UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
	For the quarterly period ended	January 31, 2012
	For the quarterly period ended April 30, 2012
	OR
o	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
	For the transition period from to .
	COMMISSION FILE NUMBER 000-53112

SOY ENERGY, LLC

(Exact name of registrant as specified in its charter)



Iowa				20-4026473
(State or other jurisdiction of incorporation or organization)				(I.R.S. Employer Identification No.)

4172 19th Street SW, Mason City, Iowa 50401
(Address of principal executive offices)

(641) 421-7590
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

x Yes o No

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:



Large Accelerated Filer o	Accelerated Filer o
Non-Accelerated Filer o	Smaller Reporting Company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes x No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: As of ~~March~~July 216, 2012, we had 33,~~018~~348 membership units outstanding.

INDEX

	Page Number
PART I. FINANCIAL INFORMATION	3
Item 1. Financial Statements	3
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	1213
Item 3. Quantitative and Qualitative Disclosures about Market Risk	1619
Item 4. Controls and Procedures	1619
PART II. OTHER INFORMATION	1619
Item 1. Legal Proceedings	1619
Item 1A. Risk Factors	1619
Item 2. Unregistered Sales of Equity Securities	1619
Item 3. Defaults Upon Senior Securities	1720
Item 4. Mine Safety Disclosures	1720
Item 5. Other Information	1720
Item 6. Exhibits	1720
SIGNATURES	1720

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

SOY ENERGY, LLC

Condensed Balance Sheets

ASSETS	~~January~~April 3130, 2012			October 31, 2011
	(Unaudited)
Current Assets
Cash and cash equivalents	$	~~170~~56,~~566~~796		$	662,946
Certificates of deposit	—			255,923
Accounts receivable	~~668~~201,~~707~~120			88,036
Accrued interest receivable	—			850
Inventories	23,~~278~~249,~~023~~044			3,602,931
Prepaid cost and other	~~168~~213,~~992~~542			60,746
Total current assets	3,~~286~~720,~~288~~502			4,671,432
Property, Plant and Equipment
Land and improvements	508,526			502,176
Buildings	4,332,952			3,278,738
Equipment	15,~~629~~937,~~656~~509			6,313,762
Accumulated depreciation	(~~167~~571,~~256~~474		)	(24,955		)
Total	20,~~303~~207,~~878~~513			10,069,721
Construction in progress	—76,392			9,902,982
Net property, plant and equipment	20,~~303~~283,~~878~~905			19,972,703
Other Assets
Other	1043,~~855~~420			43,419
Assets held for sale	1,875,637			1,875,637
Escrow deposit	379,~~932~~950			379,894
Debt service reserve	150,~~852~~907			150,766
Debt issuance costs, net	~~128,189~~—			135,530
Total other assets	2,~~545~~449,~~465~~914			2,585,246
Total Assets	$	26,~~135~~454,~~631~~321		$	27,229,381

Notes to Unaudited Condensed Financial Statements are an integral part of this Statement.

SOY ENERGY, LLC

Condensed Balance Sheets

LIABILITIES AND MEMBERS' EQUITY	~~January 31, 2012~~	April 30, 2012		~~October 31, 2011~~	October 31, 2011
	~~(Unaudited)~~	(Unaudited)
Current Liabilities
Accounts payable	$	~~1,397,549~~$	1,954,744	$	~~911,865~~$	911,865
Accrued expenses	~~214,605~~	209,656		~~209,730~~	209,730
Line-of-credit	858,722			610,500
Line of credit		2,097,758			610,500
Current maturities of long-term debt	~~440,546~~	5,780,849		~~473,826~~	473,826
Total current liabilities	~~2,911,422~~	10,043,007		~~2,205,921~~	2,205,921
Long-Term Debt, Net of Current Maturities	~~5,457,925~~	770,000		~~5,577,058~~	5,577,058
Member contributions, 33,018 units issued and outstanding	17,766,284			19,446,402
Member contributions, 33,280 and 33,018 Units Issued and Outstanding, respectively		15,641,314			19,446,402
Total Liabilities and Members’ Equity	$	~~26,135,631~~$	26,454,321	$	~~27,229,381~~$	27,229,381

Notes to Unaudited Condensed Financial Statements are an integral part of this Statement.

SOY ENERGY, LLC

Condensed ~~Statements~~Statement of Operations

	Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
	January 31, 2012			January 31, 2011
	April 30, 2012			April 30, 2011			April 30, 2012			April 30, 2011
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Sales	$	1,~~941~~993,~~937~~704		$	—		$	3,935,641		$	—
Costs of Goods Sold Including Preproduction Costs	3,006,545			—
Costs of Goods Sold	3,324,997			—			6,331,542			—
Gross Loss	(1,~~064~~331,~~608~~293		)	—			(2,395,901		)	—
Operating Expenses
General and administrative	~~454~~570,~~335~~621			~~155~~180,~~304~~817			1,024,956			336,121
Professional fees	~~131~~145,~~821~~108			7685,~~897~~750			276,929			162,647
Total operating expenses	~~586~~715,~~156~~729			~~232~~266,~~201~~567			1,301,885			498,768
Operating Loss	(12,~~650~~047,~~764~~022		)	(~~232~~266,~~201~~567		)	(3,697,786		)	(498,768		)
Other Income (Expense)
Interest income	~~863~~103			1917,~~734~~777			966			37,511
Other income	~~1,393~~144			~~4,416~~285			1,537			4,701
Interest expense	(31241,~~610~~945		)	—			(273,555		)	—
Total other income, net	(29,354		)	24,150
Total other income (expense), net	(241,698		)	18,062			(271,052		)	42,212
Net Loss	$	(12,~~680~~288,~~118~~720	)	$	(~~208~~248,~~051~~505	)	$	(3,968,838	)	$	(456,556	)
Weighted Average Units Outstanding - Basic and Diluted	33,~~018~~111			33,018			33,064			33,018
Net Loss Per Unit - Basic and Diluted	$	(5069.8812	)	$	(67.353	)	$	(120.04	)	$	(13.83	)

Notes to Unaudited Condensed Financial Statements are an integral part of this Statement.

SOY ENERGY, LLC

Condensed Statements of Cash Flows

	Three Months Ended			Three Months Ended
	Six Months Ended			Six Months Ended
	January 31, 2012			January 31, 2011
	April 30, 2012			April 30, 2011
	(Unaudited)			(Unaudited)
Cash Flows from Operating Activities
Net loss	$	(13,~~680~~968,~~118~~838	)	$	(~~208~~456,~~051~~556	)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization	~~145~~557,~~173~~292			~~487~~1,766
Loss on sale of equipment	1,462			—
Write-off of loan costs	120,914			—
Noncash interest income	(124		)	(2,960		)
Loss on sale of assets held for sale	1,462			45,000
Noncash interest income	(197		)	(5,130		)
Changes in operating assets and liabilities:
Accounts receivable	(~~580~~113,~~671~~084		)	—
Accrued interest receivable	850			(82,~~761~~186		)
Inventories	1353,~~324,908~~887			—
Prepaid costs and other	(75152,~~682~~797		)	(~~107~~110,~~752~~780		)
Accounts payable	~~473~~773,~~633~~924			3830,~~326~~519
Accrued expenses	~~4,875~~(74		)	354,~~198~~042
Net cash used for operating activities	(~~385~~2,~~694~~426,661		)	(~~253~~493,~~513~~325		)
Cash Flows from Investing Activities
Capital expenditures	(~~458~~585,~~192~~533		)	(76164,~~667~~397		)
Proceeds from disposal of equipment	400			—200,000
Payments for certificates of deposit	—			(~~514~~770,~~781~~282		)
Proceeds from maturing certificates of deposit	255,923			—
Net cash used for investing activities	(~~201~~329,~~869~~210		)	(~~591~~734,~~448~~679		)
Cash Flows from Financing Activities
Proceeds from line-of-credit, net	~~248~~1,~~222~~487,258			—
Payments on long-term debt	(153,039		)	—
Proceeds from long-term debt	770,000			—
Net cash provided by financing activities	95,183			—
Payments on long-term debt	(271,287		)	(834		)
Net Decrease in Cash and Cash Equivalents	(492,380		)	(844,961		)
Capital contributions	163,750			—
Net cash (used for) provided by financing activities	2,149,721			(834		)
Net Decrease in Cash and Cash Equivalents	(606,150		)	(1,228,838		)
Cash and Cash Equivalents at Beginning of Period	662,946			6,352,955
Cash and Cash Equivalents at End of Period	$	~~170~~56,~~566~~796		$	5,~~507~~124,~~994~~117
Supplemental Cash Flow Information
Interest expense paid	$	29132,~~979~~998		$	—
Capitalized interest paid	$81,910	~~81,910~~		$150,823	~~82,403~~
Supplemental Schedule of Noncash Investing and Financing Activities
Construction-in-progress in accounts payable	$	—		$	12,~~310~~015,~~581~~666
Property, plant and equipment in accounts payable	$268,955	~~12,051~~		$—	—
Assets held for sale reclassified to construction-in-progress	$—	—		$525,000	~~525,000~~
Prepaid costs reclassified to construction-in-progress	$—	—		$95,000	~~95,000~~
Amortization of loan fees, discounts and prepaid costs capitalized as construction-in-progress	$5,318	~~5,318~~		$68,536	~~34,233~~
Payment of construction-in-progress with escrow deposit	—			1,750,834

