Siouxland Ethanol 10QSB 2007 Q1 Quarterly report (small business)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

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

For the fiscal quarter ended December 31, 2006

OR

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

For the transition period from            to          .

COMMISSION FILE NUMBER 000-52420

SIOUXLAND ETHANOL, LLC

(Exact name of small business issuer as specified in its charter)

Nebraska	22-3902184
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

1501 Knox Boulevard
Jackson, NE 58743
(Address of principal executive offices)

(402) 632-2676
(Issuer’s telephone number)

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

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

As of February 14, 2007, there were 3,789 membership units outstanding.

Transitional Small Business Disclosure Format (Check one):o Yesþ No

INDEX

	Page No.
PART I. FINANCIAL INFORMATION		1
Item 1. Financial Statements.		1
Item 2. Management’s Discussion and Analysis and Plan of Operations		13
Item 3. Controls and Procedures		16
PART II. OTHER INFORMATION		17
Item 1. Legal Proceedings		17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		17
Item 3. Defaults Upon Senior Securities		17
Item 4. Submission of Matters to a Vote of Security Holders		17
Item 5. Other Information		17
Item 6. Exhibits		17
SIGNATURES		18
Amendment to Credit Agreement
$3,500,000 Revolving Term Note
Security Agreement and Assignment of Hedging Account
Railroad Service and Construction Agreement
Railroad Car Lease Agreement
Binding Letter of Intent
Certification
Certification
Section 1350 Certification
Section 1350 Certification

Information Regarding 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,” “should,” “anticipate,” “believe,” “expect,” “plan,” “future,” “intend,” “could,” “estimate,” “predict,” “hope,” “potential,” “continue,” or the negative of these terms or other similar expressions. These forward-looking statements are only our predictions and involve numerous assumptions, risks and uncertainties. Our actual results or actions may differ materially from these forward-looking statements for many reasons, including the following factors:

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

• Construction delays and technical difficulties in constructing the plant;

• Changes in the environmental regulations that apply to our plant site and operations;

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

• Changes in the availability and price of natural gas and corn

• Changes in the markets for ethanol and distillers grains, including the effects of possible overproduction of ethanol or distillers grain;

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

• Changes and advances in ethanol production technology;

• Competition from alternative fuel additives; and

• Changes in interest rates on our variable rate borrowings.

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

     All references to “we,” “us,” “our” and the “Company” in this report refer to Siouxland Ethanol, LLC.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

SIOUXLAND ETHANOL, LLC
(A Development Stage Company)

Condensed Balance Sheet

	December 31,
	2006
	(Unaudited)
ASSETS
Current Assets
Cash and equivalents	$	1,318,493
Restricted cash		576,573
Derivative instruments		427,137
Other receivables		3,370
Prepaid and other		28,003
Total current assets		2,353,576
Property and Equipment
Land		752,302
Office equipment		47,190
Construction in progress		64,282,691
		65,082,183
Less accumulated depreciation		(4,975	)
Net property and equipment		65,077,208
Other Assets
Restricted cash		406,100
Expansion deposit		500,000
Debt issuance costs, net of amortization		566,545
		1,472,645
Total Assets	$	68,903,429
LIABILITIES AND EQUITY
Current Liabilities
Revolving term note	$	394,188
Current maturities of long-term debt		1,075,625
Accounts payable		292,545
Accrued expenses		15,566
Construction payable		6,823,047
Total current liabilities		8,600,971
Long-Term Debt, less current maturities		23,929,375
Commitments and Contingencies
Members’ Equity
Member contributions, net of cost of raising capital, 3,789 units outstanding		36,491,418
Deficit accumulated during development stage		(118,335	)
Total members’ equity		36,373,083
Total Liabilities and Members’ Equity	$	68,903,429

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

2

SIOUXLAND ETHANOL, LLC
(A Development Stage Company)

Condensed Statement of Operations

	Three Months Ended			Three Months Ended			From Inception
	December 31,			December 31,			(August 12, 2004) to
	2006			2005			December 31, 2006
	(Unaudited)			(Unaudited)			(Unaudited)
Revenues	$	—		$	—		$	—
Operating Expenses
Professional fees		71,948			106,777			805,306
General and administrative		134,732			75,948			503,708
Total operating expenses		206,680			182,725			1,309,014
Operating Loss		(206,680	)		(182,725	)		(1,309,014	)
Other Income (Expense)
Interest income		18,909			192,342			907,545
Other income		—			975			3,582
Gain on derivative instruments		283,075			—			283,075
Interest expense		—			(3,523	)		(3,523	)
Total other income, net		301,984			189,794			1,190,679
Net Income (Loss)	$	95,304		$	7,069		$	(118,335	)
Weighted Average Units Outstanding		3,789			2,496			1,919
Net Income (Loss) Per Unit	$	25.15		$	2.83		$	(61.66	)

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

3

SIOUXLAND ETHANOL, LLC
(A Development Stage Company)

