634,808		$	4,351,341		$	423,178		$	8,276,624
Gross Profit	$	3,634,808		$	4,351,341		$	423,178		$	8,276,624		$	—
Operating Expenses	$	1,429,827		$	2,052,040		$	1,915,675		$	1,750,886		$	1,606,516
Operating Expenses	$	2,052,040		$	1,915,675		$	1,750,886		$	1,606,516		$	282,249
Other Income (Expense)	$	(29,012	)	$	39,307		$	(592,957	)	$	(1,278,545	)	$	(337,583	)
Other Income (Expense)	$	39,307		$	(592,957	)	$	(1,278,545	)	$	(337,583	)	$	324,427
Net Income (Loss)	$	(2,195,413	)	$	1,622,075		$	1,842,709		$	(2,606,253	)	$	6,332,525
Net Income (Loss)	$	1,622,075		$	1,842,709		$	(2,606,253	)	$	6,332,525		$	42,178
Weighted Average Units Outstanding		26,447			26,447			26,447			26,447			25,674
Weighted Average Units Outstanding		26,447			26,447			26,447			25,674			15,405
Net Income (Loss) Per Unit	$	(83.01	)	$	61.33		$	69.68		$	(98.55	)	$	246.65
Net Income (Loss) Per Unit	$	61.33		$	69.68		$	(98.55	)	$	246.65		$	2.74
Cash Distributions per Unit	$	—		$	—		$	—		$	80.21		$	—
Cash Distributions per Unit	$	—		$	—		$	80.21		$	—		$	—

Balance Sheet Data:	~~2009~~2010		~~2008~~2009		~~2007~~2008		~~2006~~2007		~~2005~~2006
Total Assets	$	3530,~~804~~129,~~989~~718	$	3735,~~478~~804,~~401~~989	$	4937,~~080~~478,~~864~~401	$	4849,~~831~~080,~~373~~864	$	2648,~~530~~831,~~635~~373
Long-Term Debt, less current maturities	$	32,~~262~~195,~~222~~000	$	63,~~725~~262,~~056~~222	$	126,~~366~~725,~~667~~056	$	12,~~851~~366,~~239~~667	$	1012,~~432~~851,239
Members’ Equity	$	2826,~~550~~355,~~785~~372	$	2628,~~928~~550,~~710~~785	$	2526,~~086~~928,~~001~~710	$	2925,~~813~~086,~~568~~001	$	2229,~~481~~813,~~043~~568
Units Outstanding at End of Year		26,447		26,447		26,447		2526,~~674~~447		1525,~~405~~674
Book Value Per Capital Unit	$	~~1,079~~996.5554	$	1,~~018~~079.2155	$	~~948~~1,018.5421	$	~~1,161~~948.2454	$	1,~~459~~161.3324

34 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Except for historical information, the following discussion contains forward-looking statements that are subject to risks and uncertainties. We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this report. Our actual results or actions may differ materially from these forward-looking statements for many reasons, including the risks described in “Item 1A—Risk Factors” and elsewhere in this annual report. Our discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and related notes and with the understanding that our actual future results may be materially different from what we currently expect. For an overview of our business, please see “Item 1—Business.”

During the fiscal year ended December 31, 2010, we operated at only 11.9% of our nameplate capacity. This was due in large part to the expiration of the federal blenders’ tax credit for biodiesel mixtures on December 31, 2009. In mid-April 2010 we warm-idled our plant, meaning we reduced staffing levels and maintained the plant in a state capable of commencing the production of biodiesel again within a matter of several days, due to limited sales and reduced sales forecasts related to the expiration of the blenders’ tax credit. Although this tax credit was reinstated in December 2010 and made retroactive for the 2010 calendar year, the absence of the credit during 2010 caused many biodiesel plants to significantly reduce production or halt production altogether. The biodiesel tax credit is set to expire again on December 31, 2011. If Congress fails to enact another extension of this credit, we expect that demand for biodiesel will once again decrease significantly.

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

We prepared the following discussion and analysis to help you better understand our financial condition, changes in our financial condition, and results of operations for the fiscal year ended December 31, 2009. This discussion should be read in conjunction with the financial statements and related notes for the fiscal year ended December 31, 2009.

Cautionary Statements Regarding Forward Looking Statements

This report contains forward-looking statements that involve known and unknown risks and relate to future events, our future financial performance, or our expected future operations and actions. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “future,” “intend,” “could,” “hope,” “predict,” “target,” “potential,” or “continue” or the negative of these terms or other similar expressions. These forward-looking statements are only our predictions based upon current information 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 under “RISK FACTORS” and elsewhere in this report. While it is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by us include:

• Overcapacity within the biodiesel industry resulting in increased competition and costs for feedstock and/or decreased prices for our biodiesel and glycerin;

• Competition with other manufacturers in the biodiesel industry;

• The availability and adequacy of our cash flow to meet our requirements;

• Results of our hedging strategies;

• Changes in interest rates and the availability of credit to support capital improvements, development, expansion and operations;

• Our ability to keep up with the latest technology for the production of biodiesel;

• Decrease in the demand for biodiesel;

• Changes in plant production capacity or technical difficulties in operating the plant;

• Actual biodiesel and glycerin production varying from expectations;

• Availability and cost of products and raw materials, particularly soybean oil and animal fats;

• Changes in the price and market for biodiesel and its co-products;

• Our ability to market and our reliance on third parties to market our products;

• Our ability to identify and enter into contractual arrangements with third parties to procure feedstock for our plant and to market our products;

• Fluctuations in petroleum prices;

• Competition from alternative fuels and alternative fuel additives;

• Changes in our business strategy, capital improvement or development plans;

• Consequences of the domestic and global economic downturn and recent financial crisis;

• Our ability to generate free cash flow to invest in our business and service our debt;

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

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

• Changes and advances in biodiesel production technology;

• Our ability to continue to export our biodiesel;

• Changes in federal, state, or local incentives for biodiesel production, including without limitation the expiration of the federal tax credit for biodiesel;

• Changes to the rules related to the Renewable Fuels Standard;

• Our ability to comply with the financial covenants in our loan agreements;

• The imposition of tariffs or other duties on biodiesel imported into Europe;

• Changes to our operations related to the rejection of the proposed consolidation with REG, including without limitation our ability to retain and/or train a general manager for the plant, our ability to procure feedstock for our plant, and our ability to market and sell our finished products; and

• Other factors described elsewhere in this report.

We undertake no duty to update these forward-looking statements, even though our situation may change in the future. Furthermore, we cannot guarantee future results, events, 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.

Overview

Our revenues are derived from the sale and distribution of our biodiesel, glycerin, and fatty acid throughout the continental United States and internationally. We currently rely heavily on REG, Inc. to procure our feedstock and market our biodiesel, glycerin, and fatty acid. Through REG, we have been exporting some of our biodiesel internationally when we believe export sales will return greater profits than domestic biodiesel sales.

Our operating results are largely driven by the prices at which we sell our biodiesel and glycerin and the costs of our feedstock and operating costs. Our revenues are generally impacted by such factors as the available supply and demand for biodiesel, the price of diesel fuel (with which biodiesel prices often correlate), general economic conditions, the weather, our dependence on one major customer who markets and distributes our products, the intensely competitive nature of our industry, the extensive environmental laws that regulate our industry, possible legislation at the federal, state and/or local level, and changes in federal biodiesel tax incentives.

The primary components of cost of goods sold from the production of biodiesel are feedstock (primarily animal fats and soybean oil) and other raw materials (methanol and other chemicals), energy (natural gas and electricity), labor, and depreciation on process equipment. The cost of feedstock is the largest single component of the cost of biodiesel production, typically accounting for 70-90% of the overall cost of producing biodiesel. Changes in the price or supply of feedstock are subject to and determined by market forces and other factors over which we have no control, such as crop production, carryout, exports, government policies and programs, and weather. Because biodiesel prices are so strongly correlated to diesel fuel prices, it is difficult for biodiesel producers to pass along increased input costs to customers. We have experienced a large variation in the cost of our feedstocks since we began operation. In addition, we have also seen large variations in prices within the energy complex. The profitability of our operation is dependent upon the correlation of the agricultural market and the energy market.

We expect to fund our operations during the next twelve months using cash flow from our continuing operations and our remaining credit facilities. Management is directing its efforts toward increasing production and operating efficiencies while maintaining or decreasing operating costs. As part of these efforts, we plan, to the extent possible, to reduce feedstock costs by continuing to produce biodiesel from less-costly feedstocks, such as animal fat. A majority of the feedstock used in the production of our biodiesel for the calendar year of 2009 was animal fats, and predominately choice white grease.

Throughout 2009, we operated on an as-ordered basis. Under our as-ordered production philosophy, we produce biodiesel when an order has been placed and pursuant to our forecasted demand for biodiesel. This helps us to ensure that our finished inventory does not significantly exceed the contracts for sale that we have at any given time. For the fiscal year ended December 31, 2009, we produced approximately 15,830,562 gallons of biodiesel at our plant and operated at an average of approximately 52.8% of our nameplate capacity. This is a significant reduction from fiscal year 2008, when we produced approximately 18,035,289 gallons of biodiesel and operated at an average of approximately 67% of our nameplate capacity.

The reduced production schedule in fiscal year 2009 is primarily due to the lower cost of petroleum diesel throughout the year. As a result of persistent low prices for petroleum diesel, as well as the failure of Congress to extend the biodiesel tax credit and the imposition of countervailing and anti-dumping duties on biodiesel by the European Union, we expect that we will continue to operate at lower production levels well into 2010. Although we have historically experienced higher demand during the summer months, in light of these other factors, there is no assurance that this trend will continue in 2010.

We are very reliant on REG to manage and direct the general operations of our plant. Pursuant to the MOSA, REG provides us with overall management, sales and marketing, and feedstock and chemical procurement services. On April 7, 2009, REG provided twelve months written notice of its intent to terminate the MOSA. The MOSA will terminate as of May 3, 2010. On February 24, 2010, the unit holders of WIE voted to reject a proposed consolidation of the Company with REG. The termination of the MOSA and the rejection of the proposed consolidation with REG may have a significant impact on the operations of WIE in 2010 and in future years. See “BUSINESS — Proposed Consolidation with REG” and “RISK FACTORS” for additional information.

Results of Operations

Comparison of Fiscal Years Ended December 31, ~~2009~~2010 and December 31, ~~2008~~2009

The following table shows the results of our operations and the percentage of revenues, costs of goods sold, operating expenses, and other items to total revenues in our statements of operations for the fiscal years ended December 31, ~~2009~~2010 and ~~2008~~2009.

	Fiscal Year Ended						Fiscal Year Ended
Income Statement Data	December 31, 2009						December 31, 2008
	December 31, 2010						December 31, 2009
Revenues	$	50,109,924			100.00	%	$	79,782,833			100.00	%
Statement of Operations Data	Amount			Percent			Amount			Percent
Cost of Sales	$	46,475,116			92.75	%	$	75,431,492			94.55	%
Revenues	$	11,601,444			100.00	%	$	50,109,924			100.00	%
Gross Profit	$	3,634,808			7.25	%	$	4,351,341			5.45	%
Cost of Sales	$	12,338,018			106.35	%	$	46,475,116			92.75	%
Operating Expenses	$	2,052,040			4.10	%	$	1,915,675			2.40	%
Gross Profit (Loss)	$	(736,574	)		(6.35	%)	$	3,634,808			7.25	%
Operating Income	$	1,582,768			3.16	%	$	2,435,666			3.05	%
Operating Expenses	$	1,429,827			12.32	%	$	2,052,040			4.10	%
Other Income (Expense)	$	39,307			0.08	%	$	(592,957	)		(0.74	)%
Operating Income	$	(2,166,401	)		(18.67	%)	$	1,582,768			3.16	%
Net Income	$	1,622,075			3.24	%	$	1,842,709			2.31	%
Other Income (Expense)	$	(29,012	)		(0.25	%)	$	39,307			0.08	%
Net Income (Loss)	$	(2,195,413	)		(18.92	%)	$	1,622,075			3.24	%

Revenues

Our revenues from operations primarily come from biodiesel, glycerin and fatty acid, and soapstock ~~glycerin~~ sales, as well as custom processing and storage. The following table shows the sources of our revenues for the fiscal years ended December 31, ~~2009~~ 2010 and December 31, ~~2008~~2009:

	Fiscal Year EndedDecember 31, 2009					Fiscal Year EndedDecember 31, 2008
	Fiscal Year Ended					Fiscal Year Ended
	December 31, 2010					December 31, 2009
Revenue Source	Amount		% of Revenues			Amount		% of Revenues
Biodiesel Sales	$	4810,~~097~~423,~~635~~823		9689.08	%	$	7648,~~970~~396,~~163~~111		96.56	%
Fatty Acid Sales	$	939,542		1.9	%		—		—
Glycerin Sales	$	298,037		2.6	%	$	703,169		1.4	%
Glycerin Sales	$	703,169		1.4	%	$	2,812,670		3.5	%
Fatty Acid and Soapstock Sales	$	671,355		5.8	%	$	939,542		1.9	%
USDA Bioenergy Program	$	298,476		0.6	%		—		—
Custom Processing and Storage	$	208,229		1.8	%	$	71,102		0.1	%
Custom Processing	$	71,102		0.1	%		—		—
Total Revenues	$	11,601,444		100.00	%	$	50,109,924		100.0	%
Total Revenues	$	50,109,924		100.0	%	$	79,782,833		100	%

37Revenues from operations for the twelve months ended December 31, 2010 decreased by approximately 76.8% compared to revenues from operations for the twelve months ended December 31, 2009. Revenue from sales of biodiesel decreased by approximately 78.5% for the twelve months ended December 31, 2010, 2010 compared to the twelve months ended December 31, 2009. This decrease in revenues is due primarily to a decrease in our number of gallons of biodiesel sold. During the twelve months ended December 31, 2010, we sold approximately 80.3% fewer gallons of biodiesel as compared to the same period in 2009. This decrease in number of gallons sold is a direct result of the expiration of the blenders’ tax credit for biodiesel mixtures. Although this tax credit was reinstated in December 2010 and made retroactive for the 2010 calendar year, the absence of the credit during 2010 caused many biodiesel plants to significantly reduce production or halt production altogether. Our decrease in quantity of gallons sold was offset slightly by an increase in biodiesel prices. The average price per gallon we received for our biodiesel during the twelve months ended December 31, 2010 increased approximately 7.7% compared to the same period from the prior year.

Revenue from sales of glycerin decreased by approximately 57.6% for the twelve months ended December 31, 2010 compared to the twelve months ended December 31, 2009. This decrease in revenue is the net result of a decrease in quantity sold, offset by an increase in glycerin prices. The average sales price for our glycerin increased by approximately 65.8% during the twelve months ended December 31, 2010 compared to the same period the prior year. However, our quantity of glycerin sold decreased by approximately 74.5% during the twelve months ended December 31, 2010 compared to the same period the prior year due to decreased production. Revenue from sales of fatty acids and soapstock decreased approximately 28.5% for the twelve months ended December 31, 2010 compared to the twelve months ended December 31, 2009. The average sales price for our fatty acids increased by approximately 28.3% during the twelve months ended December 31, 2010 compared to the same period the prior year. However, our quantity of fatty acids sold decreased by approximately 66.7% during the twelve months ended December 31, 2010 compared to the same period the prior year due to decreased production.

~~Revenues~~During ~~from operations for~~ the ~~fiscal~~twelve ~~year~~months ended December 31, ~~2009~~2010, ~~totaled~~we received $50210,~~109,924 compared~~509 ~~with~~in ~~$79,782,833~~incentive ~~for~~funds from the ~~fiscal~~federal ~~year~~government ~~ended~~related ~~December 31,~~to ~~2008. Included within our total revenues for~~ the ~~fiscal~~USDA ~~year~~Bioenergy ~~ended December 31~~Program, ~~2009~~compared ~~and~~to ~~2008~~the ~~are~~same ~~approximately~~period ~~$6,986,655~~the ~~and~~prior ~~$10,068,612~~year ~~respectively,~~when ~~in incentives~~ we received or$298,476 ~~which~~in ~~were receivable from certain federal government~~ incentive ~~programs~~funds ~~for~~related to the ~~sale~~federal ofblenders’ ~~our~~tax ~~biodiesel~~credit. ~~Revenues in fiscal year 2009 were~~The ~~approximately~~incentive ~~37%~~funds ~~lower~~we ~~than~~received ~~revenues~~during inthe ~~fiscal~~twelve ~~year~~months ~~2008.~~ended ~~The~~December 31, ~~decrease~~2010 inand ~~revenues~~2009 ~~was~~are ~~due~~included ~~primarily~~in toour ~~decreased production and sales volume of~~ biodiesel ~~and its co-products, and lower per-unit~~ sales ~~prices~~revenue ~~for~~in ~~our~~the ~~biodiesel~~table ~~and its co-products~~above.

~~Because~~For ~~biodiesel~~the istwelve ~~primarily~~months ~~used~~ended ~~as an additive to petroleum-based diesel fuel~~December 31, ~~biodiesel prices~~2010 ~~have~~and ~~generally correlated to diesel fuel prices. Diesel prices have climbed over the past several years~~2009, ~~reaching~~we ~~record~~also ~~highs~~derived inrevenues ~~the~~from ~~summer of 2008. Since that time, however, diesel fuel~~custom ~~prices~~processing ~~have since trended downward as oil prices have plummeted~~ and ~~the recent U~~storage.S. ~~economic downturn~~Our ~~and~~revenues ~~credit~~from ~~crisis~~custom ~~have~~processing ~~contributed~~are attributable to ~~a decrease in demand for fuel in general. According~~experimental toprocessing ~~the~~that ~~Energy~~we ~~Information~~conducted ~~Administration,~~on ~~the~~behalf ~~average sales price~~ of ~~No. 2~~another ~~ultra low sulfur diesel fuel in fiscal year 2009 was $2~~company.47 ~~per~~Our ~~gallon,~~revenues ~~compared~~from ~~with~~storage ~~an average sales price of $3.81 per~~are ~~gallon~~attributable into ~~fiscal~~storing ~~year~~product ~~2008.~~sold ~~The~~by ~~average~~us ~~sales~~until ~~price~~the ~~that~~time wethe ~~received~~purchaser ~~for~~took ~~our~~possession ~~biodiesel in fiscal year 2009 was $2.7961 per gallon, compared with an average sales price~~ of ~~$2.9150 in fiscal year~~the ~~2008~~product. AsWe ofdo ~~February 19,~~not ~~2010,~~expect ~~USDA’s~~to ~~National~~derive ~~Weekly~~substantial Agrevenues ~~Energy~~from ~~Round-Up~~custom ~~reports~~processing ~~that~~or ~~B100 biodiesel~~storage ~~prices~~ in ~~Iowa ranged from $3.23 to $3.52 per gallon, which is up from a range of $2.60~~the ~~to $2~~future.~~95 per gallon approximately one year ago.~~

~~Our~~During ~~results~~the oftwelve ~~operations~~month ~~benefit~~period ~~from~~ended ~~federal~~December 31, ~~and~~2010, ~~state~~we ~~biodiesel~~produced ~~supports~~a ~~and~~small ~~tax~~quantity of ~~incentives.~~biodiesel ~~Biodiesel~~and ~~has~~sold ~~generally~~additional ~~been~~amounts ~~more~~of ~~expensive~~our toexisting ~~produce~~biodiesel ~~than~~inventory. ~~petroleum-based~~During ~~diesel~~the ~~and,~~first quarter asof ~~a result~~2010, ~~the~~we ~~biodiesel~~rebuilt ~~industry~~our ~~depends~~in-house onbiodiesel ~~such~~inventories ~~incentives~~ to beestablish ~~competitive.~~our Ontypical ~~December 31,~~working inventory ~~2009,~~of ~~the~~approximately $1one million gallons.00 ~~federal~~Prior ~~tax~~to ~~credit~~the ~~expired~~first ~~and~~quarter ~~Congress~~of ~~has~~2010 soour ~~far~~inventory ~~failed~~levels tohad been ~~enact~~reduced anto ~~extension~~near ~~of this~~zero ~~incentive~~in order for ~~biodiesel~~us ~~production.~~to ~~Management~~take ~~expects~~advantage ~~that~~of the ~~recent~~blenders’ ~~expiration~~credit ofas ~~the~~much as we ~~federal~~could ~~tax~~in ~~credit~~2009 ~~will~~prior ~~negatively~~to ~~impact~~the ~~our~~expiration ~~ability~~of tothe ~~sell~~credit ~~biodiesel~~at year-end. IfMore ~~Congress~~recently, ~~fails~~we tostarted ~~enact~~producing anbiodiesel ~~extension~~again ofat our plant. During the ~~tax~~twelve ~~credit,~~months itended ~~may~~December 31, be2010, ~~uneconomical~~we operated ~~for~~at ~~refiners~~an average of ~~petroleum-based~~approximately ~~diesel to~~11.9% ~~blend~~of ~~biodiesel~~our ~~with~~nameplate ~~petroleum-based~~capacity, ~~diesel~~compared ~~fuel~~to ~~due~~the tosame period the ~~higher~~prior ~~cost~~year ofwhen ~~biodiesel.~~we ~~See “BUSINESS~~operated —at ~~Government~~an ~~Regulation~~average ~~and~~of ~~Federal~~approximately ~~Biodiesel~~52.8% ~~Supports~~of our capacity.”