Notes to Unaudited Condensed Financial Statements are an integral part of this Statement.

SOY ENERGY, LLC

Notes to Unaudited Condensed Financial Statements

~~January~~April 3130, 2012

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted as permitted by such rules and regulations. These financial statements and related notes should be read in conjunction with the financial statements and notes thereto included in the Company's audited financial statements for the year ended October 31, 2011, contained in the Company's Form 10-K.

In the opinion of management, the interim condensed financial statements reflect all adjustments, consisting of only normal recurring adjustments, considered necessary for fair presentation of the Company's financial position as of ~~January~~April 3130, 2012 and the results of ~~operation~~operations and cash flows for all periods present.

Nature of Business

Soy Energy, LLC, an Iowa limited liability company, (the Company) operates a 30 million gallon per year (MGY) production biodiesel facility in Mason City, Iowa. The Company produces and sells biodiesel, glycerin and soapstock. The Company commenced operations in January 2012. Prior to January 2012, the Company was in the development stage.

Accounting Estimates

Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported revenues and expenses. The Company uses estimates and assumptions in accounting for significant matters, among others, the carrying value of property, plant, and equipment and related assumptions related to impairment testing and the carrying value of assets held for sale. Actual results may differ from previously estimated amounts and such differences may be material to the financial statements.

Revenue Recognition

The Company generally sells biodiesel and related products pursuant to marketing agreements. Revenues are recognized when the marketing company (the "customer") has taken title and has assumed the risks and rewards of ownership, prices are fixed or determinable and collectability is reasonably assured. In one instance, a customer has requested that we store biodiesel inventory purchased from us due to delays in receiving rail cars at our facility (“"Bill and Hold”" transactions or arrangements). We recognize revenue prior to shipment of Bill and Hold transactions when we have satisfied the applicable revenue recognition criteria, which include the point at which title and risk of ownership transfer to our customers. This customer has specifically requested in writing that we invoice for the finished product and hold the finished product until a later date. The Company does not retain any specific performance obligations, such that the earning process is not complete and ordered biodiesel is segregated from the Company's other inventory and not subject to fulfilling other orders. ~~The~~There ~~sales~~were ~~value~~no of inventory, ~~subject~~amounts tounder Bill and Hold arrangements, ~~was~~at ~~approximately~~April ~~$637~~30,~~000~~ ~~as of January 31,~~ 2012.

Accounts Receivable

In the normal course of business, the Company provides credit to its customers and evaluates the status of outstanding balances on a regular basis. Losses on accounts receivable are recorded on the direct charge-off method for income tax purposes and the reserve method for financial reporting purposes. At ~~January 31~~April 30, 2012, the Company considered all remaining accounts receivable to be fully collectible and an allowance for doubtful accounts was not considered necessary.

Inventory

Inventory consists of raw materials, work-in-progress and finished goods. Inventories are stated at the lower-of-cost, which is determined by the first-in, first-out method, or market.

SOY ENERGY, LLC

Notes to Unaudited Condensed Financial Statements

~~January~~April 3130, 2012

Property, Plant and Equipment

Property, plant and equipment is stated at cost and is depreciated over estimated service lives of related assets, using the straight-line method of accounting. Property, plant and equipment undergoing development that is not in service is shown in the balance sheet as construction-in-progress and is not depreciated. Estimated service lives computing depreciation for financial reporting are as follows:



Description		Years
Land improvements		20 - 39
Buildings		7 - 39
Equipment		2 - 20

Ordinary maintenance and repairs are expensed as incurred. Cost of renewals and betterments are capitalized in appropriate property and equipment accounts and depreciated as discussed above.

The Company capitalizes construction costs as construction-in-progress until the assets are placed in service. The Company had construction-in-progress of approximately $76,000 and $9,903,000 as of April 30, 2012 and October 31, 2011, respectively, relating to the Mason City, Iowa plant improvements. ~~As the plant was placed into service in January 2012, the Company did not have any construction-in-progress at January 31, 2012.~~

Debt Issuance Costs

Loan costs are capitalized and amortized to interest expense over the terms of the related loans using the effective interest rate method.

The Company had unamortized debt issuance costs of approximately $~~128,000~~0 and $136,000 at ~~January 31~~April 30, 2012 and October 31, 2011, respectively. Accumulated amortization at ~~January 31~~April 30, 2012 and October 31, 2011 was approximately $30158,000 and $23,000, respectively. Additionally, Company capitalized amortization of debt issuance costs as part of the construction-in-progress during the ~~three~~six months ended ~~January 31~~April 30, 2012 ~~and 2011~~ of approximately $5,000. As ~~and~~noted $in Note 5,~~200~~ the Company wrote off the remaining debt issuance costs of approximately $121,000 ~~respectively~~as of April 30, 2012.

Long-Lived Assets

The Company reviews its long-lived assets, such as property, plant and equipment for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by an asset to the carrying value of the asset. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. The Company reviews assets held for sale at each reporting date to determine that the carrying value is equal or greater than the estimated net selling price.

Fair Value of Financial Instruments

The Company believes the carrying value of cash and equivalents, escrow deposit, debt service reserve, accounts payable, and other working capital items approximate fair value due to the short maturity nature of these instruments. The Company believes the carrying amount of the long-term debt approximates the fair value due to terms of the debt approximating the current market interest rates. The fair value of assets held for sale is disclosed in Note 4.

2. GOING CONCERN

OnThe ~~January~~financial 1,statements ~~2012,~~have ~~the~~been ~~Company~~prepared ~~commenced~~on ~~operations and transitioned from~~ a ~~"development~~going ~~stage~~concern ~~company"~~basis, towhich ancontemplates ~~"operating~~the ~~company". The~~recoverability ~~Company~~of ~~has~~assets ~~begun~~and ~~generating~~the ~~revenues~~satisfaction ~~and~~of ~~cash~~liabilities ~~flows~~in ~~from~~the ~~operations~~normal ~~since~~course ~~commencing~~of ~~operations~~business. ~~Production~~On ~~levels~~January ~~are~~1, ~~nearing~~2012, the Company's ~~targeted~~commenced ~~range~~operations and ~~are~~transitioned ~~consistent~~from ~~with~~a ~~initial~~"development ~~stages~~stage ofcompany" ~~operation~~to an "operating company". The Company's ~~production~~incurred ~~runs~~losses ~~are~~of ~~using~~approximately ~~corn~~$4.0 ~~oil~~million asfor the ~~main~~six ~~feedstock,~~months ~~which~~ended isApril ~~believed~~30, to2012 ~~have~~and ~~significant~~had ~~cost~~previously ~~advantages~~incurred ~~over~~losses ~~soybean~~in ~~oil~~fiscal ~~based~~2011 ~~production. The~~and ~~Company~~2010 ~~has~~while ~~also~~it ~~started~~was toin ~~make~~the ~~payments~~development ~~on long-term debt. The Company's line-of-credit currently provides~~

SOY ENERGY, LLC

Notes to Unaudited Condensed Financial Statements

~~January~~April 3130, 2012

$2stage. Additionally, ~~million~~the Company is out of compliance with certain provisions of the term loan agreements as described in Note 5, ~~subject~~which also triggered a default on our line of credit. The Company is in the process of resolving the events of default and working to ~~borrowing~~receive ~~base~~waivers ~~limitations~~for the violations. AnHowever, ~~additional~~there $2is ~~million~~no assurance when or if any waiver or amendment will be ~~available~~provided by the lenders. As a result, ~~based~~the onCompany ~~borrowing~~reclassified ~~base~~the ~~limitations~~term loans of approximately $5,292,000 ~~upon~~as current. If the Company's ~~becoming~~lenders ~~operational~~exercised ~~and~~their ~~profitable~~rights to accelerate the maturity of the debt outstanding, asthe ~~determined~~Company bywould not have adequate available cash to repay the ~~financial~~amounts ~~institution~~currently outstanding. These factors raise substantial doubt about the Company's ability to continue as a going concern.

