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 April 30, 2012
	For the quarterly period ended July 31, 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 ~~July~~October 68, 2012, we had 33,348 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	13
Item 3. Quantitative and Qualitative Disclosures about Market Risk	19
Item 4. Controls and Procedures	19
PART II. OTHER INFORMATION	1920
Item 1. Legal Proceedings	1920
Item 1A. Risk Factors	1920
Item 2. Unregistered Sales of Equity Securities	1920
Item 3. Defaults Upon Senior Securities	20
Item 4. Mine Safety Disclosures	20
Item 5. Other Information	20
Item 6. Exhibits	2021
SIGNATURES	2021

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

SOY ENERGY, LLC

Condensed Balance Sheets

ASSETS	~~April 30, 2012~~	July 31, 2012			~~October 31, 2011~~	October 31, 2011
	~~(Unaudited)~~	(Unaudited)
Current Assets
Cash and cash equivalents	$	~~56,796~~$	111,399		$	~~662,946~~$	662,946
Certificates of deposit	—	—			~~255,923~~	255,923
Accounts receivable	~~201,120~~	389,264			~~88,036~~	88,036
Accrued interest receivable	—	—			~~850~~	850
Inventories	~~3,249,044~~	2,735,894			~~3,602,931~~	3,602,931
Prepaid cost and other	~~213,542~~	22,469			~~60,746~~	60,746
Total current assets	~~3,720,502~~	3,259,026			~~4,671,432~~	4,671,432
Property, Plant and Equipment
Land and improvements	~~508,526~~	508,526			~~502,176~~	502,176
Buildings	~~4,332,952~~	4,332,952			~~3,278,738~~	3,278,738
Equipment	~~15,937,509~~	16,028,797			~~6,313,762~~	6,313,762
Accumulated depreciation	~~(571,474~~	(994,940	)	)	~~(24,955~~	(24,955	)	)
Total	~~20,207,513~~	19,875,335			~~10,069,721~~	10,069,721
Construction in progress	~~76,392~~	—			~~9,902,982~~	9,902,982
Net property, plant and equipment	~~20,283,905~~	19,875,335			~~19,972,703~~	19,972,703
Other Assets
Other	~~43,420~~	10,854			~~43,419~~	43,419
Assets held for sale	~~1,875,637~~	1,875,637			~~1,875,637~~	1,875,637
Escrow deposit	~~379,950~~	379,961			~~379,894~~	379,894
Debt service reserve	~~150,907~~	150,964			~~150,766~~	150,766
Debt issuance costs, net	—	—			~~135,530~~	135,530
Total other assets	~~2,449,914~~	2,417,416			~~2,585,246~~	2,585,246
Total Assets	$	~~26,454,321~~$	25,551,777		$	~~27,229,381~~$	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	~~April~~July 3031, 2012		October 31, 2011
	(Unaudited)
Current Liabilities
Accounts payable	$	13,~~954~~175,~~744~~240	$	911,865
Accrued expenses	~~209~~279,~~656~~063		209,730
Line of credit	21,~~097~~698,~~758~~109		610,500
Current maturities of long-term debt	5,780,849		473,826
Note payable	250,000		—
Total current liabilities	10,043,007		2,205,921
Current maturities of long-term debt	5,663,185		473,826
Long-Term Debt, Net of Current Maturities	770,000		5,577,058
Total current liabilities	11,065,597		2,205,921
Member contributions, 33,280 and 33,018 Units Issued and Outstanding, respectively	15,641,314		19,446,402
Long-Term Debt, Net of Current Maturities	1,048,111		5,577,058
Total Liabilities and Members’ Equity	$	26,454,321	$	27,229,381
Member contributions, 33,348 and 33,018 Units Issued and Outstanding, respectively	13,438,069		19,446,402
Total Liabilities and Members’ Equity	$	25,551,777	$	27,229,381

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

SOY ENERGY, LLC

Condensed Statement of Operations

	Three Months Ended			Three Months Ended			~~Six~~Nine Months Ended			~~Six~~Nine Months Ended
	April 30, 2012			April 30, 2011			April 30, 2012			April 30, 2011
	July 31, 2012			July 31, 2011			July 31, 2012			July 31, 2011
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Sales	$	13,~~993~~347,~~704~~738		$	—		$	37,~~935~~283,~~641~~379		$	—
Costs of Goods Sold	34,~~324~~759,~~997~~507			—			611,~~331~~091,~~542~~049			—
Gross Loss	(1,~~331~~411,~~293~~769		)	—			(23,~~395~~807,~~901~~670		)	—
Operating Expenses
General and administrative	~~570~~489,~~621~~248			~~180~~271,~~817~~591			1,~~024~~514,~~956~~204			~~336~~607,~~121~~712
Professional fees	~~145~~208,~~108~~783			8564,~~750~~971			~~276~~485,~~929~~712			~~162~~227,~~647~~618
Total operating expenses	715,729			266,567			1,301,885			498,768
Impairment	—			175,743			—			175,743
Operating Loss	(2,047,022		)	(266,567		)	(3,697,786		)	(498,768		)
Total operating expenses	698,031			512,305			1,999,916			1,011,073
Operating Loss	(2,109,800		)	(512,305		)	(5,807,586		)	(1,011,073		)
Other Income (Expense)
Interest income	~~103~~104			176,~~777~~265			~~966~~1,070			3743,~~511~~776
Other income	~~144~~726			~~285~~1,072			12,~~537~~263			45,~~701~~773
Interest expense	(~~241~~136,~~945~~775		)	—			(~~273~~410,~~555~~330		)	—
Total other income (expense), net	(~~241~~135,~~698~~945		)	187,~~062~~337			(~~271~~406,~~052~~997		)	4249,~~212~~549
Net Loss	$	(2,~~288~~245,~~720~~745	)	$	(~~248~~504,~~505~~968	)	$	(36,~~968~~214,~~838~~583	)	$	(~~456~~961,~~556~~524	)
Weighted Average Units Outstanding - Basic and Diluted	33,~~111~~330			33,018			33,~~064~~153			33,018
Net Loss Per Unit - Basic and Diluted	$	(6967.1238	)	$	(715.5329	)	$	(~~120~~187.0445	)	$	(1329.8312	)

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

SOY ENERGY, LLC

Condensed Statements of Cash Flows

	Six Months Ended			Six Months Ended
	Nine Months Ended			Nine Months Ended
	April 30, 2012			April 30, 2011
	July 31, 2012			July 31, 2011
	(Unaudited)			(Unaudited)
Cash Flows from Operating Activities
Net loss	$	(36,~~968~~214,~~838~~583	)	$	(~~456~~961,~~556~~524	)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization	~~557~~981,~~292~~384			112,~~766~~330
Write-off of loan costs	120,914			—
Loss on sale of assets held for sale	1,462			45,000
Noncash interest income	(~~197~~265		)	(5,~~130~~708		)
Impairment of long-lived assets	—			175,743
Accrued interest added to long-term debt	10,111			—
Changes in operating assets and liabilities:
Accounts receivable	(~~113~~268,~~084~~663		)	—
Accrued interest receivable	850			(21,~~186~~569		)
Inventories	~~353~~867,~~887~~037			—(15,292		)
Prepaid costs and other	~~(152~~38,~~797~~277		)	(~~110~~146,~~780~~822		)
Accounts payable	~~773~~2,~~924~~027,304			3081,~~519~~622
Accrued expenses	~~(74~~69,333		)	472,~~042~~848
Net cash used for operating activities	(2,~~426~~366,~~661~~839		)	(~~493~~740,~~325~~234		)
Cash Flows from Investing Activities
Capital expenditures	(~~585~~633,~~533~~313		)	(~~164~~323,~~397~~836		)
Proceeds from disposal of equipment	400			200,000
Payments for certificates of deposit	—			(~~770~~774,~~282~~820		)
Proceeds from maturing certificates of deposit	255,923			—255,722
Net cash used for investing activities	(~~329~~376,~~210~~990		)	(~~734~~642,~~679~~934		)
Cash Flows from Financing Activities
Proceeds from line-of-credit, net	1,~~487~~087,~~258~~609			—
Proceeds from long-term debt	770,000			—
Proceeds from note payable	250,000			—
Payments on long-term debt	(271,287		)	(834		)
Proceeds from long-term debt	1,038,000			—
Capital contributions	163,750			—
Payments on long-term debt	(389,577		)	(1,668		)
Net cash (used for) provided by financing activities	2,149,721			(834		)
Capital contributions	206,250			—
Net Decrease in Cash and Cash Equivalents	(606,150		)	(1,228,838		)
Net cash (used for) provided by financing activities	2,192,282			(1,668		)
Net Decrease in Cash and Cash Equivalents	(551,547		)	(1,384,836		)
Cash and Cash Equivalents at Beginning of Period	662,946			6,352,955
Cash and Cash Equivalents at End of Period	$	56111,~~796~~399		$	54,~~124~~968,~~117~~119
Supplemental Cash Flow Information
Interest expense paid	$	~~132~~239,~~998~~106		$	—
Capitalized interest paid	81,910			~~150~~227,~~823~~472
Supplemental Schedule of Noncash Investing and Financing Activities
Construction-in-progress in accounts payable	$	—		$	2818,~~015,666~~744
Property, plant and equipment in accounts payable	~~268~~236,~~955~~071			—10,119
Assets held for sale reclassified to construction-in-progress	—			~~525~~529,000
Prepaid costs reclassified to construction-in-progress	—			95,000
Amortization of loan fees, discounts and prepaid costs capitalized as construction-in-progress	5,318			68102,~~536~~910
Payment of construction-in-progress with escrow deposit	—			1,750,834
Accrued interest added to long-term debt	10,111			—
Payment of construction-in-progress with escrow deposit	—			5,630,037

