The business and affairs of Soy Energy are managed by and under the direction of an eleven person board. Charles Sand is our Chief Executive Officer and Dallas Thompson is our Chief Financial Officer. The table below lists the directors of Soy Energy and their addresses:
The following is a brief description of the business experience and background of Soy Energy’s officers and directors:
Mr. Sand will continue to act as a director until the first annual or special meeting of the members following substantial completion of our biodiesel plant, and until a successor is elected and qualified, or until his earlier death, resignation, removal or disqualification. Mr. Sand will continue to act as our Chairman until he is replaced by our board of directors.
Mr. Wetherell will continue to act as a director until the first annual or special meeting of the members following substantial completion of our biodiesel plant, and until a successor is elected and qualified, or until his earlier death, resignation, removal or disqualification. Mr. Wetherell will continue to act as our Vice Chairman until he is replaced by our board of directors.
Doug Lansink, Secretary and Director, Age 51. 2360 Orchard Ave., Arthur, IA 51431. For the past 30 years, Mr. Lansink has operated a livestock and grain farm in Ida County, Iowa. Mr. Lansink also is a director of Little Sioux Corn Processors, LLC located in Marcus, Iowa, a publicly reporting company. Mr. Lansink has served as our Secretary and a director since February 24, 2006.
Mr. Lansink will continue to act as a director until the first annual or special meeting of the members following substantial completion of our biodiesel plant, and until a successor is elected and qualified, or until his earlier death, resignation, removal or disqualification. Mr. Lansink will continue to act as our Secretary until he is replaced by our board of directors.
Dallas Thompson, Treasurer and Director, Age 28. 38224 Ritchie Rd., Kingsley, IA 51028. Mr. Thompson graduated in 2003 from Iowa State University with a degree in Agricultural Studies. As a student, Mr. Thompson attended the New Century Farms Program with young farmers from across the nation. Upon graduation, Mr. Thompson returned to his family farm near Kingsley, Iowa, where he raises corn, soybeans and hogs. Mr. Thompson sits on the board of Plymouth County Farm Bureau, a private company. Mr. Thompson has served as a director since February 24, 2006 and as our Treasurer since July 14, 2006.
Mr. Thompson will continue to act as a director until the first annual or special meeting of the members following substantial completion of our biodiesel plant, and until a successor is elected and qualified, or until his earlier death, resignation, removal or disqualification. Mr. Thompson will continue to act as our Treasurer until he is replaced by our board of directors.
Darrell Downs, Director, Age 70. 405 Ridgeway Dr., P.O. Box 103, Marcus, IA 51035. Prior to his retirement in 1994, Mr. Downs was employed by Moorman Manufacturing Company for 38 years. Mr. Downs has served as the mayor of Marcus, Iowa for the past eight years and has served as a consultant for the Cherokee County Economic Development Corporation in Cherokee County since 2003. Mr. Downs also sits on the board of directors of Little Sioux Corn Processors, LLC, a publicly reporting company, and on the board of directors of Siouxland Ethanol, LLC in Jackson, Nebraska, a publicly reporting company. Mr. Downs owns and leases farmland in northwest Iowa. Mr. Downs has served as a director since February 24, 2006.
Mr. Downs will continue to act as a director until the first annual or special meeting of the members following substantial completion of our biodiesel plant, and until a successor is elected and qualified, or until his earlier death, resignation, removal or disqualification.
Robert Engel, Director, Age 72. 2415 E. 3rd St., Sheldon, IA 51201. From May 1994 until May 2004, Mr. Engel was the executive vice president of the Farmers State Bank in Marcus, Iowa. Since that time, Mr. Engel has been retired. Mr. Engel sits on the board of directors of Farmers State Bank in Marcus, Iowa, a private company. Mr. Engel was appointed to our board of directors on June 7, 2007.
Mr. Engel will continue to act as a director until the first annual or special meeting of the members following substantial completion of our biodiesel plant, and until a successor is elected and qualified, or until his earlier death, resignation, removal or disqualification.
Charles Getting, Director, Age 58. 5380 300th St., Sanborn, IA 51248. For the past 27 years, Mr. Getting has owned and operated a grain and livestock farm near Sanborn and Sheldon, Iowa. Prior to returning home to farm, Mr. Getting was employed in sales and marketing by Wilson & Company in Minneapolis, Minnesota. Mr. Getting has served as a member of the board of directors and officer of Ritter Farmers Elevator Co., and as a board member and president of Farmer Coop Oil Company. Mr. Getting is currently the president of the board of directors of O’Brien County Funeral Association which owns funeral homes in Sanborn, Iowa and Hartley, Iowa. Mr. Getting has served as a director since February 24, 2006.
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Mr. Getting will continue to act as a director until the first annual or special meeting of the members following substantial completion of our biodiesel plant, and until a successor is elected and qualified, or until his earlier death, resignation, removal or disqualification.
Daryl Haack, Director, Age 65. 5985 390th St., Primghar, IA 51245. For the past 40 years, Mr. Haack has farmed approximately 900 crop acres in O’Brien County generally dedicated to corn and soybeans. In addition, Mr. Haack is one of 18 shareholders in a swine-finishing corporation and serves as the corporation’s board chairman. The swine-finishing corporation is not a publicly reporting company. Mr. Haack is past president of Little Sioux Corn Processors, LLC. He is a nine year member of the Iowa Corn Promotion Board and currently serves on the board of the National Corn Grower Association. Mr. Haack sits on the board of directors of Little Sioux Corn Processors, LLC, a publicly reporting company, National Renewable Energy Investment Fund, a private company, and Grandpa Pork, a private company. Mr. Haack has served as a director since February 24, 2006.
Mr. Haack will continue to act as a director until the first annual or special meeting of the members following substantial completion of our biodiesel plant, and until a successor is elected and qualified, or until his earlier death, resignation, removal or disqualification.
Dave Langel, Director, Age 54. 1701 4th Ave. S.E., LeMars, IA 51031. Mr. Langel has been a full time grain farmer in LeMars, Iowa since 1975. In addition, Mr. Langel is a former director of Life Skills Training Center in Le Mars, Iowa. Mr. Langel has served as a director since February 24, 2006.
Mr. Langel will continue to act as a director until the first annual or special meeting of the members following substantial completion of our biodiesel plant, and until a successor is elected and qualified, or until his earlier death, resignation, removal or disqualification.
Steve Leavitt, Director, Age 56. 1223 NE 31st St., Ankeny, IA 50021. For the last three years, Mr. Leavitt has been the Senior Project Manager for Frank Baxter General Contractor, a construction firm located in Fort Madison, Iowa. Prior to his employment with Frank Baxter General Contractor, Mr. Leavitt was employed by the Weitz Company as a Senior Project Manager for four years. Steve has served on the board of directors of Master Builder’s of Iowa, Banks of Iowa, the United Way, Iowa State University’s Engineering Curriculum Committee and was recognized in 2002 as “Energy Manager of the Year.” Mr. Leavitt serves on the board of directors of All Fuels and Energy (AFSE), a public company. Mr. Leavitt has served as a director since February 24, 2006.
Mr. Leavitt will continue to act as a director until the first annual or special meeting of the members following substantial completion of our biodiesel plant, and until a successor is elected and qualified, or until his earlier death, resignation, removal or disqualification.
Carol Reuter, Assistant Secretary and Director, Age 48. 643 530th St., Marcus, IA 51035. Since 1978, Ms. Reuter has served as the Executive Assistant at Sand Seed Service, Inc. located in Marcus, Iowa. Ms. Reuter is a current member of the boards of directors for Sand Seed Service, Inc., a private company, Iowa Fertilizer Sales, Inc., a private company, and Marcus Community Golf Course, a private company. Ms. Reuter has served as a director since July 14, 2006.