~~Biodiesel~~Cost ~~demand~~of ~~is also subject to significant seasonal variation. Based on historical~~Sales trends, management anticipates that seasonal demand for biodiesel will decrease in the fall and winter months when blenders have typically decreased their biodiesel blend percentages due to cold-flow concerns. This seasonal variation has historically caused downward pressure on biodiesel sales prices.

~~The~~While ~~EPA~~our ~~recently~~absolute ~~published~~cost ~~regulations~~of tosales ~~implement~~for ~~the~~our ~~Renewable~~products ~~Fuel~~decreased ~~Standard~~during ~~program as it was expanded in~~ the ~~Energy~~twelve ~~Independence~~months ~~and~~ended December 31, ~~Security~~2010 ~~Act~~compared ofto ~~2007~~the ~~(often~~twelve ~~referred~~month toperiod asfrom ~~“RFS2”). Pursuant to~~ the ~~new~~prior ~~regulations~~year, ~~RFS2~~our ~~requires~~cost ~~that 1.15 billion gallons~~ of ~~biomass-based~~sales ~~diesel~~as bea ~~blended~~percentage ~~into the national fuel pool by the end~~ of ~~2010,~~our ~~which~~revenues ~~amount~~increased ~~combines~~from ~~the requirements of 2009 and 2010~~92.75% ~~In 2011, at least 800 million gallons~~ of ~~biomass-based~~our ~~diesel~~revenues ~~must~~for ~~be blended into~~ the ~~nation’s~~twelve ~~fuel~~months ~~pool;~~ended December 31, ~~and in 2012~~2009, atto ~~least~~106.35% ~~1 billion gallons~~ of ~~biomass-based~~our ~~diesel~~revenues ~~must~~for ~~be blended into~~ the ~~national~~twelve ~~fuel~~months ~~pool.~~ended ~~In each year thereafter~~December 31, ~~EPA~~2010. ~~must determine the level of~~This ~~biomass-based~~percentage ~~diesel~~increase ~~required,~~is ~~which~~primarily ~~amount~~due ~~cannot~~to beprice ~~less~~increases ~~than~~for ~~1 billion~~our ~~gallons.~~raw Atmaterials ~~this~~and ~~time~~energy itcompared isto ~~unclear~~the ~~what~~previous ~~impact~~year, ifand ~~any,~~due to the ~~RFS~~fact ~~will~~that ~~have~~we onhad ~~biodiesel~~lower ~~demand since national biodiesel~~ production ~~already~~rates ~~exceeds~~compared ~~these~~to ~~requirements. Our financial condition may be negatively affected~~the ifprevious ~~the~~year ~~RFS2~~while ~~does~~fixed ~~not~~costs ~~result~~remained inrelatively ~~greater demand for biodiesel~~consistent. ~~See “BUSINESS — Government Regulation~~ ~~and Federal Biodiesel Supports.”~~

~~Excess~~The ~~production~~primary ~~capacity~~components inof ~~the~~cost ~~biodiesel~~of ~~industry~~sales ~~could~~from ~~make~~the itproduction ~~difficult~~of ~~for~~biodiesel usare ~~to market~~feedstock ~~our~~(primarily ~~products~~soybean atoil ~~profitable~~and ~~prices.~~animal ~~The~~fats) ~~National~~and ~~Biodiesel~~other ~~Board~~raw ~~estimates~~materials ~~that~~(methanol ~~current~~and ~~dedicated~~other chemicals), ~~biodiesel~~energy ~~production~~(natural ~~capacity~~gas ofand ~~existing~~electricity), ~~plants~~labor, asand ofdepreciation ~~June 22,~~on ~~2009~~process (equipment. During the twelve ~~most~~months ~~recent~~ended ~~date~~December 31, ~~for which~~2010, ~~data~~approximately is75.8% ~~available)~~of ~~was~~our ~~about~~total ~~2.69 billion~~feedstock ~~gallons~~usage ~~per~~consisted of ~~year~~choice white grease, which is upan increase from ~~approximately 1.85 billion~~the ~~gallons~~same ~~per~~period ~~year~~in as2009, ofwhen ~~September 2007~~68.8% ~~The~~of ~~National~~our ~~Biodiesel Board also estimates~~total ~~that~~feedstock ~~plants~~usage ~~under~~was ~~construction~~choice ~~and~~white ~~expansion~~grease. asAnimal offat ~~June 22,~~prices ~~2009~~remain ~~could~~less ~~add~~than ~~another~~soybean ~~427~~oil prices.~~8 million~~ The ~~gallons~~average toprice ~~U.S.~~we ~~biodiesel~~paid ~~production~~for ~~capacity,~~feedstock for athe ~~total~~twelve ~~annual~~months ~~production~~ended ~~capacity~~December 31, of2010 ~~3.12 billion~~was ~~gallons~~approximately 8.0% ~~Despite~~higher ~~these~~than ~~significant~~our ~~increases~~feedstock inprices ~~production~~for ~~capacity,~~ the ~~National Biodiesel~~same ~~Board~~period ~~has~~in ~~reported~~2009. ~~that~~Our ~~only~~average ~~700 million~~price ~~gallons~~paid offor methanol, ~~biodiesel~~another ~~were~~input ~~produced~~into inthe ~~2008~~biodiesel ~~and estimates~~production ~~that~~process, ~~only~~increased ~~490 million~~by ~~gallons~~approximately ~~were produced in 2009~~36.1% during ~~Many~~the ~~biodiesel~~twelve ~~plants~~months doended ~~not~~December 31, ~~operate at~~2010 ~~full~~compared ~~capacity due in part~~ to the ~~fact~~same ~~that~~period ~~total~~in ~~production~~the ~~capacity~~prior ~~significantly exceeds demand~~year. Finally, Ifour ~~the~~average ~~demand~~price paid for ~~biodiesel~~natural ~~does~~gas ~~not~~increased ~~grow~~by atapproximately ~~the~~36.0% ~~same~~during ~~pace~~the astwelve months ~~increases~~ended ~~in supply~~December 31, ~~we expect~~2010 ~~the~~compared ~~price~~to ~~for~~the ~~biodiesel~~same toperiod ~~decline~~ in the ~~long-term~~prior year.

Lower crude glycerin sales prices in fiscal 2009 compared to fiscal 2008 and lower production levels of crude glycerin also contributed to lower total revenues in fiscal year 2009. The average sales price for our glycerin decreased by 11.7% for the year ended December 31, 2009 compared to the average sales price for glycerin for the year ended December 31, 2008. The sales price of glycerin has decreased due to the abundant supply of crude glycerin. In addition, since crude glycerin is a by-product of the production of biodiesel, our production level of glycerin also decreased in 2009. As a result of the reduced biodiesel production levels nationally following the lapse of the federal biodiesel tax credit, management expects crude glycerin prices to increase.

During the fiscal year ended December 31, 2009, WIE received $298,476 from the Commodity Credit Corporation Bioenergy Program. See “ITEM 1. BUSINESS — Government Regulation and Federal Biodiesel Supports - Federal Biodiesel Supports and Programs.” WIE did not receive any revenue from the Bioenergy Program during the fiscal year ended December 31, 2008.

During the fiscal year ended December 31, 2009, WIE was retained by several companies to process experimental oils through the use of its pretreatment system. WIE received $71,102 for its custom processing services during the fiscal year ended December 31, 2009. WIE did not receive any revenue from custom processing during the fiscal year ended December 31, 2008.

Cost of Goods Sold

Although our sales volume decreased 38% from fiscal 2008 to fiscal 2009, our cost of goods sold as a percentage of our revenues decreased approximately 1.8% from fiscal 2008 to fiscal 2009. Cost of sales for our products for the year ended December 31, 2009 was $46,475,116, compared to $75,431,492 for the year ended December 31, 2008. This is primarily due to the combination of the historically high biodiesel prices that were experienced during a large part of fiscal year 2008 and our utilization of lower-cost feedstocks during fiscal 2008. Average biodiesel sales prices in 2009 were significantly lower than in 2008. In order to minimize our cost of sales, in 2008, we began to increase our use of lower-cost feedstocks, such as animal fats and used cooking oils, in place of higher-cost feedstocks, such as soybean oil. We continued this practice throughout the fiscal year ended December 31, 2009. In fiscal year 2009, approximately 91.5% of the feedstock used in our biodiesel production was animal fats and 8.5% was soybean oil. In particular, approximately 68.8% of our total feedstock usage in 2009 was choice white grease.

In 2009, the average price we paid for choice white grease was 24.92 cents per pound, which represents a decrease of approximately 36.9% from the price we paid in fiscal year 2008. The price of choice white grease was relatively stable throughout 2009. By contrast, in 2008, the average price we paid for choice white grease was 39.50 cents per pound.

Our average cost of methanol, another input into the biodiesel production process, decreased by approximately 52.0% per gallon for fiscal year 2009 compared to 2008 due to increased world supply.

The average price we paid for natural gas during the fiscal year ended December 31, 2009 was approximately 39.1% less than the average price we paid for natural gas during the fiscal year ended December 31, 2008. In 2008, natural gas prices significantly exceeded historical averages. According to the Energy Information Administration, the industrial price of natural gas averaged 9.67 per thousand cubic feet in 2008, reaching a peak price of 13.05 per thousand cubic feet in July 2008. In 2009, by contrast, the Energy Information Administration Reports that the industrial price of natural gas averaged $5.27 per thousand cubic feet, ranging from a low of $3.81 to a high of $7.43. A correlation can be made between high energy prices, which increase our profitability and at the same time increase our energy input costs. Conversely, when energy prices are low, our profit margins may decrease but the energy input costs will also be lower. Any increases in the price of natural gas will increase our cost of goods sold.

The price for animal fats, including choice white grease, tend to move in relation to the price of other feedstocks, such as soybean oil. Accordingly, as soybean oil prices increase, animal fat prices generally tend to increase. Soybean oil prices were generally consistent throughout the fiscal year ended December 31, 2009. According to the USDA’s Oil Crops Outlook report for February 2010, the average price for soybean oil during the twelve-month period ending December 31, 2009 was 33.01 cents per pound. The report also indicates that during that period, the price of soybean oil reached a low of 28.23 cents per pound in March 2009 and a high of 36.81 cents per pound in December 2009. By contrast, soybean oil prices during the fiscal year ended December 31, 2008 were extremely volatile, spiking to approximately 62.43 cents per pound in June 2008 and subsequently dropping to 29.30 cents per pound in December 2008. The USDA forecasted that soybean oil prices during the period from October 2009 to September 2010 would be between 33.5 cents per pound and 36.5 cents per pound.

The prices for animal fats, including lard and edible tallow, have generally correlated to the price of soybean oil. In addition, animal fats are also used as a feed supplement. Therefore, animal fat prices are dependent in part on corn prices and the quality of the available corn supply. According to the USDA’s February 2010 Oil Crops Outlook report, the average prices for lard and edible tallow during the twelve-month period ending December 31, 2009 were 26.81 cents and 27.52 cents per pound, respectively. The estimated average lard and edible tallow prices for January 2010 were 28.60 cents and 29.48 cents per pound respectively. Increased demand for soybean oil and animal fats from increased biodiesel production or other changes in demand could keep soybean oil and animal fat prices higher than currently anticipated. If the RFS-2 increases demand for biodiesel, increased demand for feedstocks could result in an increase in the cost of those feedstocks.

Operating Expenses

~~Operating~~Although our absolute operating expenses ~~for~~decreased during the ~~fiscal~~twelve ~~year~~months ended December 31, 2010 ~~2009~~compared ~~totaled~~to ~~$2,052,040,~~the ~~which~~same ~~is 7.1%~~twelve ~~higher~~month ~~than~~period ~~operating~~from ~~expenses~~the ofprior $1year,~~915,675~~ ~~for~~our ~~the same period in 2008. Our~~ operating expenses as a percentage of revenues were ~~1.7%~~ higher for the ~~fiscal~~twelve ~~year~~months ended December 31, ~~2009~~ 2010 than they were for the ~~fiscal~~twelve ~~year~~months ended December 31, ~~2008~~2009. ~~These~~The ~~percentages~~decrease ~~were~~in ~~4.10%~~our ~~and~~absolute ~~2.40%, respectively. Our~~ operating expenses was due ~~for~~to the ~~fiscal~~fact ~~year~~that ~~ended~~we ~~December 31,~~had ~~2009,~~increased ~~include~~consulting ~~approximately~~and ~~$450,000~~professional infees ~~expenses~~during ~~that~~the wetwelve months ended ~~incurred~~December 31, 2009 in connection with ~~the~~our proposed consolidation with REG,. ~~which~~The ~~includes~~decrease ~~legal~~in ~~fees, audit~~our ~~fees,~~absolute ~~accounting~~operating ~~fees,~~costs ~~and~~is ~~consulting~~also ~~fees.~~attributable ~~See~~to ~~“BUSINESS~~decreased —office ~~Proposed~~and ~~Consolidation with REG~~administrative expenses.” ~~We expect~~Our ~~that~~decreased ~~our~~office ~~operating~~and administrative expenses ~~for~~are ~~fiscal~~a ~~2009~~result ~~will~~of ~~remain~~decreased management ~~fairly~~fees, ~~consistent~~association ifdues, ~~average~~and ~~plant production~~the ~~levels~~elimination ~~remain~~of ~~consistent~~our bad debt reserve.

~~Other Income (Expenses)~~33

Our other income and expenses for the fiscal year ended December 31, 2009 increased from a net other expense of $592,957, or 0.74% of revenues, during the fiscal year ended December 31, 2008 to a net other income of $39,307, or 0.08% of revenues, during the fiscal year ended December 31, 2009. This change resulted primarily from the reduction in our interest expense from $759,243 during the fiscal year ended December 31, 2008 to $322,698 during the fiscal year ended December 31, 2009. The reduction in our interest expense resulted primarily from reducing the outstanding balance under our revolving line of credit by $1,720,000 and paying down our term loan by $1,800,000. The change from a net other expense to a net other income also resulted from our receipt of grant income in the amount of $231,525, which includes grant income in the amount of $131,525 from the Iowa Department of Economic Development’s (“IDED”) New Jobs Training Program and IDED’s forgiveness of a forgivable loan in the amount of $100,000. See “Liquidity and Capital Resources” below. Although we do not expect to receive any grant income in 2010, we expect that our other income will be similar for fiscal year 2010. We also expect our other expenses to decrease as we continue to reduce the outstanding principal of our debt.

Comparison of Fiscal Years Ended December 31, 2008 and 2007.

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 fiscal years ended December 31, 2008 and December 31, 2007.

	Fiscal Year Ended						Fiscal Year Ended
	December 31, 2008						December 31, 2007
Income Statement Data	Amount			Percent			Amount			Percent
Revenues	$	79,782,833			100.00	%	$	78,676,998			100.00	%
Cost of Sales	$	75,431,492			94.55	%	$	78,253,820			99.46	%
Gross Profit	$	4,351,341			5.45	%	$	423,178			0.54	%
Operating Expenses	$	1,915,675			2.40	%	$	1,750,886			2.23	%
Operating Income	$	2,435,666			3.05	%	$	(1,327,708	)		(1.69	)%
Other Income (Expense)	$	(592,957	)		(0.74	)%	$	(1,278,545	)		(1.63	)%
Net Income (Loss)	$	1,842,709			2.31	%	$	(2,606,253	)		(3.31	)%

In mid-April 2010 we warm-idled our plant due to limited sales and reduced sales forecasts related to the failure of Congress to extend the blenders’ tax credit for biodiesel mixtures, which expired on December 31, 2009. In connection with our plant warm-idling, we laid off 15 full-time employees to reduce operating expenses, although we agreed to pay the health and dental insurance policy premiums for these individuals through mid-August 2010. Effective August 13, 2010, we laid off seven additional full-time employees, leaving us with six full-time employees. We also agreed to temporarily pay a portion of the health and dental insurance premiums of these laid-off employees. Since these most recent layoffs, and in connection with the reinstatement of the blenders’ tax credit, we have hired additional employees as we have once again started producing biodiesel.

Other Income (Expenses)

Our other income (expenses) decreased from a net other income of $39,307, or 0.08% of revenues, for the twelve months ended December 31, 2009, to a net other expense of $29,012, or (0.25%) of revenues, for the twelve months ended December 31, 2010. This change resulted primarily from the net result of a decrease in interest expense related to our credit facilities, a decrease in grant income, and a decrease in patronage dividends received from our lender. During the twelve months ended December 31, 2009, we received grant income in the amount of $131,525 from the Iowa Department of Economic Development’s New Jobs Training Program and the forgiveness of our $100,000 forgivable loan with the Iowa Department of Economic Development.

Comparison of Fiscal Years Ended December 31, 2009 and 2008.


	Fiscal Year Ended					Fiscal Year Ended
	December 31, 2009					December 31, 2008
Income Statement Data	Amount		Percent			Amount			Percent
Revenues	$	50,109,924		100.00	%	$	79,782,833			100.00	%
Cost of Sales	$	46,475,116		92.75	%	$	75,431,492			94.55	%

Gross Profit	$	3,634,808		7.25	%	$	4,351,341			5.45	%
Operating Expenses	$	2,052,040		4.10	%	$	1,915,675			2.40	%

Operating Income	$	1,582,768		3.16	%	$	2,435,666			3.05	%
Other Income (Expense)	$	39,307		0.08	%	$	(592,957	)		(0.74	)%

Net Income (Loss)	$	1,622,075		3.24	%	$	1,842,709			2.31	%

Revenues

~~Our revenues from operations primarily come from biodiesel and glycerin sales.~~ The following table shows the sources of our revenues for the fiscal years ended December 31, 2009 ~~2008~~ and December 31, ~~2007~~2008:

	Fiscal Year EndedDecember 31, 2008					Fiscal Year EndedDecember 31, 2007
	Fiscal Year Ended					Fiscal Year Ended
	December 31, 2009					December 31, 2008
Revenue Source	Amount		% of Revenues			Amount		% of Revenues
Biodiesel Sales	$	7648,~~970~~396,~~163~~111		96.56	%	$	7776,~~195~~970,~~818~~163		9896.15	%
Glycerin Sales	$	2703,~~812,670~~169		31.54	%	$	1,~~481~~766,~~180~~579		12.92	%
Total Revenues	$	79,782,833		100	%	$	78,676,998		100	%
Fatty Acid and Soapstock Sales	$	939,542		1.9	%	$	1,046,091		1.3	%
Custom Processing and Storage	$	71,102		0.1	%	$	—		—	%
Total Revenues	$	50,109,924		100.00	%	$	79,782,833		100.0	%

~~Revenues from operations for the fiscal year ended December 31, 2008 totaled $79,782,833~~34 compared with $78,676,998 for the fiscal year ended December 31, 2007. Included within our total revenues for the fiscal year ended December 31, 2008 and 2007 are approximately $10,068,612 and $10,081,726 respectively, in incentives we received or which were receivable from certain federal government incentive programs for the sale of our biodiesel. Revenues in fiscal year 2008 were approximately 1.4% greater than revenues in fiscal year 2007. The increase in revenues was due primarily to increased production and sales volume of biodiesel and its co-products, and higher per-unit sales prices for our biodiesel and its co-products.

Revenues from operations for the fiscal year ended December 31, 2009 totaled $50,109,924 compared with $79,782,833 for the fiscal year ended December 31, 2008. Included within our total revenues for the fiscal year ended December 31, 2009 and 2008 are approximately $6,986,655 and $10,068,612 respectively, in incentives we received or which were receivable from certain federal government incentive programs for the sale of our biodiesel. Revenues in fiscal year 2009 were approximately 37% lower than revenues in fiscal year 2008. The decrease in revenues was due primarily to decreased production and sales volume of biodiesel and its co-products, and lower per-unit sales prices for our biodiesel and its co-products.