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

SOY ENERGY, LLC

Notes to Unaudited Condensed Financial Statements

~~April~~July 3031, 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 ~~April 30~~July 31, 2012 and the results of 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. There were no inventory amounts under Bill and Hold arrangements at April 30, 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 ~~April 30~~July 31, 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.

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:

SOY ENERGY, LLC

Notes to Unaudited Condensed Financial Statements

~~April~~July 3031, 2012

Property, Plant and Equipment



Description	Minimum Years	Maximum Years
Land improvements	20	39
Buildings	7	39
Equipment	2	20

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~~0 and $9,903,000 as of ~~April~~July 3031, 2012 and October 31, 2011, respectively, relating to the Mason City, Iowa plant improvements.

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~~As noted in Note 5, the Company ~~had~~wrote ~~unamortized~~off the remaining debt issuance costs of approximately $~~0 and $136~~121,000 atas ~~April~~of ~~30, 2012 and October 31, 2011, respectively. Accumulated amortization at~~ April 30, 2012 ~~and October 31, 2011 was approximately $158,000 and $23,000, respectively~~. Additionally, Company capitalized amortization of debt issuance costs as part of the construction-in-progress during the ~~six~~nine months ended ~~April~~July 3031, 2012 of approximately $5,000. ~~As noted in Note 5, the Company wrote off the remaining debt issuance costs of approximately $121,000 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

The financial statements have been prepared on a going concern basis, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. On January 1, 2012, the Company commenced operations and transitioned from a "development stage company" to an "operating company". The Company incurred losses of approximately $~~4.0 million~~ 6,200,000 for the ~~six~~nine months ended ~~April 30~~July 31, 2012 and had previously incurred losses in fiscal 2011 and 2010 while it was in the development stage. Additionally, the Company is out of compliance with certain provisions of the term loan agreement as described in Note 5, 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 receive waivers for the violations. However, there is no assurance when or if any waiver or amendment will be provided by the lenders. As a result, the Company reclassified the term loans of approximately $5,168,000 as current. If the Company's lenders exercised their rights to accelerate the maturity of the debt outstanding, the Company would not have adequate available cash to repay the amounts currently outstanding. These factors raise substantial doubt about the Company's ability to continue as a going concern.

SOY ENERGY, LLC

Notes to Unaudited Condensed Financial Statements

~~April~~July 3031, 2012

stage. Additionally, the Company is out of compliance with certain provisions of the term loan agreements as described in Note 5, 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 receive waivers for the violations. However, there is no assurance when or if any waiver or amendment will be provided by the lenders. As a result, the Company reclassified the term loans of approximately $5,292,000 as current. If the Company's lenders exercised their rights to accelerate the maturity of the debt outstanding, the Company would not have adequate available cash to repay the amounts currently outstanding. These factors raise substantial doubt about the Company's ability to continue as a going concern.

The Company has begun generating revenues and cash flows from operations since commencing operations in January. Although production levels are nearing the Company's targeted range and are consistent with initial stages of operation, the Company is not operating at full capacity. The Company's production runs are using corn oil as the main feedstock, which is believed to have significant cost advantages over soybean oil based production.

Management has raised money through the issuance of convertible subordinated notes and equity capital offerings, subject to certain conditions and lender approvals. The Company intends to continue raising additional funds through equity and convertible note offerings. ~~The~~On ~~Company~~August 16, is2012, inthe ~~discussions~~Company ~~with~~entered ~~multiple~~into ~~parties~~a ~~for~~ production tolling ~~arrangements~~arrangement with an unrelated party which will allow us to operate at a high rate without requiring a significant amount of cash and working capital to purchase 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 ~~April~~July 3031, 2012 and October 31, 2011, inventories are composed as follows:

	April 30, 2012		October 31, 2011*
	July 31, 2012		October 31, 2011*
Raw materials	$	~~755~~377,~~015~~654	$	1,691,724
Work-in-progress	47360,~~463~~278		200,000
Finished goods	21,~~446~~997,~~566~~962		1,711,207
	$	32,~~249~~735,~~044~~894	$	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~~assets.

Amounts included in assets held for sale are as follows:

	April 30, 2012		October 31, 2011*
	July 31, 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.

SOY ENERGY, LLC

Notes to Unaudited Condensed Financial Statements

April 30, 2012

5. LONG-TERM DEBT

Term 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~~165 and $25,043 as of ~~April~~July 3031, 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~~SOY ~~Company is working to obtain waivers from our lender related to the defaults under our loan agreement. However~~ENERGY, 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. LLC

Notes to Unaudited Condensed Financial Statements

July 31, 2012

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. In June and July 2012, the Company received written notices of default (the "Notices") from our lender. The Notices provided that the Company was not in compliance with the provisions of its term loan agreements related to properly naming its lender as an insured party, delivery of fully executed copies of subordinated intercreditor agreements satisfactory to the lender prior to obtaining any subordinated loan, allowing mechanics liens to be filed against the property and untimely submission of monthly financial information. Additionally, the Company is not in compliance with its Debt to Equity ratio loan covenant at July 31, 2012.

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 $5,168,000 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~~Accrued ~~Company~~interest ~~deferred~~on the ~~May~~notes ~~2012~~totaled ~~interest~~approximately ~~payments~~$30,000 as of July 31, 2012. 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~~368,~~000~~466 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:

	April 30, 2012		October 31, 2010*
	July 31, 2012		October 31, 2011*
Term loan	$	5,~~727~~608,~~045~~755	$	5,998,332
Term loan	5354,~~804~~430		52,552
Subordinated debt	~~770~~1,~~000~~048,111		—
Total long-term debt	6,~~550~~711,~~849~~296		6,050,884
Less current maturities	5,~~780~~663,~~849~~185		473,826
	$	~~770~~1,~~000~~048,111	$	5,577,058

* Derived from audited financial statements.

The estimated maturities of long-term debt, net of unamortized discount, at ~~April~~July 3031, 2012 are as follows:

2013	5,~~780~~663,~~849~~185
2014	—
2015	—
2016	—
2017	~~770~~1,~~000~~048,111
Total	$	6,~~550~~711,~~849~~296

6. LINE OF CREDIT

At July 31, 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 Company owed $1,698,109 and $610,500 on the line of credit at July 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. The line of credit is secured by various covenants. As described in Note 5, the Company was in default on the term loans at July 31, 2012, which triggered a default on the line of credit. On August 29, 2012, the Company repaid the balance of its line-of-credit from cash received from the sale of inventory and was subsequently terminated.