Ms. Reuter will continue to act as a director until the first annual or special meeting of the members following substantial completion of our biodiesel plant, and until a successor is elected and qualified, or until her earlier death, resignation, removal or disqualification.
Business Experience of Significant Employee
Richard Davis, General Manager, Age 52. 207 1st NE, Waucoma, IA 52171. Prior to his employment with Soy Energy, Mr. Davis was the manager and owner of R.C. Manufacturing from February 2000 until October 2007. Mr. Davis spent 20 years in sales and management in the cooperative system. Mr. Davis spent six years as an Agronomist, six years as an Agronomy Manager and eight years as a General Manager at a cooperative elevator. Mr. Davis graduated from Iowa State University with a B.S. degree in Agronomy. Mr. Davis is employed by the Company through an employment agreement.
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ITEM 6. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth all compensation paid or payable by us during the last two fiscal years to our principal executive officer, Charles Sand. No compensation has been paid to Dallas Thompson, our chief financial officer, during the past two years for his service to us. None of our other officers received compensation in excess of $100,000 since our inception. As of April 30, 2008, none of our directors or officers had any options, warrants, or other similar rights to purchase our securities.
Name and Position | | Fiscal Year | | All Other Compensation
($) | | Total Compensation
($) | |
Charles Sand, PEO | | 2007 | | 0 | | 0 | |
| | 2006 | | 0 | | 0 | |
Mr. Sand does not receive any compensation for his roles as our director or Chairman.
DIRECTOR COMPENSATION
The table below shows the compensation paid to each of our directors for the fiscal year ended October 31, 2007.
DIRECTOR COMPENSATION
| | Annual Compensation | | | |
Name | | Fiscal Year | | Fees Earned or Paid in Cash ($) | | All Other Compensation
($) | | Total Compensation
($) | |
Charles Sand | | 2007 | | 0 | | 0 | | 0 | |
Ron Wetherell | | 2007 | | 0 | | 0 | | 0 | |
Doug Lansink | | 2007 | | 0 | | 0 | | 0 | |
Dallas Thompson | | 2007 | | 0 | | 0 | | 0 | |
Darrell Downs | | 2007 | | 0 | | 35,150 | (1) | 35,150 | |
Robert Engel | | 2007 | | 0 | | 39,525 | (2) | 39,525 | |
Charles Getting | | 2007 | | 0 | | 0 | | 0 | |
Daryl Haack | | 2007 | | 0 | | 0 | | 0 | |
Dave Langel | | 2007 | | 0 | | 0 | | 0 | |
Steve Leavitt | | 2007 | | 0 | | 0 | | 0 | |
Carol Reuter | | 2007 | | 0 | | 0 | | 0 | |
(1) Includes $15,150 in fees and a $20,000 bonus paid to Mr. Downs pursuant to a consulting agreement.
(2) Includes $24,525 in fees and a $15,000 bonus paid to Mr. Engel pursuant to a consulting agreement.
Darrell Downs and Robert Engel both received compensation from us pursuant to consulting agreements they executed with us.
On January 4, 2006, we entered into a consulting agreement with Robert Engel to serve as our project manager and to provide project development services in connection with the development, financing, start-up and construction of our biodiesel plant. We paid Mr. Engel $150 per day up to a maximum of $750 per week for project management services. Additionally, Mr. Engel received a $15,000 cash bonus in June 2007.
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On May 10, 2006, we entered into a consulting agreement with Darrell Downs, a member of our board of directors, to act as our project consultant and to assist our project manager in contract negotiations, marketing, and securing debt financing. The consulting agreement required us to pay Mr. Downs a starting bonus of $4,000 and $150 per day not exceeding $750 per week. Following completion of our equity drive and upon obtaining a binding commitment from a lender sufficient to finance our business plan, we paid Mr. Downs a cash bonus of $16,000.
Reimbursement of Expenses
We reimburse our officers and directors for expenses incurred in connection with their service. Our reimbursement policy is to reimburse our officers and directors for all out-of-pocket expenses.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS AND DIRECTOR INDEPENDENCE
Transactions with Related Parties
Since our inception, we have engaged in transactions with the following related parties:
Transactions with Farmers State Bank
Charles Sand, our chairman and director sits on the board of directors for the holding company of Farmers State Bank in Marcus, Iowa. Robert Engel sits on the board of directors of Farmers State Bank in Marcus, Iowa. We had loans totaling $1,999,000 with Farmers State Bank. However, when we broke escrow on our registered offering, we repaid these loans to Farmers State Bank. We believe that the terms of our loans with Farmers State Bank were as favorable to us as those generally available from unaffiliated third parties. However, a majority of our disinterested directors approved the loans with Farmers State Bank. We currently anticipate that Farmers State Bank will be the lead lender for our project. We believe that any future transactions with Farmers State Bank will be no less favorable to us as those generally available from unaffiliated third parties and will also be approved by a majority of disinterested directors.
Transactions with Carol Reuter
Carol Reuter was appointed to our board of directors on July 14, 2006. Prior to being appointed to our board, Carol Reuter performed some secretarial services for the company and was compensated $1,000 for her services from February 2006 to July 2006. We do not anticipate that she will receive any further compensation for her secretarial services.
Transactions with Robert Engel
On January 4, 2006, we entered into a consulting agreement with Robert Engel to serve as our project manager and to provide project development services in connection with the development, financing, start-up and construction of our biodiesel plant. Subsequently, on June 7, 2007, Mr. Engel was appointed to our board of directors. We paid Mr. Engel $150 per day up to a maximum of $750 per week for project management services. Additionally, Mr. Engel received a $15,000 cash bonus in June 2007.
Transactions with Bratney Companies
Bratney Companies was engaged by us to construct the proposed biodiesel plant. Bratney Companies agreed to construct our biodiesel plant for $48,855,000. In our Iowa intrastate registered offering, Bratney Companies invested $750,000 in Soy Energy in exchange for 750 of our membership units. In March 2008, we terminated our agreement with Bratney Companies. On July 25, 2008, we executed a termination agreement and redemption agreement with Bratney. Pursuant to the terms of the termination and redemption agreements, we received a refund in the amount of $4,500,000 and Bratney returned the 750 membership units it purchased in our intrastate registered offering. Therefore, Bratney is no longer a member of Soy Energy and is no longer our design-builder.
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Transactions with Promoters
Each of our initial directors, Darrell Downs, Myron Danzer, Charles Getting, Daryl Haack, Shane Habben, Steve Leavitt, Dave Langel, Doug Lansink, Charles Sand, Dallas Thompson, and Ron Wetherell were involved in the organization of Soy Energy, and therefore would qualify as promoters of the company. None of our promoters, with the exception of Darrell Downs as described below, have received any compensation for their roles in organizing and operating Soy Energy to date.
On May 10, 2006, we entered into a consulting agreement with Darrell Downs, a member of our board of directors, to act as our project consultant and to assist our project manager in contract negotiations, marketing, and securing debt financing. The consulting agreement required us to pay Mr. Downs a starting bonus of $4,000 and $150 per day not exceeding $750 per week. Following completion of our equity drive and upon obtaining a binding commitment from a lender sufficient to finance our business plan, we paid Mr. Downs a cash bonus of $16,000.