Condensed Statement of Cash Flows

	Three Months Ended			Three Months Ended			From Inception
	December 31,			December 31,			(August 12, 2004) to
	2006			2005			December 31, 2006
	(Unaudited)			(Unaudited)			(Unaudited)
Cash Flows from Operating Activities
Net income (loss)	$	95,304		$	7,069		$	(118,335	)
Adjustments to reconcile net income (loss) to net cash from operations:
Depreciation and amortization		11,890			557			14,755
Equity units exchanged for services		—			—			60,000
Change in assets and liabilities
Restricted cash		(144,925	)		—			(982,673	)
Derivative instruments		(427,137	)					(427,137	)
Other receivable		2,067			—			(3,370	)
Prepaid and other		13,165			18,804			(23,503	)
Accounts payable		149,712			53,887			292,545
Accrued expenses		6,485			1,152			15,566
Net cash provided by (used in) operating activities		(293,439	)		81,469			(1,172,152	)
Cash Flows from Investing Activities
Capital expenditures		(18,356,812	)		(1,841,975	)		(58,254,636	)
Payments for expansion deposit		(500,000	)					(500,000	)
Payment for land options and other		—			—			(7,000	)
Net cash used in investing activities		(18,856,812	)		(1,841,975	)		(58,761,636	)
Cash Flows from Financing Activities
Proceeds from revolving term note		394,188			—			394,188
Proceeds from bridge financing loan		—			760,000			760,000
Payments on bridge financing loan		—			(760,000	)		(760,000	)
Proceeds from long-term debt		15,975,000			—			20,975,000
Payments for financing costs and other		(60,697	)		(52,093	)		(423,183	)
Proceeds from TIF financing		—			—			3,874,858
Member contributions		—			35,880,000			36,855,000
Payments for deferred offering costs		—			(36,449	)		(423,582	)
Net cash provided by financing activities		16,308,491			35,791,458			61,252,281
Net Increase(Decrease) in Cash and Equivalents		(2,841,760	)		34,030,952			1,318,493
Cash and Equivalents — Beginning of Period		4,160,253			213,598			—
Cash and Equivalents — End of Period	$	1,318,493		$	34,244,550		$	1,318,493
Supplemental Cash Flow Information
Cash paid during the period for:
Interest	$	323,007		$	3,523		$	326,530
Supplemental Disclosure of Noncash Investing and Financing Activities
Construction in progress in construction payable	$	6,823,047		$	90,515		$	6,823,047
Land options exercised for land purchased	$	—		$	4,500		$	4,500
Debt issuance costs financed with TIF financing	$	—		$	—		$	155,142
Deferred offering costs offset against member contributions	$	—		$	423,582		$	423,582
Equity units exchanged for services	$	—		$	—		$	60,000

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

4

SIOUXLAND ETHANOL, LLC
(A Development Stage Company)

Condensed Notes to Financial Statements (Unaudited)

December 31, 2006

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 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 September 30, 2006, contained in the Company’s annual report on Form 10-KSB for 2006.

In the opinion of management, the condensed interim financial statements reflect all adjustments (consisting of normal recurring accruals) that we consider necessary to present fairly the Company’s results of operations, financial position and cash flows. The results reported in these condensed interim financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year.

Nature of Business

Siouxland Ethanol, LLC, (a Nebraska limited liability company) was organized to pool investors to build a 50 million gallon annual production ethanol plant in Dakota County, Nebraska. As of December 31, 2006, the Company remained in the development stage with its efforts being principally devoted to organizational activities and construction of the 50 million gallon plant. The Company anticipates completion of the 50 million gallon plant in the spring of 2007. In January 2006, the Company announced plans to double the size of the plant from a 50 million gallon ethanol plant to a 100 million gallon plant after the initial plant construction is complete. The Company is still considering the expansion and related financing options.

Fiscal Reporting Period

The Company has adopted a fiscal year ending September 30 for reporting financial operations.

Accounting Estimates

Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles of the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates.

Cash and Equivalents

The Company considers all highly liquid debt instruments with a maturity of three months or less to be cash and equivalents.

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

Restricted Cash

The Company maintains cash accounts set aside for capital interest and debt service requirements as part of the tax increment revenue financing. The Company is also periodically required to maintain cash balances at its broker related to derivative instrument positions.

5

SIOUXLAND ETHANOL, LLC
(A Development Stage Company)

Condensed Notes to Financial Statements (Unaudited)

December 31, 2006

Derivative Instruments

The Company accounts for derivative instruments and hedging activities in accordance with SFAS No. 133,Accounting for Derivative Instruments and Hedging Activities, as amended. SFAS No. 133 requires a company to evaluate its contracts to determine whether the contracts are derivatives. Certain contracts that literally meet the definition of a derivative may be exempted from SFAS No. 133 as normal purchases or normal sales. Normal purchases and normal sales are contracts that provide for the purchases or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal purchases or sales are documented as normal and exempted from accounting and reporting requirements of SFAS No. 133.

The Company enters option, futures and swap contracts in order to reduce the risk caused by market fluctuations of corn. These contracts are used to fix the purchase price of the Company’s anticipated requirements of corn in production activities. The fair value of these contracts is based on quoted prices in active exchange-traded or over-the-counter markets. The fair value of the derivatives is continually subject to change due to the changing market conditions. The Company does not typically enter into derivative instruments other than for hedging purposes. On the date the derivative instrument is entered into, the Company will designate the derivative as a hedge. Changes in the fair value of a derivative instrument that are designated as, and meets all of the required criteria, for a cash flow or fair value hedge is recorded in accumulated other comprehensive income and reclassified into earnings as the hedged items affect earnings. Changes in the fair value of a derivative instrument that is not designated as, and accounted for, as a cash flow or fair value hedge is recorded in current period earnings. Although certain derivative instruments are economic hedges of specified risks, they are not designated as, and accounted for, as a cash flow or fair value hedge. Realized and unrealized gains and losses on derivative instruments are included in other income and expense since the Company has not yet commenced operations.