SOY ENERGY, LLC

Notes to Unaudited Condensed Financial Statements

~~April~~July 3031, 2012

67. ~~LINE~~NOTE ~~OF CREDIT~~PAYABLE

AtThe ~~April 30, 2012, the~~ Company has ~~available~~ a note payable for $2250,~~500,~~000 ~~line~~with ~~of credit from~~ a financial institution, ~~subject to borrowing base limitations, maturing on October 31, 2012, and~~ bearing ~~a variable rate of~~ interest ~~equal~~at ~~to the greater of the Wall Street Journal Prime Rate plus 1~~4.005% ~~or 6.00%. The line of credit advances will be increased to $4~~,~~000,000~~ ~~once~~maturing ~~the Company is fully operational and profitable, as defined by the financial institution. The Company owed $2,097,758 and $610,500~~ on ~~the~~July ~~line of credit at April~~ 30, ~~2012 and October 31, 2011, respectively~~2013. The ~~line~~note ~~of credit~~ is secured by a real estate mortgage on the Company's Marcus, Iowa property and aguaranteed ~~first~~by ~~lien~~certain ~~on the~~ Company's ~~accounts~~unit ~~receivable~~holders, ~~inventory,~~both ~~including prepaid deposits for the purchase~~ of ~~inventory,~~whom ~~deposit~~are ~~and~~members ~~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~~board, ~~2012,~~one ~~which triggered a default on the line~~ of ~~credit. The~~whom ~~Company~~ is ~~currently seeking a waiver of events of default under~~ the ~~line of credit in connection with the term loans~~chairman.

78. 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~~July 3031, 2012. The Company had incurred $8,000,000 on this contract at ~~April~~July 3031, 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~~July 3031, 2012 and October 31, 2011 and is included in accounts payable in the balance sheet. Payables related to construction are approximately $1,179,000 at July 31, 2012.

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 and August 2012, a subcontractor of the general contractor that performed the conversion to allow corn oil processing and maintenance of the plant filed mechanics liens and a lawsuit to foreclose on the mechanics ~~lien~~liens against the Company seeking payment of retainage amounts as well as other costs beyond the scope of the original contract totaling approximately $847,000. ~~The~~ As ~~Company~~of ~~disputes~~July 31, 2012, the ~~additional~~Company ~~work~~has ~~performed~~accrued ~~and~~approximately is$847,000 ~~seeking~~related to ~~have~~ the ~~lien~~subcontractors ~~removed~~claim.

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 aan initial term of two years from the date when the Company first ~~delivers~~delivered biodiesel pursuant to the marketing agreement with options to renew for additional terms. ~~This~~The ~~agreement~~Company ~~may~~plans ~~also~~to beterminate ~~terminated~~in byDecember ~~mutual consent of both parties~~2013.

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.

89. MEMBERS' EQUITY

During the ~~second~~nine ~~quarter~~months ~~2012,~~ended ~~the~~July ~~Company issued 262 units at a price of $625 per unit~~31, ~~which resulted in total proceeds of $163~~2012,~~750. Subsequent~~ ~~to quarter end,~~ the Company issued 68330 units at a price ~~off~~of $625 per unit, which resulted in total proceeds of $42206,~~500~~250.

SOY ENERGY, LLC

Notes to Unaudited Condensed Financial Statements

~~April~~July 3031, 2012

910. SUBSEQUENT EVENT

InOn ~~May~~August 16, 2012, the Company entered into a ~~chemical~~tolling ~~tank~~agreement ~~ruptured~~with ~~causing~~an unrelated party. The agreement provides for the ~~plant~~unrelated party to ~~shut~~be ~~down~~the ~~while~~exclusive ~~repairs~~supplier ~~were~~of ~~being~~feedstock ~~made~~processed at the Company's facility as well as the primary buyer. The agreement runs through December 31, 2013 and renews for successive one year terms thereafter unless written notice is given by either party at least 30 days prior to expiration. The agreement provides for specified operating performance as well as variability to changing commodity prices. The Company's ~~has~~revenue ~~insurance~~from ~~that~~the ~~covers~~agreement will be based on a processing fee subject to the ~~majority~~production of the ~~damages~~plant ~~incurred~~during a given time period. Processing fees are earned based on terms as defined within the tolling agreement.

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~~nine month periods ended ~~April~~July 3031, 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.


•	Our ability to maintain compliance with the terms of our loan agreement;


•	Our liability from litigation, including the foreclosure lawsuit that has been filed;


•	Our ability to profitably operate the biodiesel production facility pursuant to the Bunge toll manufacturing agreement;


•	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.

OnSoy ~~May~~Energy ~~15,~~restarted ~~2012,~~operations ain ~~methanol~~2011 ~~storage~~by ~~tank~~retrofitting ~~rupture~~a ~~occurred at our~~ biodiesel production facility~~. Following~~ ~~the~~that ~~tank rupture, the biodiesel production facility~~ was ~~evacuated. None~~previously ofin ~~our~~bankruptcy ~~employees~~in ~~were~~order ~~injured. Following~~to ~~the~~allow ~~incident,~~it ~~the~~to ~~biodiesel~~process ~~production~~multiple ~~facility~~types ~~was~~of ~~inspected~~feedstock byto anproduce ~~independent third party~~biodiesel. ~~The~~We ~~independent~~primarily ~~third~~use ~~party~~corn ~~generated~~oil aas ~~report~~the ~~which~~feedstock ~~was~~to ~~shared~~produce ~~with~~ASTM ~~our~~standard ~~insurance~~biodiesel ~~company~~but ~~and~~we ~~OSHA. Management~~have ~~anticipates that~~ the ~~damage~~ability ~~which~~to ~~was~~use ~~caused~~various byother ~~the~~types ~~methanol~~of ~~tank~~biodiesel ~~rupture~~production ~~will be repaired using funds from our insurance company~~feedstock. We ~~recently~~are ~~restarted~~one ~~the~~of ~~biodiesel~~a ~~production~~very ~~facility~~few ~~after~~biodiesel ~~the~~production ~~methanol~~facilities ~~tank~~that ~~rupture. During~~are ~~the~~able ~~time~~to ~~that~~operate ~~the~~on ~~biodiesel~~100% ~~production~~corn ~~facility~~stillage ~~was~~oil, ~~down~~which ~~following~~is ~~the~~a ~~methanol~~product ~~tank~~produced ~~rupture,~~by wevarious ~~performed~~ethanol ~~other~~manufacturers. Our ~~plant~~flexible ~~maintenance~~pretreatment ~~and~~ability ~~upgrades~~allows ~~which~~us ~~has~~to ~~allowed~~use usa tobroad ~~improve~~range ~~our~~of ~~biodiesel~~feedstock ~~production~~to ~~facility's~~produce ~~efficiency~~biodiesel. ~~The~~Due ~~biodiesel~~to ~~production~~our ~~facility~~location isnear ~~currently~~several ~~operating,~~ethanol ~~however~~producers, we ~~continue~~believe toour ~~experience~~location ~~plant~~allows ~~down-time~~us asto wesecure ~~work~~sufficient corn stillage oil to ~~bring~~operate the biodiesel production facility ~~into~~and ~~full~~that corn stillage oil represents our most favorable biodiesel production. feedstock.

On June 22, 2012, we received a written notice of default (the "Notice"), dated June 21, 2012, from OSM-REO FF, LLC

On September 14, 2012, the EPA issued the volume requirement under the Federal Renewable Fuels Standard ("~~OSM~~RFS") ~~our~~for ~~primary~~biomass ~~lender~~based diesel, which is the biodiesel use requirement in the RFS. ~~Our~~The ~~loan~~EPA ~~agreement~~increased ~~with~~the ~~OSM~~biodiesel ~~contains~~use ~~various~~requirement ~~covenants~~from ~~and~~the ~~restrictions~~2012 ~~with~~use ~~which~~requirement weof ~~are~~1 ~~obligated~~billion gallons to ~~comply~~1.28 ~~The~~billion ~~loan~~gallons ~~agreement~~per isyear ~~secured~~for by2013. This aincrease ~~mortgage~~in ~~and~~the ~~security~~biomass ~~interest~~based ~~granted~~diesel byvolume ~~the~~requirement ~~Company~~may inincrease ~~favor~~biodiesel ofdemand ~~OSM~~ in ~~substantially~~2013 ~~all~~which ofmay positively impact our ~~real~~ability ~~property~~to ~~and~~profitably ~~personal~~operate ~~property~~the biodiesel production facility. Further, ~~with~~biodiesel ~~the~~qualifies ~~exception~~as ofan Advanced Biofuel under the ~~real~~RFS. An ~~property~~Advanced ~~owned~~Biofuel must reduce carbon output by ~~the~~at ~~Company~~least ~~which~~50% iscompared ~~located~~to inpetroleum ~~Marcus~~diesel. Due to our ability to produce biodiesel using corn stillage oil, ~~Iowa~~our ~~and~~biodiesel ~~certain~~production ~~other~~facility ~~assets~~has an exceptionally low carbon footprint. In addition to the increased RFS requirement for biodiesel, more Original Equipment Manufacturers ("OEM") have approved biodiesel blends to be used in their engines which ~~secure~~has ~~our~~expanded ~~line~~the acceptance of ~~credit~~biodiesel by these OEMs and may lead to increased biodiesel demand.