Director Independence
Board of Directors Independence
Our board of directors is exempt from the independence listing standards because our securities are not listed on a national securities exchange or listed in an automated inter-dealer quotation system of a national securities association or to issuers of such securities. Nevertheless, each of our board members is independent within the definition of independence provided by NASDAQ Rule 4200, with the exception of Charles Sand and Dallas Thompson because they are executive officers of the Company. In evaluating the independence of our directors, we considered the following factors: (i) the business relationships of our directors; (ii) positions our directors hold with other companies; (iii) family relationships between our directors and other individuals involved with the Company; (iv) transactions between our directors and the Company; and (v) compensation arrangements between our directors and the Company.
Audit Committee Independence
We currently have four directors that sit on our audit committee. Our audit committee consists of Dallas Thompson, Robert Engel, Doug Lansink, and Daryl Haack. The audit committee is exempt from the independence listing standards because our securities are not listed on a national securities exchange or listed in an automated inter-dealer quotation system of a national securities association or to issuers of such securities. Nevertheless, each member of our audit committee is independent within the definition of independence provided by NASDAQ Rules 4200 and 4350, except Dallas Thompson because he is an executive officer of the Company.
Nominating and Compensation Committees Independence
We do not have separately designated nominating and compensation committees. Our board of directors fulfills these functions. We do not currently compensate our executive officers and our directors will not stand for election until our proposed biodiesel plant is substantially complete. We anticipate that we will form a nominating and compensation committee in the future. As discussed above, each of our directors are independent, as defined by NASDAQ Rule 4200, with the exception of Charles Sand and Dallas Thompson.
ITEM 8. LEGAL PROCEEDINGS
From time to time in the ordinary course of business, we may be named as a defendant in legal proceedings related to various issues, including without limitation, workers’ compensation claims, tort claims, or contractual disputes. We are not currently subject to any material legal proceedings or claims. Management does not believe that there are currently any material unasserted claims against us.
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ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
We have only one class of membership units. Our membership units are not traded on any public market. Our membership units were last offered in our intrastate offering at a price of $1,000 per membership unit. Our operating agreement prohibits sales of our membership units until our proposed biodiesel plant is operational.
We have not made any distributions to our unit-holders. Revenues generated from plant operations will be distributed to the unit-holders by the directors, in their sole discretion, in proportion to units held subject to, and to the extent permitted by, any loan covenants or restrictions on such distributions agreed to by us in any loan agreements with our lenders from time to time in effect. The directors will endeavor to provide for cash distributions at such times and in such amounts as will permit the unit-holders to make timely payment of income taxes.
There are no outstanding options or warrants to purchase, or securities convertible into, common equity of the company. As of September 10, 2008, we had 33,768 membership units issued and outstanding and a total of approximately 948 unit-holders. In addition, it is likely that the 1,500 units purchased in the founders offering and the 1,600 units purchased in the initial private seed capital offering will be subject to Rule 144 under the Securities Act. Our units may not be transferred absent registration pursuant to, or an exemption from, federal and state securities laws. In addition, our operating agreement restricts the transfer of units. To maintain partnership tax status, the units may not be traded on an established securities market or readily tradable on a secondary market. Our operating agreement also bars members from having a direct or indirect interest in more than 49% of the issued and outstanding units at any time. Finally, we have not offered any compensation plans under which equity securities are authorized for issuance.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
In December, 2005, we issued 1,500 of our membership units to our eight founding members at a price of $333.33 per unit, for total founding member proceeds of $500,000. In the spring of 2006, we sold 1,600 of our membership units to our seed capital investors at a price of $500 per unit and received aggregate proceeds of $800,000. We claimed exemption from federal registration with respect to our unit sales in both our founding member and seed capital offerings due to the application of Section 3(a)(11) of the Securities Act of 1933 (regarding intrastate offerings). We also claimed exemptions from registration in the State of Iowa pursuant to the private placement and accredited investor exemptions of the Iowa Uniform Securities Act. We only sold our units in these offerings to accredited investors who represented that they were residents of the State of Iowa.
Commencing in December 2006, we conducted a registered offering in the State of Iowa, but were exempt from federal registration of the securities under Section 3(a)(11) of the Securities Act of 1933. We registered a minimum of 25,000 units and a maximum of 39,000 units at an offering price of $1,000 per unit. The offering commenced on December 1, 2006 in the State of Iowa and closed on December 1, 2007. We sold 30,668 units at a price of $1,000 per unit. From our unit sales, we received total aggregate proceeds of $30,668,000. We incurred approximately $186,000 of offering costs that offset equity proceeds raised as of October 31, 2007. The primary costs we incurred in raising capital included legal fees, auditing fees, printing and distribution costs, and meeting costs.
We were able to rely on Section 3(a)(11) for the seed capital offering, founders offering, and Iowa registered offering, because we sold units only to residents of the State of Iowa and the recipients of securities in each transaction represented their intention to acquire the securities for investment only and not with a view to, or for sale in connection with, any distribution thereof, and appropriate legends were affixed to unit certificates and instruments issued in such transactions. We gave each investor information about us and gave them opportunities to ask questions regarding the terms and conditions of the offering. Our directors and officers sold the units on a best efforts basis and received no compensation for services related to the offer and sale.
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ITEM 11. DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED
We currently have 33,768 membership units issued and outstanding. We have no other class of securities issued and outstanding. All units, when issued and fully paid, are non-assessable, not subject to redemption or conversion and have no conversion rights. No member may directly or indirectly own more than 49% of our units. A complete description of the rights, privileges, obligations and restrictions associated with membership in our company are found in our articles of organization and operating agreement attached as exhibits to this registration statement.
Each unit-holder is eligible to be a member of our company and has the right to receive a share of our profits and losses, to receive distributions of our assets, if and when declared by our directors, and to participate in the distribution of our assets in the event the company is dissolved or liquidated. Unit-holders become members of the company according to the terms of our operating agreement. Additionally, each member has the right to access certain information concerning our business and affairs and to vote on matters coming before a vote of the members. If a member’s membership is terminated, regardless of whether or not units have been transferred or we admit a substitute unit-holder, the original unit-holder will lose all of his or her rights to vote the units and the right to access information concerning our business and affairs. However, a unit-holder will continue to have the right to a share of our profits and losses and to participate in the distribution of our assets in the event the company is liquidated or terminated.
Allocation of Gains and Losses
We are organized as a limited liability company and we have elected to be treated as a partnership for tax purposes. This means that our gains, losses and credits are passed through to our unit-holders who pay taxes based on these allocations. Our operating agreement describes the method by which our gains, losses, and credits are allocated between the unit-holders. Generally, our gains, losses and credits are allocated between our unit-holders in proportion to the units they hold. Our operating agreement also provides for special allocations of gains, losses and credits based on tax rules and regulations. Partnership taxation is complicated, and unit-holders should consult with their tax advisors regarding the tax impact of holding our units. Unit-holders share in any profits we may generate based on distributions from our board. Our board has discretion in determining the timing and amount of any distributions that may be declared by us. These distributions may be limited by loan covenants we may agree to in any financing agreements we may execute, as well as the requirements of Iowa law which govern the operation of Soy Energy. Unit-holders may be allocated gains in excess of any distributions that may be made by us, which may result in the unit-holder paying income tax on our gains out of the unit-holder’s personal funds. The board plans to make distributions in amounts that would offset any income taxes the unit-holder may be responsible for, but these distributions are not assured depending on the cash requirements of Soy Energy.
Voting Rights
Each member is entitled to one vote per unit owned. Investors may vote their units in person or by proxy on all matters coming before a member vote. Members do not have cumulative voting or pre-emptive rights.
