Western Iowa Energy, L.L.C. 10-Q 2009 Q1 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the fiscal quarter ended March 31, 2009.

OR

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

For the transition period from                    to                    .

COMMISSION FILE NUMBER 00051965

WESTERN IOWA ENERGY, LLC

(Exact name of registrant as specified in its charter)

Iowa
(State or other jurisdiction of
incorporation or organization) 41-2143913
(I.R.S. Employer Identification No.)

1220 S. Center Street, P.O. Box 399
Wall Lake, Iowa 51466

(Address of principal executive offices)

(712) 664-2173

(Issuer’s telephone number)

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.þ Yeso 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). o 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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

As of May 1, 2009, there were 26,447 membership units outstanding.

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. (Check one):

Large Accelerated Filero Accelerated Filero Non-Accelerated Filerþ Smaller Reporting Companyo

INDEX

PART I — FINANCIAL INFORMATION	3
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis or Plan of Operation	17
Item 3. Quantitative and Qualitative Disclosures About Market Risks	25
Item 4. Controls and Procedures	26
PART II — OTHER INFORMATION	27
Item 1. Legal Proceedings	27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3. Defaults Upon Senior Securities	28
Item 4. Submission of Matters to a Vote of Security Holders	28
Item 5. Other Information	29
Item 6. Exhibits	29
Exhibit 10.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

WESTERN IOWA ENERGY, LLC
BALANCE SHEETS

	March 31,		December 31,
	2009		2008
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	115,298		66,400
Margin deposits		319,384		285,295
Derivative instruments		548		61,360
Trade accounts receivable — related party		563,409		1,428,521
Other receivables		241,388		163,470
Incentive receivables		309,882		312,019
Inventory		3,470,832		4,510,457
Prepaid expenses		173,801		222,476
Total current assets		5,194,542		7,049,998
PROPERTY, PLANT AND EQUIPMENT
Land and land improvements		1,364,842		1,364,842
Office building and equipment		645,542		645,542
Plant and process equipment		33,687,573		33,683,185
Construction in progress		17,794		17,513
Total, at cost		35,715,751		35,711,082
Less accumulated depreciation		6,005,031		5,451,621
Total property, plant and equipment		29,710,720		30,259,461
OTHER ASSETS
Land options		596		596
Other investments		107,198		80,895
Loan origination fees, net of amortization		82,927		87,451
Total other assets		190,721		168,942
TOTAL ASSETS	$	35,095,983	$	37,478,401
LIABILITIES AND MEMBERS’ EQUITY
CURRENT LIABILITIES
Accounts payable:
Trade	$	703,424	$	794,345
Related party		67,210		28,480
Current portion of long-term debt		2,729,110		2,729,110
Accrued interest		30,030		33,372
Accrued wages and benefits		117,554		71,570
Accrued payroll taxes		5,511		4,059
Accrued expenses — related party		117,620		117,620
Other current liabilities		29,305		46,079
Total current liabilities		3,799,764		3,824,635
LONG-TERM LIABILITIES
Long-term debt, less current portion above		4,997,001		6,725,056
Total liabilities		8,796,765		10,549,691
MEMBERS’ EQUITY
Contributed capital		23,516,376		23,516,376
Retained earnings		2,782,842		3,412,334
Total members’ equity		26,299,218		26,928,710
TOTAL LIABILITIES AND MEMBERS’ EQUITY	$	35,095,983	$	37,478,401

See accompanying notes.

3

WESTERN IOWA ENERGY, LLC
STATEMENTS OF OPERATIONS(UNAUDITED)

	Three Months Ended			Three Months Ended
	March 31, 2009			March 31, 2008
REVENUES
Related parties	$	3,070,068		$	14,901,869
Incentive funds		896,069			3,127,673
Total revenues		3,966,137			18,029,542
COST OF SALES		4,260,768			16,245,228
Gross profit (loss)		(294,631	)		1,784,314
OPERATING EXPENSES
Consulting and professional fees		126,379			103,222
Office and administrative expenses		333,731			434,837
Total operating expenses		460,110			538,059
OTHER INCOME (EXPENSE)
Interest income		408			1,727
Interest expense		(91,893	)		(276,393	)
Grant income		100,000			—
Patronage dividends		116,734			156,404
Total other income (expense)		125,249			(118,262	)
NET INCOME (LOSS)	$	(629,492	)	$	1,127,993
BASIC AND DILUTED EARNINGS (LOSS) PER UNIT	$	(23.80	)	$	42.65
WEIGHTED AVERAGE UNITS OUTSTANDING, BASIC AND DILUTED		26,447			26,447

See accompanying notes.

4

WESTERN IOWA ENERGY, LLC
STATEMENTS OF CASH FLOWS(UNAUDITED)

	Three Months Ended			Three Months Ended
	March 31, 2009			March 31, 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(629,492	)	$	1,127,993
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization		557,934			550,378
Non cash portion of patronage dividends		(26,303	)		(47,085	)
Non cash forgiveness of debt		(100,000	)		—
Effects of changes in operating assets and liabilities
Margin deposits		(34,089	)		1,341,737
Trade accounts receivable — related party		865,112			962,150
Other receivables		(77,918	)		1,631
Incentive receivables		2,137			(614,339	)
Inventory		1,039,625			624,425
Derivative instruments		60,812			(1,850,677	)
Prepaid expenses and other assets		48,675			(218,385	)
Accounts payable		(52,191	)		(1,147,640	)
Accrued interest		(3,342	)		(12,839	)
Accrued wages and benefits		45,984			45,384
Accrued payroll taxes		1,452			3,403
Accrued expenses — related party		—			6,430
Other current liabilities		(16,774	)		72,000
Net cash provided by operating activities		1,681,622			844,566
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment, including construction in progress		(4,669	)		(13,645	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net payments on revolving line of credit		—			(550,000	)
Proceeds from long-term debt		1,700,000			—
Payments on long-term debt		(3,328,055	)		(28,056	)
Net cash used in financing activities		(1,628,055	)		(578,056	)
NET INCREASE IN CASH AND CASH EQUIVALENTS		48,898			252,865
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		66,400			32,048
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	115,298		$	284,913

See accompanying notes.

5

WESTERN IOWA ENERGY, LLC
 
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2009

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Use of Estimates in Preparing Financial Statements

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

Basis of Accounting

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

In the opinion of management, all adjustments have been made that are necessary to fairly present the financial position, results of operations and cash flows of the Company.

These financial statements should be read in conjunction with the financial statements and notes included in the Company’s financial statements for the year ended December 31, 2008.

Revenue Recognition

Revenue from the production of biodiesel and related products is recorded upon transfer of the risks and rewards of ownership and delivery to customers. Interest income is recognized as earned. Patronage dividends are recognized when received.

Cash and Cash Equivalents

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

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

Accounts Receivable

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

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

6

WESTERN IOWA ENERGY, LLC
 
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2009

Derivative Instruments and Hedging Activities

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 purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal purchase or normal sales are documented as such, and exempted from the accounting and reporting requirements of SFAS No. 133. The Company has entered into agreements to purchase soybean oil for anticipated production needs. These contracts are considered normal purchase contracts and exempted from SFAS No. 133.

Inventories

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

Property, Plant, and Equipment

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

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

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

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

Loan Origination Fees

Loan origination fees are stated at cost and are amortized on the straight-line method over the life of the loan agreements. Amortization commenced as the Company borrowed funds on the loans. Amortization for the three months ended March 31, 2009 and 2008 was $4,524.

Other Investments

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

Other Income

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

Income Taxes

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

7

WESTERN IOWA ENERGY, LLC
 
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2009

Earnings (Loss) Per Unit

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

Cost of Sales

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

Shipping and Handling Costs

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

Environmental Liabilities

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

Fair Value of Financial Instruments

The Company believes the carrying amounts of cash and cash equivalents, accounts payable and accrued liabilities approximate fair value due to the short maturity of these instruments. The carrying amount of long-term obligations approximates fair value based on estimated interest rates for comparable debt.

New Accounting Standards

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities- an amendment of SFAS No. 133.” The Statement requires enhanced disclosures about an entity’s derivative and hedging activities. The Statement was effective for fiscal years and interim periods beginning after November 15, 2008, which was January 1, 2009 for the Company. The Company’s enhanced disclosures are included in Note 12.

