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 July 31, 2012
	For the quarterly period ended January 31, 2013
	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 ofincorporation 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)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Membership Units

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 ~~October~~June 820, ~~2012~~2013, 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	1312
Item 3. Quantitative and Qualitative Disclosures about Market Risk	1917
Item 4. Controls and Procedures	1917
PART II. OTHER INFORMATION	2017
Item 1. Legal Proceedings	2017
Item 1A. Risk Factors	2017
Item 2. Unregistered Sales of Equity Securities	20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3. Defaults Upon Senior Securities	2018
Item 4. Mine Safety Disclosures	2018
Item 5. Other Information	2018
Item 6. Exhibits	2118
SIGNATURES	2118

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

SOY ENERGY, LLC

Condensed Balance Sheets

ASSETS	~~July~~January 31, ~~2012~~2013			October 31, ~~2011~~2012
	(Unaudited)
Current Assets
Cash and cash equivalents	$	~~111~~199,~~399~~869		$	~~662~~64,~~946~~331
Certificates of deposit	—			255,923
Restricted cash	524,993			—
Accounts receivable	~~389~~17,~~264~~013			88239,~~036~~015
Accrued interest receivable	—			850
Contract receivable	253,726			—
Inventories	2105,~~735,894~~758			3216,~~602,931~~962
Prepaid cost and other	22100,~~469~~363			60134,~~746~~625
Total current assets	31,~~259~~201,~~026~~722			4654,~~671,432~~933
Property, Plant and Equipment
Land and improvements	~~508,526~~—			~~502~~431,~~176~~801
Buildings	~~4,332,952~~—			3,~~278~~682,~~738~~629
Equipment	~~16,028,797~~—			613,~~313~~613,~~762~~377
Accumulated depreciation	~~(994,940~~—		)	(241,~~955~~418,211		)
Total	19,875,335			10,069,721
Net property, plant and equipment	—			16,309,596
Construction in progress	—			9,902,982
Net property, plant and equipment	19,875,335			19,972,703
Other Assets
Other	10,854			43,419
Assets held for sale	16,709,596			650,262
Assets held for sale	1,875,637			1,875,637
Escrow deposit	—			379,979
Escrow deposit	379,961			379,894
Debt service reserve	—			151,021
Debt service reserve	150,964			150,766
Total other assets	16,709,596			1,181,262
Debt issuance costs, net	—			135,530
Total Assets	$	17,911,318		$	18,145,791
Total other assets	2,417,416			2,585,246
Total Assets	$	25,551,777		$	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	~~July~~January 31, ~~2012~~2013		October 31, ~~2011~~2012
	(Unaudited)
Current Liabilities
Accounts payable	$	34,~~175~~329,~~240~~829	$	~~911~~4,~~865~~387,831
Accrued expenses	~~279~~429,~~063~~603		~~209~~330,~~730~~166
Line of credit	1,698,109		610,500
Note payable	528,500		250,000
Note payable	250,000		—
Current maturities of long-term debt	5,606,432		5,606,432
Current maturities of long-term debt	5,663,185		473,826
Total current liabilities	10,894,364		10,574,429
Total current liabilities	11,065,597		2,205,921
	.
Long-Term Debt, Net of Current Maturities	1,~~048~~109,~~111~~767		51,~~577~~048,~~058~~111
Member contributions, 33,348 and 33,018 Units Issued and Outstanding, respectively	13,438,069		19,446,402
Members' Equity, 33,348 Units Issued and Outstanding	5,907,187		6,523,251
Total Liabilities and Members’ Equity	$	2517,~~551~~911,~~777~~318	$	2718,~~229~~145,~~381~~791

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

SOY ENERGY, LLC

Condensed ~~Statement~~Statements of Operations

	Three Months Ended			Three Months Ended			~~Nine Months Ended~~			~~Nine Months Ended~~
	July 31, 2012			July 31, 2011			July 31, 2012			July 31, 2011
	January 31, 2013			January 31, 2012
	(Unaudited)			(Unaudited)			~~(Unaudited)~~			~~(Unaudited)~~
Sales	$	349,~~347,738~~405		$	—1,941,937		$	~~7,283,379~~		$	—
Costs of Goods Sold	448,~~759,507~~185			—3,006,545			~~11,091,049~~			—
Gross Loss	(1,411,769		)	—			(3,807,670		)	—
Gross Profit (Loss)	1,220			(1,064,608		)
Operating Expenses
General and administrative	~~489~~367,~~248~~229			~~271~~454,~~591~~335			~~1,514,204~~			~~607,712~~
Professional fees	~~208~~86,~~783~~939			64131,~~971~~821			~~485,712~~			~~227,618~~
Impairment	—			175,743			—			175,743
Total operating expenses	454,168			586,156
Total operating expenses	698,031			512,305			1,999,916			1,011,073
Operating Loss	(452,948		)	(1,650,764		)
Operating Loss	(2,109,800		)	(512,305		)	(5,807,586		)	(1,011,073		)
Other Income (Expense)
Other Income (Expense)
Interest income	64			863
Interest income	104			6,265			1,070			43,776
Other income	1,787			1,393
Other income	726			1,072			2,263			5,773
Interest expense	(164,967		)	(31,610		)
Interest expense	(136,775		)	—			(410,330		)	—
Total other income (expense), net	(163,116		)	(29,354		)
Total other income (expense), net	(135,945		)	7,337			(406,997		)	49,549
Net Loss	$	(616,064	)	$	(1,680,118	)
Net Loss	$	(2,245,745	)	$	(504,968	)	$	(6,214,583	)	$	(961,524	)
Weighted Average Units Outstanding - Basic and Diluted	33,348			33,018
Weighted Average Units Outstanding - Basic and Diluted	33,330			33,018			33,153			33,018
Net Loss Per Unit - Basic and Diluted	$	(18.47	)	$	(50.88	)
Net Loss Per Unit - Basic and Diluted	$	(67.38	)	$	(15.29	)	$	(187.45	)	$	(29.12	)

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

SOY ENERGY, LLC

Condensed Statements of Cash Flows

	Nine Months Ended			Nine Months Ended
	Three Months Ended			Three Months Ended
	July 31, 2012			July 31, 2011
	January 31, 2013			January 31, 2012
	(Unaudited)			(Unaudited)
Cash Flows from Operating Activities
Net loss	$	(6616,~~214,583~~064	)	$	(~~961~~1,~~524~~680,118	)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization	~~981,384~~—			12145,~~330~~173
Write-off of loan costs	120,914			—
Other	64,199			1,338
Loss on sale of assets held for sale	1,462			45,000
Noncash interest income	(265		)	(5,708		)
Impairment of long-lived assets	—			175,743
Accrued interest added to long-term debt	10,111			—
Changes in operating assets and liabilities:
Accounts receivable	~~(268~~222,~~663~~002		)	—(579,821		)
Accrued interest receivable	850			1,569
Inventories	111,204			1,324,908
Inventories	867,037			(15,292		)
Prepaid costs and other	34,262			(75,682		)
Prepaid costs and other	38,277			(146,822		)
Accounts payable	(58,002		)	473,633
Accounts payable	2,027,304			81,622
Accrued expenses	99,437			4,875
Accrued expenses	69,333			72,848
Net cash used for operating activities	(142,962		)	(385,694		)
Net cash used for operating activities	(2,366,839		)	(740,234		)
Cash Flows from Investing Activities
Capital expenditures	~~(633,313~~—		)	(~~323~~458,~~836~~192		)
Proceeds from disposal of equipment	~~400~~—			~~200,000~~400
Payments for certificates of deposit	—			(774,820		)
Proceeds from maturing certificates of deposit	—			255,923
Proceeds from maturing certificates of deposit	255,923			255,722
Net cash used for investing activities	—			(201,869		)
Net cash used for investing activities	(376,990		)	(642,934		)
Cash Flows from Financing Activities
Proceeds from line-of-credit, net	~~1,087,609~~—			—248,222
Proceeds from note payable	250,000			—
Proceeds from notes payable	278,500			—
Proceeds from long-term debt	1,038,000			—
Payments on long-term debt	—			(153,039		)
Payments on long-term debt	(389,577		)	(1,668		)
Net cash provided by financing activities	278,500			95,183
Capital contributions	206,250			—
Net Increase (Decrease) in Cash and Cash Equivalents	135,538			(492,380		)
Net cash (used for) provided by financing activities	2,192,282			(1,668		)
Cash and Cash Equivalents at Beginning of Period	64,331			662,946
Net Decrease in Cash and Cash Equivalents	(551,547		)	(1,384,836		)
Cash and Cash Equivalents at End of Period	$	199,869		$	170,566
Cash and Cash Equivalents at Beginning of Period	662,946			6,352,955
Cash and Cash Equivalents at End of Period	$	111,399		$	4,968,119
Supplemental Cash Flow Information
Interest expense paid	$	~~239~~4,~~106~~869		$	—29,979
Capitalized interest paid	~~81,910~~—			~~227~~81,~~472~~910
Supplemental Schedule of Noncash Investing and Financing Activities
Construction-in-progress in accounts payable	$	—		$	818,744
Accrued interest added to long-term debt	$	61,656		$	—
Property, plant and equipment in accounts payable	236,071			10,119
Sale of property and equipment in exchange for contract receivable	250,262			—
Assets held for sale reclassified to construction-in-progress	—			529,000
Property, plant and equipment in accounts payable	—			12,051
Prepaid costs reclassified to construction-in-progress	—			95,000
Escrow deposit and debt service reserve reclassified to restricted cash	524,993			—
Amortization of loan fees, discounts and prepaid costs capitalized as construction-in-progress	5,318			102,910
Property, plant and equipment, net, reclassified to assets held for sale	16,309,596			—
Accrued interest added to long-term debt	10,111			—
Amortization of loan fees, discounts and prepaid costs capitalized as construction-in-progress	—			5,318
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