~~The~~Several ~~Notice~~states ~~provided~~have ~~that~~enacted wevarious ~~are~~pieces inof ~~default~~legislation ~~pursuant~~that are designed to ~~Section~~benefit 7the biodiesel industry, including production incentives or biodiesel use mandates.~~01(f)~~ ofWe ~~the~~are ~~loan~~directly ~~agreement~~benefited ~~due~~by toa ~~the~~piece ~~fact~~of legislation that weIowa ~~failed~~adopted toin ~~procure~~May 2011. The Iowa law provides a ~~Lender's~~biodiesel ~~Loss~~production ~~Payable~~incentive ~~Endorsement~~of $0.03 per gallon in ~~favor~~2012, of$0.025 ~~OSM~~per gallon in 2013, and $0.02 Weper ~~are~~gallon ~~also~~in 2014, for each gallon of biodiesel produced in ~~default~~an ~~pursuant~~Iowa tobiodiesel ~~Section~~production 7facility.~~01(e)~~ This biodiesel production incentive is capped at the first 25 million gallons of biodiesel produced per biodiesel production facility. Further, the ~~loan~~Iowa ~~agreement~~law ~~due~~provides toa ~~our~~credit ~~failure~~for tobiodiesel ~~deliver~~retailers ~~unaudited~~in ~~financial~~Iowa. ~~statements~~In as2012, ~~required~~retailers byearn ~~Section~~$0.02 per gallon for B2 blends, which is a fuel blend which contains 2% biodiesel and 98% diesel. The Iowa legislation also provides that in 2012, retailers can earn $0.045 per gallon for B5 blends, which is a fuel blend that contains 5% biodiesel and 95% diesel.~~01(b)~~ ofFor ~~the~~2013 ~~Loan~~through ~~Agreement~~2017, Iowa retailers earn $0.045 per gallon of B5.

~~OSM~~On ~~requested~~August ~~that~~21, ~~the~~2012 ~~Company~~we ~~immediately~~were ~~cure~~served ~~each~~with ofa ~~the~~foreclosure ~~events~~lawsuit ofby ~~default~~Wolin ~~which~~& ~~have~~Associates, ~~occurred~~Inc. ~~pursuant~~("Wolin") towhich ~~the~~seeks ~~loan~~to ~~agreement. The~~foreclose ~~Notice~~two ~~advises,~~mechanics ~~and~~liens ~~the~~it ~~loan~~filed ~~agreement~~against ~~provides,~~the ~~that~~Mason ~~upon~~City ~~the~~biodiesel ~~occurrence~~production offacility. The antotal ~~event~~amount of ~~default,~~these ~~OSM~~mechanics ~~may~~liens ~~exercise~~is aapproximately ~~variety~~$847,000. Management ofhas ~~remedies~~answered ~~afforded~~Wolin's toclaims ~~OSM~~in ~~under~~ the ~~loan~~foreclosure ~~agreement~~lawsuit. Management oranticipates bythat ~~applicable~~our ~~law~~lenders orwill ~~equity,~~join ~~including~~in ~~without limitation, acceleration of~~ the ~~due~~foreclosure ~~date~~lawsuit ofif ~~the~~we ~~unpaid~~are ~~principal~~unable ~~balance~~to ofreach ~~the~~an ~~loan~~ agreement ~~and~~with ~~all~~Wolin. If ~~accrued~~we ~~but~~are ~~unpaid~~unable ~~interest~~to ~~thereon.~~successfully ~~Further,~~resolve ~~according to~~ the ~~loan~~foreclosure ~~agreement~~lawsuit, ~~OSM~~we may, ~~during~~lose anour ~~event~~interest ~~of default and~~ in ~~accordance~~the ~~with~~Mason ~~applicable~~City ~~law,~~biodiesel ~~foreclose~~production ~~its~~facility ~~mortgage~~which oncould ~~the~~reduce ~~Company's~~or ~~real~~eliminate ~~property and its security interest in~~ the ~~Company’s~~value ~~personal~~of ~~property~~our ~~and exercise any other remedies provided therein~~units.

WeEffective ~~are~~August ~~working~~16, to2012, ~~obtain~~we ~~waivers~~executed ~~from~~a ~~OSM~~Feedstock ~~related~~and toBiodiesel ~~the~~Sale ~~defaults~~and ~~under~~Service ~~our~~Agreement ~~loan~~with ~~agreement. However,~~Bunge ~~since~~North weAmerica, ~~have~~Inc. ~~not~~("Bunge") ~~received~~that ~~waivers~~allows ~~for~~us ~~these~~to ~~actual~~produce orbiodiesel ~~future~~from ~~violations,~~feedstock weprovided ~~have~~and ~~classified~~owned ~~approximately~~by ~~$5,292,000~~Bunge. Terms of ~~our~~the ~~long-term~~agreement ~~debt~~call asfor ~~current~~Bunge ~~and~~to ~~have~~be ~~written-off~~ the ~~related~~exclusive ~~debt~~feedstock ~~issuance~~supplier ~~costs~~to ofour ~~approximately~~Mason ~~$121,000~~City asfacility. Bunge ofagreed ~~April~~to ~~30,~~provide ~~2012. Further,~~a ~~due~~processing fee to ~~the~~us ~~fact~~in ~~that~~exchange itfor isthe abiodiesel ~~default~~production ~~under~~pursuant ~~our~~to ~~line~~the ofagreement. The ~~credit~~initial ifterm weof ~~are~~the inagreement ~~default~~ends ofon ~~our~~December ~~OSM~~31, ~~loans~~2013, weunless ~~have~~the anagreement ~~event~~is ofterminated ~~default~~pursuant ~~under~~to ~~our~~the ~~line~~terms of ~~credit~~the agreement. ~~Management~~The isagreement inautomatically ~~the~~renews ~~process~~for ofsuccessive ~~securing~~one-year aterms ~~waiver~~unless either party gives 30 days notice of ~~this~~its ~~default~~intent ~~under~~not ~~our~~to ~~line~~renew the agreement prior to the expiration of ~~credit~~the initial term.

~~Management~~On isAugust in29, 2012, we repaid the ~~process~~balance of ~~negotiating~~our aline ~~biodiesel~~of ~~toll~~credit ~~manufacturing~~with ~~agreement. The~~First ~~purpose~~Citizens ofand ~~this~~the ~~type~~line of ~~arrangement~~credit iswas toterminated. We ~~allow~~have usthe ability to ~~operate~~reapply ~~the~~for ~~biodiesel~~this ~~production~~line ~~facility~~of atcredit awith ~~high~~First ~~rate~~Citizens ~~without~~in ~~requiring~~the aevent ~~significant~~that ~~amount~~we ofhave ~~cash~~enough unencumbered assets to ~~purchase~~use ~~biodiesel~~as ~~production~~collateral ~~feedstock~~for the line of credit. Management isanticipates inthat ~~discussions~~our ~~with~~cash ~~various~~needs ~~toll~~will be less now that we have the manufacturing ~~counter-parties~~arrangement with Bunge. NoPursuant ~~definitive~~to ~~agreement~~the ~~has~~manufacturing ~~been~~agreement, ~~reached~~Bunge ~~but~~will ~~management~~provide ~~anticipates~~and ~~that~~own ~~such~~feedstock anwhich ~~agreement~~we will beprocess inwhich ~~place~~we ~~during~~anticipate ~~our~~will ~~third~~reduce ~~quarter~~the amount of ~~2012~~cash we need to operate the biodiesel production facility.