The ~~financial~~Company ~~statements~~has ~~have~~begun ~~been~~generating ~~prepared~~revenues onand acash ~~going~~flows ~~concern~~from ~~basis,~~operations ~~which~~since ~~contemplates~~commencing ~~the~~operations ~~recoverability of assets and the satisfaction of liabilities~~ in ~~the normal course of business~~January. ~~The~~Although ~~Company~~production ~~incurred~~levels ~~losses~~are ofnearing ~~approximately $1.7 million for~~ the ~~three~~Company's ~~months~~targeted ~~ended~~range ~~January 31, 2012~~ and ~~approximately~~are ~~$1.9~~consistent ~~million~~with ~~and~~initial ~~$2.0~~stages ~~million~~of ~~during fiscal 2011 and 2010~~operation, ~~respectively, while in~~ the ~~development~~Company ~~stage,~~is ~~through~~not ~~construction,~~operating ~~and~~at ~~initial stages of start-up prior to commencing~~ full ~~operations~~capacity. The ~~delays in commencing operations reduced the~~ Company's ~~cash~~production ~~position~~runs asare ~~well~~using ascorn ~~amounts~~oil ~~available~~as on the ~~line-of-credit. Typically~~main feedstock, ~~when~~which ~~biodiesel~~is ~~facilities~~believed ~~begin~~to ~~operations,~~have ~~the~~significant ~~expected~~cost ~~production~~advantages ~~efficiencies are experienced~~ over ~~time. These~~soybean ~~factors~~oil ~~raise~~based ~~substantial doubt about the Company's ability to continue as a going concern~~production.

Management ishas ~~finalizing~~raised ~~additional~~money through the issuance of convertible subordinated ~~debt~~notes and equity capital offerings, subject to certain conditions and lender approvals. The Company isintends ~~also~~to continue raising additional funds through equity and convertible note offerings. The Company is in discussions with multiple parties for production tolling arrangements ~~for a portion of the plant capacity~~ which will ~~improve~~allow ~~initial~~us ~~cash~~to ~~flows,~~operate ~~mitigate~~at ~~some~~a ~~feedstock~~high ~~price~~rate ~~risk,~~without ~~and~~requiring ~~operate~~a ~~the~~significant ~~plant~~amount atof ~~higher~~cash ~~levels~~to ~~and~~purchase ~~efficiencies~~biodiesel production feedstock. While the Company believes these measures will significantly improve the operating performance of the plant and provide additional working capital, there has not been sufficient time and execution of these measures to determine their impact and ultimate success.

3. INVENTORIES

At ~~January 31~~April 30, 2012 and October 31, 2011, inventories are composed as follows:

	January 31, 2012		October 31, 2011*
	April 30, 2012		October 31, 2011*
Raw materials	$	~~289~~755,~~195~~015	$	1,691,724
Work-in-progress	147,~~010,495~~463		200,000
Finished goods	~~978~~2,~~333~~446,566		1,711,207
	$	23,~~278~~249,~~023~~044	$	3,602,931

*Derived from audited financial statements.

4. ASSETS HELD FOR SALE

The Company is actively working to sell the assets held for sale. These assets have been recorded at their estimated selling price, less estimated selling costs. The fair value of these assets was determined based on recent sales of similar land and equipment.

Amounts included in assets held for sale are as follows:

	January 31, 2012		October 31, 2010*
	April 30, 2012		October 31, 2011*
Land	$	250,262	$	250,262
Equipment	1,625,375		1,625,375
Total assets held for sale	$	1,875,637	$	1,875,637

* Derived from audited financial statements.

5. LONG-TERM DEBT

The Company has a term loan for $6,000,000 with a financial institution with a fixed rate of 5.0% until October 2016. The interest rate will then adjust to the greater of the five-year LIBOR swap rate plus 3.5% or 5.0%. The Company makes monthly interest only payments on the term loan until November 1, 2011, followed by 120 monthly principal and interest payments sufficient to fully amortize the principal balance at maturity in September 2021.

SOY ENERGY, LLC

Notes to Unaudited Condensed Financial Statements

~~January~~April 3130, 2012

The Company has a non-interest bearing note with the same financial institution for $77,595 which will be due in full in September 2021. The carrying value of the loan is shown net of unamortized discount of $24,417 and $25,043 as of January 31, 2012 and October 31, 2011, respectively, and is calculated using a 5.0% LONG-TERM ~~market interest rate. The amortization of the debt discount is recognized as interest costs.~~DEBT

~~The~~Term loans are secured by substantially all business assets and are subject to various financial and non-financial covenants that limit distributions, capital expenditures, and require minimum debt service coverage requirements.Loans

The Company has a term loan for $6,000,000 with a financial institution with a fixed rate of 5.0% until October 2016. The interest rate will then adjust to the greater of the five-year LIBOR swap rate plus 3.5% or 5.0%. The Company began making monthly payments of approximately $64,000, including interest in November 2011, which will continue until maturity in September 2021.

The Company has a non-interest bearing note with the same financial institution for $77,595 which will be due in full in September 2021. The carrying value of the loan is shown net of unamortized discount of $23,791 and $25,043 as of April 30, 2012 and October 31, 2011, respectively, and is calculated using a 5.0% market interest rate. The amortization of the debt discount is recognized as interest costs.

The term loans are secured by substantially all business assets and are subject to various financial and non-financial covenants that limit distributions, capital expenditures, and require minimum debt service coverage requirements. On June 22, 2012, the Company received a written notice of default (the “Notice”) from our lender dated June 21, 2012. The Notice provided that the Company was not in compliance with the two provisions of its term loan agreements related to the timely submission of financial information as well as properly naming its lender as an insured party.

The Company is working to obtain waivers from our lender related to the defaults under our loan agreement. However, since the Company has not received waivers for actual or future violations, the Company has classified approximately $5,292,000 of this debt as current and has written-off the related debt issuance costs to interest expense of approximately $121,000 as of April 30, 2012.

Convertible Subordinate Notes

The Company issued convertible subordinated notes with a fixed rate of 12.0%. The Company owes semiannual interest only payments beginning in May 2012 until the notes become due and payable in October 2017. The Company has the right to defer all interest payments until the notes are redeemed, converted, or mature. The Company deferred the May 2012 interest payments. The notes are convertible any time after October 31, 2015 and prior to the maturity date at a book value per unit rate. The notes may be redeemed by the Company any time after April 30, 2014 without penalty or premium. The Company's borrowings through the convertible subordinated notes include $360,000 from related parties. Subsequent to quarter end, the Company issued additional convertible subordinated notes with terms identical to the notes issued totaling $218,000.

Amounts included in long-term debt are as follows:

	January 31, 2012		October 31, 2010*
	April 30, 2012		October 31, 2010*
Term loan	$	5,~~845~~727,~~293~~045	$	5,998,332
Term loan	53,~~178~~804		52,552
Total long-term debt	5,898,471		6,050,884
Subordinated debt	770,000		—
Less current maturities	440,546		473,826
Total long-term debt	6,550,849		6,050,884
	$	5,457,925	$	5,577,058
Less current maturities	5,780,849		473,826
	$	770,000	$	5,577,058

* Derived from audited financial statements.