Cost of Sales

Although our sales volume decreased 2538% from fiscal ~~2007~~2008 to fiscal ~~2008~~2009, our cost of goods sold as a percentage of our revenues decreased approximately 41.918% from fiscal ~~2007~~2008 to fiscal ~~2008~~2009. Cost of sales for our products for the year ended December 31, ~~2008~~2009 was $7546,~~431~~475,~~492~~116, compared to $7875,~~253~~431,~~820~~492 for the year ended December 31, ~~2007~~2008. This is primarily due to the combination of the historically high biodiesel prices that were experienced during a large part of fiscal year 2008 and our utilization of lower-cost feedstocks during fiscal 2008. ~~These~~Average ~~factors~~biodiesel ~~allowed~~sales usprices toin ~~realize~~2009 ~~greater~~were ~~profit~~significantly ~~margins~~lower onthan ~~the~~in 2008. In order to minimize our cost of sales, in 2008, we began to increase our use of ~~biodiesel~~lower-cost ~~for~~feedstocks, such as animal fats and used cooking oils, in place of higher-cost feedstocks, such as soybean oil. We continued this practice throughout the fiscal year ended December 31, ~~2008~~2009. ~~as compared~~In ~~with~~fiscal year 2009, approximately 91.5% of the ~~same~~feedstock ~~period~~used in ~~for~~our ~~2007~~biodiesel production was animal fats and 8.5% was soybean oil. In particular, approximately 68.8% of our total feedstock usage in 2009 was choice white grease.

Operating Expenses

~~Our~~Operating ~~operating~~ expenses for the fiscal year ended December 31, ~~2008~~2009 totaled $12,~~915~~052,~~675~~040, which is 9 7.41% higher than operating expenses of $1,~~750~~915,~~886~~675 for the same period in ~~2007~~2008. Our operating ~~expenses~~ expenses as a percentage of revenues were 01.177% higher for the fiscal year ended December 31, ~~2008~~ 2009 than they were for the fiscal year ended December 31, ~~2007~~2008. Our operating expenses for the fiscal year ended December 31, 2009, include approximately $450,000 in expenses that we incurred in connection with the proposed consolidation with REG, which includes legal fees, audit fees, accounting fees, and consulting fees.

Other Income (Expenses)

Our other income and expenses for the fiscal year ended December 31, ~~2008~~2009 ~~totaling~~increased from a net other expense of $592,957, ~~was~~or 0.74% of ~~our~~ revenues., ~~Our other expenses were significantly lower~~ during the fiscal year ended December 31, 2008 ~~than~~to a ~~they~~net ~~were~~other income of $39,307, or 0.08% of revenues, during the fiscal year ended December 31, ~~2007, in which other expenses totaled~~ ~~$1,278,545~~2009. ~~The~~This ~~decrease~~change ~~in our other expenses~~ resulted primarily from athe ~~significant~~reduction ~~decrease~~ in our interest expense ~~between~~from $759,243 during the fiscal year ended December 31, 2008 ~~and~~to $322,698 during the fiscal year ended December 31, ~~2007 of $1,400,721 and $759,243 respectively~~2009. The ~~decrease~~reduction in our interest expense resulted primarily from reducing the ~~outstanding~~ outstanding balance under our revolving line of credit ~~from~~by ~~Farm~~$1,720,000 ~~Credit~~and ~~Services~~paying ofdown ~~America~~our ~~from~~term loan by $31,800,000. asThe ofchange ~~December 31,~~from ~~2007~~a net other expense to ~~zero~~a asnet other income also resulted from our receipt of ~~December 31~~grant income in the amount of $231,525, ~~2008.~~which Weincludes ~~also~~grant ~~paid~~income ~~down~~in the ~~balance~~amount of ~~outstanding~~$131,525 ~~under~~from ~~our~~the ~~term~~Iowa ~~note~~Department ~~from~~of ~~Farm~~Economic ~~Credit~~Development’s ~~Services~~(“IDED”) ofNew ~~America~~Jobs toTraining ~~$4,150,000~~Program asand IDED’s forgiveness of ~~December 31,~~a ~~2008,~~forgivable ~~from~~loan ~~$5,950,000~~in asthe amount of ~~December 31~~$100, ~~2007~~000.

41Changes in Financial Condition for Fiscal Years Ended December 31, 2010 and 2009

The following table highlights the changes in our financial condition from December 31, 2009 to December 31, 2010:


	December 31, 2010		December 31, 2009
Current Assets	$	3,821,367	$	7,424,221
Current Liabilities	$	1,579,346	$	3,991,982
Long-Term Debt	$	2,195,000	$	3,262,222
Member’s Equity	$	26,355,372	$	28,550,785

Changes in Financial Condition for Fiscal Years Ended December 31, 2009 and 2008

The following table highlights the changes in our financial condition from December 31, 2008 to December 31, 2009:

	December 31, 2009		December 31, 2008
Current Assets	$	7,424,221	$	7,049,998
Current Liabilities	$	3,991,982	$	3,824,635
Members’ Equity	$	28,550,785	$	26,928,710

Current Assets

Current assets totaled $73,~~424~~821,~~221~~367 at December 31, ~~2009~~2010, ana ~~increase~~decrease from $7,~~049~~424,~~998~~221 at December 31, ~~2008~~2009. The ~~increase~~decrease of $~~374~~3,~~223~~602,854 during this period is a net result of ana ~~increase~~decrease in ~~trade~~ accounts receivable ~~from~~and ~~$1,428,521~~incentive ~~as of December 31~~receivables, ~~2008~~partially tooffset ~~$3,106,676~~by ~~as of December 31, 2009, as well as~~ an increase in ~~incentive~~inventory. Our receivables ~~from~~were ~~$312,019~~relatively ashigh ofat December 31, ~~2008 to $2,946,499 as of December 31,~~ 2009. Indue ~~addition,~~to our ~~inventory~~continued ~~decreased~~production ~~from~~through ~~$4,510,457~~that date atin ~~December 31,~~order ~~2008~~ to ~~$383,528~~take atadvantage ~~December 31,~~of ~~2009.~~the ~~The~~federal ~~reduction~~blenders’ intax ~~our~~credit ~~inventory~~as ~~resulted~~much ~~from our decision to operate on an “~~as~~-ordered”~~ ~~production~~we ~~schedule~~could ~~beginning~~ in ~~November 2007. We initiated this~~2009 ~~production~~prior ~~schedule in response~~ to ~~high~~the ~~feedstock~~expiration ~~prices~~of ~~and~~the ~~reduced~~credit ~~biodiesel~~at ~~orders~~year-end. ~~Once~~Since ~~we reduced~~this ~~our~~tax ~~inventory~~credit ~~in late 2007 and early 2008~~expired, weour ~~continued to maintain significantly lower~~production ~~levels~~has ofbeen ~~inventory~~limited. ~~The~~For ~~decrease~~similar inreasons, our inventory ~~also~~was ~~results~~relatively ~~from~~low ~~our~~at ~~decision~~December 31, to2009, ~~enter into two separate~~but ~~sales~~has ~~agreements~~since ~~with~~increased ~~REG~~again. ~~that~~During ~~provided for~~ the ~~sale~~year ofended ~~most of our remaining inventory of biodiesel at a fixed price on or about~~ December 31, ~~2009.~~2010, ~~Pursuant~~we tomade ~~the~~principal ~~terms~~payments ~~of the sales~~on ~~agreements,~~our ~~title~~term tonote ~~the~~totaling ~~biodiesel transferred to REG on December 31~~$2, ~~2009~~350,000 ~~although~~and ~~WIE~~reduced ~~continued to store~~ the ~~biodiesel~~amount inoutstanding ~~its~~under ~~storage~~our ~~tanks~~revolving ~~into~~credit loan ~~January 2010~~by $805,000.

Current Liabilities

Current liabilities totaled $31,~~991~~579,~~982~~346 at December 31, ~~2009~~2010, updown from $3,~~824~~991,~~635~~982 at December 31, ~~2008~~2009. The ~~increase~~decrease of $~~167~~2,~~347~~412,636 during this period ~~resulted~~was due primarily ~~from~~to ~~an increase~~a decrease in ~~accounts~~the current ~~payable~~portion ~~and~~of anour ~~increase~~long-term indebt ~~accrued~~related ~~wages~~to ~~and~~our ~~benefits~~“free ~~during~~cash ~~the~~flow” ~~fiscal~~payment ~~year ended~~and ~~December 31,~~regular ~~2009.~~quarterly payments ~~Total~~on ~~current~~our ~~liabilities~~term ~~also~~note ~~includes~~and ~~$333,008~~a ~~that~~decrease ~~resulted from~~in checks ~~that~~issued wein ~~inadvertently~~excess ~~processed~~of inour ~~December 2009~~bank ~~that~~balance, wepartially offset ~~normally~~by ~~would~~an ~~have~~increase ~~processed~~ in ~~January 2010~~accounts payable.

Long-Term Debt

The decrease in our long-term debt, net of current maturities, at December 31, 2010, as compared to December 31, 2009, was due to a decrease in the balance under our term note and our reducing revolving credit note with Farm Credit Services. During the year ended December 31, 2010, we made principal payments totaling $2,350,000 to Farm Credit Services under our term note and net payments totaling $805,000 under our revolving credit note.

Members’ Equity

Members’ contributions at ~~both~~ December 31, ~~2009~~2010 and December 31, ~~2008~~2009 ~~were~~are ~~equal to~~ $23,516,376. ~~Total~~Retained earnings ~~members’ equity~~ as of December 31, ~~2009~~2010 ~~was~~are $282,~~550~~838,~~785,~~996 ancompared ~~increase~~to ~~from~~ $265,~~928~~034,~~710~~409 asat of December 31, ~~2008.~~2009 ~~The~~due ~~$1,622,075 increase in total members’ equity is a result~~to ofour net ~~income~~loss during the ~~period~~year ended December 31, 2010.

Liquidity and Capital Resources

Comparison of Cash Flows for Fiscal Years Ended December 31, ~~2009~~2010 and December 31, ~~2008~~2009

	2009			2008
	2010			2009
Net cash provided by operating activities	$	3,~~394~~822,~~861~~100		$	93,~~050~~394,~~603~~861
Net cash used in investing activities	$	(161,~~747~~092	)	$	(~~394~~161,~~028~~747	)
Net cash used in financing activities	$	(3,~~299~~600,~~214~~230	)	$	(83,~~622~~299,~~223~~214	)
Net increase (decrease) in cash and equivalents	$	~~(66~~60,~~100~~778	)	$	34(66,~~352~~100	)

Operating Cash Flows

For the twelve months ended December 31, ~~2009~~2010, net cash provided by operating activities ~~decreased~~ increased by $5427,~~655,742~~239 compared to the twelve months ended December 31, ~~2008~~2009. This ~~decrease~~increase was primarily the result of changes in our receivables, including accounts receivable, incentive receivables and other receivables, prepaid expenses and other assets, accounts payable and non-cash forgiveness of ~~lower~~debt, netted against our net ~~income~~loss for the year ended December 31, 2010 compared to the net gain during the same period the prior year and changes in ~~operating~~our ~~assets~~inventory, margin deposits, and ~~liabilities~~accrued wages and benefits. ~~Our~~Most ~~capital~~of ~~needs~~the ~~are~~changes ~~being~~in operating cash flows for the year ended ~~adequately~~December 31, ~~met~~2010 ~~through~~compared ~~cash~~to ~~from~~the ~~our~~year ~~operating~~ended ~~activities~~December 31, ~~and~~2009 are directly attributable to our decreased ~~current~~production ~~credit~~during ~~facilities~~the year ended December 31, 2010.

~~Investing~~Although ~~Cash~~our ~~Flows~~capital needs are currently being adequately met through cash from operations and our credit facilities, any further reductions in the amount available for advancement under our revolving credit loan beyond the current reduction may cause us to be unable to meet our capital needs. See “Liquidity and Capital Resources — Indebtedness.”

~~For the twelve months ended December 31, 2009, cash used in investing activities decreased by~~36 $232,281 compared to the twelve months ended December 31, 2008. This decrease in cash used resulted from a decrease in expenditures for property, plant and equipment from the twelve months ended December 31, 2008.

Investing Cash Flows

For the twelve months ended December 31, 2010, cash used in investing activities decreased by $655 compared to the twelve months ended December 31, 2009. Our cash used in investing activities consists of expenditures for property, plant and equipment.

Financing Cash Flows

For the twelve months ended December 31, ~~2009~~2010, cash used in financing activities ~~decreased~~increased by $5301,~~323,009~~016 compared to the twelve months ended December 31, ~~2008~~2009. This change was largely due to a reduction in net payments on our revolving line of credit in 2009 compared to 2008 and an increase in payments on our long-term debt. This decrease is a result of a net decrease in checks issued in excess of our bank balance, offset by payments on our long-term debt exceeding proceeds from our long-term debt by approximately $365,000 more during the twelve months ended December 31, 2009 compared to the twelve months ended December 31, 2010.

Comparison of Cash Flows for Fiscal Years Ended December 31, ~~2008~~2009 and December 31, ~~2007~~2008

	2008			2007
	2009			2008
Net cash provided by (used in) operating activities	$	93,~~050~~394,~~603~~861		$	~~973~~9,~~435~~050,603
Net cash used in investing activities	$	(~~394~~161,~~028~~747	)	$	(~~686~~394,~~756~~028	)
Net cash used in financing activities	$	(83,~~622~~299,~~223~~214	)	$	(~~282~~8,~~953~~622,223	)
Net increase (decrease) in cash and equivalents	$	34(66,~~352~~100	)	$	334,~~726~~352

Operating Cash Flows

For the twelve months ended December 31, ~~2008~~2009, cash provided by operating activities ~~increased~~decreased by $85,~~077~~655,~~168~~742 compared to the twelve months ended December 31, ~~2007~~2008. This ~~increase~~decrease was the result of anlower ~~increase in~~ net income and changes in operating assets and liabilities.

Investing Cash Flows

For the twelve months ended December 31, ~~2008~~2009, cash used in investing activities decreased by $~~292~~232,~~728~~ 281 compared to the twelve months ended December 31, ~~2007~~2008. This decrease in cash used ~~resulted~~ resulted from a decrease in expenditures for property, plant and equipment from the twelve months ~~ended~~ ~~December 31, 2007. The decrease also resulted from our receipt of a sales tax refund related to plant construction costs in the amount of $443,535 during the fiscal year~~ ended ~~December 31,~~ ~~2007. We received no such sales tax refund during the fiscal year ended~~ December 31, 2008.

Financing Cash Flows

For the twelve months ended December 31, ~~2008~~2009, cash used in financing activities ~~increased~~decreased by $85,~~339~~323,~~270~~009 compared to the twelve months ended December 31, ~~2007~~2008. This change was largely due to a anreduction ~~increase~~ in ~~borrowings~~net ~~under~~payments on our revolving line of credit. Itin is2009 ~~also~~compared ~~a result of a distribution~~ to ~~members~~2008 ofand ~~$2,121,314~~an ~~during the fiscal year ended December 31, 2007. We made no~~increase ~~distributions~~in topayments ~~members~~on ~~during~~our ~~the~~long-term ~~fiscal year ended December 31, 2008~~debt.

Indebtedness

Short-Term Debt Sources

OnWe ~~May 30,~~obtained ~~2007, we entered into~~ a ~~Statused~~$570,000 ~~Revolving~~declining ~~Credit~~balance ~~Supplement~~standby toirrevocable ~~the~~letter ~~MLA that provided for a revolving line~~ of credit tofrom ~~finance~~Farm ~~eligible inventory and receivables. The~~Credit ~~aggregate~~in ~~amount~~favor ~~available under the revolving line~~ of ~~credit~~Glidden ~~was~~Rural ~~the~~Electric ~~lesser~~Cooperative of (1)“Glidden ~~$4,000,000, or (2~~REC”) ~~the~~ ~~borrowing base~~ as ~~calculated~~security ~~pursuant~~for to our ~~credit~~loan ~~facility~~ with ~~Farm Credit. The credit~~ ~~facility~~Glidden ~~with~~REC ~~Farm~~(discussed ~~Credit~~below ~~provided~~under ~~several~~“Long-Term ~~different~~Debt ~~interest~~Sources”). ~~rate~~The ~~options~~letter ~~for the supplemental line~~ of credit ~~and~~was wewas ~~paid interest on the unpaid balance of the line~~ extended in ~~accordance~~July 2010 ~~with the interest rate option selected~~ at the ~~time~~lower weamount ~~requested~~of ~~a draw on the line~~$490,000. The ~~supplemental~~letter ~~line~~ of credit ~~was~~will ~~set~~now to expire on ~~July~~June 130, ~~2009. On May 11, 2009, WIE cancelled the supplemental line~~ ~~of credit, which was a condition to Farm Credit’s consent to the consolidation with REG, which is discussed above~~2011. ~~WIE had no outstanding balance on the supplemental line of credit at the time of~~ ~~its cancellation.~~

Long-Term Debt Sources

On June 6, 2005, we closed on $18,000,000 of long-term debt financing with Farm Credit pursuant to ~~the~~a Master Loan Agreement (“MLA”). ~~Our~~CoBank, ~~financing~~ACB ~~agreement~~is ~~with~~the administrative agent of Farm Credit pursuant ~~provides~~to ~~for~~an aAdministrative Agency Agreement dated June 6, 2005. Pursuant to supplements to the ~~term~~MLA, the loan incommitments ~~the~~from ~~amount~~Farm Credit consisted of a $10,000,000 ~~pursuant~~term toloan aand ~~Construction~~an ~~and~~$8,000,000 reduced ~~Term~~revolving ~~Loan~~credit ~~Supplement~~loan. toIn December 2010 we paid off the remaining balance on our term loan ~~MLA~~and (therefore at December 31, 2010 had no balance outstanding on the ~~Term~~term ~~Loan~~loan, ~~Supplement).~~as Itcompared ~~also~~to December 31, ~~provides~~2009 ~~for~~when aour ~~revolving~~outstanding balance on the term loan inwas an$2,350,000. ~~amount~~Our ~~not~~term toloan ~~exceed~~required quarterly payments of principal in the amount of $8450,000,~~000~~ ~~pursuant~~with to a ~~Construction~~final ~~and~~payment ~~Revolving~~due ~~Term~~no later ~~Loan~~than ~~Supplement~~December 20, 2011. We were also required to ~~the~~make ~~MLA~~annual ~~(the~~payments of 50% of our “free ~~Revolving~~cash ~~Loan~~flow,” ~~Supplement)~~as defined in our term loan agreement. ~~CoBank~~Although we paid off our term loan in full in December 2010, ~~ACB~~our isterm loan agreement provides that in the ~~administrative~~event ~~agent~~our term loan is paid in full prior to the end of ~~Farm~~fiscal ~~Credit~~year ~~pursuant~~2012, we must continue to anmake 50% “free cash flow” payments for ~~Administrative~~each ~~Agency~~fiscal ~~Agreement~~year ~~dated~~through ~~June 6,~~fiscal ~~2005~~year 2012 in the form of early reductions to the amount of our revolving credit loan commitment.

43The expiration of the blenders’ tax credit on December 31, 2009 and our subsequent decision to warm-idle our plant led to discussions with CoBank, as administrative agent of Farm Credit, regarding certain changes to our credit facilities. In particular, on May 14, 2010, we agreed with Farm Credit to reduce the amount available under our revolving credit loan from $8,000,000 to $6,000,000 (inclusive of our $490,000 irrevocable letter of credit in favor of Glidden Rural Electric Cooperative, discussed above under “Short-Term Debt Sources”). The term of this agreement was subsequently extended through March 31, 2011. On March 28, 2011, we agreed with Farm Credit to increase the amount available under this loan to $7,000,000 through September 30, 2011. Our March 28, 2011 agreement also reduced the minimum net worth we are required to maintain pursuant to our loan covenants from $26,000,000 to $24,000,000 for the period from February 1, 2011 through September 30, 2011. The May 14, 2010 agreement to reduce the amount available under our revolving credit loan amended our loan covenant pertaining to minimum working capital so that the reduction of the amount available for advancement under the revolving credit loan did not cause us to fall out of compliance with the minimum working capital covenant in our loan agreement. Our prior minimum working capital requirement was $6,000,000 and our amended minimum working capital requirement is $4,000,000. Our March 28, 2011 agreement with Farm Credit extended this reduction in required working capital through September 30, 2011. As of December 31, 2010, the balance outstanding under the revolving credit loan was $1,825,000, as compared to December 31, 2009, when the balance outstanding under the revolving credit loan was $2,630,000.