~~July~~January 31, ~~2012~~2013

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~~2012, 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 ~~July~~January 31, ~~2012~~2013 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. On October 22, 2012, the Company shut down its biodiesel facility due to market conditions and continued production challenges.

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,~~long-lived ~~plant,~~assets and ~~equipment~~the ~~and related~~ assumptions related to impairment testing and ~~the~~inventory ~~carrying value of assets held for sale~~valuation. 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.

On August 16, 2012, the Company entered into a tolling agreement with an unrelated party. The Company's revenue from the agreement is based on a processing fee which is earned as biodiesel is produced. Additionally, the Company shares in related profits/losses associated with the sale of biodiesel produced for the unrelated party based on the terms defined within the tolling agreement.

Accounts Receivable

InCredit ~~the~~terms ~~normal~~are ~~course~~extended ~~of business, the Company provides credit~~ to ~~its~~ customers ~~and~~in ~~evaluates~~ the ~~status~~normal course of ~~outstanding balances on a regular basis~~business. At ~~July 31,~~The ~~2012, the~~ Company ~~considered~~performs ~~all~~ongoing ~~remaining~~credit ~~accounts~~evaluations ~~receivable~~of toits becustomers' ~~fully~~financial ~~collectible~~condition and, angenerally, ~~allowance~~requires ~~for~~no ~~doubtful accounts was not considered necessary~~collateral.

~~Inventory~~Accounts receivable are recorded at estimated net realizable value. Accounts are considered past due if payment is not made on a timely basis in accordance with the Company's credit terms. Accounts considered uncollectible are written off. The Company's estimate of the allowance for doubtful accounts is based on historical experience, its evaluation of the current status of receivables, and unusual circumstances, if any. At January 31, 2013 and October 31, 2012, the Company was of the belief that such accounts would be collectable and thus an allowance was not considered necessary.

~~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~~Inventories consists of raw materials, ~~Plant~~work in process, and ~~Equipment~~finished goods. Raw materials are stated at the lower of cost or market on a first-in, first-out (FIFO) basis. Work in process and finished goods are stated at the lower of average cost or market.

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

~~July~~January 31, ~~2012~~2013

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

Property, Plant and Equipment

~~Ordinary~~Property, ~~maintenance~~plant and ~~repairs~~equipment ~~are~~is ~~expensed~~stated asat ~~incurred~~cost and depreciated over estimated service lives of related assets using the straight-line method of accounting. ~~Cost~~As of ~~renewals~~January ~~and~~31, ~~betterments~~2013, ~~are~~the ~~capitalized~~Company inhas ~~appropriate~~classified property, plant and equipment ~~accounts~~as ~~and~~assets ~~depreciated~~held for sale based on the estimated sale as ~~discussed~~described ~~above~~in Note 9.

The Company capitalizes construction costs as construction-in-progress until the assets are placed in service. The Company had construction-in-progress of approximately $0 and $9,903,000 as of July 31, 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.

As noted in Note 5, the Company wrote off the remaining debt issuance costs of approximately $121,000 as of April 30, 2012. Additionally, Company capitalized amortization of debt issuance costs as part of the construction-in-progress during the nine months ended July 31, 2012 of approximately $5,000.

Long-Lived Assets

The Company reviews its long-lived assets, such as property, plant and equipment and other assets, 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.~~

In accordance with the Company's policy for evaluating impairment of long-lived assets described above, management evaluated the recoverability of the facilities based on projected future cash flows from operations over the facilities' estimated useful lives. Management determined that the projected future undiscounted cash flows from operations of these facilities exceed their carrying value at January 31, 2013; therefore, no impairment loss was indicated or recognized. In determining the projected future undiscounted cash flows, the Company has made significant assumptions concerning the future of the renewable fuels industry, the potential uses of the property and current discussions to sell the Mason City, Iowa facility. Given the uncertainties in the renewable fuels industry, should management be required to adjust the carrying value of these assets at some future point in time, the adjustment could be significant and could significantly impact the Company's financial position and results of operations. No adjustment has been made to these financial statements for this uncertainty.

Fair Value of Financial Instruments

The ~~Company~~level ~~believes~~in the ~~carrying~~fair value ofhierarchy ~~cash~~within ~~and~~which ~~equivalents,~~a ~~escrow deposit, debt service reserve, accounts payable, and other working capital items approximate~~ fair ~~value~~measurement ~~due~~in toits ~~the~~entirety ~~short~~falls ~~maturity~~is ~~nature~~based ofon ~~these instruments. The Company believes~~ the ~~carrying~~lowest ~~amount~~level ofinput ~~the~~that ~~long-term~~is ~~debt~~significant ~~approximates the fair value due~~ to ~~terms of~~ the ~~debt approximating the current market interest rates. The~~ fair value ofmeasurement ~~assets held for sale is disclosed~~ in ~~Note 4~~its entirety.

The Company believes the carrying value of cash and cash equivalents, escrow deposit, debt service reserve, accounts payable, and other financial 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 including the default interest being charged.

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 $613,~~200~~129,000 ~~for~~ ~~the~~in ~~nine~~2012 ~~months~~including ~~ended~~impairment ~~July 31,~~charges ~~2012~~of approximately $4,375,000 and had previously incurred losses in fiscal 2011 ~~and 2010~~ while it was in the development stage~~. Additionally,~~ ~~the~~that ~~Company~~were islarger ~~out~~than ofanticipated. ~~compliance~~These ~~with~~factors ~~certain~~raise ~~provisions~~substantial ofdoubt about the ~~term~~Company's ~~loan~~ability ~~agreement~~to continue as ~~described in Note 5, which also triggered~~ a ~~default~~going onconcern. ~~our~~Additionally, ~~line-of-credit. The~~the Company is inout ~~the process~~ of ~~resolving~~compliance ~~the~~with ~~events~~certain provisions of ~~default and working to receive waivers for~~ the ~~violations. However,~~term ~~there~~loan isagreements noas ~~assurance~~described ~~when~~in ~~or if any waiver or amendment will be provided by the lenders~~Note 5. As a result, the Company reclassified ~~the~~its term loans of approximately $5,~~168~~147,000 as current. If the Company's lenders exercised their rights to accelerate ~~the maturity of the~~ debt ~~outstanding~~maturities, 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.~~

On October 22, 2012, the Company shut down its biodiesel facility due to market conditions, continued production challenges and negative working capital.

In May 2013, the Company entered into a sale agreement to sell substantially all plant assets in exchange for $11,000,000 in cash and a note for $5,600,000. The sale is contingent on member approval and certain closing conditions. The buyer agreed to advance u

SOY ENERGY, LLC

Notes to Unaudited Condensed Financial Statements

~~July~~January 31, ~~2012~~2013

~~The~~p ~~Company~~to ~~has~~$750,000 ~~begun~~as ~~generating~~part ~~revenues~~of ~~and~~the ~~cash~~purchase ~~flows~~price ~~from~~for ~~operations~~working ~~since~~capital ~~commencing operations in January~~needs. ~~Although~~ ~~production~~Should ~~levels are nearing~~ the ~~Company's~~sale ~~targeted~~not ~~range and are consistent with initial stages of operation~~close, the Company iswould ~~not~~owe ~~operating~~amounts atadvanced ~~full~~under ~~capacity~~the agreement. ~~The~~ ~~Company's~~See ~~production~~Note ~~runs~~9 ~~are~~for ~~using~~additional ~~corn~~details ~~oil~~surrounding as the ~~main~~sale ~~feedstock, which is believed to have significant cost advantages over soybean oil based production~~agreement.