In February 2008, the FASB issued FASB Staff Position (“FSP”) No. FAS 157-2, EffectiveDate of FASB Statement No. 157, which delayed the effective date of SFAS No. 157,Fair Value Measurements, for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis, to fiscal years beginning after November 15, 2008. On January 1, 2009, the Company adopted SFAS No. 157 for these assets and liabilities. Since the Company’s existing fair value measurements for nonfinancial assets and nonfinancial liabilities are consistent with the guidance of the Statement, the adoption of the Statement did not have a material impact on the Company’s financial statements.

In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1,Interim Disclosures about Fair Value of Financial Instruments. This FSP requires entities to provide disclosure of the fair value of all financial instruments for which it is practicable to estimate that value, whether recognized or not recognized in the balance sheet, in interim reporting periods. Prior to the issuance of this FSP, such disclosures were required only in annual reporting periods. FSP FAS 107-1 and APB 28-1 is effective for interim and annual reporting periods ending after June 15, 2009, with earlier application permitted. We do not believe the adoption of this standard will have a material impact on our financial position, results of operations and cash flows.

8

WESTERN IOWA ENERGY, LLC
 
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2009

In April 2009, the FASB issued FSP No. FAS 157-4,Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly. The FSP provides additional guidance for estimating fair value when the market activity for an asset or liability has declined significantly. The FSP is effective for interim and annual periods ending after June 15, 2009, which is June 30, 2009 for the Company. The FSP is not anticipated to have a material impact on the Company’s financial statements.

NOTE 2 — INCENTIVE PAYMENTS AND RECEIVABLE

Revenue from federal incentive programs is recorded when the Company has sold blended biodiesel and satisfied the reporting requirements under the applicable program. When it is uncertain that the Company will receive full allocation and payment due under the federal incentive program, it derives an estimate of the incentive revenue for the relevant period based on various factors including the most recently used payment factor applied to the program. The estimate is subject to change as management becomes aware of increases or decreases in the amount of funding available under the incentive programs or other factors that affect funding or allocation of funds under such programs. The amount of incentives receivable at March 31, 2009 and December 31, 2008 was $309,882 and $312,019, respectively.

NOTE 3 — INVENTORY

Inventory consists of the following:

	March 31		December 31,
	2009		2008
Raw material	$	662,299	$	496,028
Work in process		1,156,017		541,530
Finished goods		1,652,516		3,472,899
Total	$	3,470,832	$	4,510,457

NOTE 4 — LAND OPTION

The Company entered into two land option agreements with a member to purchase approximately 73 acres of land for $2,000 per acre (which approximates fair value) payable in units of ownership in the Company. The Company was required to pay option consideration in the amount of $2,000. The options extend to December 31, 2009 to purchase any part of the property or it shall expire automatically and be null and void and the option consideration shall be forfeited. In June 2005, the Company exercised one of the options and partially exercised the other for the purchase of approximately 39 acres of land. The Company issued 81 member units totaling $76,950 in exchange for the land. As of March 31, 2009, the Company has a remaining option to purchase approximately 34 acres.

NOTE 5 — DEBT AND FINANCING

Revolving Line of Credit

In July 2006, the Company entered into a $4,000,000 revolving credit facility agreement with Farm Credit Services of America. The revolving credit facility expires July 1, 2009 and may be renewed by the lender for additional one year terms. The agreement provides for several different interest rate options including variable and fixed options (4.50% and 5.50% as of March 31, 2009 and December 31, 2008, respectively). There was $-0- drawn on this revolving line of credit at March 31, 2009 and December 31, 2008. The note is secured by essentially all of the Company’s assets. The amount available under the revolving line of credit is determined by a borrowing base calculation based on qualifying inventories. The Company has $4,000,000 available to be borrowed at March 31, 2009. This agreement was terminated on May 11, 2009 upon entering into an asset purchase agreement with Renewable Energy Group, Inc. (see Note 15).

9

WESTERN IOWA ENERGY, LLC
 
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2009

Long-Term Debt

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

	March 31,		December 31,
	2009		2008
Note payable to Farm Credit Services of America and CoBank under term note agreement — see details below.	$	3,700,000	$	4,150,000
Note payable to Farm Credit Services of America and CoBank under reducing revolving credit note — see details below.		3,200,000		4,350,000
Note payable to the Iowa Department of Economic Development — see details below.		230,000		337,500
Note payable to Glidden Rural Electric Cooperative — see details below		596,111		616,666
Total		7,726,111		9,454,166
Less current portion		2,729,110		2,729,110
Long-term portion	$	4,997,001	$	6,725,056

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

2010	$	2,729,110
2011		1,192,834
2012		112,222
2013		224,722
2014		1,332,222
Thereafter		2,135,001
Total	$	7,726,111

The Company has available loan commitments from Farm Credit Services of America and CoBank totaling $18,000,000 as of March 31, 2009 and December 31, 2008. The commitments consist of a $10,000,000 term note and a $7,350,000 reducing revolving credit note and a $650,000 letter of credit. As of March 31, 2009 and December 31, 2008, the balance outstanding under the term note was $3,700,000 and $4,150,000, respectively. Principal payments of $450,000 as amended, are required under the term loan and commenced December 20, 2006 and due each quarter thereafter, with a final payment due no later than December 20, 2011. In March 2008, the quarterly payment due March 20, 2008 was deferred until June 20, 2008 and on May 22, 2008 this payment was made. As of March 31, 2009, the balance outstanding under the reducing revolving credit note was $3,200,000. Advances under the reducing revolving credit note are available through the life of the commitment. The commitment reduces by $900,000 semi-annually beginning July 1, 2012 and continuing through January 1, 2016, with a final reduction at the expiration of the commitment on July 1, 2016, at which time any outstanding balance shall be due and payable in full. The notes require interest payments based on unpaid principal. The agreements also include a provision for additional payments for the fiscal years ending 2006 through 2010 based on the free cash flows of the Company. At March 31, 2009 and December 31, 2008, the current portion of debt includes the estimated free cash flow requirement of $819,388 as a result of the 2008 fiscal year end. The agreements provide for several different interest rate options including variable and fixed options (3.75% and 4.00% variable on the term note and revolving credit note, as of March 31, 2009 and December 31, 2008, respectively). The variable interest rate options are based on Libor or the agent’s base rate and include adjustments for performance which is based on the Company’s debt to net worth ratio, measured quarterly. The Company has issued a $650,000 irrevocable letter of credit through CoBank in favor of Glidden Rural Electric Cooperative. The letter of credit expires June 30, 2009. The notes are secured by essentially all of the Company’s assets. At March 31, 2009, the Company had available $4,150,000 to borrow under the reducing revolving credit note.

10

WESTERN IOWA ENERGY, LLC
 
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2009

The loan agreements with Farm Credit and CoBank contain various covenants pertaining to minimum working capital and minimum net worth requirements. As of December 31, 2008 and March 31, 2009, the Company believes it is in compliance with said covenants.

The Company was awarded $400,000 from the Iowa Department of Economic Development (IDED) consisting of a $300,000 zero interest deferred loan and a $100,000 forgivable loan, the balance of which was $230,000 and $337,500 at March 31, 2009 and December 31, 2008, respectively. The zero interest deferred loan requires monthly installments of $2,500 beginning January 2008, with remaining unpaid principal due at maturity, December, 2012. The Company must satisfy the terms of the agreement, which included producing 22,500,000 gallons of biodiesel and 7,500,000 pounds of glycerin annually by November 30, 2008, to receive a permanent waiver of the forgivable loan. In the event the Company did not satisfy the terms of the agreement, the Company would be required to repay all or part of the forgivable loan. This repayment would be over a five year period and include interest at 5.0%. The loan is secured by a security agreement including essentially all of the Company’s assets. In April 2009, the Company received notice from the IDED that the Company had satisfied the terms of the agreement and had forgiven the forgivable loan. The forgiveness of the loan is reflected in other income in the accompanying statement of operations for the three months ended March 31, 2009.