Property and Equipment

Property and equipment is stated at the lower of cost or estimated fair value. Depreciation and amortization are provided over estimated useful lives by use of the straight line method. Maintenance and repairs are expensed as incurred; major improvements and betterments are capitalized.

Deferred Issuance Costs

Costs associated with the issuance of loans are recorded as deferred issuance costs. Loan costs will be amortized over the life of the related debt using the effective interest method. As of December 31, 2006, the Company had approximately $9,800 of amortization related to deferred loan costs. These costs are capitalized, along with interest costs, during construction of the plant. Once operations commence, the amortization of debt issuance costs will be expensed.

Grants

The Company recognizes grant income as other income for reimbursement of expenses incurred upon complying with the conditions of the grant. For reimbursements of capital expenditures, the grants are recognized as a reduction of the basis of the asset upon complying with the conditions of the grant.

6

SIOUXLAND ETHANOL, LLC
(A Development Stage Company)

Condensed Notes to Financial Statements (Unaudited)

December 31, 2006

Fair Value of Financial Instruments

The carrying value of cash and equivalents, derivative instruments, receivables and payables approximates their fair value.

It is not currently practicable to estimate the fair value of the debt financing. Because these agreements contain certain unique terms, covenants, and restrictions, as discussed below, there are no readily determinable similar instruments on which to base an estimate of fair value.

Recently Issued Accounting Pronouncements

Management has reviewed recently issued, but not yet effective, accounting pronouncements and does not expect the implementation of these pronouncements to have a significant effect on the Company’s financial statements.

2. DEVELOPMENT STAGE ENTERPRISE

The Company was formed on August 12, 2004 to have a perpetual life. The Company was initially capitalized by members who contributed an aggregate of $100,000 for 20 membership units. Additionally, the Company was further capitalized by additional members, contributing an aggregate of $875,000 for 175 units in November 2004.

The Company raised additional equity through a Form SB-2 Registration Statement with the Securities and Exchange Commission. The equity offering was closed effective November 3, 2005 along with the termination of the escrow agreement and issuance of the 3,588 membership units totaling $35,880,000. The Company offset proceeds from the equity offering with offering costs of $423,582.

The Company issued six units related to service performed in fiscal 2006.

Income and losses are allocated to all members based upon their respective percentage of units held. See Note 3 for further discussion of members’ equity.

3. MEMBERS’ EQUITY

As specified in the Company’s operating agreement, the Company is authorized to issue up to 7,000 membership units. The Company has one class of membership units, which include certain transfer restrictions as specified in the operating agreement and pursuant to applicable tax and securities laws.

4. DERIVATIVE INSTRUMENTS

The Company has recorded an asset for derivative instruments of $427,137 as of December 31, 2006. The Company has recorded a gain on derivative instruments of approximately $283,000 for the three months ended December 31, 2006. There were no gains or loss on derivative instruments for the three months ended December 31, 2005. None of the derivative instrument positions were accounted for as cash flow or fair value hedges.

7

SIOUXLAND ETHANOL, LLC
(A Development Stage Company)

Condensed Notes to Financial Statements (Unaudited)

December 31, 2006

5. CONSTRUCTION IN PROGRESS

Amounts included in construction in progress as of December 31, 2006 are as follows:

Construction costs	$	63,798,235
Capitalized interest		332,787
Insurance and other costs		151,669
	$	64,282,691

The Company capitalizes construction costs and construction period interest until the assets are placed in service. The construction payable of approximately $6,823,000 includes approximately $2,926,000 of retainage.

6. REVOLVING TERM NOTE

In October 2006, the debt financing agreement with the lending institution was amended to add a revolving term note for up to $3,500,000, subject to borrowing base limitations, until November 2007. Interest accrues at the three-month LIBOR plus 3%, which totaled 8.36% at December 31, 2006, and is payable monthly. The Company will be obligated to pay the lender an unused commitment fee equal to 0.35% on the unused portion. The Company has issued a standby letter of credit totaling $381,000 related to rail car leases described in Note 8, which reduces the amounts available on the revolving term note. The revolving term note is secured by a common credit agreement along with the revolving promissory note and the term note described above. As of December 31, 2006, the outstanding balance on the line of credit is approximately $394,000.

7. LONG-TERM DEBT

Long-term debt consists of the following at December 31, 2006:

Term note payable to lending institution, see terms below	$	20,975,000
Tax increment financing, see terms below		4,030,000
Total long-term debt	$	25,005,000

Term Note

The Company obtained debt financing for the construction of its 50 million gallon ethanol plant from a lending institution in the form of a revolving promissory note, as described below, and a term note. The term note provides for borrowings up to $32,268,750. The Company is required to make interest payments for both loans during the construction phase at the three-month LIBOR plus 3%, which totaled 8.36% at December 31, 2006. The Company is required to make 30 quarterly principal installments of $1,075,625 plus accrued interest beginning six months following substantial completion, but no later than December 1, 2007 payable in full in June 2015. In addition to the scheduled payments, the Company will be required to make additional principal payments equal to 65% of the Company’s excess cash flow not to exceed $2,000,000 per fiscal year and an aggregate total of $6,000,000. As part of the financing agreement, the premium above LIBOR may be reduced to 2.85% for any year after 2006 based on a financial ratio.