The estimated maturities of long-term debt, net of unamortized discount, at ~~January~~April 3130, 2012 are as follows:

2013	~~440~~5,~~546~~780,849
2014	~~505,059~~—
2015	~~530,899~~—
2016	~~558,060~~—
2017	~~586~~770,~~612~~000
Thereafter	3,277,295
Total	$	6,550,849
Total	$	5,898,471

6. LINE-OF-CREDIT

At January 31, 2012, the Company has available a $4,000,000 line-of-credit from a financial institution maturing October 31, 2012 bearing a variable rate of interest equal to the greater of the Wall Street Journal Prime Rate plus 1.00% or 6.00%. Advances on the line-of-credit shall not exceed $2,000,000 until the facility is fully operational and profitable as determined by the financial institution. The Company owed $858,722 and $610,500 on the line-of-credit at January 31, 2012 and October 31, 2011, respectively. The line-of-credit is secured by a real estate mortgage on the Company's Marcus, Iowa property and a first lien on the Company's accounts receivable, inventory, including prepaid deposits for the purchase of inventory, deposit and hedging accounts and assets held for sale. An event of default of the long-term debt would constitute an event of default for the line-of-credit.

7. COMMITMENTS AND CONTINGENCIES

Construction Agreement

On August 11, 2010, the Company entered into a construction agreement with an unrelated party (contractor) for the design and construction of modifications of the Mason City, Iowa biodiesel facility allowing for the use of multiple feedstocks. The Guaranteed Maximum Price of the project is $8,000,000. The contract was complete pending final approval at January 31, 2012. The Company had incurred $8,000,000 on this contract at January 31, 2012 and October 31, 2011 which was included in construction-in-progress at October 31, 2011. The plant was put into service in January 2012. The retaintage payable related to this contract approximates $374,000 at January 31, 2012 and October 31, 2011 and is included in accounts payable in the balance sheet.

Marketing Agreement

SOY ENERGY, LLC

Notes to Unaudited Condensed Financial Statements

~~January~~April 3130, 2012

~~and has a term of two years with options to renew for additional terms~~6. ~~This~~ LINE ~~agreement~~OF ~~may also be terminated by mutual consent of both parties.~~CREDIT

At April 30, 2012, the Company has available a $2,500,000 line of credit from a financial institution, subject to borrowing base limitations, maturing on October 31, 2012, and bearing a variable rate of interest equal to the greater of the Wall Street Journal Prime Rate plus 1.00% or 6.00%. The line of credit advances will be increased to $4,000,000 once the Company is fully operational and profitable, as defined by the financial institution. The Company owed $2,097,758 and $610,500 on the line of credit at April 30, 2012 and October 31, 2011, respectively. The line of credit is secured by a real estate mortgage on the Company's Marcus, Iowa property and a first lien on the Company's accounts receivable, inventory, including prepaid deposits for the purchase of inventory, deposit and hedging accounts and assets held for sale. The line of credit is secured by various covenants. As described in Note 5, the Company was in default on the term loans at April 30, 2012, which triggered a default on the line of credit. The Company is currently seeking a waiver of events of default under the line of credit in connection with the term loans.

7. COMMITMENTS AND CONTINGENCIES

Construction Agreement

On August 11, 2010, the Company entered into a construction agreement with an unrelated party (contractor) for the design and construction of modifications of the Mason City, Iowa biodiesel facility allowing for the use of multiple feedstocks. The Guaranteed Maximum Price of the project is $8,000,000. The contract was complete pending final approval at April 30, 2012. The Company had incurred $8,000,000 on this contract at April 30, 2012 and October 31, 2011 which was included in construction-in-progress at October 31, 2011. The plant was put into service in January 2012. The retaintage payable related to this contract approximates $374,000 at April 30, 2012 and October 31, 2011 and is included in accounts payable in the balance sheet.

Legal Proceedings

The Company is subject to legal proceedings and claims which arise in the ordinary course of its business. While the ultimate outcome of these matters is not presently determinable, it is in the opinion of management that the resolution of outstanding claims will not have a material adverse effect on the financial position or results of operations of the Company. Due to the uncertainties in the settlement process, it is at least reasonably possible that management's view of outcomes will change in the near term.

In May 2012, a subcontractor of the general contractor that performed the conversion to allow corn oil processing filed a mechanics lien against the Company seeking payment of retainage amounts as well as other costs beyond the scope of the original contract. The Company disputes the additional work performed and is seeking to have the lien removed.

Marketing Agreement

On August 12, 2010, the Company entered into a marketing agreement with an unrelated party whereby the marketer would sell and market all of the biodiesel produced by the Company. The agreement commenced on the effective date, August 12, 2010, and has a term of two years from the date when the Company first delivers biodiesel pursuant to the marketing agreement with options to renew for additional terms. This agreement may also be terminated by mutual consent of both parties.

Crude Corn Oil Purchase Agreement

On June 19, 2008, the Company entered into a three year contract with an unrelated party to purchase 820,000 pounds of corn oil per month at a price based on a percentage of an index. Additionally, the contract includes a provision that allows for a profitability incentive to be paid by the Company to the unrelated party under certain conditions. The contract provides the Company the option to purchase additional corn oil at the prevailing market price. The agreement also provides for its renewal in one year increments unless terminated by either party with 90 days notice.

~~Equipment~~8. MEMBERS' ~~and Software Purchase Commitment~~EQUITY

OnDuring ~~January 20,~~the second quarter 2012, the Company ~~committed~~issued to262 ~~purchasing~~units ~~new~~at ~~process~~a ~~controls~~price ~~for~~of ~~the~~$625 ~~plant~~per ~~from~~unit, anwhich ~~unrelated~~resulted ~~party~~in ~~totaling~~total ~~approximately~~proceeds of $~~300~~163,~~000~~750. ASubsequent ~~$30,000~~to ~~down~~quarter ~~payment~~end, ~~was made by~~ the Company, asissued of68 ~~January 31,~~units ~~2012,~~at ~~with~~a ~~work~~price ~~set~~off to$625 ~~begin~~per ~~and~~unit, bewhich ~~completed~~resulted in ~~March~~total ~~2012~~proceeds of $42,500.

SOY ENERGY, LLC

Notes to Unaudited Condensed Financial Statements

April 30, 2012

9. SUBSEQUENT EVENT

In May 2012, a chemical tank ruptured causing the plant to shut down while repairs were being made. The Company has insurance that covers the majority of the damages incurred.

Item 2. 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 three and six month ~~period~~periods ended ~~January~~April 3130, 2012. This discussion should be read in conjunction with the financial statements and notes and the information contained in our annual report on Form 10-K for the fiscal year ended October 31, 2011. Unless otherwise stated, references in this report to particular years or quarters refer to our fiscal years ended in October and the associated quarters of those fiscal years.

Forward Looking Statements

This report contains forward-looking statements that involve future events, our future performance and our expected future operations and actions. In some cases you can identify forward-looking statements by the use of words such as "may," "will," "should," "anticipate," "believe," "expect," "plan," "future," "intend," "could," "estimate," "predict," "hope," "potential," "continue," or the negative of these terms or other similar expressions. These forward-looking statements are only our predictions and involve numerous assumptions, risks and uncertainties, including, but not limited to, those business risks and factors described elsewhere in this report, in our other Securities and Exchange Commission filings, as well as those listed below.


•	Overcapacity within the biodiesel industry;


•	Our ability to successfully operate the biodiesel production facility and profitably produce biodiesel;


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


•	Availability and costs of feedstock;


•	Actual biodiesel and co-product production varying from expectations;


•	Changes in or elimination of governmental laws, tariffs, trade or other controls or enforcement practices such as national, state or local energy policy; federal biodiesel tax incentives; or environmental laws and regulations that apply to the Mason City biodiesel production facility;


•	Changes in the weather or general economic conditions impacting the availability and price of vegetable oils and animal fats;


•	Total U.S. consumption of diesel;


•	Changes in interest rates or the availability of credit;


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


•	Our ability to sell assets held for sale at their carrying value minus selling costs;


•	Changes and advances in biodiesel production technology;


•	Restrictive covenants in our loan agreements;


•	Competition from other alternative fuels; 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 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

Soy Energy, LLC (referred to herein as "Soy Energy" the "Company" "us" or "we") is an Iowa limited liability company which only recently commenced operations. Soy Energy sold its first batch of biodiesel in January 2012 and sold its first batch of corn stillage oil based biodiesel in March 2012. Our facility is not currently operating at full capacity. We were organized as an Iowa limited liability company by filing articles of organization with the Iowa Secretary of State on December 15, 2005.