~~The~~We ~~problems~~received ~~that~~written wenotices ~~have~~of ~~experienced~~default in(the ~~commencing~~"Notices"), ~~operations~~dated atJune ~~our~~21, ~~biodiesel~~2012 ~~production facility~~ and ~~liquidity~~July ~~issues~~13, we2012, ~~face~~from ~~raise~~OSM-REO ~~concerns~~FF, ~~about~~LLC ("OSM") our ~~ability~~primary ~~to continue as a going concern~~lender. WeOur ~~are~~loan ~~working~~agreement towith ~~raise~~OSM ~~additional~~contains ~~debt~~various ~~and~~covenants ~~equity capital for our operations~~ and werestrictions ~~are~~with ~~exploring alternative biodiesel production agreements~~ which ~~would limit the amount of liquid assets~~ we ~~require~~are obligated to ~~operate the biodiesel production facility~~comply. ~~However,~~ weThe ~~continue~~loan toagreement ~~struggle~~is ~~with~~secured ~~our~~by ~~liquidity~~a ~~which~~mortgage ~~has~~and ~~limited~~security ~~our~~interest ~~ability~~granted toby ~~operate~~ the ~~biodiesel~~Company ~~production~~in ~~facility~~favor atof orOSM ~~near~~in ~~full~~substantially ~~capacity. Further,~~all ~~due~~of to our ~~tank~~real ~~rupture~~property and ~~other~~personal ~~obstacles~~property, wewith ~~are~~the ~~not~~exception ~~currently~~of ~~able~~the toreal ~~operate~~property atowned ~~full~~by ~~capacity~~the ~~and~~Company ~~we have experienced plant down-time~~ which ~~has~~is ~~impacted~~located ~~our~~in ~~liquidity~~Marcus, Iowa.

~~Results~~The Notices provided that we are in default pursuant to Section 7.01(f) of ~~Operations~~the ~~for~~loan agreement due to the ~~Fiscal~~fact ~~Quarters~~that ~~Ended~~we ~~April 30~~failed to procure a Lender's Loss Payable Endorsement in favor of OSM from our insurance company. We were also in default pursuant to Section 7.01(c) of the loan agreement due to our failure to deliver certain subordinated intercreditor agreements in a form satisfactory to OSM. We were in default pursuant to Section 7.01(c) due to the mechanics liens that were filed by Wolin. Finally, ~~2012~~we ~~and~~were ~~2011~~in default pursuant to Section 7.01(e) due to our failure to deliver unaudited financial statements as required by Section 5.01(b) of the loan agreement.

OSM requested that the Company immediately cure each of the events of default which have occurred pursuant to the loan agreement. The ~~following~~Notices ~~table~~advise, ~~shows~~and the ~~results~~loan agreement provides, that upon the occurrence of ~~our~~an ~~operations~~event ~~for~~of default, OSM may exercise a variety of remedies afforded to OSM under the ~~fiscal~~loan ~~quarters~~agreement ~~ended~~or ~~April 30~~by applicable law or equity, ~~2012~~including without limitation, acceleration of the due date of the unpaid principal balance of the loan agreement and ~~2011:~~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,

	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~~foreclose ~~production~~its ~~process. We~~mortgage ~~did~~on ~~not have any cost of goods sold during~~ the ~~second~~Company's ~~quarter~~real ofproperty ~~2011~~and ~~because~~its wesecurity ~~had~~interest ~~not yet started production at the biodiesel production facility at that time. Our cost of goods sold exceeded our revenue~~ in the ~~quarter~~Company's ~~primarily~~personal ~~due~~property toand ~~operating~~exercise ~~below~~any ~~the~~other ~~capacity~~remedies ofprovided ~~the plant~~therein.

~~Our~~We ~~operating~~are ~~expenses~~working ~~were~~to ~~higher~~obtain ~~during~~waivers ~~our~~from ~~second~~OSM ~~quarter~~related ~~of 2012 compared~~ to the ~~same~~defaults ~~period~~under ofour ~~2011~~loan ~~due~~agreement. However, tosince ~~the fact that~~ we ~~were~~have ~~operating~~not ~~the~~received ~~biodiesel~~waivers ~~production~~for ~~facility~~these ~~during~~violations, ~~2012~~we ~~which~~have ~~resulted~~classified inapproximately ~~more~~$5,168,000 ~~staff~~of ~~and greater costs associated with operating~~ our ~~business. We~~long-term ~~also~~debt ~~had~~as ~~increased~~current ~~professional~~and ~~fees~~have ~~during~~written-off ~~our second quarter of 2012 compared to~~ the ~~same period of 2011 due to various professional fees~~ related todebt ~~the~~issuance ~~operation~~costs of ~~the~~approximately ~~biodiesel production facility~~$121,000.

WeOn ~~had~~May ~~significantly~~15, ~~less~~2012, ~~interest~~a ~~income~~methanol ~~during~~storage ~~our~~tank ~~second~~rupture ~~quarter~~occurred ofat ~~2012~~our ~~compared~~biodiesel toproduction facility. Following the ~~same~~tank ~~period~~rupture, ofthe ~~2011~~biodiesel ~~due~~production tofacility ~~having~~was ~~less cash on hand during the 2012 period~~evacuated. WeNone ~~used much~~ of our ~~cash~~employees ~~during~~were ~~our~~injured. Following ~~2011 fiscal year to complete~~ the ~~renovations~~incident, to the ~~Mason City~~ biodiesel production facility ~~which~~was ~~resulted~~inspected inby ~~less~~an ~~cash~~independent onthird ~~hand~~party. The ~~during~~independent ~~our~~third ~~second~~party ~~quarter~~generated ofa ~~2012. We~~report ~~had~~which ~~interest~~was ~~expense~~shared ~~during~~with our ~~second~~insurance ~~quarter~~company ofand ~~2012~~OSHA. We ~~since~~restarted weoperations ~~completed~~at ~~construction of~~ the biodiesel production facility ~~and~~in ~~therefore~~July weafter ~~are~~the nomethanol ~~longer~~tank ~~capitalizing~~rupture. During ~~interest~~the ~~related~~time tothat ~~our~~the ~~credit~~biodiesel ~~facilities. Further,~~production wefacility ~~were~~was ~~drawing~~down ~~funds~~following onthe ~~our~~methanol ~~revolving~~tank ~~line~~rupture, ofwe ~~credit~~performed ~~during~~other ~~our~~plant ~~second~~maintenance ~~quarter~~and ofupgrades ~~2012~~ which ~~resulted~~has inallowed ~~interest~~us ~~expense. We~~to ~~did~~improve ~~not~~our ~~have~~biodiesel aproduction ~~line~~facility's ofefficiency. The ~~credit~~biodiesel ~~during~~production ~~our~~facility ~~second~~is ~~quarter~~currently ofoperating, ~~2011. We~~however, ~~also~~we ~~wrote~~continue ~~off~~to ~~debt~~experience ~~issuance~~plant ~~costs~~down-time ofas ~~approximately~~we ~~$121,000~~work ~~when~~to webring ~~reclassified~~the ~~our~~biodiesel ~~term~~production ~~loans~~facility tointo ~~current~~full ~~liabilities~~production.

~~Management~~The isproblems inthat ~~the~~we ~~process~~have ofexperienced ~~continuing~~in tocommencing ~~fine~~operations ~~tune~~at ~~the~~our ~~operation of the~~ biodiesel production facility~~. Management~~ isand ~~evaluating~~liquidity ~~its~~issues ~~options~~we ~~regarding~~face ~~production~~raise ofconcerns ~~biodiesel~~about ~~and~~our isability ~~considering~~to ~~entering~~continue ~~into~~as ~~toll~~a ~~manufacturing~~going orconcern. We ~~other~~are ~~types~~working ~~of arrangements which would allow us~~ to ~~continue~~raise toadditional ~~operate~~debt ~~the~~and ~~biodiesel~~equity ~~production~~capital ~~facility~~for atour ~~full~~operations ~~capacity~~and ~~without~~we ~~incurring~~recently ~~the~~executed ~~significant~~a ~~capital~~manufacturing ~~associated~~agreement with ~~purchasing~~Bunge ~~feedstock. In~~which ~~addition,~~will ~~due~~allow us to ~~the~~produce ~~fact~~biodiesel ~~that~~using ~~the~~feedstock ~~production~~provided ~~facility~~and ~~has~~owned ~~only~~by ~~recently become operational~~Bunge. However, we ~~are~~continue ~~continuing~~ to ~~find~~struggle ~~efficiencies~~with inour ~~the~~liquidity ~~operation~~which ofhas ~~the~~limited ~~biodiesel~~our ~~production~~ability ~~facility. Management~~to ~~anticipates~~operate ~~that~~the ~~this~~biodiesel ~~process~~production ~~will~~facility ~~continue~~at ~~for~~or anear ~~period~~full ~~of time as is usual for this type of manufacturing facility~~capacity.

Results of Operations for the ~~Six~~Fiscal ~~Months~~Quarters Ended ~~April~~July 3031, 2012 and 2011.