8

SIOUXLAND ETHANOL, LLC
(A Development Stage Company)

Condensed Notes to Financial Statements (Unaudited)

December 31, 2006

The financing agreement requires an annual servicing fee of $25,000. The Company is initially permitted to make distributions up to 40% of net income. For fiscal 2008 and thereafter, the Company may make distributions which exceed 40% of net income as long as the Company has made the required excess cash flow payments and maintained the required financial covenants. The financing agreement contains certain prepayment fees in the first three years of the scheduled payments.

Revolving Promissory Note

The Company has a revolving promissory note of up to $10,756,250 as part of the construction loan described above with its lending institution. The Company is required to pay interest on the principal advances monthly at the three-month LIBOR rate plus 3%. Beginning in September 2015 or three months after the repayment of the term note described above, the Company is required to make 10 quarterly installments of $1,075,625 plus accrued interest until December 1, 2017. The Company did not have an outstanding balance on the revolving promissory note at December 31, 2006. The Company pays a commitment fee of 0.5% on the unused portion of the revolving promissory note. The revolving promissory note as well as the term note described above are subject to a common credit agreement with various financial and non-financial covenants that limit distributions, require minimum debt service coverage, net worth and working capital requirements, and secured by all business assets.

Tax Increment Financing (TIF)

In July 2006 the Community Redevelopment Authority of the Village of Jackson, Nebraska (“Authority”) approved the issuance of Tax Increment Revenue Bonds, Taxable Series 2006A (Siouxland Ethanol, LLC Project) in the total amount of $4,030,000 on behalf of Siouxland Ethanol, LLC (“the Company”). The Bond issuance is for the purpose of providing financing for a portion of the costs of construction of the Company’s ethanol plant (the “Project”). These bonds were issued in one series in September 2006 and bear an interest rate of 10%. The bonds are secured by a subordinate deed of trust in which the Company’s land and facilities have been pledged as collateral, in subordination to the Company’s senior debt holder. The Company has also guaranteed the bonds. As such, the bond liability and related accounts have been recorded on the Company’s balance sheet.

In connection with the issuance of the bonds, the Authority and the Company entered into a Redevelopment Contract (“Contract”). Under the terms of the Contract, the bond proceeds are to be used for Project costs, for the establishment of special funds held by the bond trustee for interest and principal payments and reserves (the “Capitalized Interest Fund” and the “Debt Service Reserve Fund”), and for debt issuance costs. The approximate amounts of the uses of the bond proceeds are as follows: available for Project costs $2,981,000; Capitalized Interest Fund $435,000; Debt Service Reserve Fund $403,000; and debt issuance costs $211,000.

Under the Contract, the Company agreed that it intends to create taxable real property in the Project of at least $25 million no later than January 1, 2007. Additionally, the Company agrees to complete the Project and then operate it not less than 15 years from January 1, 2007. The Company may not convey, assign, or transfer the Project prior to the expiration of the 15 year period without the prior written consent of the Authority. If the Company were to default on the Contract, including not completing the Project on or before July 1, 2007 under circumstances construed to be within the Company’s control, liquidated damages plus interest could be charged against the Company.

The Company will be assessed taxes on the value of the Project (“Tax Increment Revenues”) which will be paid by the Company to a special debt service fund and then used to pay the payments required on the bonds. The Company has guaranteed that if such assessed Tax Increment Revenues are not sufficient for the required bond payments, the Company will provide such funds as are needed to fund the shortfall.

9

SIOUXLAND ETHANOL, LLC
(A Development Stage Company)

Condensed Notes to Financial Statements (Unaudited)

December 31, 2006

The bonds mature in semi-annual increments commencing June 1, 2008. The semi-annual increments commence at $5,000 and increase to $615,000, with a final maturity of December 31, 2021. Interest on the bonds is payable semi-annually on June 1 and December 1, commencing on June 1, 2007. The Company has the option to redeem or purchase the bonds in whole or in part on or after June 1, 2011. The Bonds are also subject to special semi-annual redemption provisions commencing June 1, 2008.

In connection with the bond issuance, the Authority also authorized a Series 2006B Note to the Company under which additional funding to the Company is contingently committed. Under the terms of the agreement the Authority may provide additional funding to the Company up to $2,000,000 to reimburse the Company for Project costs the Company has paid. However, any such funding to the Company would only be paid if there were Tax Increment Revenues remaining once the bonds have been fully paid. This funding commitment bears no interest and no amounts have been recorded in the accompanying financial statements due to the contingent nature of the agreement.

The estimated maturities of long-term debt at December 31, 2006 are as follows:

2008		1,075,625
2009		4,312,500
2010		4,447,500
2011		4,467,500
After 2011		10,701,875
Total long-term debt	$	25,005,000

8. COMMITMENTS AND CONTINGENCIES

Construction contracts

The total cost of the project, including the construction of the ethanol plant and start-up expenses is expected to approximate $88,000,000. In January 2006, the Company signed a lump-sum design-build agreement with a general contractor, a related party, for a fixed contract price of $56,619,000. As part of the contract, the Company paid a mobilization fee, subject to retainage. Monthly applications are submitted for work performed with final payment due upon final completion. The design-build agreement includes a provision whereby the general contractor receives an early completion bonus for each day the construction is complete prior to 485 days. The contract may be terminated by the Company upon a ten day written notice subject to payment for work completed, termination fees, and any applicable costs and retainage. An employee of the general contractor is an investor and director of the Company. An affiliate of the general contractor is an investor in the Company. As of December 31, 2006, the Company has incurred approximately $51,210,000 for these services with approximately $6,167,000 included in construction payable including retainage amounts.