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

NOTE 6 — MEMBERS’ EQUITY

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

NOTE 7 — CASH FLOW DISCLOSURES

Supplemental disclosure for interest paid:

	Three		Three
	Months		Months
	Ended		Ended
	March 31, 2009		March 31, 2008
Cash paid for interest	$	95,235	$	289,210

NOTE 8 — RELATED PARTY TRANSACTIONS

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

11

WESTERN IOWA ENERGY, LLC
 
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2009

The Company incurred management and operational service fees, feed stock procurement fees and marketing fees with West Central Coop and REG, Inc. For the three months ended March 31, 2009 and 2008, the Company incurred service fees of $41,006 and $140,319, respectively. The Company also purchases feed stock from West Central Coop and Bunge North America, Inc. an entity related by common ownership in REG, Inc. For the three months ended March 31, 2009 and 2008, the Company purchased feed stocks of $37,438 and $8,211,234, respectively. The amount payable to REG, Inc. as of March 31, 2009 and December 31, 2008 was $67,210 and $28,480.

The Company has recorded expense of $-0- and $72,000 for the net income bonus payable to REG, Inc. for the three months ended March 31, 2009 and 2008, respectively. The amount is included in accrued expenses in the accompanying balance sheet.

On April 7, 2009, the Company received from REG, Inc., a notice of termination of its management and operational services agreement. The notification from REG, Inc. states that it shall constitute such twelve month advance termination notice required by the terms of the agreement.

NOTE 9 — LEASE COMMITMENTS

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

2010	$	35,627
2011		35,627
2012		8,907
Total	$	80,161

Lease expense for the three months ended March 31, 2009 and 2008 was $8,907, respectively.

NOTE 10 — RETIREMENT AND SAVINGS PLAN

The Company has a 401(k) retirement and savings plan, which is available to substantially all employees. The participants may contribute up to 18% of their compensation. The Company’s matching contribution is discretionary for each plan year. The Company contributions for the three months ended March 31, 2009 and 2008, was $6,196 and $8,753, respectively.

NOTE 11 — FAIR VALUE OF FINANCIAL INSTRUMENTS

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

• Level 1—Unadjusted quoted prices for identical assets and liabilities in active markets;

• Level 2—Quoted prices for similar assets and liabilities in active markets (other than those included in Level 1) which are observable for the asset or liability, either directly or indirectly; and

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

12

WESTERN IOWA ENERGY, LLC
 
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2009

The following table sets forth financial assets and liabilities measured at fair value in the consolidated statement of financial position and the respective levels to which the fair value measurements are classified within the fair value hierarchy as of March 31, 2009:

						Significant
			Quoted Prices in			Other		Significant
			Active Markets for			Observable		Unobservable
			Identical Assets			Inputs		Inputs
	March 31, 2009		(Level 1)			(Level 2)		(Level 3)
Financial assets:
Cash equivalents	$	105,260	$	105,260		$	—	$	—
Commodity derivatives	$	548	$	(3,744	)	$	4,292	$	—

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

NOTE 12 — DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Effective January 1, 2009, the company prospectively implemented the provisions of SFAS No. 161,Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (SFAS 161). SFAS 161 enhances the disclosure requirements of SFAS No. 133,Accounting for Derivative Instruments and Hedging Activities(SFAS 133) to provide users of financial statements with a better understanding of the objectives of a company’s derivative use and the risks managed.

Objectives and Strategies for Holding Derivative Instruments

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

Commodity Risk Management

Commodity price risk management programs serve to reduce exposure to price fluctuations on purchases of feedstocks and biodiesel prices. The company enters into over-the-counter and exchange-traded derivative commodity instruments to hedge the commodity price risk associated with feedstocks and commodity exposures. These agreements will expire throughout 2009.

Accounting for Derivative Instruments and Hedging Activities

All derivatives are designated as non-hedge derivatives. Although the contracts may be effective economic hedges of specified risks, they do not meet the hedge accounting criteria of SFAS 133. At March 31, 2009 and December 31, 2008 the Company had net derivative assets of $548 and $61,360 related to these instruments, with the related mark-to-market effects included in “Cost of sales” in the statements operations.

13

WESTERN IOWA ENERGY, LLC
 
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2009

The following tables provide information on the location and amounts of derivative fair values in the balance sheet and derivative gains and losses in the statement of operations:

Fair Value of Derivative Instruments

	Balance Sheet	Asset Derivatives		Liability Derivatives
	Classification	March 31, 2009		March 31, 2009
Derivatives not designated as hedging under SFAS 133:
Commodity contracts — Soybean oil futures and Heat Oil options and swaps	Current assets	$	548	$	—

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

	Location of net loss
	recognized in	Net income recognized in
Derivatives not designated as	earnings on	income on derivative
hedging instruments under SFAS 133	derivative activities	activities
Commodity contracts — Soybean oil futures and Heat Oil options and swaps	Cost of sales	$	124,278

The Company recorded a decrease to cost of sales of $132,952 related to derivative contracts for the three months ending March 31, 2008.

NOTE 13 — UNCERTAINTIES

The Company has produced biodiesel for sale to customers since June of 2006. During that time, the price of crude oil has ranged from the mid $30 to a high of $147 per barrel on the Chicago Board of Trade. Since we commenced production, the biodiesel industry has faced numerous challenges, primarily a dramatic increase in the cost of its inputs. Much of that increase resulted from a large decrease in United States soybean acreage during the 2007 growing season which resulted in the cost of soybean oil increasing from $0.25 per pound to almost $0.70 per pound in early 2008. The Company has become an industry leader in processing large quantities of animal fat into biodiesel meeting ASTM D6751 standards and has gained customer acceptance of biodiesel made from animal fat. As a result, for the year ended December 31, 2008, the Company’s net income was $1,842,709 and incurred a net loss of $629,492 for the three months ended March 31, 2009. The Company also repaid $3.8 million of its seasonal loan and approximately $6.5 million of its long-term obligations during 2008 and the first three months of 2009. The Company had available to borrow $8.1 million on its seasonal loan and revolving credit line at March 31, 2009.

During our short history, the cost of our feedstock has ranged from a low of $0.11 per pound to as high as $0.69 per pound; methanol from a low of $0.95 per gallon to a high of $2.62 per gallon. During that time, the sale price of our biodiesel has ranged from a low of $2.00 per gallon to a high of $6.00 per gallon and the sale price of glycerin from a low of $0.01 per pound to a high of $0.29 per pound. Unlike many industries, historically there has been no direct correlation between the cost of our inputs and the sale price of biodiesel which is directly related to the sale price of petroleum diesel.

Two recent developments have potential to positively affect the Company’s financial performance. First, the Farm, Nutrition and Bioenergy Act of 2008 (2008 Farm Bill) reauthorized the Commodity Credit Corporation (CCC) Bioenergy Program. The program provides $300 million of mandatory funding over the five-year duration of the Farm Bill to biodiesel producers. The Farm Bill also authorizes an additional $25 million in funding each year during fiscal years 2009 — 2012 if Congress provides the additional funding during the course of its annual appropriations process. The CCC Bioenergy Program creates two classes of producers for purposes of payments under the program. Producers with production capacity of less than 150 million gallons will be eligible for 95% of the funds allowed under the program. Final rules have not yet been implemented for the CCC Bioenergy program; however, we expect to benefit from the funding that will be available to biodiesel producers under this program in an amount of anywhere from $0.08 to $0.12 per gallon of biodiesel produced.

Further, up to this point in our history there has been little federal legislation requiring the use of any biodiesel in the nation’s fuel supply. However, beginning in January of 2009 the revised Renewable Fuel Standard (RFS) requires the use of 500 million gallons of biodiesel in the domestic fuel supply increasing to 1 billion gallons by 2012. In 2007 it is estimated that only approximately 450 million gallons of biodiesel were produced in the U.S. and 250 million gallons of that was exported. Three large oil companies have visited our plant and indicated an interest in purchasing biodiesel from us to enable them to meet their obligations under the amended RFS.

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WESTERN IOWA ENERGY, LLC
 
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2009

In October 2008, legislation passed to extend the $1 per gallon blenders’ credit available through the Volumetric Ethanol Excise Tax Credit and is now set to expire on December 31, 2009. In the event the $1 per gallon blenders’ credit expires, our margins on biodiesel will be significantly reduced.