InOn ~~September~~May ~~2010~~15, we2012, ~~completed~~a methanol storage tank rupture occurred at our biodiesel production facility. Following the ~~purchase~~tank ofrupture, athe biodiesel production facility ~~located~~was inevacuated. None ~~Mason~~of ~~City~~our employees were injured. Following the incident, ~~Iowa~~the ~~which~~biodiesel production facility was ininspected ~~bankruptcy~~by an independent third party. The Weindependent ~~engaged~~third ~~Ball~~party ~~Industrial~~generated ~~Services,~~a ~~LLC~~report ~~("Ball")~~which towas ~~retrofit~~shared with our insurance company and OSHA. Management anticipates that the ~~biodiesel~~damage ~~production~~which ~~facility~~was incaused ~~order~~by tothe ~~provide~~methanol ~~greater~~tank ~~feedstock~~rupture ~~flexibility~~will ~~for~~be repaired using funds from our insurance company. We recently restarted the biodiesel production facility. ~~Pursuant~~after tothe ~~our~~methanol ~~agreement,~~tank ~~Ball~~rupture. During ~~provided~~the ~~design,~~time ~~engineering,~~that ~~procurement,~~the ~~testing,~~biodiesel ~~training,~~production ~~and~~facility ~~construction~~was ~~services~~down ~~and~~following ~~labor,~~the ~~materials~~methanol tank rupture, ~~supplies~~we performed other plant maintenance and ~~equipment~~upgrades ~~for~~which ~~modifications~~has toallowed ~~the~~us ~~Mason~~to ~~City~~improve our biodiesel production facility's efficiency. WeThe ~~agreed~~biodiesel toproduction ~~pay~~facility ~~Ball~~is acurrently ~~maximum~~operating, ~~of $8~~however,~~350,000~~ we continue to ~~complete~~experience ~~the~~plant down-time as we work onto bring the biodiesel production facility, ~~including~~into afull ~~$350,000 project management fee~~production.

WeOn ~~spent~~June ~~most~~22, of our 2011 fiscal year completing the necessary upgrades to the Mason City biodiesel production facility and restarting operations. Due to the fact that the biodiesel production facility was not operating at the time we purchased it2012, we ~~had~~received toa ~~spend~~written ~~time~~notice ~~working~~of todefault ~~restart~~ (the ~~original~~"Notice"), ~~plant~~dated inJune ~~addition~~21, to2012, ~~the~~from ~~construction of the additional pre~~OSM-~~treatment~~REO ~~equipment~~FF, weLLC ~~added to the plant.~~

We are currently in production at the biodiesel production facility, however, we continue to work to find efficiencies in operating the facility. Management anticipates that the process of fine tuning the operation of the biodiesel production facility will last for some time, which is typical for this type of facility. Management anticipates as we continue to work on finding these efficiencies, our ability to produce biodiesel will increase.

We obtained a $4 million line of credit with First Citizens National Bank ("First Citizens") on October 17, 2011 which will be used to purchase raw materials to operate the biodiesel plant. Our ability to draw funds on this line of credit is limited by a borrowing base calculation. Further, half of the $4 million principal amount of the line of credit is not available to us until we have commenced operations and the biodiesel production facility is operating profitably. The borrowing base calculation takes into account our accounts receivable, inventory, and the amount we currently have outstanding on the line of credit to determine whether we can draw funds on the line of credit.

Results of Operations for the Fiscal Quarters Ended January 31, 2012 and 2011

The following table shows the results of our operations for the fiscal quarters ended January 31, 2012 and 2011:

	Fiscal Quarter Ended			Fiscal Quarter Ended
Statement of Operations Data	January 31, 2012			January 31, 2011
	(Unaudited)			(Unaudited)
Revenues	$	1,941,937		$	—
Cost of Goods Sold Including Preproduction Costs	3,006,545			—
Gross Loss	(1,064,608		)	—
Operating Expenses	586,156			232,201
Operating Loss	(1,650,764		)	(232,201		)
Other Income (Expense)	(29,354		)	24,150
Net Loss	$	(1,680,118	)	$	(208,051	)

We had approximately $1.9 million in revenue for our first fiscal quarter of 2012. We did not have any revenue during the comparable period of 2011 as we had not yet completed the renovation of the Mason City biodiesel production facility. Our revenue during our first fiscal quarter of 2012 was related to the sale of soybean based biodiesel. We had preproduction costs, including cost of goods sold of approximately $3.0 million during our first fiscal quarter of 2012, compared to no similar costs during the same period of 2011.

Our operating expenses were higher during our first quarter of 2012 compared to the same period of 2011 due to the fact that we were preparing for and operating the biodiesel production facility during 2012 which resulted in greater general and administrative costs.

We had significantly less interest income during our first quarter of 2012 compared to the same period of 2011 due to having less cash on hand during the 2012 period. We used much of our cash during our 2011 fiscal year to complete the renovations to the Mason City biodiesel production facility which resulted in less cash on hand during our first quarter of 2012. We had interest expense during our first quarter of 2012 since we completed construction of the biodiesel production facility and therefore we are no longer capitalizing interest related to our credit facilities.

Management is in the process of continuing to fine tune the operation of the biodiesel production facility. Management is evaluating its options regarding production of biodiesel and is considering entering into toll manufacturing or other types of arrangements which would allow us to continue to operate the biodiesel production facility without incurring the significant costs associated with purchasing feedstock. In addition, due to the fact that the production facility has only recently become operational, we are continuing to find efficiencies in the operation of the biodiesel production facility. Management anticipates that this process will continue for a period of time as is usual for this type of manufacturing facility.

~~Changes~~("OSM") our primary lender. Our loan agreement with OSM contains various covenants and restrictions with which we are obligated to comply. The loan agreement is secured by a mortgage and security interest granted by the Company in ~~Financial~~favor ~~Condition~~of atOSM ~~January 31~~in substantially all of our real property and personal property, ~~2012~~with ~~Compared~~the toexception ~~October 31~~of the real property owned by the Company which is located in Marcus, ~~2011~~Iowa and certain other assets which secure our line of credit.

The ~~table~~Notice ~~below~~provided ~~shows~~that we are in default pursuant to Section 7.01(f) of the ~~changes~~loan agreement due to the fact that we failed to procure a Lender's Loss Payable Endorsement in favor of OSM. We are also in default pursuant to Section 7.01(e) of the loan agreement due to our failure to deliver unaudited financial ~~condition~~statements ~~during~~as ~~the~~required ~~three~~by ~~months~~Section ~~ended~~5.01(b) ~~January 31,~~of ~~2012~~the Loan Agreement.

ASSETS	January 31, 2012		October 31, 2011*
	(Unaudited)
Current Assets	$	3,286,288	$	4,671,432
Net Property, Plant and Equipment	20,303,878		19,972,703
Other Assets	2,545,465		2,585,246
Total Assets	$	26,135,631	$	27,229,381
LIABILITIES
Current Liabilities	$	2,911,422	$	2,205,921
Long-Term Debt Net of Current Maturities	5,457,925		5,577,058
Members' Equity	17,766,284		19,446,402
Total Liabilities and Members' Equity	$	26,135,631	$	27,229,381

OSM requested that the Company immediately cure each of the events of default which have occurred pursuant to the loan agreement. The Notice advises, and the loan agreement provides, that upon the occurrence of an event of default, OSM may exercise a variety of remedies afforded to OSM under the loan agreement or by applicable law or equity, including without limitation, acceleration of the due date of the unpaid principal balance of the loan agreement and all accrued but unpaid interest thereon. Further, according to the loan agreement, OSM may, during an event of default and in accordance with applicable law, foreclose its mortgage on the Company's real property and its security interest in the Company’s personal property and exercise any other remedies provided therein.