Subject to our May 14, 2010 agreement with Farm Credit, as extended and amended, advances under the revolving credit loan are available throughout the life of the commitment, although the amount of the commitment reduces by $900,000 semi-annually beginning upon the earlier of: (i) July 1, 2012, or (ii) the first day of the month that is six months after the first day of the month following the repayment of our term loan. Because we paid off the term loan in full in December 2010, our revolving credit loan commitment will be reduced by $900,000 every six months beginning July 1, 2011. As discussed above, the revolving credit loan commitment may also be reduced in the amount of any “free cash flow” payment we would otherwise be required to make on our term loan through 2012. Any outstanding balance on our revolving credit loan is due and payable in full on July 1, 2016. At December 31, 2010, we had $3,685,000 of available borrowings under the revolving credit loan.

The revolving credit loan bears interest at one of three rates, to be determined by us in our discretion: (1) at a rate equal to the rate of interest established by the agent as its agent base rate; (2) at a fixed rate per annum to be quoted by the agent in its sole discretion; or (3) at a fixed rate per annum equal to LIBOR. Each of the rates is subject to certain performance pricing adjustments. While our term loan had an outstanding balance, it was subject to the same terms with respect to interest rates. At December 31, 2010 and December 31, 2009, the applicable interest rate with respect to our credit facilities with Farm Credit was 3.25% and 3.50%, respectively. Our credit facilities with Farm Credit are secured by substantially all of our assets.

The MLA, as amended, contains covenants pertaining to minimum levels of working capital and net worth, as well a minimum debt service coverage ratio. As of December 31, 2010, we were not in compliance with our debt service coverage ratio covenant, which requires us to maintain a debt service coverage ratio, defined as (i) net income (after taxes), plus depreciation and amortization; divided by (ii) all current portion of long term debt for the prior period, of 1.50 to 1.00. At December 31, 2010, our debt service coverage ratio was approximately 0.21 to 1.00. Although we were in violation of this covenant, we have received a waiver for this violation.

~~Our~~The ~~$10,000,000~~working ~~term~~capital covenant ~~loan~~set ~~bears~~forth ~~interest at one of three rates, to be determined by us~~ in ~~our discretion: (1) at a rate equal to~~ the ~~rate~~MLA, ~~of interest established by the agent~~ as ~~its~~amended, ~~agent base rate;~~ (~~2) at~~including ~~a fixed rate per annum to be quoted by~~ the ~~agent~~amendment inpursuant ~~its sole discretion; or (3) at a fixed rate per annum equal~~ to ~~LIBOR.~~our ~~Each of the rates is subject to certain performance pricing adjustments. On~~ May 3014, 2010 ~~2007,~~agreement wewith ~~amended~~Farm ~~our~~Credit, ~~Term~~discussed ~~Loan Supplement. Under the amendment~~above), werequires ~~are required~~us to ~~make~~maintain minimum 20working ~~equal,~~capital ~~consecutive quarterly installments~~ of $~~450~~4,000 ~~each~~,000. ~~with~~As ~~the~~of ~~first installment due on~~ December 2031, ~~2006~~2010, ~~and~~we ~~the~~were ~~last installment due on September 20, 2011. We are~~in ~~also~~compliance ~~required~~with ~~to make annual payments of 50% of~~ our ~~“free~~working ~~cash~~capital ~~flow,” as that term is defined in the amendment~~covenant.

OnAdditionally, ~~May~~the net worth covenant set forth in the MLA, as amended, required us to maintain a minimum net worth of $26,000,000 through January 31, 2011, and requires us to maintain a minimum net worth of $24,000,000 from February 1, 2011 through September 30, ~~2007~~2011. As of December 31, 2010, we ~~amended~~were ~~the~~in ~~MLA~~compliance with our net worth covenant. ~~The~~We ~~amendment~~were not in compliance with our net worth covenant as of February 28, 2011 because our net worth at that time was less than $26,000,000. However, under our March 28, 2011 agreement with Farm Credit, our minimum net worth covenant was reduced to ~~the~~$24,000,000 retroactive ~~MLA~~to ~~places~~February 1, ~~the~~2011. ~~following~~Therefore, pursuant to our March 28, ~~restrictions~~2011 onagreement with Farm Credit, we are now in compliance with our ~~activities:~~net worth covenant.

•Although ~~During~~we ~~the~~were ~~2007~~either ~~fiscal~~in ~~year~~compliance with, or received a waiver for non-compliance for, our loan covenants as of December 31, 2010, we could ~~not~~fail ~~expend,~~to comply with one or more of our loan covenants in the ~~aggregate~~future. A failure to comply with our covenants in the future may constitute an event of default under our loan agreements which, ~~more~~at ~~than~~the $2election of Farm Credit,~~600,000~~ ~~for~~could result in the ~~acquisition~~acceleration of ~~fixed~~the unpaid principal loan balance and accrued interest owed to Farm Credit, or the ~~capital~~loss of our assets securing the loan in the event Farm Credit elected to foreclose its lien or security interest in such assets. InWhile ~~each~~Farm ~~subsequent~~Credit ~~year~~granted us a waiver for failing to comply with our debt service coverage ratio at December 31, we2010, ~~cannot~~Farm ~~expend~~Credit might not grant a waiver for future covenant violations. Additionally, inwhile ~~the~~Farm ~~aggregate~~Credit agreed to amend our loan documents to retroactively modify our net worth requirement from February 1, ~~more~~2011 ~~than~~so ~~$500~~that we would not be in violation of our net worth covenant at February 28,~~000~~ ~~for~~2011, Farm Credit might not be willing to amend our loan documents in the ~~acquisition~~future. If an event of ~~fixed~~default occurs and Farm Credit elects to accelerate the amounts due to it or ~~capital~~foreclose on our assets;, this may have a material adverse effect on our ability to operate the plant and may cause our members to lose some or all of their investment.

•The WeMLA, ~~cannot~~as ~~declare~~amended, orprohibits ~~pay~~us ~~any~~from ~~dividends~~distributing ~~or make~~ any ~~distribution~~profits ~~of assets~~ to ~~the~~our members orunless ~~acquire~~the proposed ~~for~~distribution ~~value~~is ~~any~~agreed ofto ~~our~~in ~~membership~~writing ~~units,~~by ~~except~~CoBank. ~~that~~As ina ~~any~~result, ~~fiscal year~~ we ~~can~~may ~~make~~be aunable ~~distribution~~ to ~~the~~make future ~~Company’s~~distributions ~~members of up~~ to ~~40%~~our ofmembers, ~~the~~including ~~net profit~~ for ~~each~~income ~~fiscal~~tax ~~year~~purposes.

•On WeJuly 13, ~~cannot~~2006, ~~enter~~we entered into ~~any~~a ~~lease~~Rural asDevelopment ~~lessee~~Loan ifAgreement with the ~~lease~~Glidden ~~should~~REC befor a ~~capitalized~~$740,000 inno-interest ~~accordance~~loan ~~with~~to ~~GAAP~~fund operating expenses for the ~~rental~~plant. orPursuant ~~hire~~to the terms of ~~any~~the agreement ~~real~~and oran ~~personal~~associated ~~property~~Promissory Note, ~~except~~the ~~leases~~loan ~~which~~is doto ~~not~~be ~~require~~repaid in monthly installments of $6,851 beginning on July 31, 2007, and continuing on the ~~Company~~last today ~~make~~of ~~scheduled~~each ~~payments~~month tothereafter until the ~~lessors~~principal insum ~~any~~has ~~fiscal~~been ~~year~~paid in ~~excess~~full or before the final maturity date of the promissory note which shall be on the tenth anniversary of the first advance of funds. The outstanding balance of the loan as of December 31, 2010 and December 31, 2009 was $~~100~~452,~~000~~222 and $534,444, inrespectively. The loan is secured by the ~~aggregate~~declining balance standby irrevocable letter of credit from Farm Credit discussed above under “Short-Term Debt Sources.”

• We ~~must~~have ~~maintain~~obtained ~~working~~subordinated ~~capital,~~debt ~~defined~~financing asof anapproximately ~~excess~~$400,000 from the Iowa Department of ~~current~~Economic ~~assets~~Development ~~over~~(“IDED”). ~~current~~The ~~liabilities,~~subordinated ofdebt ~~not~~financing ~~less~~included ~~than~~a $6300,000 zero-interest deferred loan and a $100,000 atforgivable loan. On April 30, 2009, IDED notified us that we had satisfied all conditions of the ~~end~~forgivable loan and that IDED had forgiven the balance outstanding under the forgivable loan. The zero-interest deferred loan requires monthly installments of ~~each~~$2,500 ~~period~~beginning ~~for~~January 2008 ~~which~~with ~~financial~~the ~~statements~~remaining ~~are~~unpaid ~~required~~principal todue bein ~~furnished~~December 2012. ~~under~~The balance outstanding on the ~~MLA~~zero-interest deferred loan at December 31, 2010 and December 31, 2009 was $177,500 and 207,500, respectively.

• We must maintain a net worth, defined as an excess of total assets over total liabilities, of not less than $26,000,000 at the end of each period for which financial statements are required to be furnished under the MLA.

Our $8,000,000 revolving term loan bears interest at one of three rates, to be determined by us in our discretion: (1) at a rate equal to the rate of interest established by the agent as its agent base rate; (2) at a fixed rate per annum to be quoted by the agent in its sole discretion; or (3) at a fixed rate per annum equal to LIBOR. Each of the rates is subject to certain performance pricing adjustments.

On June 5, 2008, we executed an amendment to the MLA, pursuant to which we agreed to an additional negative covenant prohibiting us from distributing any profits to our members unless the proposed distribution is agreed to in writing by the administrative agent. As a result of this amendment, we may be unable to make future distributions to our members, including for income tax purposes.

As of December 31, 2009 and December 31, 2008, the balance outstanding on our term loan is $2,350,000 and $4,150,000, respectively. At December 31, 2009 and December 31, 2008, the balance outstanding under the revolving term loan is $2,630,000 and $4,350,000, respectively.

The loan agreements with Farm Credit and CoBank contain various covenants pertaining to minimum working capital and minimum net worth requirements. The Company was not in compliance with the minimum net worth requirement for the period ending May 31, 2009, and obtained a waiver for the violation. As of December 31, 2009, and for all other periods in 2009, we are in compliance with our loan covenants.

Although we were in compliance with our loan covenants as of December 31, 2009, we could fail to comply with one or more of our loan covenants in the future. Failure to comply with our loan covenants constitutes an event of default under our loan agreements which, at the election of the lender, could result in the acceleration of the unpaid principal loan balance and accrued interest under the loan agreements or the loss of the assets securing the loan in the event the lender elected to foreclose its lien or security interest in such assets. There can be no assurance that our lender will waive any future failures to comply with any one or more of the loan covenants. In the event our lender declared a default under the loan agreements and elected to accelerate our payments under the loan documents or take possession of our assets securing the loans, we may be forced to shut down the plant and our members could lose some or all of their investment.

On July 13, 2006, we entered into a Rural Development Loan Agreement with the Glidden Rural Electric Cooperative (Glidden REC) for a $740,000 no interest loan to be used for operating expenses for the plant. Pursuant to the terms of the agreement and an associated Promissory Note, the loan is to be repaid in monthly installments of $6,851 beginning on July 31, 2007, and continuing on the last day of each month thereafter until the principal sum has been paid in full or before the final maturity date of the promissory note which shall be on the tenth anniversary of the first advance of funds. Funds were first advanced on September 19, 2006. The outstanding balance of the loan as of December 31, 2009 and December 31, 2008 was $534,444 and $616,666, respectively. We have the right to prepay the loan in whole or in part without penalty. The loan is secured by a declining balance Standby Irrevocable Letter of Credit.

We have obtained subordinated debt financing of approximately $400,000 from the Iowa Department of Economic Development (“IDED”). The subordinated debt financing included a $300,000 zero-interest deferred loan and a $100,000 forgivable loan. The zero-interest deferred loan requires monthly installments of $2,500 beginning January 2008 with remaining unpaid principal due in December 2012. To receive a permanent waiver of the forgivable loan we were required to meet certain production and operations criteria. On April 30, 2009, IDED notified WIE that WIE had satisfied all conditions of the forgivable loan and that IDED had forgiven the balance outstanding under the forgivable loan. The balance that is outstanding on the zero-interest deferred loan at December 31, 2009 is $207,500.

Contractual Obligations

The following ~~sets~~table ~~forth~~provides information regarding our contractual obligations and commitments as of December 31, ~~2009, and the maturity of such obligations~~2010.

	Payments Due by Period
	Total		~~2010~~2011		~~2011-~~2012-2013		~~2013-~~2014-2015		After ~~2014~~2015
Long-Term Debt Obligations	$	52,~~721~~454,~~944~~722	$	2259,~~459,~~722	$	~~224~~1,389,444	$	2764,~~684,445~~444	$	~~353~~41,~~333~~112
Capital Lease Obligations
Operating Lease Obligations	$	17,814	$	17,814		—		—		—
Operating Lease Obligations	$	—	$	35,627	$	17,313	$	—	$	—
Total	$	2,472,536	$	277,536	$	1,389,444	$	764,444	$	41,112
Purchase Obligations
Other Long-Term Liabilities Recorded on the Balance Sheet
Total	$	5,721,944	$	2,495,349	$	241,757	$	2,684,445	$	353,333

Subsequent Events

We previously agreed with Farm Credit to reduce the amount available under our revolving credit loan, inclusive of our irrevocable letter of credit in favor of Glidden Rural Electric Cooperative, from $8,000,000 to $6,000,000 through January 31, 2010. We also amended the covenant in our loan agreement with Farm Credit pertaining to minimum working capital so that the reduction of the amount available for advancement under the revolving credit loan did not cause us to fall out of compliance with the minimum working capital covenant in our loan agreement with Farm Credit. Our prior minimum working capital requirement was $6,000,000 and our amended minimum working capital requirement is $4,000,000. On January 28, 2011, we extended the term of this agreement through February 28, 2011, and on February 28, 2011, we finalized an extension of the term of this agreement through March 31, 2011.

On March 28, 2011, we agreed with Farm Credit to increase the amount available under our revolving credit loan to $7,000,000 through September 30, 2011. This agreement also extended the reduction in our minimum working capital covenant described above through September 30, 2011 and reduced the minimum net worth we are required to maintain pursuant to our loan covenants from $26,000,000 to $24,000,000 for the period from February 1, 2011 through September 30, 2011. We were not in compliance with our net worth covenant as of February 28, 2011 because our net worth at that time was less than $26,000,000. However, under our March 28, 2011 agreement with Farm Credit, our minimum net worth covenant was reduced to $24,000,000 retroactive to February 1, 2011. Therefore, pursuant to our March 28, 2011 agreement with Farm Credit, we are now in compliance with our net worth covenant.

Application of Critical Accounting Estimates

Management uses estimates and assumptions in preparing our financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The following is a discussion of what we believe to be the most critical of these policies and methods.

Inventories. Inventories are stated at the lower of cost or market value. Costs are determined using the first-in, first-out method.

Long-Lived Assets. Depreciation and amortization of our property, plant, and equipment is provided on the straight-line method by charges to operations at rates based upon the expected useful lives of individual or groups of assets. Economic circumstances or other factors may cause management’s estimates of expected useful lives to differ from actual useful lives.

Long-lived assets, including property, plant and equipment, and investments are evaluated for impairment on the basis of undiscounted cash flows whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impaired asset is written down to our estimated fair market value based on the best information available. Considerable management judgment is necessary to estimate discounted future cash flows and may differ from actual cash flows.

Recently Adopted Accounting Standards. In ~~June~~January ~~2009~~2010, the FASB issued ~~SFAS~~ASU ~~No. 168~~2010-06, ~~The~~Fair ~~FASB~~Value ~~Accounting~~Measurements ~~Standards Codification~~ and ~~the~~Disclosures ~~Hierarchy~~(Topic ~~of Generally Accepted Accounting Principles~~820), ~~which~~Improving ~~was~~Disclosures ~~primarily~~about ~~codified~~Fair ~~into Topic 105~~Value Measurements, ~~Generally~~amending ~~Accepted Accounting Standards, in the~~ ASC 820. ~~This~~ASU ~~standard~~2010-06 ~~will~~requires ~~become~~entities ~~the~~to ~~single~~provide ~~source~~new ofdisclosures ~~authoritative nongovernmental U.S.~~and ~~generally~~clarify ~~accepted accounting principles (“GAAP”), superseding~~ existing ~~FASB,~~disclosures ~~American~~relating ~~Institute~~to ~~of Certified~~fair ~~Public~~value ~~Accountants~~measurements. ~~(“AICPA”),~~The ~~Emerging~~new ~~Issues~~disclosures ~~Task Force (“EITF”),~~ and ~~related accounting~~ ~~literature.~~clarifications ~~This~~of ~~standard~~existing ~~reorganizes~~disclosures ~~the~~are ~~thousands~~effective offor ~~GAAP~~interim ~~pronouncements~~and ~~into~~annual ~~roughly~~reporting 90periods ~~accounting~~beginning ~~topics~~after ~~and~~December 15, ~~displays~~2009, ~~them~~except ~~using~~for athe ~~consistent~~disclosures ~~structure.~~about ~~Also~~purchases, ~~included~~sales, ~~is the relevant~~issuances, ~~Securities~~ and ~~Exchange~~settlements ~~Commission~~in ~~guidance~~Level ~~organized~~3 ~~using~~fair ~~the~~value ~~same~~measurements, ~~topical~~which ~~structure~~are ~~in separate sections. This guidance will be~~ effective for ~~financial~~fiscal ~~statements~~years ~~issued for reporting periods~~beginning ~~that end~~ after ~~September~~December 15, ~~2009.~~2010 ~~Beginning~~and infor ~~the~~interim ~~third~~periods ~~quarter~~within ofthose ~~2009,~~fiscal ~~this~~years. ~~guidance~~The ~~impacts~~adoption ~~the~~of ~~Company’s~~ASU ~~financial~~2010-06 ~~statements~~did ~~and~~not ~~related~~have ~~disclosures~~a asmaterial ~~all~~impact ~~references~~on tothe ~~authoritative~~Company’s ~~accounting literature~~financial ~~reflect~~position ~~the~~or ~~newly~~results ~~adopted codification~~of operations.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities — an amendment of SFAS No. 133, which was primarily codified into Topic 815, Derivatives and Hedging, in the ASC. This guidance expands the disclosures about an entity’s derivative and hedging activities. The guidance was effective for fiscal years and interim periods beginning after November 15, 2008. The Company prospectively implemented the new disclosure effective January 1, 2009. As a result of these requirements, the Company has included in its financial statements additional information regarding the Company’s use of derivatives and the risks that the Company is managing through the use of derivatives.

In April 2009, the FASB issued FASB Staff Position No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments, which was primarily codified into Topic 825, Financial Instruments, in the ASC. This standard extends the disclosure requirements concerning the fair value of financial instruments to interim financial statements of publicly traded companies. This guidance is effective for interim or annual financial periods ending after June 15, 2009. The Company adopted the guidance as of April 1, 2009. The adoption of ASC 825 did not have a material effect on its financial statements and related disclosures.

In May 2009, the FASB issued SFAS No. 165, Subsequent Events, which was primarily codified into Topic 855, Subsequent Events, in the ASC. This guidance establishes principles and requirements for subsequent events. Specifically, it sets forth guidance pertaining to the period after the balance sheet date during which management should consider events or transactions for potential recognition or disclosure, circumstances under which an event or transaction would be recognized after the balance sheet date and the required disclosures that should be made about events or transactions that occurred after the balance sheet date. This guidance is effective for interim or annual financial periods ending after June 15, 2009. In February 2010, the FASB issued Accounting Standards Update 2010-09, which amended ASC Topic 855 to provide that SEC reporting companies evaluate subsequent events through the date their financial statements are issued. The Company has adopted this guidance.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

4640

~~ITEM~~Item 7A. ~~QUANTITATIVE~~Quantitative ~~AND~~and ~~QUALITATIVE~~Qualitative ~~DISCLOSURES~~Disclosures ~~ABOUT~~About ~~MARKET~~Market ~~RISK~~Risk.

We are exposed to the impact of market fluctuations associated with interest rates and commodity prices as discussed below. We have no exposure to foreign currency risk as ~~all~~we conduct all of our business ~~is conducted~~ in U.S. Dollars. We use derivative financial instruments as part of an ~~overall~~ overall strategy to manage market risk. We consider market risk to be the potential loss arising ~~from~~ from adverse changes in market rates and prices. We do not enter into these contracts as hedges ~~for~~ for accounting purposes pursuant to the requirements of ~~ASC~~the FASB Accounting Standards Codification (ASC) Topic 815, Derivatives and Hedging.