The European Commission recently imposed anti-dumping and countervailing duties on biodiesel imported into Europe, which could cause a significant decrease in our revenues. Sales by REG, Inc. of biodiesel to European customers results in a significant portion of our sales to REG, Inc. being exported to Europe. The European Commission is currently conducting anti-subsidy and anti-dumping investigations on U.S. biodiesel imports into Europe based on complaints from the European Biodiesel Board (EBB). The European Commission recently concluded that unfair subsidization and dumping of US biodiesel had taken place. Based on this finding, the European Commission imposed provisional anti-dumping and countervailing duties on imports of biodiesel from the United States. The provisional duties, which took effect on March 13, 2009, range from approximately $1.09 to $1.72 per gallon, and will continue for a term of six months. Following the term of the provisional duties, European member states will decide whether or not to impose ‘definitive’ duties, which normally last for five years. These duties significantly increase the price at which we must sell our biodiesel in European markets, making it difficult or impossible for us to compete with European biodiesel producers. Although the provisional duties are set to expire in six months, imposition of definitive duties by EU member states could have a significant negative impact on our ability to sell our biodiesel to European markets.

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

NOTE 14 — GAIN CONTINGENCY

The Company’s primary customer and marketer (REG, Inc.) has agreed to an arbitration hearing with a European customer. The Company and REG, Inc. allege breach of contract as the customer failed to take delivery of the Company’s product. The Company’s portion of damages associated with arbitration hearing is $1,054,488. At this time, no estimate can be made as to the time or the amount, if any, of the ultimate recovery.

NOTE 15 — SUBSEQUENT EVENTS

On May 11, 2009, the Company, entered into an asset purchase agreement with Renewable Energy Group, Inc., (“REG”), REG Newco, Inc., (“Newco”), and REG Wall Lake, LLC, a wholly owned subsidiary of Newco (“Wall Lake”) (collectively, with REG and Newco, the “REG Parties”) pursuant to which Wall Lake will acquire substantially all of the Company’s assets, assume certain liabilities, and thereafter operate the Company’s biodiesel production facility (the “transaction”). The Company’s assets are to be acquired by Wall Lake under the asset purchase agreement include, without limitation, all of the business, assets, properties, contractual rights, goodwill, going concern value, rights and claims of the Company related to its biodiesel production business. The liabilities to be assumed by Wall Lake under the asset purchase agreement include, without limitation, accounts payable incurred in the ordinary course of business and certain indebtedness of the Company. In addition to this transaction, the asset purchase agreement contemplates the simultaneous closing of several other transactions, including REG’s merger with and into a wholly-owned subsidiary of Newco, with REG being the surviving entity, the acquisition by REG Newton, LLC, a wholly-owned subsidiary of Newco (“Newton”), of substantially all of the assets of, and Newton’s assumption of certain liabilities of, Central Iowa Energy, LLC, (“CIE”), and the merger of Blackhawk Biofuels, LLC, (“Blackhawk”) with and into REG Danville, LLC, a wholly-owned subsidiary of Newco (“Danville”), with Danville being the surviving entity.

Upon closing of and in consideration of the transaction, the Company’s unitholders will receive an aggregate of 6,963,377 shares of common stock of Newco and 259,012 shares of preferred stock of Newco. These shares of Newco common stock and preferred stock will be distributed to unitholders in proportion to each unitholder’s respective ownership interest. Upon closing of the transaction and the other common plan transactions, the Company’s unitholders will hold in the aggregate approximately 1.89% of the total issued and outstanding shares of Newco preferred stock and approximately 19.04% of the issued and outstanding shares of Newco common stock.

15

WESTERN IOWA ENERGY, LLC
 
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2009

The closing of the transaction is conditioned upon the receipt of certain regulatory approvals, the approval of the Company’s unitholders, and the approval of the unitholders and shareholders of the REG Parties, among other things. Approval of the transaction and the asset purchase agreement requires the affirmative vote of unitholders holding a majority of the outstanding membership interests; provided, however, that the affirmative vote of unitholders holding no less than 75% of the outstanding membership interests will be required to approve the liquidation, dissolution and winding up of the Company, which is part of the transaction contemplated in the asset purchase agreement. If the transaction is duly approved by the Company’s unitholders and all other conditions to closing are satisfied, the Company intends to liquidate, windup and dissolve and terminate its existence as soon as practicable following closing of the transactions and the asset purchase agreement, but in no case more than 30 days following such closing. Until the Company is dissolved and its existence is terminated, Newco will pay certain mutually agreeable ongoing costs related to the Company.

The Company and the REG Parties have made representations, warranties, and covenants in the asset purchase agreement. The Company has, among other things, agreed to conduct its business in the ordinary course of business consistent with past practice during the interim period between the date of execution of the asset purchase agreement and the date of closing thereof and not to engage in certain kinds of transactions during such interim period, subject to certain exceptions, not to solicit proposals relating to alternative business combination transactions or participate in discussions or negotiations regarding an alternative business combination transaction, and subject to certain exceptions, not to approve, recommend, or propose publicly any alternative business combination transaction or enter into any agreement or letter of intent related to an alternative business combination transaction. In addition to the receipt of the approval of the unitholders of the Company and the unitholders and shareholders of the REG Parties, each party’s obligation to consummate the transaction is subject to a number of other conditions.

Upon closing under the asset purchase agreement, the Company and REG will each release and discharge the other and their respective officers, directors, and affiliates, from all obligations under the management and operational services agreement, between the Company and REG.

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Item 2. Management’s Discussion and Analysis or Plan of Operation.

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-month period ended March 31, 2009, compared to the same period in fiscal year 2008. This discussion should be read in conjunction with the financial statements and notes and the information contained in the Company’s Annual Report on form 10-K for the fiscal year ended December 31, 2008.

Cautionary Statements Regarding Forward Looking Statements

This report contains historical information, as well as forward-looking statements. These forward-looking statements include any statements that involve known and unknown risks and relate to future events and our expectations regarding future performance or conditions. Words such as “may,” “should,” “anticipate,” “believe,” “expect,” “will,” “plan,” “future,” “intend,” “could,” “estimate,” “predict,” “hope,” “potential,” “continue,” or the negative of these terms or other similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. These forward-looking statements, and others we may make from time to time, are subject to a number of risks and uncertainties. Many factors could cause actual results to differ materially from those projected in forward-looking statements. While it is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by us include, but are not limited to:

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

• Competition with other manufacturers in the biodiesel industry;

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

• Results of our hedging strategies;

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

• Decrease in the demand for biodiesel;

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

• Actual biodiesel and glycerin production varying from expectations;

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

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

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

• Fluctuations in petroleum prices;

• Competition from alternative fuels and alternative fuel additives;

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

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

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

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

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

• Changes and advances in biodiesel production technology;

• Our ability to continue to export our biodiesel;

• Changes in federal, state, or local incentives for biodiesel production;

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

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

• The closing, or the failure to close, of the transaction contemplated by the asset purchase agreement entered into by the Company’s board of directors with REG and other parties affiliated with REG; and

• Other factors described elsewhere in this report.

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The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. We do not undertake any duty to update forward-looking statements after the date they are made or to conform them to actual results or to changes in circumstances or expectations. Furthermore, we cannot guarantee future results, events, levels of activity, performance or achievements. We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this report. You should read this report and the documents that we reference in this report and have filed as exhibits completely and with the understanding that our actual future results may be materially different from what we currently expect. We qualify all of our forward-looking statements by these cautionary statements.

Overview

Western Iowa Energy, LLC (“WIE”) is an Iowa limited liability company formed on September 21, 2004, for the purpose of developing, constructing and operating a 30 million gallon biodiesel manufacturing facility in Sac County, Iowa. References to “we,” “us,” and “our” refer to Western Iowa Energy, LLC. Since May 2006, we have been engaged in the production of biodiesel and glycerin. We derive our revenues from the sale and distribution of our biodiesel and glycerin.

Our plant has an approximate production capacity of 30 million gallons of biodiesel per year and is able to pretreat crude vegetable oil and crude animal fats for use in the biodiesel production process. Our pretreatment systems permit us to use lower-cost feedstock, such as animal fats, in place of higher-cost feedstock, such as soybean oil, to optimize our profits.