We are working to obtain waivers from OSM related to the defaults under our loan agreement. However, since we have not received waivers for these actual or future violations, we have classified approximately $5,292,000 of our long-term debt as current and have written-off the related debt issuance costs of approximately $121,000 as of April 30, 2012. Further, due to the fact that it is a default under our line of credit if we are in default of our OSM loans, we have an event of default under our line of credit. Management is in the process of securing a waiver of this default under our line of credit.

Management is in the process of negotiating a biodiesel toll manufacturing agreement. The purpose of this type of arrangement is to allow us to operate the biodiesel production facility at a high rate without requiring a significant amount of cash to purchase biodiesel production feedstock. Management is in discussions with various toll manufacturing counter-parties. No definitive agreement has been reached but management anticipates that such an agreement will be in place during our third quarter of 2012.

The problems that we have experienced in commencing operations at our biodiesel production facility and liquidity issues we face raise concerns about our ability to continue as a going concern. We are working to raise additional debt and equity capital for our operations and we are exploring alternative biodiesel production agreements which would limit the amount of liquid assets we require to operate the biodiesel production facility. However, we continue to struggle with our liquidity which has limited our ability to operate the biodiesel production facility at or near full capacity. Further, due to our tank rupture and other obstacles, we are not currently able to operate at full capacity and we have experienced plant down-time which has impacted our liquidity.

Results of Operations for the Fiscal Quarters Ended April 30, 2012 and 2011

The following table shows the results of our operations for the fiscal quarters ended April 30, 2012 and 2011:



	Fiscal Quarter Ended			Fiscal Quarter Ended
Statement of Operations Data	April 30, 2012			April 30, 2011
	(Unaudited)			(Unaudited)
Revenues	$	1,993,704		$	—
Cost of Goods Sold Including Preproduction Costs	3,324,997			—
Gross Loss	(1,331,293		)	—
Operating Expenses	715,729			266,567
Operating Loss	(2,047,022		)	(266,567		)
Other Income (Expense)	(241,698		)	18,062
Net Loss	$	(2,288,720	)	$	(248,505	)

We had approximately $2.0 million in revenue for our second fiscal quarter of 2012 related to sales of biodiesel and its related co-products. We did not have any revenue during the comparable period of 2011 as we had not yet completed the renovation of the Mason City biodiesel production facility. During our second fiscal quarter of 2012, we produced biodiesel for sale in the market using primarily corn oil as the biodiesel production feedstock. We had approximately $3.3 million in cost of goods sold during our second fiscal quarter of 2012 related to purchases of feedstock inventory and other raw materials necessary for the

biodiesel production process. We did not have any cost of goods sold during the second quarter of 2011 because we had not yet started production at the biodiesel production facility at that time. Our cost of goods sold exceeded our revenue in the quarter primarily due to operating below the capacity of the plant.

Our operating expenses were higher during our second quarter of 2012 compared to the same period of 2011 due to the fact that we were operating the biodiesel production facility during 2012 which resulted in more staff and greater costs associated with operating our business. We also had increased professional fees during our second quarter of 2012 compared to the same period of 2011 due to various professional fees related to the operation of the biodiesel production facility.

We had significantly less interest income during our second quarter of 2012 compared to the same period of 2011 due to having less cash on hand during the 2012 period. We used much of our cash during our 2011 fiscal year to complete the renovations to the Mason City biodiesel production facility which resulted in less cash on hand during our second quarter of 2012. We had interest expense during our second quarter of 2012 since we completed construction of the biodiesel production facility and therefore we are no longer capitalizing interest related to our credit facilities. Further, we were drawing funds on our revolving line of credit during our second quarter of 2012 which resulted in interest expense. We did not have a line of credit during our second quarter of 2011. We also wrote off debt issuance costs of approximately $121,000 when we reclassified our term loans to current liabilities.

Management is in the process of continuing to fine tune the operation of the biodiesel production facility. Management is evaluating its options regarding production of biodiesel and is considering entering into toll manufacturing or other types of arrangements which would allow us to continue to operate the biodiesel production facility at full capacity without incurring the significant capital associated with purchasing feedstock. In addition, due to the fact that the production facility has only recently become operational, we are continuing to find efficiencies in the operation of the biodiesel production facility. Management anticipates that this process will continue for a period of time as is usual for this type of manufacturing facility.

Results of Operations for the Six Months Ended April 30, 2012 and 2011.

The following table shows the results of our operations for the fiscal quarters ended April 30, 2012 and 2011:



	Six Months Ended			Six Months Ended
Statement of Operations Data	April 30, 2012			April 30, 2011
	(Unaudited)			(Unaudited)
Revenues	$	3,935,641		$	—
Cost of Goods Sold Including Preproduction Costs	6,331,542			—
Gross Loss	(2,395,901		)	—
Operating Expenses	1,301,885			498,768
Operating Loss	(3,697,786		)	(498,768		)
Other Income (Expense)	(271,052		)	42,212
Net Loss	$	(3,968,838	)	$	(456,556	)

We had revenue of approximately $3.9 million for our first six months of 2012. We had no revenue during the comparable period of 2011 because our biodiesel production facility was not yet operational. We have continued to increase our biodiesel production capacity as we have worked to bring our facility online and find efficiencies in operating the biodiesel production facility. We had nearly $6.3 million in cost of goods sold during our first six months of 2012. We had no cost of goods sold during the first six months of our 2011 fiscal year as we had not yet started operating the biodiesel production facility during that time. Our cost of goods sold exceeded our revenue in the quarter primarily due to operating below the capacity of the plant.

Our general and administrative expenses were higher during our first six months of 2012 as we operated the biodiesel production facility during that time which required more employees and expenses related to operating our business. We had more professional fee expenses during our first six months of 2012 due to various professional fees related to the operation of the biodiesel production facility.

We had less interest income during our first six months of 2012 compared to the same period of 2011 due to having less cash on hand during the 2012 period. We had interest expense during our first six months of 2012 since we completed construction of the biodiesel production facility and therefore we are no longer capitalizing interest related to our credit facilities. Further, we

were drawing funds on our revolving line of credit during 2012 which resulted in interest expense. We did not have a line of credit during the same period in 2011. We also wrote off debt issuance costs of approximately $121,000 when we reclassified our term loans to current liabilities.

Changes in Financial Condition at April 30, 2012 Compared to October 31, 2011

The table below shows the changes in our financial condition during the six months ended April 30, 2012.



ASSETS	April 30, 2012		October 31, 2011*
	(Unaudited)
Current Assets	$	3,720,502	$	4,671,432
Net Property, Plant and Equipment	20,283,905		19,972,703
Other Assets	2,449,914		2,585,246
Total Assets	$	26,454,321	$	27,229,381

LIABILITIES
Current Liabilities	$	10,043,007	$	2,205,921
Long-Term Debt Net of Current Maturities	770,000		5,577,058
Members' Equity	15,641,314		19,446,402
Total Liabilities and Members' Equity	$	26,454,321	$	27,229,381

* Derived from audited financial statements.

Our cash and equivalents were lower as of ~~January~~April 3130, 2012 compared to October 31, 2011 due to our continuing efforts to bring the biodiesel production facility to full operating capacity. We also converted our certificates of deposit to cash during our first fiscal quarter of 2012. Our accounts receivable was higher at ~~January~~April 3130, 2012 compared to October 31, 2011 due to biodiesel sales we made inprior ~~early~~to ~~January~~the end of our second quarter of 2012. The value of our inventory was lower at ~~January~~April 3130, 2012 compared to October 31, 2011 due to having less raw materials on hand, partially offset with higher finished goods. We had more prepaid costs at ~~January~~April 3130, 2012 compared to October 31, 2011 due to deposits made ~~on new process controls~~ for ~~the~~anticipated ~~plant~~purchases.

~~The~~Property, ~~value~~plant ~~of our buildings~~ and equipment ~~were~~increased ~~higher~~ at ~~January~~April 3130, 2012 compared to October 31, 2011 due to the fact that we completed our construction in progress and we incurred further construction which increased the ~~carrying~~amounts ~~value~~ of these assets as of ~~January~~April 3130, 2012.