Our risk management committee oversees our risk management practices and provides open communication among management, ~~REG,~~ and the board of directors regarding market risk. The risk management committee takes an active role in the risk management process and has developed policies and procedures that require specific administrative and business functions to assist in the identification, assessment, and control of various risks.

Interest Rate Risk

We are exposed to market risk from changes in interest rates. Exposure to interest rate risk results primarily from our ~~term~~credit ~~note~~facilities ~~and supplemental revolving loan~~ with Farm Credit. Specifically, we have $41,~~980~~825,000 outstanding in variable rate debt as of December 31, ~~2009~~2010. The specifics of ~~the~~our ~~line of~~ credit ~~and revolving loan~~ facilities are discussed in ~~greater~~ detail in “Item 7 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Liquidity and Capital Resources, Indebtedness.”

Below is a sensitivity analysis we prepared regarding our income exposure to changes in interest rates. The sensitivity analysis below shows the anticipated effect on our income from a 10% adverse change in interest rates for a one year period.

Outstanding Variable	Interest Rate at			Adverse 10% Change in			Annual Adverse Change
Outstanding Variable Rate							Adverse 10% Change in			Annual Adverse Change to
Rate Debt at 12/31/09	12/31/09			Interest Rates			to Income
Debt at 12/31/10				Interest Rate at 12/31/10			Interest Rates			Income
$2,350,000		3.50	%		3.85	%	$	8,225
$1,825,000					3.25	%		3.58	%	$	5,931
$2,630,000		3.50	%		3.85	%	$	9,205

Commodity Price Risk

We are also exposed to market risk from commodity prices. Exposure to commodity price risk results from our dependence on animal fats, soybean oil, and natural gas in the biodiesel production process. We are also exposed to biodiesel and ~~glycerin~~co-products price risks as our revenues consist primarily of biodiesel sales and ~~glycerin~~co-products sales. ~~Currently~~In 2009 and 2010, we ~~seek~~sought to minimize the risks from fluctuations in the price of ~~soybean oil and~~ biodiesel by using derivative instruments such as cash, futures, and option contracts for ~~soybean oil and~~ home heating oil. There is currently no futures market for biodiesel. Instead, we ~~use~~used home heating oil derivatives. Home heating oil is high sulfur diesel, which is the closest commodity to biodiesel for which there is a futures market. ~~Currently~~More recently, we have entered into flat price future sales contracts with our product marketer, ADM, to limit our exposure to decreases in the price of biodiesel. These flat price sales contracts allow us to lock in a margin at the time that we purchase the feedstock utilized to produce the biodiesel that we have contracted for future sale. We are currently unable to manage our price risk for animal fats as there are no futures contracts available for animal fats, and animal fats suppliers are, to date, unwilling to enter into long-term contracts for animal fats.

In practice, as markets move, we actively manage our risk and adjust hedging strategies as appropriate. The extent to which we enter into cash, futures, or option contracts varies substantially from time to time based on a number of factors, including supply and demand factors affecting the needs of customers or suppliers to purchase biodiesel or ~~glycerin~~co-products or to sell us ~~raw~~ raw materials on a fixed basis, our views as to future market trends, seasonal factors and the costs of futures contracts.

~~Although we believe our hedge positions accomplish an economic hedge against our future~~41 purchases, they are not designated as such for hedge accounting purposes, which would match the gain or loss on our hedge positions to the specific commodity purchase being hedged. As the current market price of our hedge positions changes, the gains and losses are immediately recognized in our cost of goods sold. The immediate recognition of hedging gains and losses can cause net income to be volatile from quarter to quarter due to the timing of the change in value of the derivative instruments relative to the cost and use of the commodity being hedged. At December 31, 2009 and December 31, 2008, we recorded a net liability and a net asset for derivative instruments of $2,587 and $61,360, respectively, with the related mark-to-market effects included in cost of sales in the statements of operations. During the fiscal year ended December 31, 2009, we recognized a net loss in earnings on derivative activities of $1,054,297, which is included in our cost of sales in our statements of operations.

~~There~~Although ~~are~~we ~~several~~believe ~~variables~~our ~~that~~hedge ~~could~~positions ~~affect~~accomplish ~~the~~an ~~extent~~economic tohedge ~~which~~against our ~~derivative~~future ~~instruments~~sales, they are ~~impacted~~not bydesignated ~~price~~as ~~fluctuations~~such infor ~~the~~hedge ~~cost~~accounting ofpurposes, ~~soybean~~which ~~oil~~would ~~and~~match ~~biodiesel.~~the ~~However,~~gain itor isloss ~~unlikely~~on ~~that~~our ~~commodity~~hedge ~~cash~~positions ~~prices~~to ~~will~~the ~~have~~specific ~~the~~commodity ~~greatest~~being ~~impact~~hedged. onAs the ~~derivative~~current ~~instruments with~~market ~~delivery~~price ~~dates~~of ~~nearest~~our hedge positions changes, the ~~current~~gains ~~cash~~and ~~price.~~losses Asare weimmediately ~~move~~recognized ~~forward,~~in ~~additional~~our ~~protection~~cost ~~may be~~of ~~necessary~~sales. AsThe immediate ~~the~~recognition ~~prices~~ of ~~these~~hedging ~~hedged~~gains ~~commodities~~and ~~move~~losses incan ~~reaction~~cause net income to ~~market~~be ~~trends~~volatile ~~and~~from quarter ~~information,~~to ~~our~~quarter ~~statement~~due ofto ~~operations~~the ~~will~~timing beof ~~affected~~the ~~depending~~change onin value of the ~~impact~~derivative ~~such~~instruments ~~market~~relative to the ~~movements~~cost ~~have~~and onuse of the ~~value~~commodity ofbeing ~~our~~hedged. At December 31, 2010 and December 31, 2009, we recorded a net liability for derivative instruments. ~~Depending~~of on$0 ~~the~~and ~~market movements~~$2,587, ~~crop~~respectively. ~~prospects~~During ~~and~~the ~~weather~~fiscal year ended December 31, ~~these~~2010, ~~price~~we ~~protection~~recognized ~~positions~~a ~~may~~net ~~cause~~gain ~~immediate~~in ~~adverse~~earnings ~~effects,~~on ~~but~~derivative ~~are~~activities ~~expected~~of to$95,704, ~~produce~~which ~~long-term~~is ~~positive~~included ~~growth~~in ~~for~~our ~~the~~cost ~~Company~~of sales in our statements of operations.

WeSeveral ~~entered~~variables ~~into~~could ~~agreements~~affect the extent to ~~purchase~~which ~~soybean~~biodiesel ~~oil~~price ~~for~~fluctuations ~~anticipated~~impact ~~production~~our derivative ~~needs~~instruments. ~~At December 31~~However, ~~2008,~~it weis ~~held~~likely ~~positions~~that commodity cash prices will have the greatest impact on athe ~~total~~derivative ofinstruments ~~2.5 million~~with ~~pounds~~delivery ofdates ~~soybean~~nearest ~~oil~~the ~~that~~current ~~consisted~~cash price. As we move offorward, ~~fixed~~additional ~~price~~protection ~~contracts~~may ~~for~~be 0necessary.~~0 million~~ ~~pounds~~As the prices of hedged commodities move in reaction to market trends and ~~basis~~information, ~~contracts~~our ~~for~~statement ~~2.5 million~~of ~~pounds.~~operations ~~During~~will be affected depending on the ~~first~~impact ~~two~~such ~~weeks~~market movements have on the value of ~~January 2009~~our derivative instruments. Depending on market movements, wethese ~~canceled~~price ~~this~~protection ~~contract~~positions ~~with~~may nocause ~~penalty~~immediate adverse effects, but are expected to produce long-term growth for us.

A sensitivity analysis has been prepared to estimate our exposure to ~~soybean~~commodity ~~oil and biodiesel~~ price risk. The table presents the net fair value of our derivative instruments as of December 31, ~~2009~~ ~~and~~2010 and December 31, ~~2008~~2009, and the potential loss in fair value resulting from a hypothetical 10% ~~adverse~~ adverse change in such prices. The fair value of the positions is a summation of the fair values ~~calculated~~ calculated by valuing each net position at quoted market prices as of the applicable date. The results of this analysis, which may differ from actual results, are as follows:

			Effect of
			Effect of Hypothetical
			Hypothetical Adverse
			Adverse Change –
	Fair Value		~~Change -~~ Market Risk
December 31, 2010	$	0	$	0
December 31, 2009	$	533,131	$	53,313
December 31, 2008	$	1,632,902	$	163,290

4842

~~ITEM~~Item 8. ~~FINANCIAL~~Financial ~~STATEMENTS~~Statements ~~AND~~and ~~SUPPLEMENTARY~~Supplementary ~~DATA~~Data.

INDEX TO ~~CONSOLIDATED~~ FINANCIAL STATEMENTS

	Page No.
	PAGE
Report of Independent Registered Public Accounting Firm		F-2
ACCOUNTANT’S COMPILATION REPORT		44
Financial Statements
FINANCIAL STATEMENTS
Balance Sheets as of December 31, 2009 and 2008		F-3
Balance Sheets		45
Statements of Operations for the years ended December 31, 2009, 2008, and 2007		F-4
Statements of Operations		46
Statements of Changes in Members’ Equity for the years ended December 31, 2009, 2008, and 2007		F-5
Statements of Changes in Members’ Equity		47
Statements of Cash Flows for the years ended December 31, 2009, 2008, and 2007		F-6
Statements of Cash Flows		48
Notes to Financial Statements		~~F-7 - F-17~~49

~~REPORT~~Report OFof ~~INDEPENDENT~~Independent ~~REGISTERED~~Registered ~~PUBLIC~~Public ~~ACCOUNTING~~Accounting ~~FIRM~~Firm

To the Board of Directors and Members
Western Iowa Energy, LLC
Wall Lake, Iowa

We have audited the accompanying balance sheets of Western Iowa Energy, LLC as of December 31, ~~2009~~ 2010 and ~~2008~~2009, and the related statements of operations, changes in members’ equity, and cash flows for each of the years in the three-year period ended December 31, ~~2009~~2010. Western Iowa Energy, LLC’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with the 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~~Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. AnOur audit ~~includes~~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 do not express such an opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the ~~financial~~consolidated 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~~ audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Western Iowa Energy, LLC as of December 31, ~~2009~~2010 and ~~2008~~2009, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, ~~2009~~2010 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 14 to the financial statements, the ~~Company’s management and operational services agreement has been terminated and will expire in 2010 as well as the~~ federal blender’s tax credit ~~expired~~expires on December 31, ~~2009~~2011. ~~These~~This ~~conditions~~condition ~~raise~~raises substantial doubt about ~~its~~ the Company’s ability to continue as a going concern. Management’s plans regarding those matters also are described in Note 14. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Eide Bailly LLP

~~Minneapolis~~Sioux Falls, ~~Minnesota~~South Dakota March 3129, ~~2010~~2011

~~F-2~~44

WESTERN IOWA ENERGY, LLC

BALANCE SHEETS

December 31, ~~2009~~2010 and ~~2008~~2009

	2009		2008
	2010		2009
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	~~300~~61,078	$	~~66,400~~300
Margin deposits		~~58,445~~—		~~285~~58,~~295~~445
Derivative instruments		—		61,360
Accounts receivable:
Trade accounts receivable — related party		3,106,676		1,428,521
Trade		248,928		—
Other receivables		387,883		163,470
Related parties		—		3,106,676
Incentive receivables		2,946,499		312,019
Other receivables		295,650		387,883
Inventory		383,528		4,510,457
Incentive receivables		231,949		2,946,499
Prepaid expenses and other assets		540,890		222,476
Inventory		2,612,016		383,528
Total current assets		7,424,221		7,049,998
Prepaid expenses and other assets		371,746		540,890
Total current assets		3,821,367		7,424,221
PROPERTY, PLANT AND EQUIPMENT
Land and land improvements		1,~~364~~435,~~842~~928		1,364,842
Office building and equipment		~~645~~659,~~542~~840		645,542
Plant and process equipment		33,~~854~~938,~~309~~749		33,~~683~~854,~~185~~309
Construction in progress		~~8,136~~—		178,~~513~~136
Total, at cost		3536,~~872~~034,~~829~~517		35,~~711~~872,~~082~~829
Less accumulated depreciation		79,~~669~~901,~~210~~503		57,~~451~~669,~~621~~210
Total property, plant and equipment		2826,~~203~~133,~~619~~014		3028,~~259~~203,~~461~~619
OTHER ASSETS
Land options		~~596~~—		596
Other investments		~~107~~124,~~198~~078		80107,~~895~~198
Loan origination fees, net of amortization		6951,~~355~~259		8769,~~451~~355
Total other assets		~~177~~175,~~149~~337		~~168~~177,~~942~~149
TOTAL ASSETS	$	3530,~~804~~129,~~989~~718	$	3735,~~478~~804,~~401~~989
LIABILITIES AND MEMBERS’ EQUITY
CURRENT LIABILITIES
Checks issued in excess of bank balance	$	~~333,008~~—	$	—333,008
Accounts payable:
Trade		~~824~~1,~~979~~209,965		~~794~~824,~~345~~979
Related party		8813,~~277~~838		2888,~~480~~277
Current portion of long-term debt		2259,~~459,~~722		2,~~729~~459,~~110~~722
Derivative instruments		~~2,587~~—		—2,587
Accrued interest		226,~~226~~079		3322,~~372~~226
Accrued wages and benefits		~~107~~61,~~664~~651		71107,~~570~~664
Accrued payroll taxes		32,~~678~~657		43,~~059~~678
Accrued expenses — related party		~~103,537~~—		~~117~~103,~~620~~537
Other current liabilities		4625,~~304~~434		46,~~079~~304
Total current liabilities		31,~~991~~579,~~982~~346		3,~~824~~991,~~635~~982
LONG-TERM LIABILITIES
Long-term debt, less current portion above		32,~~262~~195,~~222~~000		63,~~725~~262,~~056~~222
Total liabilities		73,~~254~~774,~~204~~346		107,~~549~~254,~~691~~204
COMMITMENTS AND CONTINGENCIES (Note 9 & Note 15)
MEMBERS’ EQUITY
Contributed capital		23,516,376		23,516,376
Retained earnings		52,~~034~~838,~~409~~996		35,~~412~~034,~~334~~409
Total members’ equity		2826,~~550~~355,~~785~~372		2628,~~928~~550,~~710~~785
TOTAL LIABILITIES AND MEMBERS’ EQUITY	$	3530,~~804~~129,~~989~~718	$	3735,~~478~~804,~~401~~989

See accompanying notes.

~~F-3~~45

WESTERN IOWA ENERGY, LLC

STATEMENTS OF OPERATIONS

Years Ended December 31, ~~2009~~2010, ~~2008~~2009 and ~~2007~~2008

	2009			2008			2007
	2010			2009			2008
REVENUES
Related parties	$	438,~~123~~452,~~269~~526		$	6943,~~714~~123,~~221~~269		$	6869,~~595~~714,~~272~~221
Incentive funds		6,986,655			10,068,612			10,081,726
Unrelated parties		2,706,459			—			—
Total revenues		50,109,924			79,782,833			78,676,998
Incentive funds		442,459			6,986,655			10,068,612
COST OF SALES		46,475,116			75,431,492			78,253,820
Total revenues		11,601,444			50,109,924			79,782,833
Gross profit		3,634,808			4,351,341			423,178
COST OF SALES		12,338,018			46,475,116			75,431,492
Gross profit (loss)		(736,574	)		3,634,808			4,351,341
OPERATING EXPENSES
Consulting and professional fees		~~622~~446,~~584~~302			~~289~~622,~~544~~584			~~302~~289,~~503~~544
Office and administrative expenses		1983,~~429,456~~525			1,~~626~~429,~~131~~456			1,~~448~~626,~~383~~131
Total operating expenses		21,~~052~~429,~~040~~827			12,~~915~~052,~~675~~040			1,~~750~~915,~~886~~675
OTHER INCOME (EXPENSE)
Interest income		133,~~746~~733			913,~~882~~746			169,~~310~~882
Interest expense		(~~322~~98,~~698~~997	)		(~~759~~322,~~243~~698	)		(1759,~~400,721~~243	)
Grant income		~~231,525~~—			—231,525			—
Patronage dividends		~~116~~66,~~734~~252			~~156~~116,~~404~~734			~~105~~156,~~866~~404
Total other income (expense)		39(29,~~307~~012	)		~~(592~~39,~~957~~307	)		(1592,~~278,545~~957	)
NET INCOME (LOSS)	$	1(2,~~622~~195,~~075~~413	)	$	1,~~842~~622,~~709~~075		$	(21,~~606~~842,~~253~~709	)
BASIC AND DILUTED EARNINGS (LOSS) PER UNIT	$	61(83.3301	)	$	6961.6833		$	~~(98~~69.5568	)
WEIGHTED AVERAGE UNITS OUTSTANDING, BASIC AND DILUTED		26,447			26,447			26,447

See accompanying notes.

~~F-4~~46

WESTERN IOWA ENERGY, LLC

STATEMENTS OF CHANGES IN MEMBERS’ EQUITY

Years Ended December 31, ~~2009~~2010, ~~2008~~2009 and ~~2007~~2008

			Contributed		Retained
	Units		Capital		Earnings			Total
BALANCE, DECEMBER 31, 2006		26,447	$	23,516,376	$	6,297,192		$	29,813,568
BALANCE, DECEMBER 31, 2007		26,447	$	23,516,376	$	1,569,625		$	25,086,001
Distributions to members		—		—		(2,121,314	)		(2,121,314	)
Net loss for the year ended December 31, 2007		—		—		(2,606,253	)		(2,606,253	)
BALANCE, DECEMBER 31, 2007		26,447		23,516,376		1,569,625			25,086,001
Net income for the year ended December 31, 2008		—		—		1,842,709			1,842,709
BALANCE, DECEMBER 31, 2008		26,447		23,516,376		3,412,334			26,928,710
Net income for the year ended December 31, 2009		—		—		1,622,075			1,622,075
BALANCE, DECEMBER 31, 2009		26,447	$	23,516,376	$	5,034,409		$	28,550,785
Net loss for the year ended December 31, 2010		—		—		(2,195,413	)		(2,195,413	)
BALANCE, DECEMBER 31, 2010		26,447	$	23,516,376	$	2,838,996		$	26,355,372

See accompanying notes.

~~F-5~~47

WESTERN IOWA ENERGY, LLC

STATEMENTS OF CASH FLOWS

Years Ended December 31, ~~2009~~2010, ~~2008~~2009 and ~~2007~~2008

	2009			2008			2007
	2010			2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	1(2,~~622~~195,~~075~~413	)	$	1,~~842~~622,~~709~~075		$	(21,~~606~~842,~~253~~709	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		2,~~235~~250,~~685~~389			2,~~208~~235,~~288~~685			2,~~183~~208,~~988~~288
Non cash portion of patronage dividends		(2616,~~303~~880	)		(4726,~~085~~303	)		(3147,~~810~~085	)
Non cash forgiveness of debt		~~(100,000~~—	)		—(100,000	)		—
Effects of changes in operating assets and liabilities:
Margin deposits		~~226~~58,~~850~~445			1226,~~141,923~~850			(1,~~159~~141,~~958~~923	)
Trade accounts receivable — related party		(1,678,155	)		4,387,564			(1,484,736	)
Accounts receivable		2,857,748			(1,678,155	)		4,387,564
Other receivables		~~(224~~92,~~413~~233	)		(~~157~~224,~~473~~413	)		(5157,~~997~~473	)
Incentive receivables		(2,~~634~~714,~~480~~550	)		5(2,~~206~~634,480	)		~~280~~5,~~653~~206
Inventory		4(2,~~126~~228,~~929~~488	)		4,~~587~~126,~~894~~929			(14,~~302~~587,~~168~~894	)
Derivative instruments		63(2,~~947~~587	)		(163,~~997,735~~947	)		3(1,~~204~~997,~~124~~735	)
Prepaid expenses and other assets		~~(318~~169,~~414~~144	)		(34318,~~114~~414	)		(~~155~~34,~~155~~114	)
Accounts payable		90310,~~431~~547			(290,~~985,924~~431	)		(2,~~466~~985,~~093~~924	)
Accrued interest		(1116,~~146~~147	)		(6711,~~170~~146	)		(1567,~~422~~170	)
Accrued wages and benefits		36(46,~~094~~013	)		1436,~~881~~094			1014,~~128~~881
Accrued payroll taxes		(~~381~~1,021	)		~~804~~(381	)		~~(30,264~~804	)
Accrued expenses — related party		(14103,~~083~~537	)		~~117~~(14,~~620~~083	)		~~(379~~117,~~788~~620	)
Other current liabilities		~~225~~(20,870	)		~~33,215~~225			—33,215
Net cash provided by operating activities		3,~~394~~822,~~861~~100			93,~~050~~394,~~603~~861			~~973~~9,~~435~~050,603
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment, including construction in progress		(161,~~747~~092	)		(~~394~~161,~~028~~747	)		(1394,~~130,291~~028	)
Sales tax refund received on plant construction costs		—			—			443,535
Net cash used in investing activities		(161,092	)		(161,747	)		(394,028	)
Net cash used in investing activities		(161,747	)		(394,028	)		(686,756	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in checks issued in excess of bank balance		333,008			—			—
Net increase (decrease) in checks issued in excess of bank balance		(333,008	)		333,008			—
Net payments (borrowings) on revolving line of credit		—			(3,800,000	)		3,800,000
Net payments on revolving line of credit		—			—			(3,800,000	)
Proceeds from long-term debt		125,~~627~~175,000			812,~~082~~627,~~566~~000			108,~~109~~082,~~472~~566
Payments on long-term debt		(168,~~259~~442,222	)		(1216,~~904~~259,~~789~~222	)		(12,~~071~~904,~~111~~789	)
Distributions to members		—			—			(2,121,314	)
Net cash used in financing activities		(3,600,230	)		(3,299,214	)		(8,622,223	)
Net cash used in financing activities		(3,299,214	)		(8,622,223	)		(282,953	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		60,778			(66,100	)		34,352
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(66,100	)		34,352			3,726
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		300			66,400			32,048
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		66,400			32,048			28,322
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	61,078		$	300		$	66,400
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	300		$	66,400		$	32,048

See accompanying notes.