We engage REG, Inc. (“REG”) to manage and direct general operations of our plant. Pursuant to our Agreement with REG, we incurred management and operational service fees of $41,006 and $140,319 for the three months ended March 31, 2009 and March 31, 2008, respectively. The amount payable as of March 31, 2009 was $67,210. On April 7, 2009 REG provided twelve months written notice of its intent to terminate its management and operational services agreement (“MOSA”) with us. On May 11, 2009, we entered into an Asset Purchase Agreement with REG providing for the sale of substantially all of our assets. The specifics of the Asset Purchase Agreement are discussed in detail under“Liquidity and Capital Resources —Proposed Asset Purchase Transaction with Renewable Energy Group, Inc.”

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

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

The primary components of cost of goods sold from the production of biodiesel are feedstock (primarily soybean oil and animal fats) and other raw materials (methanol and other chemicals), energy (natural gas and electricity), labor, and depreciation on process equipment. The cost of feedstock is the largest single component of the cost of biodiesel production, typically accounting for 70-90% of the overall cost of producing biodiesel. Our plant is capable of utilizing animal fats to produce biodiesel and, like soybean oil, animal fat prices have increased over the past several years. The primary animal fat that we used during the three months ended March 31, 2009 was choice white grease. During this period, approximately 87.3% of our total feedstock usage consisted of choice white grease, which represents a significant increase from the same period during 2008 when only 47.9% of our total feedstock usage was choice white grease. We expect our ability to utilize greater amounts of animal fat will increase as we move into the summer months and cold-flow concerns related to animal fat-based biodiesel wane.

18

Changes in the price or supply of feedstock are subject to and determined by market forces and other factors over which we have no control. Because biodiesel prices correlate strongly to diesel fuel prices, it is difficult for biodiesel producers to pass along increased input costs to customers. We have experienced a large variation in the cost of our feedstocks since we began operation. In addition, we have also seen large variations in prices within the energy complex. The profitability of our operation is dependent upon the correlation between the agricultural market and the energy market.

During the first quarter of 2009, we operated on an as-ordered basis. Under our as-ordered production philosophy, we produce biodiesel when an order has been placed and pursuant to our forecasted demand for biodiesel. This helps us to ensure that our finished inventory does not significantly exceed the contracts for sale that we have at any given time. During the first quarter of 2009, we operated at an average of approximately 15.7% of our nameplate capacity primarily due to reduced demand during the winter months. We expect to continue to operate on an as-ordered basis during the next fiscal quarter, but we expect our orders will increase as we move into the summer months. However, we cannot guarantee increased orders for our biodiesel and, as a result, we may operate at a lower capacity than anticipated.

Results of Operations for the Three Months Ended March 31, 2009 and 2008

The following table shows the results of our operations for the three months ended March 31, 2009 and 2008, and the percentage of revenues, cost of sales, operating expenses and other items to total revenues in our statement of operations:

	Three Months Ended						Three Months Ended
	March 31, 2009						March 31, 2008
	(Unaudited)						(Unaudited)
Statement of Operations Data	Amount			%			Amount			%
Revenues	$	3,966,137			100.00	%	$	18,029,542			100.00	%
Cost of Sales	$	4,260,768			107.43	%	$	16,245,228			90.10	%
Gross Profit (Loss)	$	(294,631	)		(7.43	%)	$	1,784,314			9.90	%
Operating Expenses	$	460,110			11.60	%	$	538,059			2.98	%
Other Income (Expense)	$	125,249			3.16	%	$	(118,262	)		(0.66	%)
Net Income (Loss)	$	(629,492	)		(15.87	%)	$	1,127,993			6.25	%

Revenues

Our revenues from operations come primarily from our sales of biodiesel and, to a lesser extent, our sales of crude glycerin, fatty acids and soapstock. The following table shows the sources of our revenues for the three months ended March 31, 2009 and 2008:

	March 31, 2009					March 31, 2008
			% of					% of
Revenue Sources	Amount		Revenues			Amount		Revenues
Biodiesel Sales	$	3,809,079		96.04	%	$	17,254,479		95.70	%
Glycerin Sales	$	88,003		2.22	%	$	632,361		3.50	%
Fatty Acid Sales and Soapstock Sales	$	69,055		1.74	%	$	142,702		0.79	%
Total Revenues	$	3,966,137		100	%	$	18,029,542		100	%

Revenues from operations for the three months ended March 31, 2009 decreased by approximately 78% compared to revenues from operations for the three months ended March 31, 2008. The decrease in revenues from period to period is due primarily to a decrease in the average price per gallon we received for the biodiesel sold, a decrease in the demand for biodiesel resulting from the decline in the price of petroleum diesel, cold-flow concerns during the winter months, and the lack of sales to Europe as a result of anti-dumping and countervailing duties that the European Commission recently imposed on exports of biodiesel to Europe. The average biodiesel sale price we received for the three months ended March 31, 2009 was $1.32 less per gallon, or approximately 33% lower than the price per gallon received for the three months ended March 31, 2008. The decrease in the number of biodiesel gallons sold for the three months ended March 31, 2009 compared to the same period in 2008 is due primarily to slow winter sales and the lack of sales to Europe.

19

Revenue from sales of glycerin decreased by approximately 86% in the three months ended March 31, 2009 compared to the three months ended March 31, 2008 due to the reduced production of biodiesel. As of March 31, 2009, the average sale price for our glycerin has decreased by about 57% from its levels at March 31, 2008, or a decrease of $0.097 per pound. Revenue from sales of fatty acids has decreased dramatically for the three months ended March 31, 2009 compared to the three months ended March 31, 2008 due to the reduced production of biodiesel.

Included within our net sales of biodiesel are incentive funds we received from the federal government for sales of 99.9% biodiesel. The amount of incentive revenues for the fiscal quarter ended March 31, 2009 was $896,069 as compared to $3,127,673 for the same quarter of 2008. This decrease in incentive funds received from period to period is largely a result of the decrease in the number of gallons of biodiesel sold from period to period.

Over the past year, biodiesel prices have decreased significantly because of declining energy prices. In general, biodiesel prices correlate to diesel fuel prices. In recent months, the price of petroleum-based diesel has declined significantly. According to the Energy Information Administration, midwest diesel prices reached a peak of $4.70 per gallon during the week of July 14, 2008, but fell to $2.22 per gallon during the week of May 11, 2009, representing a decrease of 53% during the ten-month period. As a result, we have seen declines in the price of biodiesel over the same period. According to the USDA’s Weekly Ag Energy Round-Up report, which does not take into account the $1.00 tax credit for B100 available to biodiesel producers, the price for B100 biodiesel in Iowa was approximately $2.85 to $3.32 per gallon for the week of May 8, 2009, compared with a price of $4.99 to $5.52 one year earlier, a decrease of approximately 40%.

Based on historical trends, management anticipates that demand for biodiesel will increase during the second quarter of 2009. Management expects that rising temperatures of the spring and summer months will reduce cold flow concerns in northern states, and agricultural producers will increase their use of biodiesel. Further, beginning in January 2009, the Renewable Fuel Standard (“RFS”) requires the use of 500 million gallons of biodiesel for the calendar year 2009. The requirement increases in subsequent years. Although we anticipate that the RFS may increase demand for biodiesel, there can be no guarantee that such increases will actually occur.

A greater supply of biodiesel on the market from increased utilization of existing capacity could make it difficult for us to market our products at profitable prices. As of September 29, 2008, the latest date for which data is available, the National Biodiesel Board estimated that national biodiesel production capacity was approximately 2.61 billion gallons per year, but that biodiesel producers are utilizing only an extremely limited amount of this capacity. In fact, despite the significant production capacity, the National Biodiesel Board reports that U.S. biodiesel producers produced only 460 million gallons of biodiesel in 2007. Many biodiesel plants do not operate at full capacity due in part to the fact that total production capacity significantly exceeds demand. Accordingly, there is no assurance that the RFS will significantly increase demand for biodiesel or that additional production of biodiesel and biomass-based diesel will not outstrip any additional demand for biodiesel that the RFS might generate. If the demand for biodiesel does not grow at or exceed the pace of increases in supply, we expect the price for biodiesel to decline in the long-term.