We had more accounts payable as of ~~January~~April 3130, 2012 compared to October 31, 2011 due to having less cash on hand to pay amounts owed to our vendors. In addition, we had a larger amount outstanding on our line- of- credit as of ~~January~~April 3130, 2012 compared to October 31, 2011 due to funds we used to purchase feedstock and continue our operations. Our total long-term debt, net of current maturities, was ~~lower~~higher at ~~January~~April 3130, 2012 compared to October 31, 2011 due to ~~payments~~issuing ~~we made on our~~ long-term subordinated debt ~~during~~to ~~our~~investors ~~first~~in ~~quarter~~a ofprivate ~~2012~~offering.

Liquidity and Capital Resources

Our primary sources of liquidity are cash ~~from~~and ~~our~~cash ~~operations~~equivalents we have on hand and amounts we can draw on our line of credit with First Citizens National Bank as well as recently raised funds from the sale of our units and issuance of subordinated debt. As of ~~January~~ April 3130, 2012, we had cash and equivalents of approximately $~~171~~57,000. In addition, the balance of our escrow account as of ~~January~~April 3130, 2012 was approximately $380,000. The funds in our escrow account are used to pay our construction costs. OnIn ~~October~~addition, 17as of April 30, ~~2011~~2012, we ~~secured~~had a $4402,000 ~~million~~available ~~revolving line of credit with First Citizens~~ to ~~provide~~be ~~working~~drawn ~~capital~~on ~~for~~ our ~~operations. However, half of the $4 million principal amount of the~~ line of credit, issubject ~~not available~~ to usborrowing ~~until~~base welimitations. Once ~~have commenced operations at~~ the ~~biodiesel~~plant ~~production~~is ~~facility~~fully operational and ~~are~~profitable ~~operating~~First ~~profitably. We~~Citizens ~~anticipate~~will ~~using~~open ~~this~~the line of credit ~~for~~to ~~raw~~the ~~material~~full ~~purchases. As of January 31, 2012, we had approximately~~ $~~859~~4,000,000, ~~outstanding~~allowing onus ~~the~~to ~~line~~borrow ofan ~~credit~~additional ~~and approximately~~ $1,~~141~~500,000 ~~available~~when ~~to be drawn~~needed. ~~Our~~We ~~ability~~expect to ~~draw~~spend ~~funds on~~ the ~~line~~next of12 ~~credit~~months iscommencing ~~limited~~operations byat athe ~~borrowing~~Mason ~~base~~City ~~calculation. The~~biodiesel ~~borrowing~~production ~~base~~facility ~~calculation~~and ~~takes~~producing ~~into~~biodiesel ~~account a percentage of our accounts receivable, inventory~~ and ~~outstanding~~its ~~balance of the line of credit to determine whether we can draw funds on the line of credit~~co-products. ~~Therefore,~~ ~~the entire $4 million will not always be available to us.~~

WeManagement ~~anticipate~~is ~~using~~evaluating ~~cash~~potential tocapital ~~continue~~expenditures designed to ~~develop~~improve ~~our~~the ~~biodiesel~~efficiency ~~production~~of ~~facility~~the ~~during~~biodiesel ~~our~~production ~~2012 fiscal year~~facility. WeNo ~~have~~specific ~~identified~~timetable ~~two~~has ~~capital~~been ~~projects~~established ~~that~~for weany ~~anticipate~~such ~~will~~capital beexpenditures ~~completed~~and ~~during~~management ~~our~~has ~~2012~~not ~~fiscal~~made ~~year~~any ~~which~~definitive ~~together~~plans weregarding ~~expect~~these ~~will~~potential ~~require~~ capital expenditures. However, ofmanagement ~~approximately~~continues ~~$600,000. These~~to ~~projects~~work ~~relate~~ to ~~installation~~identify ofimprovements anthat ~~updated~~can ~~control~~be ~~system~~made ~~for~~to the biodiesel production facility ~~and~~which ~~adding~~will anallow ~~additional~~us ~~centrifuge~~to ~~which~~consistently ~~management~~operate ~~believes~~at ~~will~~full capacity and improve ~~the~~our ~~efficiency~~operating ofefficiencies. We ~~our~~may ~~biodiesel~~require ~~production~~additional ~~facility~~equity or debt capital in order complete any future capital projects.

1416

WeConcerns ~~are~~have been raised regarding our ability to continue as a going concern, especially in light of the ~~process~~recent ofdifficulties ~~seeking~~we ~~additional~~have ~~sources~~had ofoperating ~~liquidity~~the biodiesel production facility and the default notice we received from our primary lender, ~~including~~OSM. These ~~raising~~factors ~~additional~~may ~~capital~~continue ~~through~~to ~~subordinated~~negatively ~~debt~~impact our liquidity. In order to address our current liquidity constraints, amanagement ~~private~~is ~~offering~~in orthe ~~entering~~process ~~into~~of negotiating a toll manufacturing agreement, aswhich weis doexpected ~~not~~to ~~believe~~decrease ~~our~~the ~~current~~amount of cash ~~reserves~~we ~~and~~require to operate the ~~line-of-credit~~biodiesel production facility. A toll manufacturing agreement will beallow ~~sufficient~~us to ~~fund~~operate ~~all~~the biodiesel production facility without incurring the significant up front cost of ~~operations~~purchasing feedstock and other raw materials for the ~~next~~biodiesel ~~twelve~~production ~~months~~process. ~~Any~~Further, management anticipates continuing to try to raise additional ~~financing~~equity ~~could~~and bedebt ~~subject~~capital in order to ~~approval~~provide byadditional cash for our ~~current~~operations. Management ~~lenders,~~is ~~which~~also ~~could~~working ~~limit~~on improving the efficiency of our ~~ability~~biodiesel production facility in order to ~~obtain~~attempt ~~financing~~to increase our operating margins and profitability. AsFinally, amanagement ~~result,~~is weworking ~~may~~with ~~not~~our belenders ~~able~~in order to ~~obtain~~receive ~~any~~waivers ~~additional~~of ~~financing~~our ~~that~~recent weloan ~~may~~agreement ~~require~~defaults.

The following table shows our cash flows for the six months ended April 30, 2012 and 2011



	Six Months Ended			Six Months Ended
	April 30, 2012			April 30, 2011
Net cash used for operating activities	$	(2,426,661	)	$	(493,325	)
Net cash used for investing activities	(329,210		)	(734,679		)
Net cash provided by (used for) financing activities	2,149,721			(834		)
Cash beginning of period	662,946			6,352,955
Cash end of period	$	56,796		$	5,124,117

Cash Flow from Operating Activities

Our operating activities used more cash during the six months ended April 30, 2012 compared to the same period of 2011, primarily due to losses we experienced during the 2012 period. We were commencing operations at the biodiesel production facility which resulted in a significantly higher net loss during the 2012 period compared to the 2011 period. In 2012, we have hired most of the operating personnel that we will need, but we are not operating at full capacity, which increased our losses.

Cash Flow from Investing Activities

Our investing activities used less cash during the six months ended April 30, 2012 compared to the same period of 2011. We used more cash for capital expenditures during the 2012 period compared to the 2011 period. These capital expenditures were related to capital improvements we have been making to our biodiesel production facility. In 2011, we had purchased certificates of deposit to hold cash that was not yet needed. In 2012, we used the proceeds from the certificates of deposit to pay for capital expenditures.

Cash Flow from Financing Activities

We received cash from our line of credit during the six months ended April 30, 2012 which we used to finance operations at the biodiesel production facility. These funds were primarily used for purchases of biodiesel feedstock and other raw materials necessary to produce biodiesel and its co-products. In addition, we received additional capital through subordinated debt and a private offering which we commenced during our second quarter of 2012. We started making payments on our OSM long-term debt in November 2011.

Long-term and Short-term Debt Sources

On April 2, 2010, we entered into a loan agreement with OSM. Subject to the terms of the loan agreement, OSM agreed to lend us $6,000,000. The initial interest rate is 5%. In October 2016, the interest rate will adjust to the 5-year London Inter-bank Offered Rate (LIBOR) swap rate plus 3.5%, with a minimum annual interest rate of 5%. During the first year of the loan, we were required to only pay interest on outstanding amounts. Beginning in November 2011, we agreed to make scheduled principal and interest payments amortized over a ten-year period. The maturity date of the loan is in September 2021.