The following table shows the results of our operations for the fiscal quarters ended ~~April~~July 3031, 2012 and 2011:

	Six Months Ended			Six Months Ended
	Fiscal Quarter Ended			Fiscal Quarter Ended
Statement of Operations Data	~~April~~July 3031, 2012			~~April~~July 3031, 2011
	(Unaudited)			(Unaudited)
Revenues	$	3,~~935~~347,~~641~~738		$	—
Cost of Goods Sold Including Preproduction Costs	6,331,542			—
Cost of Goods Sold	4,759,507			—
Gross Loss	(21,~~395~~411,~~901~~769		)	—
Operating Expenses	1698,~~301,885~~031			~~498~~512,~~768~~305
Operating Loss	(32,~~697~~109,~~786~~800		)	(~~498~~512,~~768~~305		)
Other Income (Expense)	(~~271~~135,~~052~~945		)	427,~~212~~337
Net Loss	$	(32,~~968~~245,~~838~~745	)	$	(~~456~~504,~~556~~968	)

We had ~~revenue of~~ approximately $3.93 million in revenue for our ~~first~~third ~~six~~fiscal ~~months~~quarter of 2012 related to sales of biodiesel and its related co-products. We ~~had~~did nonot have any revenue during the comparable period of 2011 ~~because~~as ~~our~~we ~~biodiesel~~had ~~production facility was~~ not yet ~~operational. We~~completed ~~have~~the ~~continued~~renovation toof ~~increase~~the ~~our~~Mason City biodiesel production ~~capacity~~facility. During asour third fiscal quarter of 2012, we ~~have~~produced ~~worked~~biodiesel tofor ~~bring~~sale ~~our~~in ~~facility~~the ~~online~~market ~~and~~using ~~find~~primarily ~~efficiencies~~corn inoil ~~operating~~as the biodiesel production ~~facility~~feedstock. We had ~~nearly~~approximately $64.38 million in cost of goods sold during our ~~first~~third ~~six~~fiscal ~~months~~quarter of 2012 related to purchases of feedstock inventory and other raw materials necessary for the biodiesel production process as well as having a full production staff. We ~~had~~did nonot have any cost of goods sold during the ~~first~~third ~~six~~quarter ~~months~~ of ~~our~~ 2011 ~~fiscal~~because ~~year as~~ we had not yet started ~~operating~~production at the biodiesel production facility ~~during~~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 ~~general~~operating ~~and administrative~~ expenses were higher during our ~~first~~third ~~six~~quarter ~~months~~ of 2012 ascompared to the same period of 2011 due to the fact that we ~~operated~~were operating the biodiesel production facility during ~~that~~2012 ~~time~~ which ~~required~~resulted in more ~~employees~~staff and ~~expenses~~greater ~~related~~costs toassociated with operating our business. We also had ~~more~~increased professional ~~fee~~fees ~~expenses~~ during our ~~first~~third ~~six~~quarter ~~months~~ 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 an impairment of our assets of approximately $176,000 during our third quarter of 2011 related to various equipment which we had for sale which was not used in the Mason City biodiesel production facility. We had no comparable impairments during our third quarter of 2012.

We had significantly less interest income during our ~~first~~third ~~six~~quarter ~~months~~ of 2012 compared to the same period of 2011 due to having less cash on hand during the 2012 period. We ~~had~~used ~~interest~~much ~~expense~~of our cash during our ~~first~~2011 ~~six~~fiscal ~~months~~year ofto ~~2012~~complete ~~since~~the werenovations ~~completed~~to ~~construction~~the ofMason ~~the~~City biodiesel production facility. We ~~and~~had ~~therefore~~interest weexpense ~~are~~during noour ~~longer~~third ~~capitalizing~~quarter ~~interest~~of ~~related~~2012 tosince ~~our credit facilities. Further,~~ 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 third quarter of 2012 which resulted in increased interest expense. We did not have a line of credit during ~~the~~our ~~same~~third ~~period~~quarter inof 2011. ~~We also wrote off debt issuance costs of approximately $121,000 when we reclassified our term loans to current liabilities.~~

~~Changes~~Management is in ~~Financial~~the ~~Condition~~process atof ~~April 30~~continuing to fine tune the operation of the biodiesel production facility. However, ~~2012~~we ~~Compared~~continue to ~~October 31,~~experience ~~2011~~plant downtime as we address mechanical issues with the biodiesel production facility. These mechanical issues have resulted in decreased production while we try to rectify these issues. We recently entered into an agreement with Bunge to manufacture biodiesel using feedstock provided and owned by Bunge which management believes will reduce the cash we need to operate since we will not be required to purchase feedstock to operate the biodiesel production facility. We recently started producing biodiesel for Bunge that we anticipate will be delivered in October 2012.

~~The~~Results ~~table~~of ~~below~~Operations ~~shows~~for the ~~changes~~Nine inMonths ~~our~~Ended ~~financial condition during the six months ended April~~July 3031, 2012 and 2011.

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

The following table shows the results of our operations for the nine months ended July 31, 2012 and 2011:

* Derived from audited financial statements.



	Nine Months Ended			Nine Months Ended
Statement of Operations Data	July 31, 2012			July 31, 2011
	(Unaudited)			(Unaudited)
Revenues	$	7,283,379		$	—
Cost of Goods Sold	11,091,049			—
Gross Loss	(3,807,670		)	—
Operating Expenses	1,999,916			1,011,073
Operating Loss	(5,807,586		)	(1,011,073		)
Other Income (Expense)	(406,997		)	49,549
Net Loss	$	(6,214,583	)	$	(961,524	)

~~Our~~We ~~cash~~had ~~and~~revenue ~~equivalents~~of ~~were~~approximately ~~lower~~$7.3 asmillion offor ~~April 30,~~our ~~2012~~first ~~compared~~nine tomonths ~~October 31,~~of ~~2011~~2012. We ~~due~~had tono ~~our~~revenue ~~continuing~~during ~~efforts~~the tocomparable ~~bring~~period ~~the~~of 2011 because our biodiesel production facility towas ~~full~~not ~~operating~~yet ~~capacity~~operational. We ~~also~~have ~~converted~~continued ~~our~~to ~~certificates~~increase ofour ~~deposit~~biodiesel toproduction ~~cash~~capacity ~~during~~as ~~our~~we ~~first~~have ~~fiscal~~worked ~~quarter~~to ofbring ~~2012. Our~~our ~~accounts~~facility ~~receivable~~online ~~was~~and ~~higher~~find atefficiencies ~~April 30,~~in ~~2012~~operating ~~compared~~the tobiodiesel ~~October 31,~~production ~~2011~~facility. We ~~due~~had ~~to biodiesel~~approximately ~~sales~~$11.1 wemillion ~~made~~in ~~prior~~cost toof ~~the~~goods ~~end~~sold ofduring our ~~second~~first ~~quarter~~nine months of 2012. ~~The~~We ~~value~~had ofno ~~our~~cost ~~inventory~~of ~~was~~goods ~~lower~~sold atduring ~~April 30,~~the ~~2012~~first ~~compared~~nine tomonths ~~October 31,~~of our 2011 ~~due~~fiscal toyear ~~having~~as ~~less~~we ~~raw~~had ~~materials~~not onyet ~~hand,~~started ~~partially~~operating ~~offset~~the ~~with~~biodiesel ~~higher~~production ~~finished~~facility ~~goods~~during that time. We Our ~~had~~cost ~~more~~of ~~prepaid~~goods ~~costs~~sold atexceeded ~~April 30,~~our ~~2012~~revenue ~~compared~~for tothe ~~October 31,~~2012 ~~2011~~period primarily due to ~~deposits~~operating ~~made~~the ~~for~~biodiesel ~~anticipated~~production ~~purchases~~facility below its production capacity.

~~Property,~~Our ~~plant~~general and ~~equipment~~administrative ~~increased~~expenses atwere ~~April 30,~~higher ~~2012~~during ~~compared~~our tofirst ~~October 31,~~nine ~~2011~~months ~~due~~of to2012 as we operated the ~~fact~~biodiesel ~~that~~production wefacility ~~completed~~during ~~our~~that ~~construction~~time inwhich ~~progress~~required more employees and weexpenses ~~incurred~~related ~~further~~to ~~construction~~operating ~~which~~our ~~increased~~business. We ~~the~~had ~~amounts~~more professional fee expenses during our first nine months of ~~these~~2012 ~~assets~~due asto various professional fees we incurred related to the operation of ~~April 30,~~the ~~2012~~biodiesel production facility.