~~F-6~~48

WESTERN IOWA ENERGY, LLC

NOTES TO FINANCIAL STATEMENTS

December 31, ~~2009~~2010 and ~~2008~~2009

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Western Iowa Energy, LLC located in Wall Lake, Iowa was organized on September 21, 2004 to own and operate a 30 million gallon biodiesel plant for the production of fuel grade biodiesel. The Company’s fiscal year ends on December 31. Significant accounting policies followed by the Company are presented below.

Use of Estimates in Preparing Financial Statements

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Basis of Accounting

The Company uses the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. This method recognizes revenues as earned and expenses as incurred.

Revenue Recognition

Revenue from the production of biodiesel and related products is recorded upon transfer of the risks and rewards of ownership which generally occurs upon ~~delivery to customers~~shipment. The Company ~~recognizes~~ recognizes revenue on biodiesel sales under bill and store relationships when certain criteria are ~~met~~ met including, but not limited to the following; the buyer requests such transactions, terms are documented in written contracts, risk of ownership and title has passed to the buyer, the seller requests a schedule for delivery, the product is complete and ready to ship and the product is segregated from the Company’s inventory. For the year ended December 31, 2009 the Company recognized revenue of $1,750,458 under bill and store transactions with a related party.

Interest income is recognized as earned. Patronage dividends are recognized when received.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

The Company maintains its accounts primarily at one financial institution. At times throughout the year, the Company’s cash and equivalents balances may exceed amounts insured by the Federal Deposit Insurance Corporation.

Accounts Receivable

Accounts receivable are presented at face value, net of the allowance for doubtful accounts. The allowance for doubtful accounts is established through provisions charged against income and is maintained at a level believed adequate by management to absorb estimated bad debts based on historical experience and current economic conditions. Management has established an allowance for doubtful accounts of $-0- and $105,712 at December 31, ~~2009~~2010 and ~~2008~~2009, respectively.

~~F-7~~The Company’s policy is to charge simple interest on trade receivables past due balances; accrual of interest is discontinued when management believes collection is doubtful. Receivables are considered past due based upon payment terms set forth at the date of the related sale. The Company has no receivables accruing interest at December 31, 2010 and December 31, 2009.

WESTERN IOWA ENERGY, LLC

NOTES TO FINANCIAL STATEMENTS

December 31, 2009 and 2008

The Company’s policy is to charge simple interest on trade receivables past due balances; accrual of interest is discontinued when management believes collection is doubtful. Receivables are considered past due based upon payment terms set forth at the date of the related sale. The Company has no receivables accruing interest at December 31, 2009 and 2008.

Derivative Instruments and Hedging Activities

~~SFAS~~Topic ~~No. 133,~~815 ~~which~~of ~~was~~the ~~primarily~~Accounting ~~codified~~Standards ~~into~~Codification ~~Topic 815~~(ASC), Derivatives and Hedging, ~~in the ASC (Accounting Standards Codification),~~ requires a company to evaluate its contracts to determine whether the contracts are derivatives. Certain contracts that literally meet the definition of a derivative may be exempted from ASC 815 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 purchase or normal sales are documented as such, and exempted from the accounting and reporting requirements of ASC 815. The Company ~~has~~does ~~entered~~enter into agreements to purchase soybean oil for anticipated production needs. These contracts are considered normal purchase contracts and exempted from ASC 815.

Inventories

Inventory is stated at the lower of cost, determined on a first in, first out basis, or market value.

Property, Plant, and Equipment

Property and equipment are stated at cost. Significant additions are capitalized, while expenditures for maintenance, repairs and minor renewals are charged to operations when incurred.

Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets determined as follows:


	Years
Land improvements		20-40
Office building		5-40
Office equipment		5-20
Plant and process equipment		10-40

Depreciation expense for the years ended December 31, 2010, 2009, and 2008 was $2,232,293, $2,217,589, and $2,190,192, respectively.

The Company reviews its property and equipment for impairment whenever events indicate that the carrying amount of the asset may not be recoverable. An impairment loss is recorded when the sum of the future cash flows is less than the carrying amount of the asset. The amount of the loss is determined by comparing the fair market values of the asset to the carrying amount of the asset.

Loan Origination Fees

Loan origination fees are stated at cost and are amortized on the straight-line method over the life of the loan agreements. Amortization commenced as the Company borrowed funds on the loans. Amortization for the years ended December 31, ~~2009~~2010, ~~2008~~2009, and ~~2007~~2008 was $18,096.

Other Investments

Other investments consist of investments in the capital stock and patron equities of the Company’s primary lenders. The investments are stated at cost and adjusted for non cash patronage equities received.

Grant Income

Grant income consists of amounts received from unaffiliated organizations to assist in the organization and development of the Company. Amounts are recorded as other income when there is no obligation to repay the organization.

~~F-8~~50

WESTERN IOWA ENERGY, LLC

NOTES TO FINANCIAL STATEMENTS

December 31, 2009 and 2008

Income Taxes

The Company is organized as a limited liability company under state law and is treated as a partnership for income tax purposes. Under this type of organization, the Company’s earnings pass through to the partners and are taxed at the partner level. Accordingly, no income tax provision has been calculated. Differences between financial statement basis of assets and tax basis of assets is related to capitalization and amortization of organization and start-up costs for tax purposes, whereas these costs are expensed for financial statement purposes,. ~~and~~Differences also exist in the ~~difference~~treatment of expenses capitalized for inventory for tax purposes, prepaid expenses, and differences between ~~the~~depreciable ~~recorded~~lives ~~amounts~~and ofmethods ~~financial~~used ~~statement~~for book and tax ~~depreciation~~purposes.

Earnings (Loss) Per Unit

~~Earnings~~Losses ~~(loss)~~ per unit are calculated based on the period of time units have been issued and outstanding. For purposes of calculating diluted earnings per capital unit, units subscribed for but not issued are included in the computation of outstanding capital units based on the treasury stock method. As of December 31, ~~2009~~2010, ~~2008~~2009, and ~~2007~~2008, there was not a difference between basic and diluted earnings per unit as there were no units subscribed.

Cost of Sales

The primary components of cost of sales from the production of biodiesel products are, raw ~~materials~~ materials (soybean oil, animal fats, hydrochloric acid, methanol, and sodium methylate), energy (natural gas and electricity), labor and depreciation on process equipment.

Fixed costs during the periods when the plant is idle are classified in cost of sales. Cost of sales during these periods primarily consists of labor, depreciation on process equipment, and other indirect costs.

Shipping and Handling Costs

Shipping and handling costs are expensed as incurred and are included in the cost of sales.

Environmental Liabilities

The Company’s operations are subject to federal, state and local environmental laws and regulations. These laws require the Company to investigate and remediate the effects of the release or disposal of materials at its location. Accordingly, the Company has adopted policies, practices and procedures in the areas of pollution control, occupational health, and the production, handling, storage and use of hazardous materials to prevent material environmental or other damage; and to limit the financial liability which could result from such events. Environmental liabilities are recorded when the liability is probable and the costs can be reasonably estimated.

Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instrument held by the Company:

Current assets and current liabilities — The carrying value approximates fair value due to the short maturity of these items.

Long-term debt — The carrying amount of long-term obligations approximated fair value based on estimated interest rates for comparable debt.

~~F-9~~51

WESTERN IOWA ENERGY, LLC

NOTES TO FINANCIAL STATEMENTS

December 31, 2009 and 2008

New Accounting Standards

In ~~June~~January ~~2009~~2010, the FASB issued ~~SFAS~~ASU ~~No. 168~~2010-06, ~~The~~Fair ~~FASB~~Value ~~Accounting~~Measurements ~~Standards~~and ~~Codification~~Disclosures ~~and~~(Topic ~~the~~820), ~~Hierarchy~~Improving ofDisclosures ~~Generally~~about ~~Accepted~~Fair ~~Accounting~~Value ~~Principles~~Measurements, ~~which~~amending ~~was~~ASC ~~primarily~~820. ~~codified~~ASU ~~into~~2010-06 ~~Topic 105,~~requires ~~Generally~~entities ~~Accepted~~to ~~Accounting~~provide ~~Standards,~~new indisclosures ~~the~~and ~~ASC.~~clarify ~~This~~existing ~~standard~~disclosures ~~will~~relating ~~become~~to ~~the~~fair ~~single source of~~value ~~authoritative nongovernmental U~~measurements.S. ~~generally~~The ~~accepted~~new ~~accounting~~disclosures ~~principles~~and ~~(“GAAP”),~~clarifications ~~superseding~~ of existing ~~FASB,~~disclosures ~~American~~are ~~Institute~~effective offor interim ~~Certified~~and ~~Public~~annual ~~Accountants~~reporting ~~(“AICPA”),~~periods ~~Emerging~~beginning ~~Issues Task~~after ~~Force~~December 15, ~~(“EITF”)~~2009, ~~and~~except ~~related~~for ~~accounting literature. This standard reorganizes~~ the ~~thousands~~disclosures ofabout ~~GAAP~~purchases, ~~pronouncements~~sales, ~~into~~issuances, ~~roughly~~and 90settlements ~~accounting topics~~in ~~and~~Level ~~displays~~3 ~~them~~fair ~~using~~value ameasurements, ~~consistent~~which ~~structure.~~are ~~Also~~effective ~~included~~for isfiscal ~~the~~years ~~relevant~~beginning ~~Securities~~after ~~and~~December 15, ~~Exchange~~2010 ~~Commission~~and ~~guidance~~for ~~organized~~interim ~~using~~periods ~~the~~within ~~same~~those ~~topical~~fiscal ~~structure in separate sections~~years. ~~This guidance~~The ~~will~~adoption beof ~~effective~~ASU ~~for~~2010-06 ~~financial~~did ~~statements~~not ~~issued~~have ~~for reporting periods that end after~~a ~~September 15,~~material ~~2009.~~impact ~~Beginning~~on in the ~~third quarter of 2009, this guidance impacts the~~ Company’s financial ~~statements~~position ~~and~~or ~~related~~results ~~disclosures~~of ~~as all references to authoritative accounting literature reflect the newly adopted codification~~operations.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities — an amendment of SFAS No. 133, which was primarily codified into Topic 815, Derivatives and Hedging, in the ASC. This guidance expands the disclosures about an entity’s derivative and hedging activities. The guidance was effective for fiscal years and interim periods beginning after November 15, 2008, which was January 1, 2009 for the Company. The Company’s enhanced disclosures are included in Note 13.

In May 2009, the FASB issued SFAS No. 165, Subsequent Events, which was primarily codified into Topic 855, Subsequent Events, in the ASC. This guidance establishes principles and requirements for subsequent events. Specifically, it sets forth guidance pertaining to the period after the balance sheet date during which management should consider events or transactions for potential recognition or disclosure, circumstances under which an event or transaction would be recognized after the balance sheet date and the required disclosures that should be made about events or transactions that occurred after the balance sheet date. This guidance is effective for interim or annual financial periods ending after June 15, 2009. The Company adopted the guidance as of April 1, 2009. The adoption of ASC 855 did not have a material effect on its financial statements and related disclosures.

NOTE 2 — INCENTIVE PAYMENTS AND RECEIVABLE

Revenue from federal incentive programs is recorded when the Company has sold blended biodiesel and satisfied the reporting requirements under the applicable program. When it is uncertain that the Company will receive full allocation and payment due under the federal incentive program, it derives an estimate of the incentive revenue for the relevant period based on various factors including the most recently used payment factor applied to the program. The estimate is subject to change as management becomes aware of increases or decreases in the amount of funding available under the incentive programs or other factors that affect funding or allocation of funds under such programs. ~~The amount of incentives receivable at December 31, 2009 and December 31, 2008 was~~ ~~$2,946,499 and $312,019, respectively.~~

The Company receives federal incentive revenues from the Volumetric Ethanol Tax Credit (“VEETC”) and Commodity Credit Corporation (CCC) Bioenergy Programs. The VEETC expired on December 31, 2009 and was reinstated in December 2010 and made retroactive for 2010. The amount of incentives receivable was $231,949 and $2,946,499 as of December 31, 2010 and December 31, 2009 respectively.

NOTE 3 — INVENTORY

Inventory consists of the following:

	December 31,		December 31,
	2010		2009
	2009		2008
Raw material	$	1,976,460	$	273,791
Raw material	$	273,791	$	496,028
Work in process		31,278		49,398
Work in process		49,398		541,530
Finished goods		604,278		60,339
Finished goods		60,339		3,472,899
Total	$	2,612,016	$	383,528
Total	$	383,528	$	4,510,457

~~F-10~~NOTE 4 — DEBT AND FINANCING

WESTERN IOWA ENERGY, LLC

NOTES TO FINANCIAL STATEMENTS

December 31, 2009 and 2008

NOTE 4 — LAND OPTION

The Company entered into two land option agreements with a member to purchase approximately 73 acres of land for $2,000 per acre payable in units of ownership in the Company. The Company was required to pay option consideration in the amount of $2,000. The options extend to December 31, 2009 to purchase any part of the property or it shall expire automatically and be null and void and the option consideration shall be forfeited. In June 2005, the Company exercised one of the options and partially exercised the other for the purchase of approximately 39 acres of land. The Company issued 81 member units totaling $76,950 in exchange for the land. In December 2009, the Company exercised the remaining option of approximately 35 acres. The Company completed a cash purchase in January 2010 for a total cost of $70,496.

NOTE 5 — DEBT AND FINANCING

Long-Term Debt

Long-term obligations of the Company are summarized as follows:

	December 31,		December 31,
	2010		2009
	2009		2008
Note payable to Farm Credit Services of America and CoBank under term note agreement — see details below	$	—	$	2,350,000
Note payable to Farm Credit Services of America and CoBank under term note agreement — see details below	$	2,350,000	$	4,150,000
Note payable to Farm Credit Services of America and CoBank under reducing revolving credit note — see details below		1,825,000		2,630,000
Note payable to Farm Credit Services of America and CoBank under reducing revolving credit note — see details below		2,630,000		4,350,000
Note payable to the Iowa Department of Economic Development — see details below		177,500		207,500
Note payable to the Iowa Department of Economic Development — see details below		207,500		337,500
Note payable to Glidden Rural Electric Cooperative — see details below		452,222		534,444
Note payable to Glidden Rural Electric Cooperative — see details below		534,444		616,666
Total		2,454,722		5,721,944
Total		5,721,944		9,454,166
Less current portion		259,722		2,459,722
Less current portion		2,459,722		2,729,110
Long-term portion	$	2,195,000	$	3,262,222
Long-term portion	$	3,262,222	$	6,725,056

~~The estimated future maturities of long-term debt at December 31, 2009 are as follows:~~52

2010	$	2,459,722
2011		112,222
2012		112,222
2013		202,222
2014		2,482,223
Thereafter		353,333
Total	$	5,721,944

F-11

~~WESTERN~~The ~~IOWA~~estimated ~~ENERGY~~future maturities of long-term debt at December, ~~LLC~~2010 are as follows:

NOTES TO FINANCIAL STATEMENTS


2011	$	259,722
2012		82,222
2013		1,307,222
2014		682,222
2015		82,222
Thereafter		41,112


Total	$	2,454,722

The Company has available loan commitments from Farm Credit Services of America and CoBank. The commitments consisted of a $10,000,000 term note, a $5,510,000 reducing revolving credit note and a $490,000 letter of credit. The commitment under the reducing revolving credit note reflects a $2,000,000 reduction which is effective until March 31, 2011. On March 28, 2011, the reducing revolving credit note was amended to increase the commitment to $7,000,000 effective until September 28, 2011. As of December 31, 2010 and December 31, 2009, the balance outstanding under the term note was $-0- and ~~2008~~$2,350,000, respectively. As of December 31, 2010 and December 31, 2009, the balance outstanding under the reducing revolving credit note was $1,825,000 and $2,630,000, respectively. Advances under the reducing revolving credit note are available through the life of the commitment. The commitment reduces by $900,000 semi-annually beginning either July 1, 2012 or six months after the repayment of the term loan, whichever is earlier, and continues through January 1, 2016, with a final reduction at the expiration of the commitment on July 1, 2016, at which time any outstanding balance shall be due and payable in full. The notes require interest payments based on unpaid principal. The agreements also include a provision for additional payments for the fiscal years ending 2006 through 2012 based on the free cash flows of the Company. The agreements provide for several different interest rate options including variable and fixed options (3.25% and 3.50% variable on the revolving credit note, as of December 31, 2010 and December 31, 2009, respectively). The variable interest rate options are based on Libor or the agent’s base rate and include adjustments for performance which is based on the Company’s debt to net worth ratio, measured quarterly. The Company has issued a $490,000 irrevocable letter of credit through CoBank in favor of Glidden Rural Electric Cooperative. The notes are secured by essentially all of the Company’s assets. At December 31, 2010, the Company had $3,685,000 of available borrowings under the reducing revolving credit note.

The ~~Company has available~~ loan ~~commitments~~agreements ~~from~~with Farm Credit ~~Services of America~~ and CoBank ~~totaling $18,000,000~~contain asvarious ofcovenants ~~December 31,~~pertaining ~~2009~~to ~~and 2008. The commitments consist of a $10,000,000 term note,~~minimum aworking $7capital,~~430,000~~ ~~reducing~~minimum ~~revolving~~net ~~credit~~worth ~~note~~requirements, and adebt ~~$570,000~~service ~~letter~~coverage ofratio ~~credit~~requirements. As ~~of December 31,~~ ~~2009 and 2008, the balance outstanding under the term note was $2,350,000 and $4,150,000, respectively. Principal payments~~ of ~~$450,000 as amended, are required under the term loan and commenced~~ December ~~20, 2006 and due each quarter thereafter, with a final payment due no later than December 20, 2011. As of December~~ 31, ~~2009 and 2008~~2010, the ~~balance~~Company ~~outstanding under the reducing revolving credit note~~ was ~~$2,630,000~~not ~~and~~in ~~$4,350,000,~~compliance respectively. Advances under the reducing revolving credit note are available through the life of the commitment. The commitment reduces by $900,000 semi-annually beginning July 1, 2012 and continuing through January 1, 2016, with ~~a final reduction at~~ the expiration of the commitment on July 1, 2016, at which time any outstanding balance shall be due and payable in full. The notes require interest payments based on unpaid principal. The agreements also include a provision for additional payments for the fiscal years ending 2006 through 2010 based on the free cash flows of the Company. At December 31, 2009, the current portion of debt ~~includes~~service ~~the estimated~~coverage ~~free cash flow requirements of $724,020. The agreements provide for several different~~ratio ~~interest~~requirement ~~rate options including variable~~ and ~~fixed~~obtained ~~options~~waiver (3.50% and 4.00% variable on the term note and revolving credit note, as of December 31, 2009 and 2008, respectively). The variable interest rate options are based on Libor or the agent’s base rate and include adjustments for ~~performance~~ ~~which~~said ~~is based on the Company’s debt to net worth ratio, measured quarterly~~violation. ~~The~~ Company has issued a $570,000 irrevocable letter of credit through CoBank in favor of Glidden Rural Electric Cooperative. The notes are secured by essentially all of the Company’s assets. At December 31, 2009, the Company had $4,800,000 of available borrowings under the reducing revolving credit note.