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. On August 16, 2012, the Company entered into a production tolling 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

AtInventories ~~July~~consisted ~~31,~~of ~~2012~~the ~~and October 31, 2011, inventories are composed as follows~~following:

	July 31, 2012		October 31, 2011*
	January 31, 2013		October 31, 2012
Raw materials	$	~~377~~79,~~654~~370	$	1146,~~691,724~~053
Work-in-progress	360,278		200,000
Finished goods	26,388		50,909
Finished goods	1,997,962		1,711,207
	$	105,758	$	196,962
	$	2,735,894	$	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 assets.

Amounts included in assets held for sale are as follows:

	July 31, 2012		October 31, 2011*
	January 31, 2013		October 31, 2012
Land	$	250,262	$	250,262
Land and improvements	$	419,700	$	250,262
Equipment	1,625,375		1,625,375
Buildings	3,457,915		—
Total assets held for sale	$	1,875,637	$	1,875,637
Equipment	12,831,981		400,000
Total assets held for sale	$	16,709,596	$	650,262

* Derived from audited financial statements.

5. LONG-TERM DEBT

Term Loans

The Company has a term loan ~~for $6,000,000~~ with a financial institution ~~with~~at 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~~Upon ~~began~~Event ~~making~~of ~~monthly~~Default, ~~payments~~the interest rate will adjust to the lesser of ~~approximately~~4.0% ~~$64~~plus the otherwise applicable rate and the maximum interest rate which borrower may pay by law. At January 31,~~000~~ 2013, ~~including~~the ~~interest~~Company was in default on the loan, related to both financial and non-financial covenant violations more fully described below, and the default rate of interest was 9.0%. The Company made monthly interest only payments on the term loan until November 1, 2011, ~~which~~followed ~~will~~by ~~continue~~120 monthly principal and interest payments of approximately $64,000 until maturity at 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~~Upon ~~value~~Event of Default, the ~~loan~~interest israte ~~shown~~will ~~net~~be of4.0% ~~unamortized~~per ~~discount~~annum until the Event of ~~$23,165~~Default ~~and~~is ~~$25,043~~cured asor ofuntil ~~July~~the ~~31,~~loan ~~2012~~is ~~and~~paid ~~October 31,~~in ~~2011,~~full. ~~respectively~~As of January 31, 2013 and isin ~~calculated~~2012, ~~using~~the aCompany ~~5.0%~~was ~~market~~in ~~interest~~default ~~rate. The~~on ~~amortization~~the ofloan, ~~the~~related ~~debt~~to ~~discount~~both isfinancial ~~recognized~~and asnon-financial ~~interest~~covenant ~~costs~~violations.

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. The Company received written notices of default (the "Notices") from the lender in which 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 requirement.

Since the Company has not received waivers for actual or future violations, the Company has classified approximately $5,147,000 of this debt as current. The Company is currently operating under a forbearance agreement with the lender until July 31, 2013.

SOY ENERGY, LLC

Notes to Unaudited Condensed Financial Statements

~~July~~January 31, ~~2012~~2013

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% interest rate. 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. ~~Accrued interest on the notes totaled approximately $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~~at the time of the conversion. The Company does have convertible debt, which if it were exercisable would result in an additional approximately 6,265 member units at January 31, 2013. 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 $~~368~~480,~~466~~000 from related parties.

Amounts included in long-term debt are as follows:

	July 31, 2012		October 31, 2011*
	January 31, 2013		October 31, 2012
Term loan	$	5,~~608~~528,~~755~~837	$	5,~~998~~528,~~332~~837
Term loan	5477,~~430~~595		5277,~~552~~595
Subordinated debt	1,~~048~~109,~~111~~767		—1,048,111
Total long-term debt	6,~~711~~716,~~296~~199		6,~~050~~654,~~884~~543
Less current maturities	5,~~663~~606,~~185~~432		~~473~~5,~~826~~606,432
	$	1,~~048~~109,~~111~~767	$	51,~~577~~048,~~058~~111

*The ~~Derived~~estimated ~~from~~maturities ~~audited~~of ~~financial~~long-term ~~statements.~~debt at January 31, 2013 are as follows:

The estimated maturities of long-term debt, net of unamortized discount, at July 31, 2012 are as follows:



2014	$	5,606,432
2015	—
2016	—
2017	1,109,767
Total	$	6,716,199

2013	5,663,185
2014	—
2015	—
2016	—
2017	1,048,111
Total	$	6,711,296

6. NOTE PAYABLES

6The Company has a note payable with an availability of up to $320,000 from a financial institution initially scheduled to mature May 21, 2013 bearing 4. ~~LINE~~5% OFinterest. The ~~CREDIT~~Company owed $278,500 at January 31, 2013. The note is secured by certain assets held for sale and personal guarantees by all eight members of the Company's Board of Directors. Subsequent to January 31, 2013, the Company borrowed the full $320,000, which remains outstanding.

AtThe ~~July 31, 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 Company owed $1~~,~~698,109~~ ~~and~~maturing ~~$610,500~~ on ~~the line of credit at~~ July 3130, ~~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~~two onmembers of the Company's ~~accounts~~Board ~~receivable, inventory, including prepaid deposits for the purchase~~ of ~~inventory, deposit and hedging accounts and assets held for sale~~Directors. ~~The line of credit is secured by various covenants.~~ AsIn ~~described~~January ~~in Note 5~~2013, the Company ~~was~~sold ~~in default on~~ the ~~term loans at July 31~~Marcus, ~~2012,~~Iowa ~~which~~property ~~triggered~~and ~~a default on~~ the ~~line~~note ofpayable ~~credit. On~~was ~~August 29, 2012, the Company~~ repaid ~~the~~in ~~balance of~~ its ~~line-of-credit~~entirety ~~from~~upon ~~cash~~settlement ~~received~~in ~~from~~March ~~the sale of inventory and was subsequently terminated~~2013.

In March 2013, the Company entered into a note payable for $50,000 with a financial institution bearing interest at 4.5%, maturing on July 27, 2013. The note is secured by the equipment held for sale as described in Note 4 and guaranteed by all eight members of the Company's Board of Directors. The Company anticipates using proceeds from the asset sale agreement to settle the note.

7. MEMBERS' EQUITY

The Company's operating agreement authorizes the Board of Directors to issue up to 48,750 units without consent of a majority of its membership voting interests. The Company has one class of membership unit which, under its operating agreement, gives a member one vote for each unit owned, provided no member, related party and/or affiliate of a member may vote more than five percent of the Company's outstanding membership interests. The Company's operating agreement restricts transfer of membership units generally to operation of law, such as upon death, without approval of a majority of its Directors.

SOY ENERGY, LLC

Notes to Unaudited Condensed Financial Statements

~~July~~January 31, ~~2012~~2013

~~7. NOTE~~Income, ~~PAYABLE~~losses, and distributions are allocated to members based upon their respective percentage of units owned.

The Company has a note payable for $250,000 with a financial institution bearing interest at 4.5%, maturing on July 30, 2013. The note is secured by a real estate mortgage on the Company's Marcus, Iowa property and guaranteed by certain Company unit holders, both of whom are members of the board, one of whom is the chairman.

8. 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~~feed stocks. The initial Guaranteed Maximum Price of the project iswas $8,000,000. ~~The~~ ~~contract was complete pending final approval at July 31, 2012.~~ The ~~Company had incurred $8,000,000 on this contract at July 31, 2012 and October 31, 2011 which was included in construction-in-progress at October 31, 2011. The~~ plant was put into service in January 2012. The ~~retaintage~~retainage payable related to this contract approximates $374,000 at ~~July~~January 31, ~~2012~~2013 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, asubcontractors ~~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 ~~liens~~lien against the Company seeking payment of retainage amounts as well as other costs beyond the scope of the original contract totaling approximately $~~847~~850,000. As of ~~July~~January 31, ~~2012~~2013, the Company has accrued approximately $~~847~~850,000 related to the subcontractors claim.