Cost of Sales

Our cost of sales for our products increased as a percentage of our revenues from 90.10% of our revenues for the three months ended March 31, 2008, to 107.43% of our revenues for the three months ended March 31, 2009. This increase is primarily due to lower production rates while fixed costs remained the same.

20

Increased demand for animal fats or soybean oil from increased biodiesel production or other factors could push animal fat and soybean oil prices higher than currently anticipated. Animal fat prices peaked in the summer of 2008, and have since fallen as domestic and global economic conditions have worsened. Although prices for animal fats have declined from their recent peak, animal fat prices are nonetheless higher than their historical average. Our animal fat costs for the three months ended March 31, 2009 were approximately 39% lower than animal fat costs for the same period in 2008. As of March 31, 2009, the price we paid for our primary animal fat, choice white grease, was 18 cents per pound. By contrast, in March 2008, we paid 34.74 cents per pound for choice white grease. Currently, animal fats prices remain less than soybean oil prices. We anticipate that we will utilize greater amounts of animal fats as we move into the spring and summer months due to reduced cold-flow concerns.

Price fluctuations for soybean oil have been extremely volatile in recent months. Our average soybean oil costs for the three months ended March 31, 2009 were approximately 47% higher than soybean oil costs for the same period in 2008. The USDA National Weekly Ag Energy Round-Up reported that soybean oil prices in Iowa reached a high of 65.48 cents per pound during the week of July 3, 2008, but prices have trended downward since that time. During the week of May 8, 2009, Iowa soybean oil prices had dropped to approximately 35.47 to 37.03 cents per pound, a decrease of approximately 45%. Accordingly, based on recent trends, management expects that cost of goods sold on a per-gallon basis may remain low for the remainder of the 2009 fiscal year.

The cost of methanol, another input into the biodiesel production process, has decreased from record-level highs caused by a shortage of methanol during the first quarter of 2008. During the three months ended March 31, 2009, we paid approximately 38% less per gallon of methanol than we paid during the same period in 2008. We expect this decrease in the price of methanol to continue to have a positive impact on our cost of goods sold in the future.

For the last several years, natural gas prices have exceeded historical averages. During the three months ended March 31, 2009, we paid approximately 21% less for natural gas than we paid during the same period in 2008, which should continue to positively impact our profit margins going forward. WIE has taken a proactive approach in the price we pay for natural gas. WIE works with a third party that purchases natural gas for the City of Wall Lake to purchase and schedule natural gas more economically and efficiently. We have also negotiated a lower transportation rate with the City of Wall Lake. We anticipate that these measures will save WIE approximately 15% to 20% in its cost of natural gas.

Operating Expense

Our operating expenses as a percentage of revenues were higher for the three-month period ended March 31, 2009 than they were for the three-month period ended March 31, 2008. This increase was due to lower production levels while fixed costs remained the same. We expect that going forward our operating expenses will remain consistent if plant production levels remain consistent or as projected.

Other Income (Expenses)

Our other income and expenses for the three months ended March 31, 2009, increased from a net expense of $118,262, or 0.66% of revenues, as of March 31, 2008, to a net income of $125,249, or 3.16% of revenues, as of March 31, 2009. This change from a net other expense to a net other income resulted primarily from a reduction in our interest expense from $276,393 for the three months ended March 31, 2008, to $91,893 for the three months ended March 31, 2009. The reduction in our interest expense resulted primarily from reducing the outstanding balance under our revolving line of credit from $3,250,000 at March 31, 2008, to zero during the second quarter of 2008. The change from a net other expense to a net other income also resulted from our recognition of grant income in the amount of $100,000 during the three months ended March 31, 2009. This grant income resulted from the forgiveness of a forgivable loan in the amount of $100,000 from the Iowa Department of Economic Development.

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Changes in Financial Condition for the Three Months Ended March 31, 2009

The following table highlights the changes in our financial condition for the three months ended March 31, 2009:

	March 31, 2009		December 31, 2008
Current Assets	$	5,194,542	$	7,049,998
Current Liabilities	$	3,799,764	$	3,824,635
Long-Term Debt	$	4,997,001	$	6,725,056
Members’ Equity	$	26,299,218	$	26,928,710

Current Assets. The decrease in current assets from $7,049,998 to 5,194,542 during the three months ended March 31, 2009, is a direct result of reduced sales, which lower both our trade receivables and our inventory.

Current Liabilities. Our current liabilities decreased by $24,871 during the three months ended March 31, 2009, due to a decrease in trade accounts payable and accounts payable to related parties. Our trade accounts payable were $703,424 at March 31, 2009 compared to $794,345 at December 31, 2008. Our accounts payable to related parties were $67,210 at March 31, 2009 compared to $28,480 at December 31, 2008. In addition, our accrued wages and benefits increased from $71,570 at December 31, 2008, to $117,554 at March 31, 2009.

Long-Term Debt. The decrease in our long-term debt, net of current maturities, was due to our regularly scheduled loan payments, which resulted in reductions in the principal amounts of our loans. As of March 10, 2009, we had made payments totaling $450,000 to Farm Credit Services, satisfying all 2009 quarterly payments under our loan agreement. Additionally, we made payments to our revolving loan of $1,150,000 from cash derived from reduced inventory and receivables.

Members’ Equity. Members’ contributions for March 31, 2009 and 2008 are $23,516,376. Retained earnings as of March 31, 2009 are $2,782,842 compared to $3,412,334 at December 31, 2008 due to a net loss in the first quarter. Total members’ equity as of March 31, 2009, decreased by $629,492 as compared to December 31, 2008.

Liquidity and Capital Resources

Cash Flows

The following table shows cash flows for the three months ended March 31, 2009 and 2008:

	2009			2008
Net cash provided by operating activities	$	1,681,622		$	844,566
Net cash used in investing activities	$	(4,669	)	$	(13,645	)
Net cash used in financing activities	$	(1,628,055	)	$	(578,056	)
Net increase in cash and equivalents	$	48,898		$	252,865

Operating Cash Flows

For the three months ended March 31, 2009, cash provided by operating activities increased by $837,056 compared to the three months ended March 31, 2008. This increase was the result of inventory and trade receivable reductions and changes in operating assets and liabilities. Our capital needs are being adequately met through cash from our operating activities and our current credit facilities.

Investing Cash Flows

For the three months ended March 31, 2009, cash used in investing activities decreased by $8,976 compared to the three months ended March 31, 2008. This decrease in cash used resulted from a decrease in expenditures for property, plant and equipment during the three months ended March 31, 2009.

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Financing Cash Flows

For the three months ended March 31, 2009, cash used in financing activities increased $1,049,999, compared to the three months ended March 31, 2008.

Indebtedness

Short-Term Debt Sources

We maintained a supplemental line of credit with Farm Credit Services of America, FLCA (“Farm Credit”) to finance short-term working capital requirements. The aggregate amount available under the supplemental revolving loan was the lesser of (1) $4,000,000 or (2) the borrowing base as calculated pursuant to our credit facility with Farm Credit. The credit facility with Farm Credit provided several different interest options for the supplemental line of credit and we paid interest on the unpaid balance of the line in accordance with the interest rate option selected at the time we requested a draw on the line. The supplemental line of credit was set to expire on July 1, 2009. As of March 31, 2009, WIE had no outstanding balance on the supplemental line of credit and $4,000,000 was available for borrowing. On May 11, 2009, WIE cancelled the supplemental line of credit, which was a condition to Farm Credit’s consent to the consolidation with REG, which is discussed below. CoBank, as administrative agent for Farm Credit under our Master Loan Agreement with Farm Credit, granted its consent to the consolidation on May 11, 2009.

In addition, we have obtained a $650,000 declining balance standby irrevocable letter of credit through CoBank in favor of Glidden Rural Electric Cooperative (“Glidden REC”) as security for our loan with Glidden REC. Unless extended, the letter of credit will expire on June 30, 2009.

Long-Term Debt Sources

On June 6, 2005, we closed on $18,000,000 of long-term debt financing with Farm Credit pursuant to a Master Loan Agreement. Our financing agreement with Farm Credit provides for a term loan in the amount of $10,000,000 pursuant to a Construction and Term Loan Supplement to the MLA (the Term Loan Supplement). It also provides for a revolving term loan in an amount not to exceed $8,000,000 pursuant to a Construction and Revolving Term Loan Supplement to the MLA (the Revolving Loan Supplement). As of March 31, 2009, the balance outstanding on our term loan is $3,700,000. At March 31, 2009, the balance outstanding under the revolving term loan is $3,200,000.