Our operating agreement provides that the directors do not have authority to do any of the following without the unanimous consent of members:
| • | Cause or permit us to engage in any activity that is inconsistent with our purposes; |
| • | Knowingly act in contravention of the operating agreement or act in a manner that would make it impossible for us to carry on our ordinary business, except as otherwise provided in the operating agreement; |
| • | Possess company property or assign rights in specific company property other than for our purposes; or |
| • | Cause us to voluntarily take any action that would cause our bankruptcy. |
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In addition to the above actions, the board must receive consent of a majority of the membership voting interests to do the following:
| • | Merge, consolidate, exchange or otherwise dispose of at one time, all or substantially all of our property, except for a liquidating sale of the property in connection with our dissolution; |
| • | Confess a judgment against us in an amount in excess of $500,000; |
| • | Issue units at a purchase price that is less than the book value of our units determined by the most recent audited financial statements of the company or less than the purchase price offered to investors in our initial registered offering of units; |
| • | Issue an aggregate number of units that is greater than 125% of the maximum number of units offered to investors in our initial registered offering of units; or |
| • | Cause us to acquire any equity or debt securities of any director or any of its affiliates, or otherwise make loans to any director or any of its affiliates. |
Our operating agreement may be amended by the affirmative vote of the holders of a majority of the units constituting a quorum at a meeting of the members. However, no amendment may adversely affect a member’s membership economic interest or modify the liability of a member, without that member’s consent. Voluntary dissolution of our company may be affected only upon the prior approval of a 75% majority of the membership voting interests.
Transfer Restrictions
An investor’s ability to transfer our units is restricted by federal and state securities laws. The units may not be transferred absent registration pursuant to, or an exemption from, federal and state securities laws. In addition, our operating agreement restricts the transfer of units. Investors may transfer their units to any person or organization only if such transfer meets the conditions precedent to a transfer under our operating agreement and:
| • | Has been approved by our directors in accordance with the terms of the operating agreement; or |
| • | The transfer is made to any other member or to any affiliate or related party of another member or the transferring member. |
To maintain partnership tax status, the units may not be traded on an established securities market or readily tradable on a secondary market. We do not expect to list our units on the New York Stock Exchange, or the NASDAQ Stock Market, or any other stock exchange. To help ensure that a market does not develop, our operating agreement prohibits transfers without the approval of the directors. The directors will generally approve transfers so long as the transfers fall within “safe harbors” contained in the publicly traded partnership rules under the Internal Revenue Code. Permitted transfers also include transfers by gift, transfers upon death of a member, transfers between family members and other transfers approved by directors during the tax year that in the aggregate do not exceed 2% of the total outstanding units. If any person transfers units in violation of the publicly traded partnership rules or without our prior consent, the transfer will be null and void.
Dissolution Rights
Should the company be dissolved, our operating agreement provides the order in which our assets will be distributed. Our membership units are unsecured interests and have a lower repayment priority than our other liabilities. Our operating agreement provides that, on dissolution, our assets will be distributed in the following order: (a) first, to our creditors in satisfaction of all of our debts and other liabilities (whether by payment or the making of reasonable provision for payment thereof), other than liabilities for which reasonable provision for payment has been made; and (b) second, to members in satisfaction of liabilities for distributions pursuant to the Iowa Limited Liability Company Act; (c) third, the balance, if any, to the unit-holders in accordance with the positive balance in their capital accounts calculated after making adjustments required by the operating agreement, and after giving effect to all contributions, distributions and allocations for all periods. Our operating agreement does not provide for any priority among the unit-holders for any repayment of their investment in us.
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ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our operating agreement provides that none of our directors will be liable to us for any breach of their fiduciary duty, except as required under Iowa law. This could prevent us and our members from bringing an action against any director or officer for monetary damages arising out of a breach of that director’s or officer’s fiduciary duty. This provision does not affect possible injunctive or other equitable remedies to enforce a director’s duty of loyalty to Soy Energy or its members for a wrongful distribution in violation of Iowa law; for the amount of a financial benefit received by a member, director or officer to which the member, director or officer is not entitled; for an intentional infliction of harm on the limited liability company or its members; or for an intentional violation of criminal law
No member or director will be liable for any of our debts, obligations or liabilities merely because he or she is a member or director. In addition, Iowa law and our operating agreement contain extensive indemnification provisions which require us to indemnify any officer or director who was or is a party, or who is threatened to be made a party to any current or potential legal action because he or she is our director, officer, employee or agent. We must also indemnify these individuals if they were serving another entity at our request. We must also indemnify against expenses, including attorneys’ fees, judgments, fines and any amounts paid in any settlement that was actually and reasonably incurred by these individuals in connection with any legal proceedings, including legal proceedings based upon violations of the Securities Act or state securities laws. Our indemnification obligations may include criminal or other proceedings.
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ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
FINANCIAL STATEMENTS
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Soy Energy, LLC
Marcus, Iowa
We have audited the accompanying balance sheet of Soy Energy, LLC (a development stage company), as of October 31, 2007 and 2006, and the related statements of operations, changes in members’ equity, and cash flows for the fiscal year ended October 31, 2007, and the periods from inception (December 15, 2005) to October 31, 2007 and 2006. Soy Energy, LLC’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Soy Energy, LLC, (a development stage company) as of October 31, 2007 and 2006, and the results of its operations and its cash flows for the year ended October 31, 2007, and for the periods from inception (December 15, 2005) to October 31, 2007 and 2006 in conformity with accounting principles generally accepted in the United States of America.
/s/ Boulay, Heutmaker, Zibell & Co. P.L.L.P.
Certified Public Accountants
Minneapolis, Minnesota
February 28, 2008
F-2
SOY ENERGY, LLC
(A Development Stage Company)
Balance Sheets
ASSETS | | October 31,
2007 | | October 31,
2006 | |
| | | | | | | |
Current Assets | | | | | | | |
Cash and equivalents | | $ | 16,244,811 | | $ | 209,537 | |
Certificate of deposit | | | 1,850,000 | | | — | |
Accrued interest receivable | | | 12,507 | | | — | |
Prepaid expenses | | | 2,250 | | | 2,250 | |
Total current assets | | | 18,109,568 | | | 211,787 | |
| | | | | | | |
Property, Plant and Equipment | | | | | | | |
Land | | | 250,012 | | | 250,012 | |
Equipment | | | 8,873 | | | 455 | |
Total | | | 258,885 | | | 250,467 | |
Accumulated depreciation | | | (718 | ) | | (15 | ) |
Total | | | 258,167 | | | 250,452 | |
Construction-in-progress | | | 11,093,267 | | | 523,739 | |
Net property, plant and equipment | | | 11,351,434 | | | 774,191 | |
| | | | | | | |
Other Assets | | | | | | | |
Design services deposit - related party | | | 4,535,000 | | | 1,500,000 | |
Loan commitment fee | | | 25,000 | | | — | |
Deferred offering costs | | | — | | | 68,965 | |
Total other assets | | | 4,560,000 | | | 1,568,965 | |
| | | | | | | |
Total Assets | | $ | 34,021,002 | | $ | 2,554,943 | |
| | | | | | | |
LIABILITIES AND MEMBERS’ EQUITY | | | | | | | |
| | | | | | | |
Current Liabilities | | | | | | | |
Revolving notes payable | | $ | — | | $ | 1,201,000 | |
Accounts payable | | | 499,379 | | | 254,803 | |
Accounts payable - related party | | | 1,711,363 | | | — | |
Accrued expenses | | | 1,708 | | | 50,342 | |
Total current liabilities | | | 2,212,450 | | | 1,506,145 | |
| | | | | | | |
Members’ Equity | | | | | | | |
Member contributions, 33,768 and 3,100 units outstanding at October 31, 2007 and 2006, respectively | | | 31,781,572 | | | 1,286,788 | |
Income (deficit) accumulated during development stage | | | 26,980 | | | (237,990 | ) |
Total members’ equity | | | 31,808,552 | | | 1,048,798 | |
| | | | | | | |
Total Liabilities and Members’ Equity | | $ | 34,021,002 | | $ | 2,554,943 | |
Notes to Financial Statements are an integral part of this Statement.