We had ~~more~~less ~~accounts~~interest ~~payable~~income asduring ofour ~~April 30,~~first nine months of 2012 compared to ~~October 31,~~the same period of 2011 due to having less cash on hand toduring ~~pay~~the ~~amounts~~2012 ~~owed~~period. We tohad interest expense during our ~~vendors. In~~first ~~addition,~~nine months of 2012 since we ~~had~~completed aconstruction ~~larger~~of ~~amount~~the ~~outstanding~~biodiesel onproduction ~~our~~facility ~~line~~and oftherefore ~~credit~~we asare ofno ~~April 30,~~longer ~~2012~~capitalizing ~~compared~~interest related to ~~October 31~~our credit facilities. Further, ~~2011~~we ~~due~~were todrawing funds weon ~~used~~our torevolving ~~purchase~~line ~~feedstock~~of ~~and~~credit ~~continue~~during ~~our~~2012 ~~operations~~which resulted in interest expense. ~~Our~~We ~~total~~did ~~long-term~~not ~~debt,~~have ~~net~~a line of ~~current~~credit ~~maturities,~~during ~~was~~the ~~higher~~same atperiod ~~April 30,~~in ~~2012~~2011. We ~~compared~~also towrote ~~October 31~~off debt issuance costs of approximately $121,000 ~~2011~~during ~~due~~the to2012 ~~issuing~~period ~~long-term~~when ~~subordinated~~we ~~debt~~reclassified toour ~~investors~~term inloans ato ~~private~~current ~~offering~~liabilities.

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

The table below shows the changes in our financial condition during the nine months ended July 31, 2012.



ASSETS	July 31, 2012		October 31, 2011*
	(Unaudited)
Current Assets	$	3,259,026	$	4,671,432
Net Property, Plant and Equipment	19,875,335		19,972,703
Other Assets	2,417,416		2,585,246
Total Assets	$	25,551,777	$	27,229,381

LIABILITIES
Current Liabilities	$	11,065,597	$	2,205,921
Long-Term Debt Net of Current Maturities	1,048,111		5,577,058
Members' Equity	13,438,069		19,446,402
Total Liabilities and Members' Equity	$	25,551,777	$	27,229,381

* Derived from audited financial statements.

Our cash and equivalents were lower as of July 31, 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 were higher at July 31, 2012 compared to October 31, 2011 due to biodiesel sales we made prior to the end of our third quarter of 2012 for which we had not yet received payment. The value of our inventory was lower at July 31, 2012 compared to October 31, 2011 due to having less raw materials on hand, partially offset with higher finished goods.

Property, plant and equipment increased at July 31, 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 amounts of these assets as of July 31, 2012 compared to October 31, 2011. We had no debt issuance costs as of July 31, 2012 compared to approximately $136,000 at October 31, 2011. When we moved our long-term debt to current, we wrote off our debt issuance costs.

We had significantly more accounts payable as of July 31, 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 July 31, 2012 compared to October 31, 2011 due to funds we used to purchase feedstock and continue our operations. Our current portion of long-term debt was higher at July 31, 2012 compared to October 31, 2011 due to the fact that we reclassified our long-term debt with OSM as current due to covenant issues we had outstanding at July 31, 2012. Our long-term debt, net of current maturities, included amounts we had outstanding to various investors who provided subordinated debt through a private offering.

Liquidity and Capital Resources

Our primary sources of liquidity are cash and cash equivalents we have on hand. Following ~~and~~the ~~amounts~~end of our third quarter of 2012, we ~~can~~repaid ~~draw~~the onentire ~~our~~outstanding ~~line~~balance of ~~credit~~our ~~with~~ First Citizens ~~National~~line ~~Bank~~of ascredit ~~well~~from ascash ~~recently~~that ~~raised~~was ~~funds~~generated ~~from~~through the sale of ~~our~~inventory ~~units~~ and ~~issuance~~this line of ~~subordinated~~credit ~~debt~~was canceled. As a result, we do not have a line of credit that we can use for operating capital. ~~April~~As of July 3031, 2012, we had cash and equivalents of approximately $57111,000. In addition, the balance of our escrow account as of ~~April~~July 3031, 2012 was approximately $380,000. The funds in our escrow account are used to pay our construction costs~~. In addition~~, asbut ofare ~~April 30,~~being ~~2012,~~held until we ~~had~~are ~~$402,000~~satisfied ~~available~~that ~~to be drawn on our line of credit, subject to borrowing base limitations. Once~~ the plant is fully operational and profitable First Citizens will open the line of credit to the full $4,000,000, allowing us to borrow an additional $1,500,000 when needed. We expect to spend the next 12 months commencing operations at the Mason City biodiesel production facility ~~and~~meets ~~producing~~operating ~~biodiesel~~performance ~~and its co-products~~measures.

Management is evaluating potential capital expenditures designed to improve the efficiency of the biodiesel production facility. No specific timetable has been established for any such capital expenditures and management has not made any definitive plans regarding these potential capital expenditures. However, management continues to work to identify improvements that can be made to the biodiesel production facility which will allow us to consistently operate at full capacity and improve our operating efficiencies. We may require additional equity or debt capital in order complete any future capital projects.

16Concerns have been raised regarding our ability to continue as a going concern, especially in light of the recent difficulties we have had operating the biodiesel production facility and the default notices we received from our primary lender, OSM along with the mechanics lien foreclosure proceeding with Wolin. These factors may continue to negatively impact our liquidity. We recently entered into an agreement with Bunge that may result in Bunge providing feedstock to process into biodiesel. This will allow us to avoid some of the feedstock costs that we may incur in order to operate the biodiesel production facility at a higher capacity. Further, management anticipates continuing to try to raise additional equity and debt capital in order to provide additional cash for our operations. Management is also working on improving the efficiency of our biodiesel production facility in order to attempt to increase our operating margins and profitability. Finally, management is working with our lenders in order to receive waivers of our recent loan agreement defaults and with Wolin to address the issues related to the mechanics lien foreclosure.

Concerns have been raised regarding our ability to continue as a going concern, especially in light of the recent difficulties we have had operating the biodiesel production facility and the default notice we received from our primary lender, OSM. These factors may continue to negatively impact our liquidity. In order to address our current liquidity constraints, management is in the process of negotiating a toll manufacturing agreement which is expected to decrease the amount of cash we require to operate the biodiesel production facility. A toll manufacturing agreement will allow us to operate the biodiesel production facility without incurring the significant up front cost of purchasing feedstock and other raw materials for the biodiesel production process. Further, management anticipates continuing to try to raise additional equity and debt capital in order to provide additional cash for our operations. Management is also working on improving the efficiency of our biodiesel production facility in order to attempt to increase our operating margins and profitability. Finally, management is working with our lenders in order to receive waivers of our recent loan agreement defaults. 17

The following table shows our cash flows for the ~~six~~nine months ended ~~April~~July 3031, 2012 and 2011

	Six Months Ended			Six Months Ended
	Nine Months Ended			Nine Months Ended
	April 30, 2012			April 30, 2011
	July 31, 2012			July 31, 2011
Net cash used for operating activities	$	(2,~~426~~366,~~661~~839	)	$	(~~493~~740,~~325~~234	)
Net cash used for investing activities	(~~329~~376,~~210~~990		)	(~~734~~642,~~679~~934		)
Net cash provided by (used for) financing activities	2,~~149~~192,~~721~~282			(~~834~~1,668		)
Cash beginning of period	662,946			6,352,955
Cash end of period	$	56111,~~796~~399		$	54,~~124~~968,~~117~~119

Cash Flow from Operating Activities

Our operating activities used more cash during the ~~six~~nine months ended ~~April~~July 3031, 2012 compared to the same period of 2011, primarily due to ~~losses~~the westart-up ~~experienced~~of ~~during~~ the ~~2012~~plant ~~period. We~~and ~~were commencing operations at~~ the ~~biodiesel~~losses ~~production~~we ~~facility~~experienced ~~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~~nine months ended ~~April~~July 3031, 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. We also received cash during the 2011 period related to equipment we sold for approximately $200,000. We sold significantly less equipment during the comparable period of 2012.

Cash Flow from Financing Activities

We received cash from our line of credit during the ~~six~~nine months ended ~~April~~July 3031, 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. Our line of credit was repaid and canceled in August 2012. In addition, we received additional capital through subordinated debt and a private offering which we commenced during our second quarter of 2012. Finally, we received $250,000 in proceeds from a note payable from Farmers State Bank during our third quarter of 2012 which we used in our operations. 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.