On July 13, 2006, we entered into a Rural Development Loan Agreement with the Glidden Rural Electric Cooperative (Glidden REC) for a $740,000 no interest loan to fund operating expenses for the plant. Pursuant to the terms of the agreement and an associated Promissory Note, the loan is to be repaid in monthly installments of $6,851 beginning on July 31, 2007, and continuing on the last day of each month thereafter until the principal sum has been paid in full or before the final maturity date of the promissory note which shall be on the tenth anniversary of the first advance of funds. The outstanding balance of the loan as of March 31, 2009 was $596,111.

We have subordinated debt financing of approximately $400,000 with the Iowa Department of Economic Development (“IDED”). The subordinated debt financing includes a $300,000 zero-interest deferred loan and a $100,000 forgivable loan. The zero-interest deferred loan requires monthly installments of $2,500 beginning January 2008 with remaining unpaid principal due in December 2012. To receive a permanent waiver of the forgivable loan we were required to complete construction of a biodiesel production facility capable of producing and selling at least 22,500,000 gallons of biodiesel and 7,500,000 pounds of crude glycerin annually between December 16, 2004 and November 30, 2008. The balance outstanding on the zero-interest deferred loan at March 31, 2009 is $230,000. On April 30, 2009, IDED notified WIE that WIE had satisfied all conditions of the forgivable loan and that IDED had forgiven the balance outstanding under the forgivable loan.

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Proposed Asset Purchase Transaction with Renewable Energy Group, Inc.

On May 11, 2009, our board of directors entered into an Asset Purchase Agreement with REG, REG Newco, Inc., a Delaware corporation (“Newco”), and REG Wall Lake, LLC, an Iowa limited liability company and a wholly owned subsidiary of Newco (“Wall Lake”) (collectively, with REG and Newco, the “REG Parties”) pursuant to which Wall Lake will acquire substantially all of our assets, assume certain of our liabilities, and thereafter operate our biodiesel production facility (the “Transaction”). The Asset Purchase Agreement contemplates the simultaneous closing of REG’s merger with and into a wholly-owned subsidiary of Newco, with REG being the surviving entity (the “REG Merger”). The Asset Purchase Agreement also refers to two other similar agreements entered into by REG and Newco. These other agreements provide for (i) the acquisition by REG Newton, LLC, a wholly-owned subsidiary of Newco (“Newton”), of substantially all of the assets of, and Newton’s assumption of certain liabilities of, Central Iowa Energy, LLC, an Iowa limited liability company (“CIE”), and (ii) the merger of Blackhawk Biofuels, LLC, a Delaware limited liability company (“Blackhawk”), with and into REG Danville, LLC, a wholly-owned subsidiary of Newco (“Danville”), with Danville being the surviving entity (together, with the REG Merger, the “Common Plan Transactions”). Accordingly, the business and assets of WIE, CIE, Blackhawk, and REG may all be consolidated under Newco.

Upon closing of and in consideration of the Transaction, WIE unitholders will receive an aggregate of 6,963,377 shares of Common Stock of Newco and 259,012 shares of Preferred Stock of Newco (subject to adjustment for fractional shares). These shares of Newco Common Stock and Preferred Stock are expected to be distributed to WIE unitholders in proportion to each unitholder’s respective ownership interest in WIE. Upon closing of the Transaction and the Common Plan Transactions, WIE’s unitholders will hold in the aggregate approximately 1.89% of the total issued and outstanding shares of Newco Preferred Stock and approximately 19.04% of the issued and outstanding shares of Newco Common Stock. The closing of the Transaction contemplated by the Asset Purchase Agreement is conditioned upon the receipt of certain regulatory approvals, the approval of the unitholders of WIE, and the approval of the shareholders REG, among other things. If the Transaction is duly approved by our unitholders and all other conditions to closing are satisfied, we intend to liquidate, windup and dissolve, and terminate the existence of WIE as soon as practicable following closing of the Transaction, but in no case more than 30 days following such closing. Until the Company is dissolved and its existence is terminated after closing of the Transaction, Newco has agreed to pay certain mutually agreeable ongoing costs related to the Company. In addition, upon closing of the Asset Purchase Agreement, WIE and REG will each release and discharge the other and their respective officers, directors, and affiliates, from all obligations under the MOSA.

Following receipt of certain regulatory approvals, it is expected that the Company’s board of directors will convene a special meeting of WIE’s unitholders for the purpose of holding a vote to obtain the requisite unitholder approval on the Transaction and the Asset Purchase Agreement. Prior to such meeting, it is expected that Newco will file a registration statement on Form S-4 to register with the Securities and Exchange Commission (“SEC”) the Newco shares of Common Stock and Preferred Stock to be issued in consideration of the Transaction and the other Common Plan Transactions; such Registration Statement will contain a prospectus and joint proxy statement prepared in cooperation with the Company, the REG Parties, and the other parties to the Common Plan Transactions and will describe the Transaction and the other Common Plan Transactions. The prospectus and joint proxy statement are expected to be made available to the Company’s unitholders prior to such meeting.

Approval of the Transaction and the Asset Purchase Agreement requires the affirmative vote of unitholders holding a majority of the outstanding membership interests of WIE; provided, however, that the affirmative vote of unitholders holding no less than 75% of the outstanding membership interests of WIE will be required to approve the liquidation, dissolution and winding up of WIE. The closing of the Transaction is also subject to numerous other conditions identified in the Asset Purchase Agreement, which is filed as an exhibit to this report. There can be no assurances that the Transaction contemplated by the Asset Purchase Agreement will ever close.

Critical Accounting Estimates

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

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

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

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

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risks.

We are exposed to the impact of market fluctuations associated with interest rates and commodity prices as discussed below. We have no exposure to foreign currency risk as we conduct all of our business in U.S. Dollars. We use derivative financial instruments as part of an overall strategy to manage market risk. We consider market risk to be the potential loss arising from adverse changes in market rates and prices. We do not enter into these contracts as hedges for accounting purposes pursuant to the requirements of SFAS 133,Accounting for Derivative Instruments and Hedging Activities.

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

Interest Rate Risk

We are exposed to market risk from changes in interest rates. Exposure to interest rate risk results primarily from our revolving line of credit and supplemental revolving loan with Farm Credit. Specifically, we have $6,900,000 outstanding in variable rate debt as of March 31, 2009. The specifics of the line of credit and revolving loan are discussed in detail in “Item 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Liquidity and Capital Resources,Indebtedness.”

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

Outstanding Variable	Interest Rate at			Adverse 10% Change in			Annual Adverse Change
Rate Debt at 3/31/09	3/31/09			Interest Rates			to Income
$3,700,000		4.0	%		4.4	%	$	14,800
$3,200,000		4.0	%		4.4	%	$	12,800

Commodity Price Risk

We are also exposed to market risk from commodity prices. Exposure to commodity price risk results from our dependence on soybean oil, animal fats and natural gas in the biodiesel production process. We are also exposed to biodiesel and glycerin price risks as our revenues consist primarily of biodiesel sales and glycerin sales. Currently, we seek to minimize the risks from fluctuations in the price of soybean oil and biodiesel by using derivative instruments such as cash, futures and option contracts for soybean oil and home heating oil. There is currently no futures market for biodiesel. Instead, we use home heating oil derivatives. Home heating oil is high sulfur diesel, which is the closest commodity to biodiesel for which there is a futures market. Currently, we are unable to manage our price risk for animal fats as there are no futures contracts available for animal fats, and animal fats suppliers are, to date, unwilling to enter into long-term contracts for animal fats.

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

Although we believe our hedge positions accomplish an economic hedge against our future purchases, they are not designated as such for hedge accounting purposes, which would match the gain or loss on our hedge positions to the specific commodity purchase being hedged. As the current market price of our hedge positions changes, the gains and losses are immediately recognized in our cost of goods sold. The immediate recognition of hedging gains and losses can cause net income to be volatile from quarter to quarter due to the timing of the change in value of the derivative instruments relative to the cost and use of the commodity being hedged. At March 31, 2009 and March 31, 2008, we recorded a net asset for derivative instruments of $548 and $61,360, respectively. This is due primarily to unrealized gains on our hedging positions taken with respect to home heating oil.