F-3
SOY ENERGY, LLC
(A Development Stage Company)
Statements of Operations
| | Year Ended
October 31, 2007 | | From Inception
(December 15,
2005) to
October 31, 2006 | | From Inception
(December 15,
2005) to
October 31, 2007 | |
| | | | | | | | | | |
Revenues | | $ | — | | $ | — | | $ | — | |
| | | | | | | | | | |
Operating Expenses | | | | | | | | | | |
General and administrative | | | 171,668 | | | 91,561 | | | 263,229 | |
Professional fees | | | 139,301 | | | 154,953 | | | 294,254 | |
Total operating expenses | | | 310,969 | | | 246,514 | | | 557,483 | |
| | | | | | | | | | |
Operating Loss | | | (310,969 | ) | | (246,514 | ) | | (557,483 | ) |
| | | | | | | | | | |
Other Income | | | | | | | | | | |
Interest income | | | 571,439 | | | — | | | 571,439 | |
Other income | | | 4,500 | | | 8,524 | | | 13,024 | |
Total other income | | | 575,939 | | | 8,524 | | | 584,463 | |
| | | | | | | | | | |
Net Income (Loss) | | $ | 264,970 | | $ | (237,990 | ) | $ | 26,980 | |
| | | | | | | | | | |
Weighted Average Units Outstanding - Basic and Diluted | | | 13,776 | | | 2,500 | | | 8,493 | |
| | | | | | | | | | |
Net Income (Loss) Per Unit - Basic and Diluted | | $ | 19.23 | | $ | (95.20 | ) | $ | 3.18 | |
Notes to Financial Statements are an integral part of this Statement.
F-4
SOY ENERGY, LLC
(A Development Stage Company)
Statements of Changes in Members’ Equity
| | Member
Contributions | | Income (Deficit)
Accumulated
During
Development
Stage | |
| | | | | | | |
Balance at December 15, 2005 | | $ | — | | $ | — | |
| | | | | | | |
Capital contributions - 1,500 units, $333.33 per unit - December 2005 | | | 500,000 | | | — | |
| | | | | | | |
Capital contributions - 1,600 units, $500 per unit - April 2006 | | | 800,000 | | | — | |
| | | | | | | |
Costs of raising capital | | | (13,212 | ) | | | |
| | | | | | | |
Net loss for the period ended October 31, 2006 | | | — | | | (237,990 | ) |
| | | | | | | |
Balance at October 31, 2006 | | $ | 1,286,788 | | $ | (237,990 | ) |
| | | | | | | |
Capital contributions - 30,668 units, $1,000 per unit June - October 2007 | | | 30,668,000 | | | — | |
| | | | | | | |
Costs of raising capital | | | (173,216 | ) | | | |
| | | | | | | |
Net income for the year ended October 31, 2007 | | | — | | | 264,970 | |
| | | | | | | |
Balance at October 31, 2007 | | $ | 31,781,572 | | $ | 26,980 | |
Notes to Financial Statements are an integral part of this Statement.
F-5
SOY ENERGY, LLC
(A Development Stage Company)
Statements of Cash Flows
| | Year Ended
October 31, 2007 | | From Inception
(December 15,
2005) to
October 31, 2006 | | From Inception
(December 15,
2005) to
October 31, 2007 | |
| | | | | | | | | | |
Cash Flows from Operating Activities | | | | | | | | | | |
Net income (loss) | | $ | 264,970 | | $ | (237,990 | ) | $ | 26,980 | |
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | | | | | | | | | | |
Depreciation | | | 703 | | | 15 | | | 718 | |
Write off of construction services related to terminated agreement | | | — | | | 50,000 | | | 50,000 | |
Changes in operating assets and liabilities: | | | | | | | | | | |
Accrued interest receivable | | | (12,507 | ) | | — | | | (12,507 | ) |
Prepaid expenses | | | — | | | (2,250 | ) | | (2,250 | ) |
Accounts payable | | | (37,835 | ) | | 63,147 | | | 25,312 | |
Accrued expenses | | | 1,231 | | | 477 | | | 1,708 | |
Net cash provided by (used for) operating activities | | | 216,562 | | | (126,601 | ) | | 89,961 | |
| | | | | | | | | | |
Cash Flows from Investing Activities | | | | | | | | | | |
Capital expenditures | | | (7,686,614 | ) | | (571,437 | ) | | (8,258,051 | ) |
Payments for design services deposit | | | (3,950,000 | ) | | (1,500,000 | ) | | (5,450,000 | ) |
Payments for construction deposit | | | — | | | (2,500,000 | ) | | (2,500,000 | ) |
Refund of construction deposit | | | — | | | 2,450,000 | | | 2,450,000 | |
Payment for certificates of deposit | | | (1,850,000 | ) | | — | | | (1,850,000 | ) |
Net cash used for investing activities | | | (13,486,614 | ) | | (2,121,437 | ) | | (15,608,051 | ) |
| | | | | | | | | | |
Cash Flows from Financing Activities | | | | | | | | | | |
Proceeds from (payments on) revolving notes payable | | | (1,201,000 | ) | | 1,201,000 | | | — | |
Loan commitment fees | | | (25,000 | ) | | — | | | (25,000 | ) |
Members’ contributed capital | | | 30,668,000 | | | 1,300,000 | | | 31,968,000 | |
Payments for offering costs | | | (136,674 | ) | | (43,425 | ) | | (180,099 | ) |
Net cash provided by financing activities | | | 29,305,326 | | | 2,457,575 | | | 31,762,901 | |
| | | | | | | | | | |
Net Increase in Cash and Equivalents | | | 16,035,274 | | | 209,537 | | | 16,244,811 | |
| | | | | | | | | | |
Cash and Equivalents at Beginning of Period | | | 209,537 | | | — | | | — | |
| | | | | | | | | | |
Cash and Equivalents at End of Period | | $ | 16,244,811 | | $ | 209,537 | | $ | 16,244,811 | |
| | | | | | | | | | |
Supplemental Cash Flow Information | | | | | | | | | | |
Capitalized interest paid | | $ | 133,556 | | $ | — | | $ | 133,556 | |
| | | | | | | | | | |
Supplemental Schedule of Noncash Investing and Financing Activities | | | | | | | | | | |
Offering costs included in accounts payable | | $ | 6,329 | | $ | 38,752 | | $ | 6,329 | |
Construction-in-progress included in accounts payable | | $ | 2,179,101 | | $ | 152,904 | | $ | 2,179,101 | |
Construction-in-progress applied against design services deposit | | $ | 915,000 | | $ | — | | $ | 915,000 | |
Capitalized interest included in accrued expenses | | $ | — | | $ | 49,865 | | $ | — | |
Notes to Financial Statements are an integral part of this Statement
F-6
SOY ENERGY, LLC
(A Development Stage Company)
Notes to Financial Statements
October 31, 2007 and 2006
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Soy Energy, LLC (a development stage Iowa limited liability company) was organized to develop, own and operate a 30 million gallon per year (MGY) production biodiesel facility between Cleghorn and Marcus, Iowa in Cherokee County. The Company was formed December 15, 2005 to have a perpetual life. Substantial construction began in August 2007. As of October 31, 2007, Soy Energy is in the development stage with its efforts being principally devoted to organizational, financing, and project development activities. In November 2007, the Company temporarily suspended construction on the project until debt financing can be secured as described in Notes 2 and 7.