Expansion Design Build Letter of Intent

In December 2006, the Company signed a letter of intent with the current general contractor as discussed above to design and build a 50 million gallon expansion of the ethanol plant at a total contract price of approximately $56,997,000. This letter of intent does not include all costs of the expansion. The contract price is subject to price increases based on factors including increases in construction costs and the timing until notice to proceed is given. The letter of intent shall terminate on December 31, 2007 unless the basic size and design of the expansion have been agreed upon and minimum funding is met. As part of the letter of intent, the Company paid a $500,000

10

SIOUXLAND ETHANOL, LLC
(A Development Stage Company)

Condensed Notes to Financial Statements (Unaudited)

December 31, 2006

non-refundable commitment fee in December 2006, which was recorded as an expansion deposit. It is reasonably possible that the expansion may not proceed, at which point this payment will be expensed.

Rail Service and Construction Agreement

In November 2006, the Company entered into a rail service and construction agreement with an unrelated party to provide rail service to the ethanol plant. The Company will be responsible for the construction of a sidetrack from the mainline to the entrance of the plant and the tracks inside the plant. The Company will be reimbursed approximately $537,000 for the cost of constructing the sidetrack of which $150,000 is due upon 50% completion of the plant, which the Company received in November 2006 and was credited against the cost to construct the sidetrack. The remainder will be due when operations begin. The Company guarantees it will ship a minimum of 1,500 rail cars in each of the first five years after completion of the ethanol plant. In the event the minimum is not met in any of the years, the Company will pay $75 for each car short of the minimum. In addition, the Company will lease, at no additional cost, the sidetrack for their non-exclusive use. Either party may terminate the agreement following the five year term with thirty days notice.

Consulting Contracts

In September 2006, the Company entered into an agreement with an unrelated party to establish a risk management plan with respect to the Company’s grain origination, energy and transportation, procurement and output sales. The Company will pay a monthly fee of $0.001 per gallon of ethanol produced estimated to be approximately $4,200 per month. The initial term of the agreement is for one year from the date the Company begins ethanol production and will automatically renew for an additional term unless notice is given four months prior to the end of the initial term.

Marketing Agreements

In February 2006, the Company entered into a marketing agreement with an unrelated party to purchase all of the distillers dried grains with solubles (DDGS) the Company is expected to produce. The buyer agrees to pay the Company a percentage of the selling price, subject to a minimum amount per ton. The agreement commences when the Company begins producing DDGS and continues for one year initially and is terminable thereafter by either party with four months notice.

In March 2006, the Company entered into a marketing agreement with an unrelated party for the sale of ethanol the Company is expected to produce. The Company agrees to pay the buyer a certain percentage of the sales price for certain marketing, storage, and transportation costs. The initial term is for two years beginning in the month when ethanol production begins with renewal options thereafter in one year increments.

Utility Contracts

In March 2006, the Company entered into an agreement with an unrelated party to provide all natural gas required by the Company for the period from February 2007 or the date the facilities are installed and for ten years thereafter. The agreement requires minimum charges over the ten year period of approximately $50,000 per month beginning at the start of production. The Company also is required to make a construction security payment and demand payment totaling approximately $1,182,000 related to the pipeline construction which may be partially refundable based on the Company’s credit history.

In September 2006, the Company entered into an agreement with an unrelated party for the acquisition and installation of water treatment equipment. The agreement also provides for chemicals and ongoing support and services for the water treatment equipment for an initial term of three years from the date the plant becomes operational and is renewable for additional one-year terms. The Company will pay approximately $1,700,000 for

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SIOUXLAND ETHANOL, LLC
(A Development Stage Company)

Condensed Notes to Financial Statements (Unaudited)

December 31, 2006

the equipment and then $9,400 per month beginning in April 2007 for the necessary chemicals and support services based on name plate production. As of December 31, 2006, the Company has incurred approximately $832,000 for these services.

Landfill gas contract

In July 2006, the Company entered into an agreement with a related party to purchase all of the extracted landfill gas for use as fuel in one or more burners at the plant. The Company agrees to purchase all gas extracted from the landfill at a specified price per MMBtu as set forth in the contract. In addition, the Company will be reimbursed up to $400,000 for the design, installation and maintenance of specific equipment and systems required to be paid by the end of the fifth year from the commencement date. The initial term is for fifteen years beginning when operations commence. Either party may terminate the agreement subject to specific guidelines in the agreement. The owner of the landfill is an investor of the Company.