~~Marketing~~The ~~Agreement~~Company is involved with other claims and lien disputes related to the construction at the plant and operational issues. The Company is working to settle these vendor payables with the anticipated proceeds from the sale of the plant assets.

~~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~~9. ~~The~~ SUBSEQUENT agreement commenced on the effective date, August 12, 2010, and has an initial term of two years from the date when the Company first delivered biodiesel pursuant to the marketing agreement with options to renew for additional terms. The Company plans to terminate in December 2013. EVENT

~~Crude~~Asset ~~Corn~~Sale ~~Oil Purchase~~ Agreement

On ~~June 19~~May 1, ~~2008~~2013, the Company entered into aan ~~three~~asset ~~year~~sale ~~contract~~agreement with ana ~~unrelated~~buyer ~~party~~for tothe ~~purchase~~sale ~~820~~of substantially all assets of the Company. The estimated sales price is $16,600,000, ~~pounds~~ of ~~corn~~which ~~oil~~$11,000,000 ~~per~~would ~~month~~be atpaid ain ~~price~~cash ~~based~~and on$5,600,000 awould ~~percentage~~be issued in the form of ana ~~index~~term note. ~~Additionally,~~ ~~the~~The ~~contract~~term note includes ainterest ~~provision~~at ~~that~~5%. ~~allows~~The ~~for~~term anote ~~profitability~~provides ~~incentive~~the buyer to bepay ~~paid~~interest byonly for the ~~Company~~first toeight months of the ~~unrelated~~term ~~party~~with ~~under~~principal ~~certain~~and ~~conditions~~interest owed thereafter to fully amortize the note by 2019. The ~~contract~~note ~~provides~~may ~~the~~be ~~Company~~repaid prior to maturity based on excess cash flows generated by the ~~option~~assets sold to ~~purchase~~the ~~additional~~buyer ~~corn~~during ~~oil~~the atterm of the ~~prevailing~~promissory ~~market price~~note. The Company would use the proceeds from the close of the asset sale agreement ~~also~~to ~~provides~~settle ~~for~~substantially all of its ~~renewal~~liabilities. inThe ~~one~~remaining ~~year~~proceeds ~~increments~~and ~~unless~~the ~~terminated~~subsequent byterm ~~either~~note ~~party~~payments ~~with~~would 90be ~~days~~pro-ratably ~~notice~~distributed amongst its members.

9The buyer has provided up to $750,000, which the Company can access to pay working capital expenses of the Company through August 15, 2013, which in the event of close, would be deducted from the net sales proceeds. ~~MEMBERS'~~ ~~EQUITY~~In the event of the termination of the agreement, any advances made to the Company would be due and payable to the buyer with interest accrued from the date of the advance until paid in full at a rate of 8% per annum, plus the cost of collection.

~~During~~The sale agreement includes a termination fee of between $500,000 and $1,000,000 under certain conditions if the ~~nine~~sale ~~months~~is ~~ended~~terminated. In the event that the sale does not close by July 3115, ~~2012~~2013, the Company ~~issued~~is ~~330~~subject ~~units~~to atpenalties ainitially ~~price~~at of $~~625~~5,000 per ~~unit~~day, ~~which~~but ~~resulted~~increasing inover ~~total~~time, ~~proceeds~~limited ofto $~~206~~1,~~250~~050,000.

SOY ENERGY, LLC

Notes to Unaudited Condensed Financial Statements

July 31, 2012

10. SUBSEQUENT EVENT

On August 16, 2012, the Company entered into a tolling agreement with an unrelated party. The agreement provides for the unrelated party to be the exclusive supplier of feedstock 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 revenue from the agreement will be based on a processing fee subject to the production of the plant 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 nine~~ month ~~periods~~period ended ~~July~~January 31, ~~2012~~2013. 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~~2012. 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~~secure ~~compliance~~member ~~with~~approval to sell the ~~terms~~Mason ofCity ~~our~~biodiesel ~~loan~~production ~~agreement~~facility;

• ~~Our~~Or ~~liability~~ability ~~from~~to ~~litigation,~~maintain ~~including~~our ~~the~~liquidity ~~foreclosure~~until ~~lawsuit~~we ~~that~~can ~~has~~close ~~been~~on ~~filed~~a sale of the biodiesel production facility;

• ~~Our~~The ~~ability~~price tothat ~~profitably~~we ~~operate~~receive for the ~~biodiesel~~sale ~~production~~of ~~facility~~our ~~pursuant~~biodiesel toproduction ~~the Bunge toll manufacturing agreement~~facility;

• ~~Overcapacity~~Our ~~within~~ability ~~the~~to work with our creditors to avoid foreclosure and forced sale of our biodiesel ~~industry~~production facility;

• ~~Our~~Availability ~~ability~~and tocosts ~~successfully~~of ~~operate~~feedstock, ~~the~~particularly ~~biodiesel~~soy ~~production~~oil, ~~facility~~animal fats and ~~profitably~~corn ~~produce biodiesel~~oil;

• 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;


•	Weather changes, strikes, transportation or production problems causing supply interruptions or shortages affecting the availability and price of feedstock;


•	Changes in interest rates or the availability of credit;

• Our ~~ability~~potential toliability ~~generate~~resulting ~~free~~from ~~cash~~future ~~flow to operate and invest in our business~~litigation;


•	General economic conditions;


•	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~~agreement;


•	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~~was ~~recently~~organized ~~commenced~~by ~~operations~~filing articles of organization with the Iowa Secretary of State on December 15, 2005. ~~Soy~~We ~~Energy~~ sold ~~its~~our first batch of biodiesel in January 2012 and we sold ~~its~~our first batch of corn stillage oil based biodiesel in March 2012. ~~We were organized as an Iowa limited liability company by filing articles of organization with the Iowa Secretary of State on December 15, 2005.~~

~~Soy~~Asset ~~Energy~~Sale restarted operations in 2011 by retrofitting a biodiesel production facility that was previously in bankruptcy in order to allow it to process multiple types of feedstock to produce biodiesel. We primarily use corn oil as the feedstock to produce ASTM standard biodiesel but we have the ability to use various other types of biodiesel production feedstock. We are one of a very few biodiesel production facilities that are able to operate on 100% corn stillage oil, which is a product produced by various ethanol manufacturers. Our flexible pretreatment ability allows us to use a broad range of feedstock to produce biodiesel. Due to our location near several ethanol producers, we believe our location allows us to secure sufficient corn stillage oil to operate the biodiesel production facility and that corn stillage oil represents our most favorable biodiesel production feedstock. Transaction

We are in the process of pursuing a sale of our assets to REG Mason City, LLC (“REG Mason City”), a wholly owned subsidiary of Renewable Energy Group, Inc. (“REG”). We are pursuing the asset sale because we have had multiple setbacks since purchasing the Mason City biodiesel production facility which have negatively impacted our ability to continue to operate. These setbacks include general conditions in the biodiesel industry; the time and cost to commission and install the new feedstock pre-treatment front end; the methanol tank rupture and fire in May 2012, which closed the facility; and pending legal issues. We have incurred significant losses since our inception and we continue to incur losses. We have not operated since October 2012

and have had only limited sales of remaining inventory since that time. As a result of our losses and the fact that the biodiesel production facility has not been operational since October 2012, we are in default of our loan with our primary lender, OSM-REO FF, LLC (“OSM”). We owe OSM approximately $5.7 million and have an obligation to pay certain subordinated creditors approximately $1.1 million. Further, we have accrued approximately $4.4 million in accounts payable and several lawsuits are pending by companies seeking payments for amounts they claim we owe. We currently have less than $10,000 in cash compared to more than $11 million in liabilities.

As a result of our financial condition, in September 2012, our board of directors started to evaluate its options for either raising additional capital or selling our assets. Our board of directors determined that it would not be feasible to raise a sufficient amount of capital in order to make the necessary repairs to the biodiesel production facility and secure the working capital necessary to restart operations. Therefore, in November 2012, the board determined that it was in the best interests of our members to find a purchaser for our assets in order to repay our outstanding liabilities and attempt to return a portion of our members' investments.

Effective May 1, 2013, we executed an Asset Purchase Agreement (the “Asset Purchase Agreement”) with REG and REG Mason City. Pursuant to the Asset Purchase Agreement, we agreed to sell substantially all of our assets to REG Mason City. The purchase price (which is subject to reduction for delays, certain expenses advanced by REG to us and liabilities related to our indemnification obligations under the Asset Purchase Agreement) for our assets is $16.6 million, which is divided between $11 million in cash and a $5.6 million promissory note issued by REG Mason City and secured by REG Mason City's equipment and fixtures, a mortgage on the real property related to the Mason City biodiesel production facility and certain general intangibles (the “Promissory Note”). However, REG Mason City's payment obligations under the Promissory Note are subordinated to up to $6 million of debt REG Mason City plans to borrow from REG for repair and improvement of the facility. REG Mason City's obligations under the Promissory Note are not guaranteed by REG.