Fiscal Reporting Period
The Company adopted a fiscal year ending October 31 for reporting financial operations.
Accounting Estimates
Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported revenues and expenses. Actual results could differ from those estimates.
Cash and Equivalents
The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash and equivalents.
The Company maintains its accounts primarily at one financial institution. At times throughout the period, cash and equivalents balances exceed amounts insured by the Federal Deposit Insurance Corporation. The Company has not experienced losses relative to cash and equivalents, and does not believe such accounts are at significant risk of loss.
Certificates of Deposit
The Company has certificates of deposit with maturities greater than three months and classifies them as “available for sale.” The certificates of deposit are due in less than one year. Certificates of deposit are carried at their estimated fair market value based on quoted market prices, which approximates cost. Interest is accrued as earned on the certificates of deposit. Because fair market value approximates cost, there are neither realized gains nor losses upon automatic renewal or liquidation at maturity nor unrealized gains or losses at October 31, 2007. Automatic renewals upon maturity are considered neither sales nor new purchases of available for sale securities.
Property, Plant and Equipment
Property and equipment are stated at cost. Equipment is depreciated over estimated service lives of related assets, three to seven years, using the straight-line method of accounting. Property, plant and equipment undergoing development that is not in service is shown on the balance sheet as construction-in-progress and is not depreciated.
Ordinary maintenance and repairs are expensed as incurred. Cost of renewals and betterments are capitalized in appropriate property, plant and equipment accounts and depreciated as discussed above.
Capitalization of Interest
The Company capitalizes interest cost on construction in progress and capitalized development costs in accordance with the requirements of Statement of Financial Accounting Standards (“SFAS”) No. 34, Capitalization of Interest Cost. This standard requires that a certain portion of interest cost be capitalized as part of the historical cost of developing or constructing an asset.
F-7
SOY ENERGY, LLC
(A Development Stage Company)
Notes to Financial Statements
October 31, 2007 and 2006
Long-lived Assets
The Company reviews property, plant and equipment and other long-lived assets for impairment in accordance with Statement of Financial Accounting Standards No. 144 (SFAS No. 144), Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of its carrying amount to future undiscounted cash flows the assets are expected to generate. If property and equipment and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair market value. The Company has not recognized any long-lived asset impairment charges as of October 31, 2007 and 2006.
Deferred Offering Costs
The Company defers costs incurred to raise equity financing until that financing occurs, at which time costs are netted against proceeds received. During the fiscal year ended October 31, 2007 and 2006, the Company offset equity proceeds raised of approximately $173,000 and $13,000, respectively.
Grants
The Company recognizes grant income for reimbursement of expenses incurred upon complying with the conditions of the grant. For reimbursements of incremental expenses (expenses the Company otherwise would not have incurred had it not been for the grant), the grant proceeds are recognized as a reduction of the related expense. For reimbursements of capital expenditures, the grants are recognized as a reduction of the basis of the asset upon complying with the conditions of the grant.
Organization and Start-up Costs
The Company expenses organizational and start-up costs as they are incurred.
Income Taxes
The Company is treated as a partnership for federal and state income tax purposes and; accordingly, members report their proportionate share of the Company’s income, gains, losses, tax credits, etc. in their income tax returns. No benefit from or provision for federal or state income taxes is included in accompanying financial statements.
Net Income (Loss) per Unit
Basic net income (loss) per unit is computed by dividing net income by the weighted average number of members’ units outstanding during the period. Diluted net income per unit is computed by dividing net income by the weighted average number of members’ units and members’ unit equivalents outstanding during the period. There were no member unit equivalents outstanding during the 2007 and 2006 periods; accordingly, the Company’s basic and diluted net income (loss) per unit are the same for all periods presented.
Commitments and Contingencies
Liabilities for loss contingencies, including environmental remediation costs, arising from claims, assessments, litigation, fines, and penalties and other sources, are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. As of October 31, 2007, the Company estimates it is not subject to any material legal claims.
F-8
SOY ENERGY, LLC
(A Development Stage Company)
Notes to Financial Statements
October 31, 2007 and 2006
Recently Issued Accounting Pronouncements
In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157 (SFAS 157), Fair Value Measurements. SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The statement is effective for financial assets and liabilities in financial statements issued for fiscal years beginning after November 15, 2007; and, for certain non-financial assets and liabilities in financial statements issued for fiscal years beginning after November 15, 2008. Soy Energy is currently evaluating the effect adopting SFAS 157 will have, if any, on its results of operations, financial position and related disclosures. The Company does not expect SFAS 157 to have a material impact on its financial statements.
In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, (SFAS 159), The Fair Value Option for Financial Assets and Financial Liabilities which included an amendment of FASB Statement 115. FASB 159, effective for fiscal years beginning after November 15, 2007, provides companies an option to report selected financial assets and liabilities at fair value. The Company is in the process of evaluating the effect, if any, adoption of SFAS 159 will have on its results of operations and financial position.
2. LIQUIDITY
The Company is a developmental stage company and has no operating revenues. The Company does not currently produce biodiesel, as its project is under development. In November 2007, the Company suspended construction of the biodiesel plant while it worked to secure additional or new debt financing and to consider changes to the Company’s plant design including reducing the size of the plant. The Company’s current equity reserves will be sufficient to fund operations through 2008 if it does not resume construction of the biodiesel plant. However, if the Company recommences construction of the biodiesel plant at its currently planned size, it will need to secure debt or equity financing to complete the project and begin operations. The Company does not plan on recommencing construction until additional debt or equity financing is secured.
3. CONSTRUCTION-IN-PROGRESS
The Company continues to make payments for the construction of a 30 MGY plant. The Company anticipates the construction will cost approximately $53,112,000 with approximately $42,019,000 remaining at October 31, 2007.
Amounts included in construction-in-progress are as follows.
| | October 31,
2007 | | October 31,
2006 | |
| | | | | | | |
Construction costs | | $ | 10,944,264 | | $ | 470,158 | |
Capitalized interest | | | 133,556 | | | 49,865 | |
Insurance and other costs | | | 15,447 | | | 3,716 | |
| | | | | | | |
| | $ | 11,093,267 | | $ | 523,739 | |
Construction costs in accounts payable include approximately $502,000 and $24,000 of retainage at October 31, 2007 and 2006, respectively. The Company capitalized interest of approximately $84,000 and approximately $50,000 for the year ended October 31, 2007 and the period ended October 31, 2006, respectively.
4. DEBT FINANCING
Revolving Notes Payable
Beginning in May 2006, the Company entered into loan agreements for loans up to $1,999,000 bearing interest at 8.0% interest with Farmers State Bank in Marcus, Iowa. Outstanding loan balances totaled $1,201,000 as of October 31, 2006. The loan amounts were repaid and closed in fiscal 2007. The loans were secured by a blanket security agreement covering substantially all assets.