The loan agreement requires us to adhere to various covenants which restrict our operating flexibility. The loan agreement restricts our ability to make distributions to our members, to further pledge our assets for other financing that we might require, and to make payments on subordinated debt we acquire. In addition, the loan agreement requires us to maintain certain financial ratios and to obtain OSM's permission before taking certain actions affecting our business and material contracts.

The Company was not out of compliance at April 30, 2012 with any covenants, but anticipates being out of compliance with one or more covenants within the next year without improved performance or amendments to our covenants. As discussed above, OSM sent us a notice of default with respect to this loan on June 21, 2012. We are seeking to resolve the events of default and obtain a waiver from OSM. We have reclassified the debt to current since OSM has the right to accelerate our loans.

At closing, we executed a mortgage and security agreement in favor of OSM creating a first lien on the land and property at the Mason City plant. As a result, we must obtain OSM's permission to sell these assets, which could limit our operating flexibility. The loan agreement provides that certain actions will constitute defaults, which would allow OSM to demand immediate repayment of the entire loan amount and foreclose its lien on our property.

On September 30, 2010, we entered into an Amended and Restated Loan Agreement with OSM. The purpose of amending and restating the loan agreement was to address certain items related to closing on the loan and to address additional details related to the Construction and Design Agreement and our anticipated biodiesel production facility modifications to make the facility multi-feedstock capable. On March 18, 2011, we entered into a second amendment to the loan agreements with OSM, whereby certain defined terms related to a covenant calculation were clarified.

As of ~~January~~April 3130, 2012, we had approximately $5~~,898,000~~.8 million outstanding pursuant to our OSM loan which accrued interest at a rate of 5% per year.

In addition to our OSM loan, on October 17, 2011, we executed a new $4 million operating line of credit with First Citizens. We anticipate using these funds to purchase raw materials to operate the biodiesel production facility. The maturity date of this line of credit is October 31, 2012. The line of credit accrues interest at the greater of the Wall Street Journal prime rate plus 1% or a fixed rate of 6%. Our ability to draw funds on the line of credit is subject to a borrowing base calculation. The borrowing base calculation adds (i) 75% of our accounts receivable of 0-30 days and 50% of our accounts receivable of 31-45 days; plus (ii) 70% of our finished biodiesel inventory, 50% of our feedstock inventory and 50% of our chemical inventory; minus (iii) the amount that is currently outstanding on the line of credit. This calculation determines the amount of funds that we can draw on the line of credit subject to a $4 million cap. ~~Further,~~First ~~half~~Citizens ofhas ~~the~~allowed $4us ~~million~~to ~~line~~borrow ofup ~~credit~~to is$2.5 ~~not~~million ~~available~~on tothe usline of credit until we have commenced operations and the biodiesel production facility is operating profitably. This is based on an oral agreement with First Citizens which is different from our line of credit agreement. If we experience an event of default under our OSM credit agreement, First Citizens can declare a default under the line of credit.

As of ~~January~~April 3130, 2012, we had approximately $~~859,000~~2.1 million outstanding on the First Citizens line of credit which accrued interest at an annual rate of 6%. As of ~~January~~April 3130, 2012, the maximum we were allowed to draw on the line of credit was $2.5 million based on the borrowing base calculation and the restriction in our loan agreement which prevents us from drawing in excess of $2.5 million until we had commenced operations and are operating profitably.

In addition, we raised $770,000 through the private sale of subordinated unsecured debt securities during our second quarter of 2012. We used the capital we raised through these debt securities to continue the development and startup of our biodiesel production facility. After April 30, 2012, we raised an additional $218,000 through subordinated loans.

On February 3, 2011, we entered into a development agreement with the City of Mason City, Iowa. This agreement provides that the City of Mason City, Iowa will make certain incentive payments to us based on the increased property tax revenue for 5 years, beginning December 1, 2012, related to the initial construction of the Mason City biodiesel production facility and 8 years, beginning December 1, 2013, based on the equipment installation at the Mason City biodiesel production facility, totaling up to, but not to exceed, approximately $623,000. The agreement also provides for a new water main extension to our site estimated to cost approximately $120,000, of which 25% of the cost will be paid by the City of Mason City and the remaining 75% will be paid using funds held in our escrow account. Additionally under the development agreement, we have agreed to meet certain employment requirements related to hiring and retention through December 31, 2021.

Critical Accounting Estimates

Management uses various 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. Accounting estimates that are the most important to the presentation of our results of operations and financial condition, and which require the greatest use of judgment by management, are designated as our critical accounting estimates. We have the following critical accounting estimate:

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Impairment testing for assets requires various estimates and assumptions, including an allocation of cash flows to those assets and, if required, an estimate of the fair value of those assets. We review assets held for sale at each reporting date to determine that the carrying value is equal to or greater than the estimated net selling price. The carrying value of assets held for sale is based on the ability to sell or utilize these assets. Our estimates are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable. These valuations require the use of management's assumptions, which do not reflect unanticipated events and circumstances that may occur.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is not required to provide the information required by this item because it is a smaller reporting company.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on an evaluation under the supervision and with the participation of the Company's management, the Company's principal executive officer, Jeff Oestmann, and principal financial officer, Steve Nath, have concluded that the Company's disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act") were effective as of ~~January~~April 3130, 2012 to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to the Company's management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company's internal control over financial reporting during the quarter ended ~~January~~April 3130, 2012, which were identified in connection with management's evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time in the ordinary course of business, we may be named as a defendant in legal proceedings related to various issues, including without limitation, workers' compensation claims, tort claims, or contractual disputes. We are not currently subject to any material legal proceeding or claims. Management does not believe that there are currently any material unasserted claims against us.

Item 1A. Risk Factors

The Company is not required to provide the information required by this item because it is a smaller reporting company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

16On February 13, 2012, April 18, 2012 and April 26, 2012, we sold a total of 262 membership units in exchange for an aggregate offering price of $163,750. The sale of membership units was deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) and Rule 506 of the Securities Act of 1933 as transactions by an issuer not involving a public offering. No underwriting discounts or commissions were paid in these transactions and we conducted no general solicitation in connection with the offer or sale of the securities. The acquirers of our membership units made representations to us regarding their status as accredited investors as defined in Regulation D, or as investors with such knowledge and experience in financial and business matters that they were capable of evaluating the merits and risks of the investment (alone or with a purchaser

~~None.~~ 19

representative), and their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof. Appropriate legends will be affixed to unit certificates and instruments issued in such transactions. All acquirers were provided a private placement memorandum concerning the Company and the offering.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits.


(a)	The following exhibits are filed as part of this report.

Exhibit No.			Exhibit
31.1			Certificate Pursuant to 17 CFR 240.13a-14(a)*
31.2			Certificate Pursuant to 17 CFR 240.13a-14(a)*
32.1			Certificate Pursuant to 18 U.S.C. Section 1350*
32.2			Certificate Pursuant to 18 U.S.C. Section 1350*
101			The following financial information from Soy Energy, LLC's Quarterly Report on Form 10-Q for the quarter ended ~~January~~April 3130, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Balance Sheets as of ~~January~~April 3130, 2012 and October 31, 2011, (ii) Condensed Statements of Operations for the three and six months ended ~~January~~April 3130, 2012 and 2011, (iii) Condensed Statements of Cash Flows for the ~~three~~six months ended ~~January~~April 3130, 2012 and 2011, and (iv) the Notes to Financial Statements.**

* Filed herewith.

** Furnished herewith.

SIGNATURES

Pursuant to the requirements 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.

		SOY ENERGY, LLC
Date:	~~March~~July 216, 2012	/s/ ~~Charles~~Jeff ~~Sand~~Oestmann
		Charles Sand
		Jeff Oestmann
		President and Chief Executive Officer
		(Principal Executive Officer)
Date:	~~March~~July 216, 2012	/s/ ~~Dallas~~Steve ~~Thompson~~Nath
		Dallas Thompson
		Steve Nath
		Treasurer and Chief Financial Officer
		Chief Financial Officer
		(Principal Financial Officer)

1720

Filing Compare · Soy Energy, LLC