Rail Car Lease Agreement

In December 2006, the Company entered into a five-year lease agreement for fifteen covered hopper cars and a ten-year lease agreement for thirty-five covered hopper cars with an unrelated party. The Company will pay approximately $1,286 per car per month for the first five years and then approximately $618 per car per month for the remaining five years of the lease agreement starting when the rail cars are delivered. The base monthly rents under the lease agreements are subject to a one-time adjustment as of the delivery dates of the first cars delivered based on interest rate changes and raw material cost increases. In addition, a surcharge of $0.03 per mile will be assessed for each mile in excess of 36,000 miles per year a car travels. The Company provided a standby letter of credit for approximately $381,000 as described in Note 7.

Grant

In June 2006, the Company was a beneficiary of a Community Development Block Grant received by Dakota County from Nebraska’s Department of Economic Development. The grant will not exceed $77,500 and will be used to assist with constructing a road to the plant. As part of the grant, the Company must create and maintain a specified number of jobs, which principally benefit low to moderate income persons. If the grant conditions are not fulfilled, the Company and the County will be obligated to repay the grant to the Department of Economic Development.

9. RELATED PARTY TRANSACTIONS

The Company has incurred costs from related party transactions as further described in Note 8. As of December 31, 2006, the Company has incurred approximately $51,210,000 in costs related to the design-build agreement of which approximately $6,167,000 is included in construction payable. The Company has not incurred costs related to the landfill gas agreement as of December 31, 2006.

10. SUBSEQUENT EVENTS

In February 2007, the Company entered into an agreement with an unrelated party to purchase all electrical power required by the Company beginning April 2007 or the date the substation is energized and continues perpetually thereafter. The Company is required to make a security deposit equal to 1.5 month’s average usage, adjusted annually. In addition, the Company will contribute approximately $719,000 for the construction of the electrical substation.

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Item 2. Management’s Discussion and Analysis and Plan of Operations.

Overview

     Siouxland Ethanol, LLC is a development-stage Nebraska limited liability company that was formed on August 12, 2004 for the purpose of constructing and operating a dry mill corn-based ethanol plant near Jackson, Nebraska. We are in the process of building a plant with an anticipated capacity to produce 50 million gallons of denatured fuel grade ethanol and 160,000 tons of dried distillers’ grains per year. This plant is under construction and is expected to be completed in April 2007. In January 2006, we announced our intent to double the production capacity of our plant from an annual ethanol production capacity of 50 million gallons to 100 million gallons. We are still considering the expansion and related financing options.

Results of Operation

     We are still in the development phase and until the first phase of our ethanol plant is operational we will generate no revenues other than interest income earned on our cash balances. During the quarter ended December 31, 2006, we incurred operating expenses of $206,680, which consisted primarily of professional fees and general and administrative expenses. During the quarter, we earned net interest income of $18,909 and had gains relating to derivative instruments of $283,075, resulting in net income for the quarter of $195,304 or $25.15 per unit. At December 31, 2006, our accumulated deficit equaled $118,335. The results of operations during the quarter are not indicative of the future results of operations that we anticipate for the company once the initial phase of our ethanol plant begins commercial operations. We anticipate this to occur in the April 2007.

Liquidity and Capital Resources

     We expect that the total cost to complete the construction of the initial 50 million gallon per year ethanol plant and the associated infrastructure, land acquisition and development, and various start-up costs will be approximately $88 million by the time the plant commences operations in April 2007. We have capitalized approximately $65.6 million to date in connection with these activities. Construction costs of the proposed 50 million gallon per year expansion are expected to approximate the total costs associated with bringing the first 50 million gallon plant into production.

     We are financing the costs of the initial plant with a combination of equity and debt as described below. We are still considering the expansion and related financing options and have no commitments with respect to providing such financing at this time.

     Equity Financing. Through November 19, 2004, we raised $975,000 in seed capital through a private placement of membership units. We filed a Registration Statement for an initial public offering of our units with the Securities and Exchange Commission on Form SB-2 (SEC Registration No. 333-123473), as amended, which became effective on August 8, 2005 and sold 3,588 units for $35,880,000 in our registered offering which closed on November 3, 2005.

     Credit Facility. On May 4, 2006, we entered into a credit agreement with Farm Credit Services of America, FLCA (“Farm Credit”) establishing a senior credit facility with Farm Credit for the construction of our ethanol plant. The construction financing is in the amount of $43,025,000 consisting of a $32,268,750 term loan and a $10,756,250 revolving loan. In October 2006, we amended our credit agreement with Farm Credit to add a revolving term note for up to $3,500,000, subject to borrowing base limitations, until November 2007. Borrowings under the revolving term note will be primarily used for corn hedging activities. The amount available to us under the new revolving term note is also reduced by the amount of a standby letter of credit totaling $381,000 that we provided under the terms of two rail car leases.

     We must pay interest on the borrowed funds at a variable rate equivalent to LIBOR Short Term Index Rate plus 3.0%. The variable rate shall be adjusted at the LIBOR Short Term Index Rate plus 2.85% for any year after 2006 in which, at the end of the preceding year, our owners’ equity is equal to or greater than 60% provided we are not otherwise in default. Interest will be calculated on a 360 day basis. We paid an origination fee of $322,687 to

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Farm Credit for the loans. We will pay an annual administration fee of $25,000 to Farm Credit. For the revolving loan and the revolving term loan, we will pay commitment fees of¹/2 of 1% per annum and 0.35% per annum, respectively on the unused portions of the borrowing capacity. The revolving term note is secured a common credit agreement along with the revolving promissory note and the term note described above.