F-9
SOY ENERGY, LLC
(A Development Stage Company)
Notes to Financial Statements
October 31, 2007 and 2006
Iowa Department of Economic Development Loan
In September 2006, the Company was awarded a $400,000 loan from the Iowa Department of Economic Development under the Value-Added Agricultural Products and Processes Financial Assistance Program. The arrangement provides $100,000 of the loan to be forgiven upon the Company fulfilling certain employment obligations and production of 30 MGY of biodiesel. The remaining $300,000 will be payable without interest in sixty monthly installments beginning the first day of the fourth month from the date funds are disbursed. If the Company fails to meet the employment obligations, they may be required to pay the full amount of the loan, as permitted under the contract, prorated based on the deficiency in employment obligation along with interest on the $100,000 at 6%. No funds have been drawn on the Iowa Department of Economic Development loan as of October 31, 2007.
5. MEMBERS’ EQUITY
In December 2005, the Company was initially capitalized by members investing an aggregate $500,000 for 1,500 units. The Company issued an additional 1,600 units for $800,000 pursuant to an April 2006 private placement memorandum. Proceeds from the two offerings were used to pay organizational, permitting, and other development costs.
The Company raised additional equity through an Iowa intrastate offering. The Company offered a minimum of 25,000 units and a maximum of 39,000 units at $1,000 per unit. As of October 31, 2007, the Company raised $30,668,000 by issuing 30,668 units in the Iowa intrastate offering. The equity proceeds from the Iowa intrastate offering were held in escrow until June 2007.
The Company’s operating agreement authorizes the Board of Directors to issue up to 48,750 units without consent of a majority of the membership voting interests. The Company has one class of membership unit which, under its operating agreement, gives a member one vote for each unit owned, provided no member, related party and/or affiliate of a member may vote more than five percent of the Company’s outstanding membership interests. The Company’s operating agreement restricts transfer of membership units generally to operation of law, such as upon death, without approval of a majority of its Directors.
Income, losses, and distributions are allocated to members based upon their respective percentage of units owned.
6. INCOME TAXES
The Company adopted an October 31 fiscal year end for financial and income tax reportings. Differences in total assets for financial and income tax reportings are as follows:
| | October 31,
2007 | | October 31,
2006 | |
Financial statement basis of total assets | | $ | 34,021,002 | | $ | 2,554,943 | |
Add – Start up and organizational costs expensed for financial reporting | | | 456,192 | | | 150,171 | |
Subtract – Interest capitalized for financial reporting | | | (83,691 | ) | | — | |
| | | | | | | |
Taxable income tax basis of total assets | | $ | 34,393,503 | | $ | 2,705,114 | |
There are no differences in liabilities for financial and income tax reportings at October 31, 2007 and 2006, respectively.
F-10
SOY ENERGY, LLC
(A Development Stage Company)
Notes to Financial Statements
October 31, 2007 and 2006
7. COMMITMENTS AND CONTINGENCIES
Construction Contracts
The total cost of the project, including the construction and start-up expenses of the biodiesel plant is expected to approximately $60,686,000 with approximately $53,112,000 for construction costs and approximately $7,574,000 of start-up expenses and project costs. In April 2006, the Company purchased approximately 35 acres of land for $250,000 for the biodiesel plant near Marcus, Iowa.
In February 2006, the Company entered into an agreement with Renewable Energy Group for the construction of the plant. The Company paid a construction deposit of approximately $2,500,000 for preconstruction services. The Company terminated the agreement in June 2006 and received a refund $2,450,000 based on services not performed.
In July 2006, the Company entered into an agreement with Bratney Companies, a related party, to provide engineering and pre-construction services for $1,500,000, which was paid by October 31, 2006. The agreement required a design services deposit of $1,500,000, which will reduce payments under the construction contract. The general contractor invested $750,000 in the Company as part of the Iowa intrastate offering.
In June 2007, the Company entered into an agreement with Bratney Companies, a related party, to construct a 30 MGY biodiesel facility for a total contract price, including change orders, of approximately $48,855,000. Cost savings below this contract price, unless adjusted for change orders, will belong to Bratney Companies. The contract provides for various performance and quality specifications with liquidated damages up to 7.5% of the total contract cost, which are warranted by the technology and process providers, Cimbria SKET and Westfalia Separator, Inc. Delays in completion beyond November 2008, based on the original construction schedule, are provided for with a penalty of $7,500 a day for each day the contractor fails to meet the scheduled date, limited to $225,000. If the construction contract is terminated by the Company without cause, the Company shall pay costs incurred by the contractors in performing the project to date along with demobilization and subcontract termination fees. The Company made an additional design services deposit towards the construction contract of $3,950,000 during June 2007. Costs incurred total approximately $9,119,000 as of October 31, 2007. No amounts were incurred under this contract at October 31, 2006.
In August 2006, the Company entered into an agreement for an unrelated party to construct a boiler system for approximately $3,173,000, of which approximately $1,837,000 and $470,000 were incurred at October 31, 2007 and 2006, respectively.
In October 2007, the Company entered into an agreement for an unrelated party to construct an office building for approximately $382,000. Construction of the office began after October 31, 2007.
AgStar Financial Services, ACA Loan Commitment
In June 2007, the Company obtained a commitment from AgStar Financial Services, ACA to fund approximately $33,487,000 subject to AgStar successfully placing approximately $28,487,000 of the approximately $33,487,000 total commitment. Interest rates and terms of the credit arrangement are to be based on market rates at the date of financing. The Company paid a commitment fee upon receiving the commitment of $25,000.
AgStar has not placed approximately $28,487,000 of the approximately $33,487,000 commitment with other financial institutions. As a result, the Company has suspended construction until it can secure debt financing as described in Note 1 and 2.
F-11
SOY ENERGY, LLC
(A Development Stage Company)
Notes to Financial Statements
October 31, 2007 and 2006
Consulting Agreement
During July 2006, the Company entered into an agreement for an unrelated party to obtain environmental permits to operate the biodiesel facility for a fee not to exceed $80,000. As of October 31, 2007, approximately $62,000 had been incurred under this agreement.
Sales Agreement
In August 2006, the Company entered into an agreement with an unrelated party to market and purchase all the Company’s production for three years beginning the first day of production. The Company will pay a fee for the services provided of 1.0% of the net purchase price per gallon of bio-diesel purchased. The contract provides for automatic renewal for three years unless terminated by either party with 120 days notice.
Energy Supply Contract
On June 7, 2007, the Company entered into a contract for an unrelated party to provide process engineered fuel pellets to fuel the Company’s boiler system for ten years commencing the first day of operations unless the Company is not operating by June 1, 2009. The agreement provides for the Company to pay $3.00 per MMBTU for Process Engineered Fuel (PEF) pellets delivered to the Company.
8. RELATED PARTY TRANSACTIONS
In January 2006, the Company entered into an agreement with a related party to serve as temporary project manager, providing organizational and development services. The agreement, subject to termination upon the Company employing a permanent project manager or with 14 days notice, obligates the Company to pay $150 for each service day not to exceed $750 a calendar week plus reimbursement for expenses, plus $15,000 upon the Company employing a permanent manager and phasing out its temporary manager. Services totaling approximately $41,000 and $28,000 were provided during the periods ended October 31, 2007 and 2006, respectively. The related party is an investor and serves on the Company’s board of directors.
In May 2006, the Company entered into a consulting agreement with a related party to assist its temporary project manager. The agreement, subject to termination upon 14 days notice, obligates the Company to pay an initial $4,000, $150 for each service day not to exceed $750 a calendar week, and $16,000 upon the Company obtaining debt and equity capital to fund its business plan. Services totaling approximately $36,000 and $3,000 were provided during the periods ended October 31, 2007 and 2006, respectively. The related party is an investor and serves on the Company’s board of directors.