Due to our current financial condition and lack of liquid assets, if our members do not approve the Asset Sale, we will likely be forced to file bankruptcy. Also, if our members do not approve the Asset Sale, it is likely that OSM, our primary lender, will institute a foreclosure action and take our assets. We are planning to hold a member meeting in July 2013 in order to seek the approval of our members to proceed with the sale of the biodiesel production facility and to dissolve and liquidate Soy Energy.

Results of Operations for the Fiscal Quarters Ended January 31, 2013 and 2012

The following table shows the results of our operations for the fiscal quarters ended January 31, 2013 and 2012:



	Fiscal Quarter Ended			Fiscal Quarter Ended
Statement of Operations Data	January 31, 2013			January 31, 2012
	(Unaudited)			(Unaudited)
Revenues	$	49,405		$	1,941,937
Cost of Goods Sold	48,185			3,006,545
Gross Profit (Loss)	1,220			(1,064,608		)
Operating Expenses	454,168			586,156
Operating Loss	(452,948		)	(1,650,764		)
Other Income (Expense), Net	(163,116		)	(29,354		)
Net Loss	$	(616,064	)	$	(1,680,118	)

We had approximately $49,000 in revenue for our first fiscal quarter of 2013 related to sales of remaining inventory after we had ceased operating the biodiesel production facility. We had approximately $1.9 million in revenue for our first fiscal quarter of 2012 related to sales of biodiesel and its related co-products since we were operating the biodiesel production facility during that time. We had approximately $48,000 in cost of goods sold during our first fiscal quarter of 2013 which was primarily for glycerin sales. These costs were significantly less than our first quarter of 2012 as we were no longer operating during the 2013 period. Our cost of goods sold was significantly higher than our revenue during our first quarter of 2012 due to costs we incurred in ramping up production and due to the fact that we were not operating at full capacity. Our cost of goods sold during the 2012 period was primarily related to the use of feedstock and other raw materials necessary for the biodiesel production process as well as having a full production staff.

Our operating expenses, including professional fees, were lower during our first quarter of 2013 compared to the same period of 2012 due to the fact that we had ceased operating the biodiesel production facility during 2013 which resulted in less staff and lower costs associated with operating our business.

OnWe ~~September~~had ~~14,~~significantly ~~2012,~~more ~~the~~interest ~~EPA~~expense ~~issued~~during ~~the~~our ~~volume~~first ~~requirement~~quarter ~~under~~of ~~the~~2013 ~~Federal~~compared ~~Renewable~~to ~~Fuels Standard ("RFS") for biomass based diesel, which is~~ the ~~biodiesel~~same ~~use~~period ~~requirement~~of ~~in the RFS. The EPA increased the biodiesel use requirement from the~~ 2012 ~~use~~due ~~requirement of 1 billion gallons~~ to ~~1.28~~having ~~billion~~more ~~gallons~~debt ~~per~~outstanding ~~year~~with ~~for 2013. This increase in the biomass based diesel volume requirement may increase biodiesel demand in 2013 which may positively impact~~ our ~~ability~~subordinated topromissory ~~profitably operate the biodiesel production facility. Further~~notes, ~~biodiesel~~as ~~qualifies~~well as ~~an Advanced Biofuel under~~ the ~~RFS. An~~fact ~~Advanced~~that ~~Biofuel~~we ~~must~~are ~~reduce~~paying ~~carbon~~interest ~~output by~~ at ~~least~~a ~~50%~~higher ~~compared~~rate toon ~~petroleum~~our ~~diesel. Due~~primary todebt ~~our~~due ~~ability~~ to ~~produce biodiesel using corn stillage oil,~~ our ~~biodiesel~~loan ~~production facility has an exceptionally low carbon footprint~~defaults. 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 has expanded the acceptance of biodiesel by these OEMs and may lead to increased biodiesel demand.

~~Several~~Changes states have enacted various pieces of legislation that are designed to benefit the biodiesel industry, including production incentives or biodiesel use mandates. We are directly benefited by a piece of legislation that Iowa adopted in ~~May~~Financial ~~2011.~~Condition ~~The~~at ~~Iowa law provides a biodiesel production incentive of $0.03 per gallon in 2012~~January 31, ~~$0.025 per gallon in~~ 2013, ~~and~~Compared ~~$0.02~~to ~~per gallon in 2014, for each gallon of biodiesel produced in an Iowa biodiesel production facility. This biodiesel production incentive is capped at the first 25~~October ~~million gallons of biodiesel produced per biodiesel production facility. Further~~31, ~~the Iowa law provides a credit for biodiesel retailers in Iowa. In~~ 2012, retailers earn $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. For 2013 through 2017, Iowa retailers earn $0.045 per gallon of B5.

OnThe ~~August~~information ~~21,~~below ~~2012~~shows ~~we were served with a foreclosure lawsuit by Wolin & Associates, Inc. ("Wolin") which seeks to foreclose two mechanics liens it filed against~~ the ~~Mason~~changes ~~City biodiesel production facility. The total amount of these mechanics liens is approximately $847,000. Management has answered Wolin's claims~~ in ~~the foreclosure lawsuit. Management anticipates that~~ our ~~lenders~~financial ~~will~~condition ~~join~~during in the ~~foreclosure~~three ~~lawsuit~~months ifended ~~we are unable to reach an agreement with Wolin. If we are unable to successfully resolve the foreclosure lawsuit~~January 31, ~~we may lose our interest in the Mason City biodiesel production facility which could reduce or eliminate the value of our units~~2013.

Effective August 16, 2012, we executed a Feedstock and Biodiesel Sale and Service Agreement with Bunge North America, Inc. ("Bunge") that allows us to produce biodiesel from feedstock provided and owned by Bunge. Terms of the agreement call for Bunge to be the exclusive feedstock supplier to our Mason City facility. Bunge agreed to provide a processing fee to us in exchange for the biodiesel production pursuant to the agreement. The initial term of the agreement ends on December 31, 2013, unless the agreement is terminated pursuant to the terms of the agreement. The agreement automatically renews for successive one-year terms unless either party gives 30 days notice of its intent not to renew the agreement prior to the expiration of the initial term.



ASSETS	January 31, 2013		October 31, 2012
	(Unaudited)
Current Assets	$	1,201,722	$	654,933
Net Property, Plant and Equipment	—		16,309,596
Other Assets	16,709,596		1,181,262
Total Assets	$	17,911,318	$	18,145,791

LIABILITIES
Current Liabilities	$	10,894,364	$	10,574,429
Long-Term Debt Net of Current Maturities	1,109,767		1,048,111
Members' Equity	5,907,187		6,523,251
Total Liabilities and Members' Equity	$	17,911,318	$	18,145,791

OnOur ~~August~~cash ~~29,~~and ~~2012,~~cash weequivalents ~~repaid~~are ~~the~~higher ~~balance~~as of ~~our~~January 31, ~~line~~2013 ofcompared ~~credit~~to ~~with~~October 31, ~~First~~2012 ~~Citizens~~due ~~and~~to ~~the~~sales ~~line~~ of ~~credit~~our ~~was~~remaining ~~terminated~~inventory. WeOur ~~have~~accounts ~~the~~receivable ~~ability~~was lower at January 31, 2013 compared to ~~reapply~~October 31, ~~for~~2012 ~~this~~due ~~line~~to ofpayments ~~credit~~we ~~with~~received ~~First~~for ~~Citizens~~sales inof ~~the~~our ~~event~~products that wewere ~~have~~received ~~enough~~during ~~unencumbered~~our ~~assets~~first toquarter ~~use~~of as2013. We ~~collateral~~had ~~for~~a contract receivable of approximately $254,000 at January 31, 2013 related to the ~~line~~sale of ~~credit~~land. ~~Management~~The ~~anticipates~~value ~~that~~of our ~~cash~~inventory ~~needs~~was ~~will~~lower beat ~~less~~January 31, ~~now~~2013 ~~that~~compared weto ~~have~~October 31, ~~the~~2012 ~~manufacturing~~due ~~arrangement~~to ~~with~~sales ~~Bunge. Pursuant~~of toinventory ~~the~~and ~~manufacturing~~returns ~~agreement,~~made ~~Bunge~~to ~~will~~vendors ~~provide~~with ~~and~~a ~~own~~reduction ~~feedstock~~of ~~which~~accounts wepayable. Our ~~will~~property, ~~process~~plant ~~which~~and weequipment ~~anticipate~~were ~~will~~reclassified ~~reduce~~to ~~the~~assets ~~amount~~held for sale as of ~~cash~~January we31, ~~need~~2013 tobased ~~operate~~on the ~~biodiesel~~anticipated ~~production~~sale ~~facility~~of assets.