17In addition to the loan defaults discussed above, we were out of compliance at July 31, 2012 with our debt to equity financial covenant, and we anticipate being out of compliance with one or more covenants during the next year without improved performance or amendments to our covenants. As discussed above, OSM sent us notices of default with respect to this loan on June 21, 2012 and July 13, 2012. We are seeking to resolve the events of default and obtain a waiver from OSM. We have reclassified our OSM debt as a current liability since OSM has the right to accelerate our loans due to the defaults.

~~The~~At ~~Company was not out of compliance at April 30~~closing, ~~2012~~we ~~with~~executed ~~any~~a ~~covenants,~~mortgage ~~but~~and ~~anticipates~~security ~~being~~agreement ~~out~~in favor of ~~compliance~~OSM ~~with~~creating ~~one~~a orfirst ~~more~~lien ~~covenants~~on ~~within~~ the ~~next~~Mason ~~year~~City ~~without~~biodiesel ~~improved~~production ~~performance or amendments to our covenants~~facility. As ~~discussed~~a ~~above~~result, ~~OSM~~we ~~sent~~must usobtain aOSM's ~~notice~~permission ofto ~~default~~sell ~~with~~these ~~respect~~assets, towhich ~~this~~could ~~loan~~limit onour ~~June~~operating ~~21, 2012~~flexibility. WeThe ~~are~~loan ~~seeking~~agreement toprovides ~~resolve~~that ~~the~~certain ~~events~~actions ofwill ~~default~~constitute ~~and~~defaults, ~~obtain~~which awould ~~waiver~~allow ~~from~~ OSM~~. We~~ ~~have reclassified the debt~~ to ~~current~~demand ~~since~~immediate ~~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. 18

Onrepayment ~~September 30, 2010, we entered into an Amended and Restated Loan Agreement with OSM. The purpose~~ of ~~amending and restating~~ the ~~loan~~entire ~~agreement was to address certain items related to closing on the~~ loan ~~and~~amount ~~to address additional details related to the Construction~~ and ~~Design~~foreclose ~~Agreement~~its ~~and~~lien on our ~~anticipated biodiesel production facility modifications to make the facility multi-feedstock capable~~property. ~~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 On ofSeptember ~~April~~ 30, ~~2012~~2010, we ~~had~~entered ~~approximately~~into $5an Amended and Restated Loan Agreement with OSM.8 The ~~million~~purpose ~~outstanding~~of ~~pursuant~~amending and restating the loan agreement was to ~~our~~address ~~OSM~~certain issues related to closing on the loan ~~which~~and ~~accrued~~to ~~interest~~address atadditional 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 ~~rate~~second ofamendment 5%to ~~per~~the ~~year~~loan agreements with OSM, whereby certain defined terms related to a covenant calculation were clarified.

InAs ~~addition~~of ~~to our OSM loan~~July 31, ~~on October 17~~2012, ~~2011,~~ we ~~executed~~had aapproximately ~~new~~ $45.8 million ~~operating~~outstanding ~~line~~pursuant ~~of credit with First Citizens. We anticipate using these funds~~ to ~~purchase~~our ~~raw~~OSM ~~materials~~loan towhich ~~operate~~accrued ~~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 65%~~. Our~~ ~~ability~~per ~~to draw funds on the line of credit is subject to a borrowing base calculation~~year. 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. First Citizens has allowed us to borrow up to $2.5 million on the line 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.

AsIn ofaddition ~~April 30~~to our OSM loan, ~~2012~~on October 17, 2011, we ~~had~~executed ~~approximately~~a $~~2.1~~4 million ~~outstanding~~operating ~~on the First Citizens~~ line of credit ~~which~~with ~~accrued~~First ~~interest~~Citizens. We atused anthese ~~annual~~funds ~~rate~~to ofpurchase ~~6%. As~~raw ofmaterials ~~April 30,~~to ~~2012,~~operate the ~~maximum~~biodiesel weproduction ~~were~~facility. The ~~allowed~~maturity todate ~~draw~~of onthis ~~the~~ line of credit was ~~$2.5~~October ~~million~~31, ~~based~~2012. However, onin ~~the~~August ~~borrowing~~2012, ~~base~~this ~~calculation~~line ~~and~~of ~~the~~credit ~~restriction~~was inrepaid ~~our~~and ~~loan~~canceled. As ~~agreement~~a ~~which~~result, ~~prevents~~we usno ~~from~~longer ~~drawing~~have ina ~~excess~~line of ~~$2.5~~credit ~~million~~to ~~until~~use wefor ~~had~~working ~~commenced operations and are operating profitably~~capital.

In addition, we raised $~~770~~1,~~000~~048,111 through the private sale of subordinated unsecured debt securities during our ~~second~~2012 ~~quarter~~fiscal ~~of 2012~~year. 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 interim principal financial officer, ~~Steve~~Jeff ~~Nath~~Oestmann, ~~have~~has 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 April 30, 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.

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 not effective as of July 31, 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. More specifically, the Company has a limited number of personnel in finance and accounting functions. Were there a larger staff, it would be possible to provide for enhanced segregation of duties. Management recognizes that this is a material weakness. We continue to evaluate internal control improvements to provide greater segregation and internal controls.

Changes in Internal Control Over Financial Reporting

~~There~~ ~~were~~In noAugust ~~changes~~2012, in the Company's ~~internal~~CFO, ~~control~~Steve ~~over~~Nath, ~~financial~~resigned ~~reporting~~from ~~during~~ the ~~quarter~~Company. Jeff ~~ended~~Oestmann ~~April 30,~~assumed ~~2012,~~the ~~which~~title ~~were identified in connection with management's evaluation required by paragraph (d)~~ of ~~Rules~~interim ~~13a-15~~Chief ~~and~~Financial ~~15d-15~~Officer ~~under~~until ~~the~~a ~~Exchange~~replacement ~~Act,~~is ~~that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting~~found.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

~~From~~On ~~time~~August to21, ~~time~~2012 inwe ~~the~~were ~~ordinary~~served ~~course~~with ofa ~~business~~foreclosure lawsuit by Wolin & Associates, weInc. ~~may~~("Wolin") bewhich ~~named~~seeks asto aforeclose ~~defendant~~two inmechanics ~~legal~~liens ~~proceedings~~it ~~related~~filed toagainst ~~various~~the ~~issues,~~Mason ~~including~~City ~~without~~biodiesel ~~limitation,~~production ~~workers'~~facility. This ~~compensation~~foreclosure ~~claims~~lawsuit was filed on August 16, ~~tort~~2012 ~~claims~~in Cerro Gordo County District Court, orin ~~contractual~~the ~~disputes~~State of Iowa. WeThe ~~are~~total ~~not~~amount ~~currently~~of ~~subject~~these tomechanics ~~any~~liens ~~material~~is ~~legal~~approximately ~~proceeding~~$847,000. Management orhas answered Wolin's claims in the foreclosure lawsuit. Management ~~does~~anticipates ~~not~~that ~~believe~~our ~~that~~lenders ~~there~~will join in the foreclosure lawsuit if we are ~~currently~~unable ~~any~~to ~~material~~reach ~~unasserted~~an ~~claims~~agreement ~~against~~with usWolin. If we are unable to successfully resolve the foreclosure lawsuit, we may lose our interest in the Mason City biodiesel production facility which could reduce or eliminate the value of our units.

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

On ~~February~~May 138, 2012, ~~April~~we ~~18,~~sold ~~2012~~36 units and ~~April~~on 26June 13, 2012, we sold 32 units for a total of ~~262~~68 membership units in exchange for an aggregate offering price of $~~163~~42,~~750~~500. 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 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.

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
10.1			Feedstock and Biodiesel Sale and Service Agreement between Soy Energy, LLC and Bunge North America, Inc. dated August 16, 2012.+
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 ~~April~~July 3031, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Balance Sheets as of ~~April~~July 3031, 2012 and October 31, 2011, (ii) Condensed Statements of Operations for the three and ~~six~~nine months ended ~~April~~July 3031, 2012 and 2011, (iii) Condensed Statements of Cash Flows for the ~~six~~nine months ended ~~April~~July 3031, 2012 and 2011, and (iv) the Notes to Financial Statements.**

* Filed herewith.

** Furnished herewith.

+ Confidential Treatment Requested

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:	~~July~~October 68, 2012	/s/ Jeff Oestmann
		Jeff Oestmann
		President and Chief Executive Officer
		(Principal Executive Officer)
Date:	~~July~~October 68, 2012	/s/ ~~Steve~~Jeff ~~Nath~~Oestmann
		Steve Nath
		Jeff Oestmann
		Chief Financial Officer
		Interim Chief Financial Officer
		(Principal Financial Officer)

2021

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