     We are obligated to repay the term construction loan in 30 equal, consecutive, quarterly principal installments of $1,075,625 plus accrued interest, with the first installment due on December 1, 2007 or no later than 6 months after substantial completion of the ethanol plant, and the last installment due on June 1, 2015. During construction we will make monthly payments of interest only. On the earlier of September 1, 2015 or three months following repayment of the term loan we will begin repayment on the revolving term loan in 10 equal, consecutive, quarterly principal installments of $1,075,625 plus accrued interest with the last installment due on the later of December 1, 2017 or ten calendar quarters from the date repayment begins. During the term of the loan, we are required to make special principal payments in an annual amount equal to 65% of our excess cash flow for each year, not to exceed $2,000,000 in any fiscal year. These payments will continue until an aggregate sum of $6,000,000 has been paid to Farm Credit.

     The loans will be secured by a first mortgage on our real estate and a lien on all of our personal property. If we prepay any portion of the construction loans prior to December 1, 2008, we will pay a prepayment charge of 3% in addition to certain surcharges. This prepayment charge will be reduced by 1.0% each year thereafter and any prepayment made on the construction loan after December 1, 2010 will not be subject to a prepayment charge. During the term of the loans, we will be subject to certain financial loan covenants consisting of minimum working capital, minimum debt coverage, and minimum tangible net worth. After the construction phase, we will only be allowed to make annual capital expenditures up to $500,000 annually without prior approval. The loan agreements also impose restrictions on our ability to make cash distributions to our members. For each fiscal year commencing with fiscal 2008, we may make a distribution to our members of 40% of the net profit for such fiscal year, provided that no event of default or potential default exists. We may make distributions in a fiscal year exceeding 40% of net profit only if we have made the required excess cash flow payment to Farm Credit for that fiscal year. We must be in compliance with all financial ratio requirements and loan covenants before and after any distributions to our members.

     Upon an occurrence of an event of default or an event which will lead to our default, Farm Credit may upon notice terminate its commitment to loan funds and declare the entire unpaid principal balance of the loans, plus accrued interest, immediately due and payable. An event of default includes, but is not limited to, our failure to make payments when due, insolvency, any material adverse change in our financial condition or our breach of any of the covenants, representations or warranties we have given in connection with the transaction.

     Tax Increment Financing. On September 28, 2006, we completed a tax increment financing transaction through the placement and sale of $4,030,000 Tax Increment Revenue Bonds, Taxable Series 2006A (the “Bonds”) issued by the Community Redevelopment Authority of the Village of Jackson, Nebraska (the “Issuer”) for the purpose of financing certain public redevelopment costs in connection with the Facility. We received net proceeds of approximately $3,819,000 from the issuance of the Bonds, of which approximately $838,000 are held in a capitalized interest fund and a debt service reserve fund. In connection with this financing, we entered into the following agreements:

     (i) a Redevelopment Contract, dated July 20, 2006, by and between us and the Issuer (the “Redevelopment Contract”);

     (ii) a Guaranty Agreement, dated September 28, 2006, from us to the Issuer (the “Guaranty”);

     (iii) a Subordinate Deed of Trust, Assignment of Leases and Rents and Security Agreement Fixture Filing Statement, dated September 28, 2006, made by us in favor of Wells Fargo Bank, National Association, as trustee of the Bonds (the “Deed of Trust”); and

     (iv) a Debt Subordination Agreement, dated September 28, 2006, by and among us, Wells Fargo Bank, National Associations, as trustee of the Bonds, and Farm Credit Services of America FLCA (the “Subordination Agreement”).

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     The Bonds bear interest at a fixed rate of 10% per annum on the outstanding principal. Principal of, and interest on, the Bonds are payable semi-annually, on June 1 and December 1, commencing on June 1, 2007 for interest and June 1, 2008 for principal. The Bonds mature on December 1, 2021, but are subject to early redemption on or after June 1, 2011.

     In general, principal and interest on the Bonds is payable solely from (i) proceeds of the Bonds deposited into a capitalized interest fund and (ii) incremental real estate taxes paid by us on the Facility allocable to the Issuer (the “Tax Increment Revenues”). However, under the terms of the Redevelopment Contract, we are obligated to make payments to the Issuer in lieu of real estate taxes if for any reason the Tax Increment Revenues are not sufficient to pay principal and interest on the Bonds. This obligation is represented by the Guaranty under which we have guaranteed to the holders of the Bonds full and prompt payment of principal, premium, if any, and interest on the Bonds when due, whether at maturity, upon acceleration or otherwise. Our obligations under the Redevelopment Contract and the Guaranty are secured by the pledge of the real property on which the Facility is located, along with all improvements, equipment and fixtures making up the Facility, rents and profits from the Facility and certain other assets made in favor of the trustee of the Bonds under the Deed of Trust. Under the Subordination Agreement, the trustee of the Bonds has agreed to subordinate its rights to exercise its remedies against us to the rights of Farm Credit Services of America, FLCA with respect to the $43,025,000 senior credit facility that we obtained on May 4, 2006.

     Under the terms of the Redevelopment Agreement, we are obligated to construct the Facility and operate it until at least January 1, 2022. Until that date, we may not sell, transfer or encumber the Facility without the consent of the Issuer.