The ~~loan~~Company ~~agreements~~was ~~with~~awarded ~~Farm~~$400,000 ~~Credit~~from the Iowa Department of Economic Development (IDED) consisting of a $300,000 zero interest deferred loan and ~~CoBank~~a ~~contain~~$100,000 ~~various~~forgivable ~~covenants~~loan, ~~pertaining~~the tobalance ~~minimum~~of which was ~~working~~$177,500 ~~capital~~and $207,500 at December 31, 2010 and ~~minimum~~December 31, ~~net~~2009, ~~worth~~respectively. ~~requirements~~The zero interest deferred loan requires monthly installments of $2,500 beginning January 2008, with remaining unpaid principal due at maturity, December, 2011. The Company was ~~not~~required into ~~compliance~~satisfy ~~with~~the terms of the ~~minimum~~agreement ~~net~~to ~~worth~~receive ~~requirement~~a ~~for~~permanent waiver of the ~~period~~forgivable ~~ending~~loan. ~~May~~In April 312009, ~~2009~~the ~~and~~Company received ~~obtained~~notice ~~waiver~~from ~~for~~the ~~said~~IDED that the Company had satisfied the terms of the agreement and had ~~violation~~forgiven the forgivable loan. AsThe forgiveness of the loan is reflected in other income in the accompanying statement of operations for the year ended December 31, 2009,. ~~except~~The asloan ~~noted~~is ~~above,~~secured ~~the~~by a ~~Company~~security ~~believes~~agreement itincluding isessentially ~~in compliance~~all ~~with~~of ~~said~~the ~~covenants~~Company’s assets.

The Company was awarded $400,000 from the Iowa Department of Economic Development (IDED) consisting of a $300,000 zero interest deferred loan and a $100,000 forgivable loan, the balance of which was $207,500 and $337,500 at December 31, 2009 and 2008, respectively. The zero interest deferred loan requires monthly installments of $2,500 beginning January 2008, with remaining unpaid principal due at maturity, December, 2012. The Company was required to satisfy the terms of the agreement to receive a permanent waiver of the forgivable loan. In April 2009, the Company received notice from the IDED that the Company had satisfied the terms of the agreement and had forgiven the forgivable loan. The forgiveness of the loan is reflected in other income in the accompanying statement of operations for the year ended December 31, 2009. The loan is secured by a security agreement including essentially all of the Company’s assets.

In July 2006, the Company entered into a rural development loan agreement under the Rural Electrification Act of 1936 with Glidden Rural Electric Cooperative. The original loan amount was $740,000 and requires monthly installments of $6,851, requiring no interest and commencing July 31, 2007. The loan is to be paid in full on or before the tenth anniversary date of the first advance of funds. The Company has issued an irrevocable letter of credit through CoBank in favor of Glidden Rural Electric Cooperative as security for the note.

~~NOTE 6 — MEMBERS’ EQUITY~~53

The Company’s operating agreement provides that the net profits or losses of the Company will be allocated to the members in proportion to the membership units held. Members will not have any right to take part in the management or control of the Company. Each membership unit entitles the member to one vote on any matter which the member is entitled to vote. Transfers of membership units are prohibited except as provided in the operating agreement.

On February 19, 2007, the Board of Directors approved a distribution to members of $80.21 per unit, for a total payment of $2,121,314.

F-12

~~WESTERN~~NOTE ~~IOWA~~5 ~~ENERGY,~~— ~~LLC~~MEMBERS’ EQUITY

~~NOTES~~The TOCompany’s ~~FINANCIAL~~operating ~~STATEMENTS~~agreement provides that the net profits or losses of the Company will be allocated to the members in proportion to the membership units held. Members will not have any right to take part in the management or control of the Company. Each membership unit entitles the member to one vote on any matter which the member is entitled to vote. Transfers of membership units are prohibited except as provided in the operating agreement.

~~December 31,~~NOTE ~~2009~~6 ~~and~~— ~~2008~~INCOME TAXES

~~NOTE~~As 7of —December 31, ~~INCOME~~2010 ~~TAXES~~and 2009, the book basis of assets exceeded the tax basis of assets by approximately $21,400,000 and $19,500,000, respectively.

AsThe ofCompany ~~December 31,~~files ~~2009~~income ~~and~~tax ~~2008,~~returns in the ~~book~~U.S. ~~basis~~Federal ofjurisdiction ~~assets~~and ~~exceeded~~various states. Generally, the ~~tax~~Company ~~basis~~is ofno ~~assets~~longer subject to examination by tax authorities within these ~~approximately~~jurisdictions ~~$19,500,000~~for years before 2006. The Company’s policy is to recognize interest and ~~$17~~penalties related to uncertain tax benefits in income tax expense. The Company has no accrued interest or penalties related to uncertain tax positions as of December 31,~~485,000,~~ ~~respectively~~2010 or 2009.

~~The~~NOTE ~~Company~~7 is— ~~subject~~CASH toFLOW ~~the following material tax jurisdictions: U.S. and Iowa. The tax years~~DISCLOSURES that remain open to examination by the Internal Revenue Service are 2005 through 2009. The tax years that remain open to examination by the Iowa Department of Revenue are 2005 through 2009. The Company’s policy is to recognize interest and penalties related to uncertain tax benefits in income tax expense. The Company has no accrued interest or penalties related to uncertain tax positions as of December 31, 2009 or 2008.

NOTE 8 — CASH FLOW DISCLOSURES

Supplemental disclosure for interest paid:

	2009		2008		2007
	2010		2009		2008
Cash paid for interest	$	~~333~~115,~~845~~118	$	~~826~~333,~~413~~845	$	1826,~~416,143~~413

NOTE 98 — RELATED PARTY TRANSACTIONS

The Company’s general contractor (Renewable Energy Group, LLC) originally used to construct the plant is an entity related to West Central Coop who was originally contracted to provide the management and operational services for the Company. Renewable Energy Group, LLC was also issued member units in July 2006 and December 2006 in exchange for a reduction in the construction payable. In July 2006, West Central Coop and Renewable Energy Group, LLC joined forces and created Renewable Energy Group, Inc. (REG, Inc.). On September 21, 2006, the Company consented to the assignment of the contract to construct the facility and the management and operational services agreement to REG, Inc.

The Company incurred management and operational service fees, feed stock procurement fees and marketing fees with ~~West Central Coop and~~ REG, Inc. For the ~~years~~Years ended December 31, ~~2009~~2010, ~~2008,~~ 2009 and ~~2007~~2008, the Company incurred service fees of $~~572~~116,~~995~~233, $~~634~~572,~~040,~~995 and $~~909~~634,~~960,~~040 respectively. The Company also purchases feed stock from West Central Coop and Bunge North America, Inc. an entity related by common ownership in REG, Inc. For the ~~years~~Years ended December 31, ~~2009~~2010, ~~2008~~2009 and ~~2007~~2008, the Company purchased feed stocks of $-0-, $2,839,352, and $12,679,380 respectively, ~~and~~from ~~$26,748,829,~~these ~~respectively~~related parties. The amount payable to related parties as of December 31, ~~2009~~2010 and ~~2008~~2009 and was $8813,~~277~~838 and $2888,~~480~~277, respectively.

~~The~~On ~~Company~~April 3, ~~has~~2009, ~~recorded~~the ~~expense~~Company ofreceived ~~$103~~from REG,~~537,~~ ~~$117~~Inc.,~~620,~~ ~~and~~a ~~$-0-~~notice ~~for~~of ~~the~~termination ~~net~~of ~~income~~its ~~bonus payable~~management toand operational services agreement. The notification from REG, Inc. ~~for~~states ~~the~~that ~~years~~it ~~ended~~shall constitute ~~December 31,~~such ~~2009,~~twelve ~~2008~~month ~~and~~advance ~~2007,~~termination ~~respectively.~~notice ~~The~~required ~~amounts~~by ~~are included~~the interms ~~accrued~~of ~~expenses~~the inagreement. The ~~the~~agreement ~~accompanying~~expired ~~balance~~in ~~sheet~~2010.

OnNOTE ~~April 7,~~9 ~~2009,~~— ~~the~~MAJOR ~~Company~~CUSTOMER ~~received~~AND ~~from REG, Inc., a notice of termination of its management~~COMMITMENTS ~~and operational services agreement. The notification from REG, Inc. states that it shall constitute such twelve month advance termination notice required by the terms of the agreement.~~

~~NOTE~~On 10September 24, —2010, ~~LEASE~~the ~~COMMITMENTS~~Company entered into three agreements with Archer-Daniels-Midland (ADM) for product marketing, feedstock procurement and other services. The marketing agreement provides that ADM will purchase from the Company and the Company will sell to ADM all of the biodiesel and related products produced by the Company. The feedstock agreement provides that ADM will procure feedstock for the Company’s production plant. The services agreement provides that ADM will provide certain services to the Company such as; safety, regulatory and environmental compliance, operations assistance and quality control and lab testing. The agreements include a provision for fees based on a percentage of the net profits of the Company. The agreements are effective for one year commencing on the first day of the month in which the Company commences production of biodiesel. The agreements may also be terminated by either party upon thirty days written notice. Revenues from this customer for the year ended December 31, 2010 were $2,457,958. Trade accounts receivable due from this customer as of December 31, 2010 were $248,928.

~~During July 2006, the Company entered into an operating lease agreement for rail equipment which~~54 ~~expires in 2011. The lease agreement has a monthly payment amount of $2,969. The following is a schedule of future minimum lease payments under a non-cancelable lease at December 31, 2009:~~

2010	$	35,627
2011		17,813
Total	$	53,440

Lease expense for the years ended December 31, 2009, 2008, and 2007 was $35,627.

F-13

~~WESTERN~~NOTE ~~IOWA~~10 ~~ENERGY,~~— ~~LLC~~LEASE COMMITMENTS

~~NOTES~~During TOJuly 2006, ~~FINANCIAL~~the ~~STATEMENTS~~Company entered into an operating lease agreement for rail equipment which expires in 2011. The lease agreement has a monthly payment amount of $2,969. The following is a schedule of future minimum lease payments under a non-cancelable lease at December 31, 2010:

~~December 31,~~2011 ~~2009~~$ ~~and 2008~~17,814

Lease expense for the years ended December 31, 2010, 2009 and 2008 was $35,627.

NOTE 11 — RETIREMENT AND SAVINGS PLAN

The Company has a 401(k) retirement and savings plan, which is available to substantially all employees. The participants may contribute up to 18% of their compensation. The Company’s matching contribution is discretionary for each plan year. The Company contributions for the ~~years~~year ended December 31, ~~2009~~2010, ~~2008,~~2009 and ~~2007,~~2008 ~~was~~were $2118,~~883~~255, $2221,~~855~~883, and $2322,~~396~~855, respectively.

NOTE 12 — FAIR VALUE OF FINANCIAL INSTRUMENTS

~~Effective~~The ~~January 1,~~Company ~~2008,~~follows the ~~company~~guidance ~~adopted~~set ~~FASB~~forth ~~Statement~~in ~~No. 157~~ASC ~~(FAS~~Topic ~~157),~~820 ~~“Fair~~for ~~Value Measurements,”~~assets ~~which~~and ~~was~~liabilities ~~primarily~~recognized at ~~codified~~fair ~~into~~value ~~Topic~~on ~~820,~~a ~~Fair~~recurring ~~Value Measurements and Disclosures, in the ASC~~basis. This guidance provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, ~~the~~ the guidance sets forth a definition of fair value and establishes a hierarchy prioritizing the ~~inputs~~ inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. The adoption of this guidance had an immaterial impact on the company’s financial statements. The guidance defines levels within the hierarchy as follows:

• Level 1—Unadjusted quoted prices for identical assets and liabilities in active markets; • Level 2—Quoted prices for similar assets and liabilities in active markets (other than those included in Level 1) which are observable for the asset or liability, either directly or indirectly; and • Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

•The ~~Level~~following ~~2—Quoted~~table ~~prices~~sets ~~for~~forth ~~similar~~financial assets and liabilities measured at fair value in ~~active~~the consolidated ~~markets~~statement ~~(other~~of ~~than~~financial ~~those~~position ~~included~~and inthe ~~Level~~respective 1)levels to which the fair value measurements are ~~observable~~classified ~~for~~within the ~~asset~~fair orvalue ~~liability,~~hierarchy ~~either~~as ~~directly~~of orDecember 31, ~~indirectly; and~~2009:

• Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Significant

Quoted Prices in

Other

Significant

Carrying Amount

Active Markets for

Observable

Unobservable

Identical Assets

Inputs

Balance Sheet

(Level 1)

(Level 2)

(Level 3)

Financial liabilities:

Commodity derivatives

(2,587

)

(2,587

)

—

The following table sets forth financial assets and liabilities measured at fair value in the consolidated statement of financial position and the respective levels to which the fair value measurements are classified within the fair value hierarchy as of December 31:

2009

Significant

Quoted Prices in

Other

Significant

Carrying

Active Markets for

Observable

Unobservable

Amount on

Identical Assets

Inputs

Balance Sheet

(Level 1)

(Level 2)

(Level 3)

Financial liabilities:

Commodity derivatives

(2,587

)

(2,587

)

—

2008

Significant

Quoted Prices in

Other

Significant

Carrying

Active Markets for

Observable

Unobservable

Amount on

Identical Assets

Inputs

Balance Sheet

(Level 1)

(Level 2)

(Level 3)

Financial assets:

Commodity derivatives

61,360

2,538

58,822

—

The Company enters into various commodity derivative instruments, including forward contracts, futures, options and swaps. The fair value of the Company’s derivatives are determined using unadjusted quoted prices for identical instruments on the applicable exchange in which the Company transacts. When quoted prices for identical instruments are not available, the Company uses forward price curves derived from market price quotations. Market price quotations are obtained from independent brokers, exchanges, direct communication with market participants and actual transactions executed by the Company.

~~F-14~~55

WESTERN IOWA ENERGY, LLC

NOTES TO FINANCIAL STATEMENTS

December 31, 2009 and 2008

NOTE 13 — DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

~~Effective~~The ~~January 1,~~Company ~~2009,~~adopted ~~the~~ASC ~~company~~Topic ~~prospectively implemented the provisions of SFAS No. 161~~815, ~~Disclosures~~ ~~about~~Derivatives ~~Derivative Instruments~~ and Hedging ~~Activities~~, anon ~~amendment of FASB Statement No.~~January ~~133 (SFAS 161)~~1, ~~which was primarily codified into Topic 815 Derivatives and Hedging in the ASC~~2009. This guidance ~~enhances~~was intended ~~the~~to ~~disclosure~~improve ~~requirements~~financial ofreporting ~~SFAS~~about ~~No. 133,~~derivative ~~Accounting~~instruments ~~for Derivative Instruments~~ and ~~Hedging~~hedging ~~Activities~~activities ~~(SFAS~~by ~~133),~~requiring toenhanced ~~provide~~disclosures ~~users~~to ofenable ~~financial~~investors ~~statements~~to ~~with a~~ better ~~understanding~~understand oftheir ~~the~~effects ~~objectives~~on ~~of a~~an ~~company~~entity’s ~~derivative~~financial ~~use~~position, ~~and~~financial ~~the~~performance, ~~risks~~and ~~managed~~cash flows.

Objectives and Strategies for Holding Derivative Instruments

In the ordinary course of business, the ~~company~~Company enters into contractual arrangements (derivatives) as a means of managing exposure to changes in biodiesel prices and feedstock costs under established procedures and controls. The ~~company~~Company has established a variety of approved derivative instruments to be utilized in each risk management program, as well as varying levels of exposure coverage and time horizons based on an assessment of risk factors related to each hedging program. As part of its trading activity, the Company uses futures, option and swap contracts offered through regulated commodity exchanges to reduce risk and is exposed to risk of loss in the market value of biodiesel inventories and input costs.

Commodity Risk Management

Commodity price risk management programs serve to reduce exposure to price fluctuations on purchases of feedstocks and biodiesel prices. The ~~company~~Company enters into over-the-counter and exchange-traded derivative commodity instruments to hedge the commodity price risk associated with feedstocks and commodity exposures. ~~These~~There ~~agreements~~were ~~expire~~no ~~throughout~~derivative commodity instruments open at December 31, 2010.

Accounting for Derivative Instruments and Hedging Activities

All derivatives are designated as non-hedge derivatives. Although the contracts may be effective economic hedges of specified risks, they do not meet the hedge accounting criteria of ASC 815. At December 31, ~~2009~~2010 and ~~2008~~December 31, 2009, the Company had net derivative ~~assets (~~liabilities) of $-0- and $(2,587) ~~and $61~~,~~360,~~ respectively, related to these instruments, with the related mark-to-market effects included in “Cost of sales” in the statements operations.

The following ~~tables~~table ~~provide~~sets ~~information~~forth on the ~~location~~fair ~~and~~value ~~amounts~~ of ~~derivative~~derivatives ~~fair~~not ~~values~~designated ~~in the~~as ~~balance~~hedging ~~sheet~~instruments as ~~and derivative gains and losses in the statement~~ of ~~operations~~December 31, 2009:

Fair Value of Derivative Instruments


	Liability Derivatives
	Balance Sheet
	Location	Fair Value
Commodity contracts — Heat oil swaps	Current liabilities	$	(2,587	)

Balance Sheet

Asset Derivatives

Liability Derivatives

Classification

December 31, 2009

Derivatives not designated as hedging:

Commodity contracts — Heat Oil options and swaps

Current liabilities

—

(2,587

)

During the years ended December 31, 2010 and 2009, net realized and unrealized losses on derivative transactions were recognized in the statement of operations as follows:

F-15

Derivative (Gain) Loss

Year Ended

December 31, 2010

December 31, 2009

Statement of

Operations Location

(Gain) Loss

Operations Location

(Gain) Loss

Commodity contracts — Heat oil swaps

Cost of sales

(95,704

)

Cost of sales

1,054,297

WESTERN IOWA ENERGY, LLC

NOTES TO FINANCIAL STATEMENTS

December 31, 2009 and 2008

During the year ended December 31, 2009, net realized and unrealized losses on derivative transactions were recognized in the statement of income as follows:

	Location of net loss	Net income (loss)
	recognized in	recognized in income on
Derivatives not designated as	earnings on	derivative
hedging instruments	derivative activities	activities
Commodity contracts — Soybean oil futures and Heat Oil options and swaps	Cost of sales	$	(1,054,297	)

NOTE 14 — UNCERTAINTIES

The Company has produced biodiesel for sale to customers since ~~June~~September of 2006. During that time, crude oil has ranged in price from the mid-$30 per barrel to a high of $147 per barrel on the NYMEX. We also have experienced a wide swing in the price of soybean oil: between 25¢ per pound and 70¢ per pound. Because the Company is able to process multiple feed stocks, they have been able to process ~~lesser~~less expensive animal fats and vegetable oils into biodiesel that meets ASTM D 6751 standards. As a result, for the year ended December 31, 2009, the Company’s net income was $1,622,075 and incurred a loss of $2,195,413 for the year ended December 31, 2010. In addition, during ~~the~~2009 ~~calendar~~and the year ofended December 31, ~~2009~~2010, the Company repaid approximately $37.6 0 million of its long-term obligations.

During the Company’s short history, it has dealt with the lack of a direct correlation between the cost of its inputs and the selling price of the products that it produces. On the input side, it has to work within the Agricultural market; and on the output side, it has to work within the Energy market. Historically, there has been no consistent relationship between those two markets. Because of the relationship of its business within differing markets, it is necessary that management stay abreast of the varying market conditions to determine the economic relationship that exists at any given time and under certain market conditions. Because of the subjectivity involved with the determination and relationships of market conditions, the uncertainties are exacerbated. The flexibility of the production facilities to process varying feed stocks adds to the Company’s ability to respond to the varying market conditions and to reduce some of the market uncertainties. The ~~expiration~~Federal ~~of the federal~~ blender’s tax credit expired on December 31, 2009 until December 2010, when ~~subject~~it was reinstated retroactively for 2010. The credit is set to ~~any~~ ~~action~~expire ~~that~~on ~~Congress~~December 31, ~~may~~2011. The ~~take~~elimination or reduction in ~~2010,~~the credit may ~~also~~ materially impair the Company’s ability to profitably produce and sell biodiesel. As a result of these factors, the Company warm idled its facility in April 2010 and has had reduced production during 2010.