We ~~received~~had ~~written~~more ~~notices~~accrued ofexpenses ~~default~~at ~~(the "Notices")~~January 31, ~~dated~~2013 ~~June~~compared 21to October 31, 2012 ~~and~~due ~~July~~to ~~13,~~additional ~~2012,~~accrued ~~from~~interest. We ~~OSM-REO~~had ~~FF,~~a ~~LLC~~balance ~~("OSM")~~on our ~~primary~~notes ~~lender. Our~~payable ~~loan~~with ~~agreement~~Farmer ~~with~~State ~~OSM~~Bank ~~contains~~of ~~various~~approximately ~~covenants~~$529,000 ~~and~~at ~~restrictions~~January 31, ~~with~~2013 which wewas ~~are~~used ~~obligated~~ to ~~comply~~pay for our operating expenses. In ~~The~~January ~~loan~~2013, ~~agreement~~we issold ~~secured~~the byMarcus areal ~~mortgage~~estate and ~~security~~repaid ~~interest~~a ~~granted~~$250,000 bynote ~~the~~payable ~~Company~~upon cash receipt in ~~favor~~March 2013. All of our long-term debt with OSM inis ~~substantially~~classified ~~all~~as ofcurrent ~~our~~due ~~real~~to ~~property~~covenant violations and ~~personal~~loan ~~property,~~agreement ~~with~~defaults ~~the~~we ~~exception~~have ofexperienced ~~the~~on ~~real~~our ~~property~~long-term ~~owned~~debt. We byhad ~~the~~more ~~Company~~long-term ~~which~~debt isoutstanding ~~located~~at inJanuary 31, ~~Marcus~~2013 compared to October 31, ~~Iowa.~~2012 due to interest that accrued on our subordinated debt.

The Notices provided that we are in default pursuant to Section 7.01(f) of the loan agreement due to the fact that we 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, we were 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 Notices advise, and the loan agreement provides, that upon the occurrence of an event of default, OSM may exercise a variety of remedies afforded to OSM under the loan agreement or by applicable law or equity, including without limitation, acceleration of the due date of the unpaid principal balance of the loan agreement and all accrued but unpaid interest thereon. Further, according to the loan agreement, OSM may, during an event of default and in accordance with applicable law,

foreclose its mortgage on the Company's real property and its security interest in the Company's personal property and exercise any other remedies provided therein.

We are working to obtain waivers from OSM related to the defaults under our loan agreement. However, since we have not received waivers for these violations, we have classified approximately $5,168,000 of our long-term debt as current and have written-off the related debt issuance costs of approximately $121,000.

On May 15, 2012, a methanol storage tank rupture occurred at our biodiesel production facility. Following the tank rupture, the biodiesel production facility was evacuated. None of our employees were injured. Following the incident, the biodiesel production facility was inspected by an independent third party. The independent third party generated a report which was shared with our insurance company and OSHA. We restarted operations at the biodiesel production facility in July after the methanol tank rupture. During the time that the biodiesel production facility was down following the methanol tank rupture, we performed other plant maintenance and upgrades which has allowed us to improve our biodiesel production facility's efficiency. The biodiesel production facility is currently operating, however, we continue to experience plant down-time as we work to bring the biodiesel production facility into full production.

The problems that we have experienced in commencing operations at our biodiesel production facility and liquidity issues we face raise concerns about our ability to continue as a going concern. We are working to raise additional debt and equity capital for our operations and we recently executed a manufacturing agreement with Bunge which will allow us to produce biodiesel using feedstock provided and owned by Bunge. However, we continue to struggle with our liquidity which has limited our ability to operate the biodiesel production facility at or near full capacity.

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

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

	Fiscal Quarter Ended			Fiscal Quarter Ended
Statement of Operations Data	July 31, 2012			July 31, 2011
	(Unaudited)			(Unaudited)
Revenues	$	3,347,738		$	—
Cost of Goods Sold	4,759,507			—
Gross Loss	(1,411,769		)	—
Operating Expenses	698,031			512,305
Operating Loss	(2,109,800		)	(512,305		)
Other Income (Expense)	(135,945		)	7,337
Net Loss	$	(2,245,745	)	$	(504,968	)

We had approximately $3.3 million in revenue for our third 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 third fiscal quarter of 2012, we produced biodiesel for sale in the market using primarily corn oil as the biodiesel production feedstock. We had approximately $4.8 million in cost of goods sold during our third fiscal 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 did not have any cost of goods sold during the third quarter of 2011 because we had not yet started production at the biodiesel production facility at that time. Our cost of goods sold exceeded our revenue in the quarter primarily due to operating below the capacity of the plant.

Our operating expenses were higher during our third quarter of 2012 compared to the same period of 2011 due to the fact that we were operating the biodiesel production facility during 2012 which resulted in more staff and greater costs associated with operating our business. We also had increased professional fees during our third quarter of 2012 compared to the same period of 2011 due to various professional fees related to the operation of the biodiesel production facility. We had 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 third quarter of 2012 compared to the same period of 2011 due to having less cash on hand during the 2012 period. We used much of our cash during our 2011 fiscal year to complete the renovations to the Mason City biodiesel production facility. We had interest expense during our third quarter of 2012 since we completed

construction of the biodiesel production facility and therefore we are no longer capitalizing interest related to our credit facilities. Further, we were drawing funds on our revolving line of credit during our third quarter of 2012 which resulted in increased interest expense. We did not have a line of credit during our third quarter of 2011.

Management is in the process of continuing to fine tune the operation of the biodiesel production facility. However, we continue to experience 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.

Results of Operations for the Nine Months Ended July 31, 2012 and 2011.

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

	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	)

We had revenue of approximately $7.3 million for our first nine months of 2012. We had no revenue during the comparable period of 2011 because our biodiesel production facility was not yet operational. We have continued to increase our biodiesel production capacity as we have worked to bring our facility online and find efficiencies in operating the biodiesel production facility. We had approximately $11.1 million in cost of goods sold during our first nine months of 2012. We had no cost of goods sold during the first nine months of our 2011 fiscal year as we had not yet started operating the biodiesel production facility during that time. Our cost of goods sold exceeded our revenue for the 2012 period primarily due to operating the biodiesel production facility below its production capacity.

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

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

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~~, ~~the~~collection ~~end~~ of ~~our~~accounts ~~third quarter of 2012~~receivable, weand ~~repaid~~ the ~~entire~~notes ~~outstanding~~payable ~~balance of our First Citizens line of credit from cash that was generated through the sale of inventory and this line of credit was canceled. As a result,~~ we ~~do not have a line of credit that we can use for operating capital~~obtained. As of ~~July~~ January 31, ~~2012~~2013, we had cash and cash equivalents of approximately $~~111~~200,000. In addition, the balance of our escrow account as of July 31, 2012 was approximately $380,000. The funds in our escrow account are used to pay our construction costs, but are being held until we are satisfied that the biodiesel production facility meets operating performance measures.

~~Management~~Concerns ishave ~~evaluating~~been ~~potential~~raised ~~capital~~regarding ~~expenditures~~our ~~designed~~ability to ~~improve~~continue ~~the~~as ~~efficiency~~a ofgoing ~~the~~concern ~~biodiesel~~due ~~production~~to ~~facility. No~~the ~~specific~~losses ~~timetable~~we ~~has~~incurred ~~been~~due ~~established~~to ~~for~~construction ~~any~~delays ~~such capital expenditures~~ and ~~management~~difficulties ~~has~~operating ~~not~~the ~~made~~plant ~~any~~at ~~definitive~~full ~~plans regarding these potential capital expenditures. However~~production, ~~management~~the ~~continues~~fact tothat ~~work~~we tohave ~~identify~~very ~~improvements~~little ~~that~~cash ~~can~~available, ~~be made to~~ the ~~biodiesel~~default ~~production~~notices ~~facility~~we ~~which~~received ~~will~~from ~~allow~~our usprimary tolender, ~~consistently~~OSM, ~~operate~~along atwith ~~full~~the ~~capacity~~mechanics ~~and~~lien ~~improve~~foreclosure ~~our~~proceeding ~~operating~~with ~~efficiencies~~Wolin. We ~~may~~These ~~require~~factors ~~additional~~may ~~equity~~continue orto ~~debt~~negatively ~~capital~~impact inour ~~order~~liquidity ~~complete~~and ~~any~~may ~~future~~cause ~~capital~~us ~~projects~~to fail.