Several variables could affect the extent to which price fluctuations in the cost of soybean oil and biodiesel impact our derivative instruments. However, it is unlikely that commodity cash prices will have the greatest impact on the derivative instruments with delivery dates nearest the current cash price. As we move forward, additional protection may be necessary. As the prices of these hedged commodities move in reaction to market trends and information, our statement of operations will be affected depending on the impact such market movements have on the value of our derivative instruments. Depending on the market movements, crop prospects, and weather, these price protection positions may cause immediate adverse effects, but are expected to produce long-term positive growth for the Company.

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

			Effect of
			Hypothetical
			Adverse Change -
	Fair Value		Market Risk
March 31, 2009	$	1,469,225	$	146,923
March 31, 2008	$	1,207,248	$	120,725

Item 4. Controls and Procedures.

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer (President) and Chief Financial Officer (Treasurer), as appropriate, to allow for timely decisions regarding required disclosures.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13(a)-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our President and Treasurer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) inInternal Control — Integrated Framework. Based on this assessment, management has concluded that our internal controls over financial reporting were effective as of March 31, 2009.

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Our management reviewed and evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2008. Based upon this review and evaluation, management has noted that the financial statements prepared for the fiscal year ended December 31, 2008 failed to account for a change in our SEC reporting status from the previous fiscal year. Management believes that this is a material weakness in our internal controls. Management contacted our accounting firm to ensure that future financial statements comply with the specific requirements for issuers of our reporting status. Management has observed no additional material weaknesses in our disclosure controls and procedures during the three months ended March 31, 2009.

Changes in Internal Control Over Financial Reporting

Our management, consisting of our principal executive officer and our chief financial officer, have reviewed and evaluated any changes in our internal control over financial reporting that occurred as of December 31, 2008 and there has been no change that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors

Risk factors are discussed in our annual report on Form 10-K. The risks described in our annual report on Form 10-K are not the only risks facing us. The following Risk Factors are provided to supplement and update the Risk Factors previously disclosed in our annual report on Form 10-K. The Risk Factors set forth below should be read in conjunction with the considerations set forth above in“MANAGEMENT’S DISCUSSION AND ANALYSIS”and the risk factors set forth in our annual report on Form 10-K.

REG’s termination of the MOSA could cause a material adverse effect on our ability to produce, sell and market biodiesel.REG currently manages and directs the general operations of our plant pursuant to a Management and Operational Services Agreement (“MOSA”). Pursuant to the MOSA, REG provides us with overall management, sales and marketing, and feedstock and chemical procurement services. We are very reliant on REG for these services, as we have no relationships with any other parties with respect to the performance of these services. However, on April 7, 2009 REG provided twelve months written notice of its intent to terminate the MOSA. The Company expects the MOSA to terminate as of May 1, 2010. REG indicated that its determination to terminate the MOSA stems from changes in the biodiesel market generally since the parties originally entered into the MOSA. REG has proposed that the parties review and cooperate to negotiate a new contract that is mutually beneficial to the Company and REG; however, there is no guarantee that a new contract will be entered into between the parties. The Company, REG and certain entities affiliated with REG have entered into an agreement for a proposed asset purchase transaction pursuant to which an REG affiliate proposes to acquire substantially all of the Company’s assets and assume certain liabilities of the Company. In the event the proposed asset purchase transaction is consummated, the Company does not expect to enter into another MOSA agreement. However, in the event the proposed asset purchase transaction is not consummated, the Company’s inability to negotiate a new MOSA with REG on mutually beneficial terms could have a material adverse effect on the Company due to its significant reliance on REG for the management of the plant, procurement of inputs necessary to produce biodiesel, the sales and marketing of the biodiesel and co-products produced at its plant, and other administrative functions performed by REG. In such event, the Company may be forced to find one or more alternative persons to provide the management, procurement and sales and marketing services previously performed by REG under the MOSA: however, there can be no assurance that the Company would be able to contract with another third party to provide management and sales and marketing services on terms favorable to the Company, or at all. Any lack of a provider for these services would have a negative impact on our revenues. Accordingly, REG’s termination of the MOSA could adversely affect the Company’s ability to generate revenues and the Company’s members could lose some or all of their investment.

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The asset purchase agreement entered into by the Company’s board of directors, REG, and certain other REG affiliates is subject to a variety of closing conditions and may not close.On May 11, 2009, the Company’s board of directors entered into an agreement on behalf of the Company for the sale of substantially all of its assets to REG Wall Lake, LLC (“Wall Lake”), an entity affiliated with REG. In connection with such transaction, Wall Lake will assume certain liabilities of the Company. In consideration for the sale of the Company’s assets, the Company’s unitholders will receive a total of 6,963,377 shares of Common Stock of Wall Lake’s parent company, REG Newco, Inc. (“Newco”) and 259,012 shares of Preferred Stock of Newco. As soon as practicable following the closing of the transaction, the Company intends to dissolve, liquidate, wind up and terminate its existence. The transaction contemplated by the asset purchase agreement, however, is subject to multiple closing conditions, including the certain regulatory approvals, the approval of the Company’s unitholders and REG’s shareholders, and other conditions. In the event that any one or more of the conditions to closing are not satisfied or any event giving rise to a party’s right to terminate the agreement arises, the transaction contemplated by the asset purchase agreement may not close.

The EPA’s recent finding that soy-based biodiesel does not meet the requirements under the RFS to reduce greenhouse gas emissions could reduce demand for soy-based biodiesel and reduce our profitability.The EPA recently issued findings that soy-based biodiesel fails to meet targets for reducing greenhouse gas emissions, as required under the RFS. The RFS requires that biodiesel reduce greenhouse gas emissions by 40 to 50% when compared to conventional diesel in order to count towards the RFS mandate. The EPA found soy-based biodiesel to reduce greenhouse gas emissions by only 22%. If soy-based biodiesel does not count towards the RFS, demand for biodiesel made from soy oil will likely be reduced. If animal fat-based biodiesel demand increases as a result, animal fat prices may increase to the extent that we cannot produce animal fat-based biodiesel profitably. The results could significantly harm our revenues and financial performance and reduce the value of your investment.

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.

On May 11, 2009, we held our 2009 Annual Meeting of Members for the purpose of electing directors. Votes were solicited in person and by proxy.

Three (3) director positions were open at our 2009 Annual Meeting of Members. John Geake, William Horan, and Dennis Mauser were nominated by the board of directors. The three nominees receiving the greatest number of votes were elected to serve until the 2012 Annual Meeting of Members. At the meeting, the Members cast votes for the following individuals:

Name	Votes For		Votes Against		Abstentions
John Geake		9,195		258
William Horan		8,473		504
Dennis Mauser		9,081		152

For the matter on which votes were entitled to be cast, there were 25 abstentions and no broker non-votes. There were 9,523 units voting.

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The following directors will continue their terms:

Name	Term Expiration
Nile Ramsbottom		2010
Wayne Seaman		2010
Warren Bush		2011
Kevin Ross		2011

Item 5. Other Information.

None.

Item 6. Exhibits.The following exhibits are included herein:

Exhibit No.		Exhibit
	10.1	Asset Purchase Agreement between Western Iowa Energy, LLC, REG Newco, Inc., REG Wall Lake, LLC, and Renewable Energy Group, Inc. dated May 11, 2009.
	31.1	Certificate Pursuant to 17 CFR 240.15d-14(a).
	31.2	Certificate Pursuant to 17 CFR 240.15d-14(a).
	32.1	Certificate Pursuant to 18 U.S.C. § 1350.
	32.2	Certificate Pursuant to 18 U.S.C. § 1350.

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.

	WESTERN IOWA ENERGY, LLC
Date: May 20, 2009	/s/ William J. Horan
	William J. Horan
	Chairman, President and Director (Principal Executive Officer)
Date: May 20, 2009	/s/ Denny Mauser
	Denny Mauser
	Treasurer and Director (Principal Financial and Accounting Officer)

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