     As of December 31, 2006, we had cash and cash equivalents (other than restricted cash) of approximately $1.3 million and total assets of approximately $68.9 million. We expect that the funds available to us from our equity and debt financings will be sufficient to cover all costs associated with construction of the initial 50 million gallon per year ethanol plant and the associated infrastructure, including, but not limited to, site acquisition and development, utilities, construction and equipment acquisition and to provide adequate working capital, when combined with anticipated revenues produced from the sale of ethanol and distillers grains produced at the plant, to meet our operating expenses going forward. However, there is no assurance that the funds available to us will be sufficient to cover our anticipated capital needs and operating expenses, particularly if there are unanticipated delays in the commencement of commercial production of ethanol and distillers grains from the initial phase of the ethanol plant, if the sale of ethanol and distillers grains do not produce revenues in the amounts currently anticipated or if our operating costs, including specifically the cost of corn and other inputs, are greater than anticipated. In addition, if we determine to proceed with the expansion of the ethanol plant’s productive capacity from 50 million to 100 million gallons per year, we will need to obtain additional funds of approximately $88,000,000. We would expect to finance the costs of any such expansion through a combination of additional debt and equity financing along with retained earnings from the operation of the initial 50 million gallon per year phase of the ethanol plant.

     Employment and Investment Growth Act Project Agreement.On March 15, 2006, we entered into an Employment and Investment Growth Act Project Agreement with the State of Nebraska Department of Revenue. The Agreement provides that upon our hiring at least 30 new individuals, and our involvement in a qualified business activity resulting in an investment of at least $3,000,000 in qualified property prior to September 30, 2011, the State agrees to allow the Company the use of several incentives. We may elect annually to determine taxable income for Nebraska income tax purposes by multiplying federal taxable income by the sales factor only. This calculation was first available to be used for 2005, and is available for each year thereafter for a period of fourteen years beginning in the year the required employees are hired and the applicable investment in property is made. In addition, upon meeting the required minimum levels of employments and investments required by the Employment and Investment Growth Act, we will be entitled to: (1) claim a refund once each quarter, for a period of six years, for sales and use taxes paid on purchases and leases of tangible property used or incorporated into an improvement of real estate as part of the project and placed in service after January 14, 2005; (2) tax credits equal to 5% of the amount of compensation paid during the year to employees who are Nebraska employees or who have been employed by the Company since September 30, 2004 (base-year employees) that exceeds the average compensation paid at the project multiplied by the number of base-year employees; and (3) a tax credit of 10% of the investment made in qualified property located and used at the project calculated by the total cost of property required to be capitalized, less the amount of Nebraska state and local option sales or use taxes subject to refund. The tax credits

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are available to us for a period of six years. If at any time we fail to meet the required levels of employment and investment during the six year period following the year the Application was submitted for the incentives, all or a portion of the incentives and any penalties applicable thereto will be recaptured or disallowed.

Application of Critical Accounting Estimates

     Management uses estimates and assumptions in preparing our financial statements in accordance with accounting principles generally accepted in the United States. 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. We do not believe that any of the significant accounting policies described in the notes to the financial statements is critical at this time, however we expect to continue to review our accounting policies as we commence operation of our ethanol plant in order to determine if any of these accounting policies are critical.

Off-Balance Sheet Arrangements

     We do not have any off-balance sheet arrangements.

Item 3. Controls and Procedures

     Our management, including our President and Chairman (the principal executive officer), Tom Lynch, along with our Treasurer (the principal financial officer), John Kingsbury, have reviewed and evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2006. Based upon this review and evaluation, these officers believe that our disclosure controls and procedures are effective in ensuring that material information related to us is recorded, processed, summarized and reported within the time periods required by the forms and rules of the Securities and Exchange Commission.

     Our management, consisting of our President and Chief Executive Officer and our Treasurer, have reviewed and evaluated any changes in our internal control over financial reporting that occurred as of December 31, 2006 and there has been no change that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

     None.

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

     None

Item 3. Defaults Upon Senior Securities

     None.

Item 4. Submission of Matters to a Vote of Security Holders

     None.

Item 5. Other Information

     None.

Item 6. Exhibits

     The following exhibits are included in this report:

10.1	Amendment, dated October 27, 2006, to Credit Agreement, dated May 4, 2006, between the Company and Farm Credit Services of America, FLCA.
10.2	$3.500,000 Revolving Term Note, dated October 27, 2006, from the Company to Farm Credit Services of America, FLCA
10.3	Security Agreement and Assignment of Hedging Account, dated October 27, 2006, between the Company and Farm Credit Services of America, FLCA
10.4	Rail Service and Construction Agreement, dated November 11, 2006, between the Company Nebraska Northeastern Railroad
10.5	Railroad Car Lease Agreement, dated December 7, 2006, between the Company and Trinity Industries Leasing Company.
10.6	Binding Letter of Intent, dated December 11, 2006, between the Company and Fagen, Inc. pertaining to services for the development of a 50 million gallon per year expansion to Company’s ethanol production facility
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. § 1350.
32.2	Certificate Pursuant to 18 U.S.C. § 1350.

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SIGNATURES

     In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SIOUXLAND ETHANOL, LLC
Date: February 14, 2007	/s/ Tom Lynch
	Tom Lynch
	Chairman and President (Principal Executive Officer)
Date: February 14, 2007	/s/ John Kingsbury
	John Kingsbury
	Treasurer (Principal Financial and Accounting Officer)

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