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 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.14

17The following table shows our cash flows for the three months ended January 31, 2013 and 2012

The following table shows our cash flows for the nine months ended July 31, 2012 and 2011



	Three Months Ended			Three Months Ended
	January 31, 2013			January 31, 2012
Net cash used for operating activities	$	(142,962	)	$	(385,694	)
Net cash used for investing activities	—			(201,869		)
Net cash provided by financing activities	278,500			95,183
Cash beginning of period	64,331			662,946
Cash end of period	$	199,869		$	170,566

	Nine Months Ended			Nine Months Ended
	July 31, 2012			July 31, 2011
Net cash used for operating activities	$	(2,366,839	)	$	(740,234	)
Net cash used for investing activities	(376,990		)	(642,934		)
Net cash provided by (used for) financing activities	2,192,282			(1,668		)
Cash beginning of period	662,946			6,352,955
Cash end of period	$	111,399		$	4,968,119

Cash Flow from Operating Activities

Our operating activities used ~~more~~less cash during the ~~nine~~three months ended ~~July~~January 31, ~~2012~~2013 compared to the same period of ~~2011~~2012, primarily due to ~~the~~having ~~start-up~~a ofsmaller ~~the~~net ~~plant~~loss ~~and~~during the ~~losses~~2013 weperiod ~~experienced~~as ~~during~~well ~~the~~as ~~2012~~collection ~~period~~of accounts receivable.

Cash Flow from Investing Activities

~~Our~~We ~~investing~~did ~~activities~~not ~~used~~use ~~less~~any cash for investing activities during the ~~nine~~three months ended ~~July~~January 31, ~~2012 compared to the same period of 2011~~2013. We used ~~more~~ cash for ~~capital~~investing ~~expenditures~~activities during the ~~2012~~three ~~period~~months ~~compared~~ended toJanuary 31, ~~the~~2012 ~~2011~~related ~~period. These~~to capital expenditures ~~were~~ related to ~~capital~~bringing ~~improvements~~the weplant ~~have~~into ~~been~~full ~~making to our biodiesel~~ production ~~facility~~. ~~In 2011, we 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~~2012 period related to ~~equipment~~proceeds wefrom ~~sold~~certain ~~for~~certificates ~~approximately~~of ~~$200,000. We~~deposit ~~sold~~which ~~significantly~~matured ~~less equipment~~ during the ~~comparable~~2012 period ~~of 2012~~.

Cash Flow from Financing Activities

We received more cash from our ~~line~~financing ofactivities ~~credit~~for ~~during~~ the ~~nine~~three months ended ~~July~~January 31, ~~2012~~2013 ~~which~~compared ~~we used~~ to ~~finance operations at~~ the ~~biodiesel~~same ~~production~~period ~~facility. These~~of ~~funds~~2012, ~~were~~ primarily ~~used~~due ~~for~~to ~~purchases~~the offact ~~biodiesel~~that ~~feedstock~~we ~~and~~were ~~other~~not ~~raw~~making ~~materials~~payments ~~necessary~~on toour ~~produce biodiesel and its co~~long-~~products. Our~~term ~~line~~debt ofduring ~~credit~~the ~~was~~2013 ~~repaid~~period and ~~canceled in August 2012. In addition,~~ we received ~~additional~~proceeds ~~capital~~from ~~through subordinated debt and~~ a ~~private~~Farmers ~~offering~~State ~~which~~Bank wenote ~~commenced~~payable ~~during~~of ~~our~~approximately ~~second~~$279,000. During ~~quarter~~the of 2012~~. Finally~~ period, we received ~~$250,000 in~~ proceeds ~~from~~of aapproximately ~~note~~$248,000 ~~payable~~related ~~from~~to ~~Farmers~~the ~~State~~First Citizens Bank ~~during~~line ~~our third quarter~~ of ~~2012~~credit ~~which~~ we ~~used in our operations~~had. ~~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 5.0%. In October 2016, the interest rate ~~will~~is scheduled to adjust to the 5-year London Inter-bank Offered Rate (LIBOR) swap rate plus 3.5%, with a minimum annual interest rate of 5.0%. 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~~At ~~loan~~closing, ~~agreement~~we ~~requires~~executed usa tomortgage ~~adhere~~and tosecurity ~~various~~agreement ~~covenants~~in ~~which~~favor ~~restrict~~of ~~our~~OSM ~~operating~~creating ~~flexibility. The~~a ~~loan~~first ~~agreement~~lien ~~restricts~~on ~~our~~the ~~ability~~Mason toCity ~~make~~biodiesel ~~distributions~~production tofacility. ~~our~~As ~~members~~a result, towe ~~further~~must ~~pledge~~obtain ~~our~~OSM's ~~assets~~permission ~~for~~to ~~other~~sell ~~financing~~these ~~that we might require~~assets, ~~and~~which tocould ~~make~~limit ~~payments~~our onoperating ~~subordinated debt we acquire~~flexibility. In ~~addition,~~The ~~the~~ loan agreement ~~requires~~provides usthat tocertain ~~maintain~~actions ~~certain~~will ~~financial~~constitute ~~ratios~~defaults, ~~and~~which towould ~~obtain~~allow OSM's ~~permission~~to ~~before~~demand ~~taking~~immediate ~~certain~~repayment ~~actions~~of ~~affecting~~the ~~our~~entire ~~business~~loan amount and ~~material~~foreclose ~~contracts~~its lien on our property.

InWe ~~addition~~stopped tomaking ~~the~~payments ~~loan~~on ~~defaults~~our ~~discussed~~term ~~above,~~loan wewith ~~were~~OSM ~~out~~in ofOctober ~~compliance at July 31,~~ 2012 ~~with~~due ~~our debt~~ to ~~equity~~our ~~financial~~lack ~~covenant, and we anticipate being out~~ of ~~compliance~~funds ~~with~~necessary ~~one~~to orcontinue ~~more~~making ~~covenants during the next year without improved performance or amendments to~~ our ~~covenants~~debt payments. As discussed ~~above~~below, OSM sent usseveral written notices of default with respect to this loan. onWe ~~June~~have ~~21,~~reclassified ~~2012~~our ~~and~~OSM ~~July~~debt ~~13,~~as ~~2012. We~~a ~~are~~current ~~seeking~~liability since OSM has the right to ~~resolve~~accelerate our loans due to the ~~events~~defaults. As of ~~default~~October ~~and~~31, ~~obtain~~2012, awe ~~waiver~~had ~~from~~approximately ~~OSM~~$5. We6 ~~have~~million ~~reclassified~~outstanding pursuant to our OSM ~~debt~~loan aswhich accrued interest at a ~~current~~rate ~~liability~~of ~~since~~5.0% ~~OSM~~per ~~has~~year ~~the~~plus ~~right~~default tointerest ~~accelerate~~of ~~our~~4.0% ~~loans~~which ~~due~~began toaccruing ~~the~~in ~~defaults~~2012.