The Company has also received from REG, Inc. a notice of termination of the management and operational services agreement (see Note 9). Therefore the current agreement will expire on April 1, 2010. REG has proposed that the parties review and cooperate to negotiate a new contract mutually beneficial to the Company and REG; however, there is no guarantee that a new contract will be entered into between the parties. Additionally, on February 24, 2010 a vote was held by unitholders to approve the proposed asset purchase agreement and merger with REG (see Note 16). The Company failed to obtain the unitholder votes necessary to approve the transaction.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. Due to certain items discussed above, our ability to continue to generate positive cash flow is uncertain.

NOTE 15 — GAIN CONTINGENCIES

The Company’s former primary customer and marketer (REG, Inc.) has agreed to an arbitration hearing with a European customer. The Company and REG, Inc. allege breach of contract as the customer failed to take delivery of the Company’s product. The Company’s portion of damages associated with arbitration hearing is $1,054,488. At this time, no estimate can be made as to the time or the amount, if any, of the ultimate recovery. As such no revenues have been recorded to date in the accompanying statement of operations ~~for the year ended December 31, 2009~~ relating to estimated damages recoverable. Revenues will be recorded at which time the actual damages are determinable, which will likely occur upon receipt.

F-NOTE 16 — SUBSEQUENT EVENTS

~~Table~~On March 28, 2011, the Company’s reducing revolving credit note with Farm Credit Services of America ~~Contents~~and CoBank was amended to increase the commitment to $7,000,000, which is effective until September 28, 2011 (See Note 4).

~~WESTERN~~Management ~~IOWA~~evaluated ~~ENERGY,~~subsequent ~~LLC~~events through the date the financial statements were issued.

NOTES TO FINANCIAL STATEMENTS

December 31, 2009 and 2008

NOTE 16 — ASSET PURCHASE AGREEMENT

On May 11, 2009, the Company entered into an asset purchase agreement and plan of merger with REG, for the consolidation of the Company’s commercial-scale biodiesel production facility with REG and two other biodiesel producers. A new holding company (“Newco”), which was incorporated by REG, would own and operate the Company and other acquired companies. The holding company was to be owned by current REG investors and the current members of the Company as well as the members of the two other consolidating companies.

On February 24, 2010 a vote was held by unitholders to approve the proposed transactions and merger with REG. The Company failed to obtain the unitholder votes necessary to approve the transaction.

NOTE 17 — QUARTERLY FINANCIAL DATA (UNAUDITED)

Summary quarterly results are as follows:

Year ended December 31, 2010:


	First			Second			Third			Fourth
	Quarter			Quarter			Quarter			Quarter

Revenues	$	3,539,041		$	2,995,789		$	2,898,239		$	2,168,375
Gross profit (loss)		(457,172	)		18,776			(456,099	)		157,921
Operating income (loss)		(967,250	)		(366,305	)		(733,000	)		(99,846	)
Net income (loss)		(930,802	)		(392,955	)		(755,132	)		(116,524	)
Basic and diluted earnings (loss) per unit		(35.19	)		(14.86	)		(28.55	)		(4.41	)

Year ended December 31, 2009:


	First			Second			Third		Fourth
	Quarter			Quarter			Quarter		Quarter

Revenues	$	3,966,137		$	10,899,985		$	17,037,884	$	18,134,816
Gross profit (loss)		(294,631	)		369,129			1,606,965		1,882,243
Operating income (loss)		(754,741	)		(175,824	)		1,065,530		1,379,701
Net income (loss)		(629,492	)		(259,934	)		1,119,037		1,392,464
Basic and diluted earnings (loss) per unit		(23.80	)		(9.83	)		42.31		52.65

Year ended December 31, 2008:


	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter

Revenues	$	18,029,542	$	27,601,282	$	26,238,615	$	7,913,394
Gross profit (loss)		1,784,314		2,467,747		2,093,569		(1,993,289	)
Operating income (loss)		1,246,255		1,896,946		1,515,203		(2,222,738	)
Net income (loss)		1,127,993		1,675,218		1,377,779		(2,338,281	)
Basic and diluted earnings (loss) per unit		42.65		63.34		52.10		(88.41	)

Year ended December 31, 2007:

	First			Second		Third			Fourth
	Quarter			Quarter		Quarter			Quarter
Revenues	$	14,254,980		$	24,800,210	$	21,262,859		$	18,358,949
Gross profit (loss)		566,299			2,565,826		(734,715	)		(1,974,232	)
Operating income (loss)		128,304			1,990,272		(1,099,711	)		(2,346,573	)
Net income (loss)		(142,559	)		1,629,537		(1,436,064	)		(2,657,167	)
Basic and diluted earnings (loss) per unit		(5.39	)		61.62		(54.30	)		(100.48	)

The above quarterly data is unaudited, but in the opinion of management, all adjustments necessary for a fair presentation of the selected data for these periods presented have been included.

~~NOTE 18 — SUBSEQUENT EVENTS~~58

Management evaluated subsequent events through the date the financial statements were available to be issued

F-17

~~ITEM~~Item 9. ~~CHANGES~~Changes INin ~~AND~~and ~~DISAGREEMENTS~~Disagreements ~~WITH~~With ~~ACCOUNTANTS~~Accountants ONon ~~ACCOUNTING~~Accounting ~~AND~~and ~~FINANCIAL~~Financial ~~DISCLOSURE~~Disclosure.

Eide Bailly LLP is our independent auditor at the present time. The Company has had no disagreements with its auditors.

~~ITEM~~Item 9A. ~~CONTROLS~~Controls ~~AND~~and ~~PROCEDURES~~Procedures.

Disclosure Controls and Procedures

Our management, including our ~~principal~~Principal ~~executive~~Executive ~~officer~~Officer, William J. Horan, ~~along~~and ~~with~~ our Principal ~~principal~~Financial ~~financial~~ and ~~accounting~~Accounting ~~officer~~Officer, Joe Neppl, have reviewed and evaluated the effectiveness of our disclosure controls and procedures (as ~~of December 31, 2009. Disclosure controls and procedures are~~ defined in ~~Rules~~Rule 13a-15(e) and ~~15(d)~~Rule 15d-15(e) under the ~~Securities~~ Securities Exchange Act of 1934, as ~~controls~~amended) ~~and~~as ~~other~~of ~~procedures~~December 31, of2010. anBased ~~issuer~~on this review and evaluation, these officers have concluded that ~~are~~our ~~designed~~disclosure controls and procedures are effective to ensure that information required to be disclosed ~~by the issuer~~ in the reports that itwe ~~files~~file or ~~submits~~submit under the Exchange Act ~~(15 U.S.C. 78a et seq.)~~ is recorded, processed, summarized, and reported, within the time periods specified in the ~~Commission’s rules and~~ forms. ~~Disclosure controls~~ and ~~procedures~~rules ~~include, without~~of ~~limitation,~~the ~~controls~~Securities and ~~procedures~~Exchange ~~designed~~Commission; and to ensure that ~~information~~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 ~~the~~our ~~issuer’s~~ management, including ~~its~~our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. ~~Based on a review and evaluation, these officers believe that our~~ ~~disclosure controls and procedures are effective as of December 31, 2009.~~

Management’s Report on Internal Control over Financial Reporting

Our management, including our ~~principal~~Principal ~~executive~~Executive ~~officer~~Officer, William J. Horan, and our ~~principal~~Principal Financial ~~financial~~ and ~~accounting~~ ~~officer~~Accounting Officer, Joe Neppl, is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for ~~external~~ external purposes in accordance with Generally Accepted Accounting Principles and includes those ~~policies~~ policies and procedures that:

•

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

•

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with Generally Accepted Accounting Principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

•

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.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, ~~2009~~2010. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on this assessment, our management concluded that, as of December 31, ~~2009~~2010, our integrated controls over financial reporting iswas effective based on those criteria.

Attestation Report of Registered Public Accounting Firm

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

Changes in Internal Control Over Financial Reporting

Our management, ~~consisting~~including of our ~~principal~~Principal ~~executive~~Executive ~~officer~~Officer, William J. Horan, and our ~~chief~~Principal Financial ~~financial~~and ~~officer~~Accounting Officer, Joe Neppl, have reviewed and evaluated any changes in our internal control over financial reporting that occurred asduring ofthe fiscal quarter ended December 31, ~~2009~~2010 and there has been no change that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

~~ITEM 9B. OTHER INFORMATION.~~59


Item 9B.		Other Information.

None.

PART III

~~ITEM~~Item 10. ~~DIRECTORS~~Directors, ~~EXECUTIVE~~Executive ~~OFFICERS,~~Officers ~~PROMOTERS~~and ~~AND~~Corporate ~~CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT~~Governance.

The information required by Item 10 is incorporated by reference from our definitive proxy statement relating to our ~~2010~~2011 annual meeting of members. In accordance with Regulation 14A, we intend to file ~~that~~such proxy statement no later than 120 days after the end of the last fiscal year.

~~ITEM~~Item 11. ~~EXECUTIVE~~Executive ~~COMPENSATION~~Compensation.

The information required by Item 11 is incorporated by reference from our definitive proxy statement relating to our ~~2010~~2011 annual meeting of members. In accordance with Regulation 14A, we intend to file ~~that~~such proxy statement no later than 120 days after the end of the last fiscal year.

~~ITEM~~Item 12. ~~SECURITY~~Security ~~OWNERSHIP~~Ownership OFof ~~CERTAIN~~Certain ~~BENEFICIAL~~Beneficial ~~OWNERS~~Owners ~~AND~~and ~~MANAGEMENT~~Management ~~AND~~and ~~RELATED~~Related ~~MEMBER~~Stockholder ~~MATTERS~~Matters.

The information required by Item 12 is incorporated by reference from our definitive proxy statement relating to our ~~2010~~2011 annual meeting of members. In accordance with Regulation 14A, we intend to file ~~that~~such proxy statement no later than 120 days after the end of the last fiscal year.

~~ITEM~~Item 13. ~~CERTAIN~~Certain ~~RELATIONSHIPS~~Relationships ~~AND~~and ~~RELATED~~Related ~~TRANSACTIONS~~Transactions, ~~AND~~and ~~DIRECTOR~~Director ~~INDEPENDENCE~~Independence.

The information required by Item 13 is incorporated by reference from our definitive proxy statement relating to our ~~2010~~2011 annual meeting of members. In accordance with Regulation 14A, we intend to file ~~that~~such proxy statement no later than 120 days after the end of the last fiscal year.

~~ITEM~~Item 14. ~~PRINCIPAL~~Principal ~~ACCOUNTING~~Accounting ~~FEES~~Fees ~~AND~~and ~~SERVICES~~Services.

The information required by Item 14 is incorporated by reference from our definitive proxy statement relating to our ~~2010~~2011 annual meeting of members. In accordance with Regulation 14A, we intend to file ~~that~~such proxy statement no later than 120 days after the end of the last fiscal year.

50PART IV


Item 15.		Exhibits, Financial Statement Schedules.

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

(1)

Financial Statements

The financial statements appear beginning at page 44 of this report.

(2)

Financial Statement Schedules

All supplemental schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.

~~ITEM~~(3) ~~15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.~~Exhibits

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


Exhibit No.		Exhibit	Method of Filing

	3.1	Articles of Organization of Western Iowa Energy, LLC.		1

	3.2	Amended and Restated Operating Agreement of Western Iowa Energy, LLC		1

	3.3	First Amendment to Amended and Restated Operating Agreement of Western Iowa Energy, LLC.		6

	10.1	Water Supply and Storage Agreement between the Incorporated City of Wall Lake, Iowa and Western Iowa Energy, LLC, undated.		1

	10.2	Master Loan Agreement between Farm Credit Services of America, FLCA and Western Iowa Energy, LLC, dated June 6, 2005.		1

	10.3	Construction and Revolving Term Loan Supplement between Farm Credit Services of America, FLCA and Western Iowa Energy, LLC, dated June 6, 2005.		1

	10.4	Administrative Agency Agreement between Farm Credit Services of America, FLCA, CoBank, ACB and Western Iowa Energy, LLC, dated June 6, 2005.		1

	10.5	Iowa Department of Economic Development VAAPFAP Loan/Forgivable Loan Agreement and Promissory Note, dated December 16, 2004.		1

	10.6	Industry Track Agreement between Chicago Central and Pacific Railroad Company and Western Iowa Energy, LLC, dated June 5, 2006.		2

	10.7	Assignment and Pledge Agreement by Western Iowa Energy, LLC in favor of Farm Credit Services of America, FLCA, dated June 15, 2006.		2

	10.8	Rural Development Loan Agreement between Glidden Rural Electric Cooperative and Western Iowa Energy, LLC, dated July 13, 2006.		3

	10.9	Amendment to Master Loan Agreement between Farm Credit Services of America, FLCA and Western Iowa Energy, LLC, dated June 21, 2007.		5

	10.10	Amendment to Master Loan Agreement between Farm Credit Services of America, FLCA and Western Iowa Energy, LLC, dated June 5, 2008.		7

	10.11	Letter Agreement regarding Term Revolver between Farm Credit Services of America, FLCA and Western Iowa Energy, LLC, dated May 14, 2010.		8

	10.12	Letter Agreement regarding Employment between Jeffrey J. Johannesmeyer and Western Iowa Energy, LLC, dated August 31, 2010.		9

	10.13	Product Marketing Agreement between Archer-Daniels-Midland Company and Western Iowa Energy, LLC, dated September 21, 2010. +		10

	10.14	Feedstock Agreement between Archer-Daniels-Midland Company and Western Iowa Energy, LLC, dated September 21, 2010. +		10

	10.15	Services Agreement between Archer-Daniels-Midland Company and Western Iowa Energy, LLC, dated September 21, 2010. +		10

Exhibit			Method of
No.		Description	Filing
	3.1	Articles of Organization of Western Iowa Energy, LLC.		1
	3.2	Amended and Restated Operating Agreement of Western Iowa Energy, LLC		1
	3.3	First Amendment to Amended and Restated Operating Agreement of Western Iowa Energy, LLC		6
	10.1	Water Supply and Storage Agreement between the Incorporated City of Wall Lake, Iowa and Western Iowa Energy, LLC.		1
	10.2	Master Loan Agreement between Farm Credit Services of America and Western Iowa Energy, LLC.		1
	10.3	Construction and Term Loan Supplement between Farm Credit Services of America and Western Iowa Energy, LLC.		1
	10.4	Construction and Revolving Term Loan Supplement between Farm Credit Services of America and Western Iowa Energy, LLC.		1
	10.5	Administrative Agency Agreement between Farm Credit Services of America and Western Iowa Energy, LLC.		1
	10.6	Design/Build Agreement between Renewable Energy Group and Western Iowa Energy.		1
	10.7	Management and Operational Services Agreement between West Central Cooperative and Western Iowa Energy, LLC.		1
	10.8	Letter from CoBank regarding term extension for the Construction and Term Loan Supplement (exhibit 10.3) between Farm Credit Services of America and Western Iowa Energy, LLC.		1
	10.9	Iowa Department of Economic Development VAAPFAP Loan/Forgivable Loan Agreement and Promissory Note.		1
	10.10	Statused Revolving Credit Supplement Agreement between Farm Credit Services, FLCA and Western Iowa Energy, LLC dated August 3, 2006.		2
	10.11	Industry Track Agreement between Chicago Central and Pacific Railroad Company and Western Iowa Energy, LLC dated June 5, 2006.		2
	10.12	Assignment and Pledge Agreement		2
	10.13	Letter Agreement between Renewable Energy Group, LLC and Western Iowa Energy, LC regarding the issuance of 1,000 membership units to Renewable Energy Group, LLC		2
	10.14	Rural Development Loan Agreement between Glidden Rural Electric Cooperative and Western Iowa Energy, LLC.		3
	10.15	Amendment to Management and Operations Agreement between Renewable Energy Group, Inc. and Western Iowa Energy, LLC.		4
	10.16	Amendment to Master Loan Agreement between Farm Credit Services of America, FLCA and Western Iowa Energy, LLC, dated June 21, 2007.		5

Exhibit			Method of
Exhibit No.		Exhibit	Method of Filing
No.		Description	Filing
	10.16	Letter Agreement regarding Term Revolver between Farm Credit Services of America, FLCA and Western Iowa Energy, LLC, dated February 25, 2011.		11
	10.17	Amendment to Construction and Term Loan Supplement between Farm Credit Services of America, FLCA and Western Iowa Energy, LLC, dated June 21, 2007.		5
	14.1	Code of Ethics.		4
	10.18	Statused Revolving Credit Supplement between Farm Credit Services of America, FLCA and Western Iowa Energy, LLC, dated June 21, 2007.		5
	31.1	Certificate Pursuant to 17 CFR 240.15d-14(a).		*
	10.19	Amendment to Master Loan Agreement between Farm Credit Services of America and Western Iowa Energy, LLC dated June 5, 2008.		7
	31.2	Certificate Pursuant to 17 CFR 240.15d-14(a).		*
	10.20	Extension and Second Amendment to Management and Operational Services Agreement between Western Iowa Energy, LLC and Renewable Energy Group, Inc., dated March 16, 2010.		*
	32.1	Certificate Pursuant to 18 U.S.C. § 1350.		*
	14.1	Code of Ethics		4
	32.2	Certificate Pursuant to 18 U.S.C. § 1350.		*
	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		*

(+)		Confidential Treatment Requested.
(1)		Incorporated by reference as filed on our Registration Statement on Form 10-SB, No. 000-51965, originally filed on May 2, 2006.
(2)		Incorporated by reference as filed on our Quarterly Report on Form 10-QSB filed on August 18, 2006.
(3)		Incorporated by reference as filed on our Quarterly Report on Form 10-QSB filed on November 14, 2006.
(4)		Incorporated by reference as filed on our Annual Report on Form 10-KSB filed on March 9, 2007.
(5)		Incorporated by reference as filed on our Quarterly Report on Form 10-QSB filed on August 14, 2007.
(6)		Incorporated by reference as filed on our Quarterly Report on Form 10-Q filed on May 15, 2008.
(7)		Incorporated by reference as filed on our Form 8-K filed on February 12, 2009.
(8)		Incorporated by reference as filed on our Form 8-K filed on May 19, 2010.
(9)		Incorporated by reference as filed on our Form 8-K filed on September 8, 2010.
(10)		Incorporated by reference as filed on our Quarterly Report on Form 10-Q filed on November 15, 2010.
(11)		Incorporated by reference as filed on our Form 8-K filed on March 18, 2011.
(*)		Filed herewith.

5262

SIGNATURES

InPursuant ~~accordance~~to ~~with~~the requirements of Section 13 or 15(d) of the Securities Exchange Act, of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	WESTERN IOWA ENERGY, LLC
Date: March 31, 2010	/s/ William J. Horan
Date: March 29, 2011	/s/ William J. Horan
	William J. Horan
	Chairman, President and Director (Principal Executive Officer)
Date: March 31, 2010	/s/ Joe Neppl
Date: March 29, 2011	/s/ Joe Neppl
	Joe Neppl
	Chief Financial Officer (Principal Financial and Accounting Officer)

InPursuant ~~accordance~~to ~~with~~the requirements of the Securities Exchange Act of 1934, 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: March 31, 2010	/s/ William J. Horan
Date: March 29, 2011		/s/ William J. Horan William J. Horan, Chairman, President and Director
	William J. Horan, Chairman, President,
Date: March 29, 2011		/s/ John Geake John Geake, Vice-Chairman and Director
	Director (Principal Executive Officer)
Date: March 29, 2011		/s/ Kevin J. Ross Kevin J. Ross, Secretary and Director
Date: March 31, 2010	/s/ Kevin J. Ross
Date: March 29, 2011		/s/ Dennis Mauser Dennis Mauser, Treasurer and Director
	Kevin J. Ross, Secretary and Director
Date: March 29, 2011		/s/ Warren L. Bush Warren L. Bush, Director
Date: March 31, 2010	/s/ John Geake
Date: March 29, 2011		/s/ Brent Halling Brent Halling, Director
	John Geake, Vice-Chairman and Director
Date: March 29, 2011		/s/ Virgil Harrison Virgil Harrison, Director
Date: March 31, 2010	/s/ Warren L. Bush
	Warren L. Bush, Director
Date: March 31, 2010	/s/ Wayne Seaman
	Wayne Seaman, Director
Date: March 31, 2010	/s/ Nile Ramsbottom
	Nile Ramsbottom, Director

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