AtWe ~~closing,~~have wereceived ~~executed~~various awritten ~~mortgage~~notices ~~and~~of ~~security~~default ~~agreement~~from inOSM. We ~~favor~~are out of compliance with each of the financial loan covenants in our loan agreements with OSM ~~creating~~and awe ~~first~~have ~~lien~~failed to make payments on ~~the~~our ~~Mason~~OSM ~~City~~loan ~~biodiesel~~since ~~production~~October ~~facility~~2012, amongst other defaults under our loans. AsIn aorder ~~result~~to address these events of default, we ~~must~~executed ~~obtain~~a Forbearance Agreement with OSM's ~~permission~~on February 15, 2013 (the "Forbearance Agreement"). Pursuant to ~~sell~~the ~~these~~Forbearance ~~assets~~Agreement, ~~which~~OSM ~~could~~agreed ~~limit~~not ~~our~~to ~~operating~~proceed ~~flexibility. The~~with its remedies under the loan agreement ~~provides~~until ~~that~~the ~~certain~~earlier ~~actions~~of ~~will~~April ~~constitute~~30, ~~defaults~~2013 or the termination of the Forbearance Agreement. On April 25, 2013, we executed the First Amendment to Forbearance Agreement which ~~would~~extended ~~allow~~the ~~OSM~~deadline of the forbearance until July 31, 2013. On May 8, 2013, we executed the Second Amendment to ~~demand~~Forbearance ~~immediate~~Agreement which addressed certain defaults related to us executing the Asset Purchase Agreement. During the time that the Forbearance Agreement is in effect, OSM has

1815

~~repayment~~agreed not to proceed with any of ~~the~~its ~~entire~~rights and remedies under the loan ~~amount~~agreement, including its ability to institute a foreclosure action. The Forbearance Agreement can be terminated by OSM in the event our negotiations with REG regarding a sale of the biodiesel production facility are abandoned, if our financial condition materially deteriorates, if we violate any of the agreements we made in the Forbearance Agreement, and ~~foreclose~~for other reasons included in the Forbearance Agreement. If the Forbearance Agreement terminates, OSM could pursue any of its ~~lien~~rights onor ~~our~~remedies ~~property~~under the loan agreements, including pursuing a foreclosure of its interest in the Mason City biodiesel production facility. If OSM were to proceed with a foreclosure, we may lose the biodiesel production facility and the other assets which are pledged as collateral for the OSM loan.

OnIn ~~September~~addition ~~30,~~to ~~2010,~~our weOSM ~~entered~~loan, ~~into~~on anOctober ~~Amended~~17, ~~and~~2011, ~~Restated~~we ~~Loan~~executed ~~Agreement~~a ~~with~~$4 ~~OSM. The~~million ~~purpose~~operating line of ~~amending~~credit ~~and~~with ~~restating~~First ~~the~~Citizens ~~loan~~Bank. ~~agreement~~We ~~was~~used tothese ~~address~~funds ~~certain issues related~~ to ~~closing~~purchase onraw ~~the~~materials ~~loan and~~ to ~~address~~operate ~~additional details related to~~ the ~~Construction~~biodiesel ~~and~~production ~~Design~~facility. ~~Agreement~~The ~~and~~maturity ~~our~~date ~~anticipated~~of ~~biodiesel~~this ~~production~~line ~~facility~~of ~~modifications~~credit towas ~~make~~October ~~the~~31, ~~facility~~2012. ~~multi-feedstock~~However, ~~capable. On~~in ~~March~~August 182012, ~~2011,~~this weline ~~entered~~of ~~into~~credit awas ~~second~~repaid ~~amendment~~and tocanceled. ~~the~~As ~~loan~~a ~~agreements~~result, ~~with~~we ~~OSM,~~no ~~whereby~~longer ~~certain~~have ~~defined~~a ~~terms~~line ~~related~~of credit to ause ~~covenant~~for ~~calculation~~working ~~were clarified~~capital.

AsIn ~~of July 31~~addition, ~~2012~~we raised $1,038,000 wethrough ~~had~~the ~~approximately~~private ~~$5.8~~sale ~~million~~of ~~outstanding~~subordinated ~~pursuant~~unsecured todebt securities during our ~~OSM~~2012 ~~loan~~fiscal ~~which~~year. ~~accrued~~We ~~interest~~used atthe acapital ~~rate~~we raised through these debt securities to continue the development and startup of 5%our ~~per~~biodiesel ~~year~~production facility.

In addition to our OSM loan, on October 17, 2011, we executed a $4 million operating line of credit with First Citizens. We used these funds to purchase raw materials to operate the biodiesel production facility. The maturity date of this line of credit was October 31, 2012. However, in August 2012, this line of credit was repaid and canceled. As a result, we no longer have a line of credit to use for working capital.

In addition, we raised $1,048,111 through the private sale of subordinated unsecured debt securities during our 2012 fiscal year. We used the capital we raised through these debt securities to continue the development and startup of our biodiesel production facility.

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.

In November 2012, we entered into a note payable with Farmers State Bank, advanced in multiple installments, totaling approximately $279,000 at January 31, 2013, but subsequently increased to $320,000, including interest at 4.5%, maturing on May 21, 2013. The note is secured by certain equipment we are in the process of selling and guaranteed by all eight members of our board of directors. As of the date of this report, the note payable remains due in addition to the accrued interest on the note. We anticipate using proceeds from the asset sales agreement to settle this note.

In March 2013, we entered into a note payable with Farmers State Bank for $50,000 including interest at 4.5%, maturing on July 27, 2013. The note is secured by certain equipment we are in the process of selling and guaranteed by all eight members of our board of directors. We anticipate using proceeds from the asset sales agreement to settle the note.

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. Our assumptions relate to the future of the renewable fuels industry, the potential uses of assets, and value of the assets to a buyer. Given the uncertainties with these assumptions, the actual results could be different than expected and these changes could be significant.

We are involved with claims and lawsuits from vendors related to the payment for services related to the construction and operation of the biodiesel facility. We record provisions in the financial statements for pending litigation when we determine that an unfavorable outcome is probable and the amount of loss can be reasonably estimated. The claims and liens we are currently involved with involve the payment and settlement of vendor payables. It is possible that our results of operations, cash flows and financial position could be materially adversely affected by an unfavorable outcome of certain pending or future litigation.

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 and interim principal financial officer, Jeff Oestmann, 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 not effective as of January 31, 2013 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.

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 Inwere ~~August~~no ~~2012,~~changes in our internal control over financial reporting during the ~~Company~~first quarter of our 2013 fiscal year which were identified in connection with management's ~~CFO,~~evaluation ~~Steve~~required ~~Nath,~~by ~~resigned~~paragraph ~~from~~(d) ~~the~~of ~~Company. Jeff~~rules ~~Oestmann~~13a-15 ~~assumed~~and 15d-15 under the ~~title~~Exchange ofAct ~~interim~~that ~~Chief~~have ~~Financial~~materially ~~Officer~~affected, ~~until~~or aare ~~replacement~~reasonably islikely ~~found~~to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

~~On August 21, 2012 we were served with a foreclosure lawsuit by~~ Wolin & Associates, Inc. ("Wolin") which seeks to foreclose two mechanics liens it filed against the Mason City biodiesel production facility. This foreclosure lawsuit was filed on August 16, 2012 in Cerro Gordo County District Court, in the State of Iowa. The total amount of these mechanics liens is approximately $847,000. Management has answered Wolin's claims in the foreclosure lawsuit. Management anticipates that our lenders will join in the foreclosure lawsuit if we are unable to reach an agreement with Wolin. 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.

On August 21, 2012 we were served with a foreclosure lawsuit by Wolin & Associates, Inc. ("Wolin") which seeks to foreclose on two mechanics liens it filed against the Mason City biodiesel production facility. This foreclosure lawsuit was filed on August 16, 2012 in Cerro Gordo County District Court, in the State of Iowa. The total amount of these mechanics liens is approximately $850,000. Management has answered Wolin's claims in the foreclosure lawsuit. Management anticipates that our lenders will join in the foreclosure lawsuit if we are unable to reach an agreement with Wolin. 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.

Brenntag Great Lakes LLC

On January 30, 2013, Brenntag Great Lakes LLC (“Brenntag”) filed a lawsuit against Soy Energy in Cerro County District Court, in the State of Iowa. Brenntag is seeking amounts that it claims are owed by Soy Energy. Brenntag received a default judgment which was subsequently reversed by the Cerro Gordo County District Court.

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 May 8, 2012, we sold 36 units and on June 13, 2012, we sold 32 units for a total of 68 membership units in exchange for an aggregate offering price of $42,500~~None. 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.

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 ~~July~~January 31, ~~2012~~2013, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Balance Sheets as of ~~July~~January 31, ~~2012~~2013 and October 31, ~~2011~~2012, (ii) Condensed Statements of Operations for the three ~~and nine~~ months ended ~~July~~January 31, ~~2012~~2013 and ~~2011~~2012, (iii) Condensed Statements of Cash Flows for the ~~nine~~three months ended ~~July~~January 31, ~~2012~~2013 and ~~2011~~2012, 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:	~~October~~June 820, ~~2012~~2013	/s/ Jeff Oestmann
		Jeff Oestmann
		President and Chief Executive Officer
		(Principal Executive Officer)
Date:	~~October~~June 820, ~~2012~~2013	/s/ Jeff Oestmann
		Jeff Oestmann
		Interim Chief Financial Officer
		(Principal Financial Officer)

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