Bratney Companies invested $750,000 in the Company as part of the Company’s Iowa intrastate offering.
Certain members of the board of directors of the Company are also members of the board of directors of Farmers State Bank, which lent the Company money during 2006 and 2007.
F-12
SOY ENERGY, LLC
(A Development Stage Company)
Condensed Balance Sheets
ASSETS | | April 30,
2008 | | October 31,
2007 | |
| | (Unaudited) | | | | |
Current Assets | | | | | | | |
Cash and equivalents | | $ | 15,928,351 | | $ | 16,244,811 | |
Certificates of deposit | | | — | | | 1,850,000 | |
Other receivable - related party | | | 3,300,000 | | | — | |
Accrued interest receivable | | | 34,000 | | | 12,507 | |
Prepaid expenses | | | 9,869 | | | 2,250 | |
Total current assets | | | 19,272,220 | | | 18,109,568 | |
| | | | | | | |
Property, Plant and Equipment | | | | | | | |
Land | | | 250,262 | | | 250,012 | |
Equipment | | | 8,873 | | | 8,873 | |
Total | | | 259,135 | | | 258,885 | |
Accumulated depreciation | | | (1,605 | ) | | (718 | ) |
Total | | | 257,530 | | | 258,167 | |
Construction-in-progress | | | 8,580,444 | | | 11,093,267 | |
Net property, plant and equipment | | | 8,837,974 | | | 11,351,434 | |
| | | | | | | |
Other Assets | | | | | | | |
Design services deposit - related party | | | — | | | 4,535,000 | |
Loan commitment fee | | | 25,000 | | | 25,000 | |
Total other assets | | | 25,000 | | | 4,560,000 | |
Total Assets | | $ | 28,135,194 | | $ | 34,021,002 | |
| | | | | | | |
LIABILITIES AND MEMBERS’ EQUITY | | | | | | | |
| | | | | | | |
Current Liabilities | | | | | | | |
Accounts payable | | $ | 207,298 | | $ | 499,379 | |
Accounts payable - related party | | | — | | | 1,711,363 | |
Accrued expenses | | | 6,685 | | | 1,708 | |
Total current liabilities | | | 213,983 | | | 2,212,450 | |
| | | | | | | |
Members’ Equity | | | | | | | |
Member contributions, 33,768 units outstanding | | | 31,781,572 | | | 31,781,572 | |
(Deficit) income accumulated during development stage | | | (3,860,361 | ) | | 26,980 | |
Total members’ equity | | | 27,921,211 | | | 31,808,552 | |
| | | | | | | |
Total Liabilities and Members’ Equity | | $ | 28,135,194 | | $ | 34,021,002 | |
Notes to Unaudited Condensed Financial Statements are an integral part of this Statement.
F-13
SOY ENERGY, LLC
(A Development Stage Company)
Condensed Statements of Operations
| | Three Months
Ended
April 30,
2008 | | Three Months
Ended
April 30,
2007 | |
| | (Unaudited) | | (Unaudited) | |
Revenues | | $ | — | | $ | — | |
Operating Expenses | | | | | | | |
General and administrative expense | | | 49,348 | | | 35,259 | |
Professional fees | | | 116,354 | | | 40,005 | |
Impairment expense | | | 4,000,000 | | | — | |
Total operating expenses | | | 4,165,702 | | | 75,264 | |
| | | | | | | |
Operating Loss | | | (4,165,702 | ) | | (75,264 | ) |
| | | | | | | |
Other Income | | | | | | | |
Interest income | | | 128,741 | | | — | |
Total other income | | | 128,741 | | | — | |
| | | | | | | |
Net Loss | | $ | (4,036,961 | ) | $ | (75,264 | ) |
| | | | | | | |
Weighted Average Units Outstanding - Basic and Diluted | | | 33,768 | | | 3,100 | |
| | | | | | | |
Net Loss Per Unit - Basic and Diluted | | $ | (119.55 | ) | $ | (24.28 | ) |
Notes to Unaudited Condensed Financial Statements are an integral part of this Statement.
F-14
SOY ENERGY, LLC
(A Development Stage Company)
Condensed Statements of Operations
| | Six Months
Ended
April 30,
2008 | | Six Months
Ended
April 30,
2007 | | From Inception
(December 15,
2005) to
April 30,
2008 | |
| | (Unaudited) | | (Unaudited) | | (Unaudited) | |
| | | | | | | | | | |
Revenues | | $ | — | | $ | — | | $ | — | |
| | | | | | | | | | |
Operating Expenses | | | | | | | | | | |
General and administrative expense | | | 113,569 | | | 65,648 | | | 376,798 | |
Professional fees | | | 165,988 | | | 57,052 | | | 460,242 | |
Impairment expense | | | 4,000,000 | | | — | | | 4,000,000 | |
Total operating expenses | | | 4,279,557 | | | 122,700 | | | 4,837,040 | |
| | | | | | | | | | |
Operating Loss | | | (4,279,557 | ) | | (122,700 | ) | | (4,837,040 | ) |
| | | | | | | | | | |
Other Income | | | | | | | | | | |
Interest income | | | 392,216 | | | — | | | 963,655 | |
Other income | | | — | | | 250 | | | 13,024 | |
Total other income | | | 392,216 | | | 250 | | | 976,679 | |
| | | | | | | | | | |
Net Loss | | $ | (3,887,341 | ) | $ | (122,450 | ) | $ | (3,860,361 | ) |
| | | | | | | | | | |
Weighted Average Units Outstanding - Basic and Diluted | | | 33,768 | | | 3,100 | | | 13,799 | |
| | | | | | | | | | |
Net Loss Per Unit - Basic and Diluted | | $ | (115.12 | ) | $ | (39.50 | ) | $ | (279.76 | ) |
Notes to Unaudited Condensed Financial Statements are an integral part of this Statement.
F-15
SOY ENERGY, LLC
(A Development Stage Company)
Condensed Statements of Cash Flows
| | Six Months
Ended
April 30,
2008 | | Six Months
Ended
April 30,
2007 | | From Inception
(December 15,
2005) to
April 30,
2008 | |
| | (Unaudited) | | (Unaudited) | | (Unaudited) | |
| | | | | | | | | | |
Cash Flows from Operating Activities | | | | | | | | | | |
Net loss | | $ | (3,887,341 | ) | $ | (122,450 | ) | $ | (3,860,361 | ) |
Adjustments to reconcile net loss to net cash provided by (used for) operating activities: | | | | | | | | | | |
Depreciation | | | 887 | | | 167 | | | 1,605 | |
Impairment of long-lived assets | | | 4,000,000 | | | — | | | 4,000,000 | |
Write off of construction services related to terminated agreement | | | — | | | — | | | 50,000 | |
Changes in operating assets and liabilities: | | | | | | | | | | |
Accrued interest receivable | | | (21,493 | ) | | — | | | (34,000 | ) |
Prepaid expenses | | | (7,619 | ) | | 2,250 | | | (9,869 | ) |
Accounts payable | | | 80,855 | | | 41,282 | | | 106,167 | |
Accrued expenses | | | 4,977 | | | 1,012 | | | 6,685 | |
Net cash provided by (used for) operating activities | | | 170,266 | | | (77,739 | ) | | 260,227 | |
| | | | | | | | | | |
Cash Flows from Investing Activities | | | | | | | | | | |
Capital expenditures | | | (2,330,397 | ) | | (500,495 | ) | | (10,588,448 | ) |
Payments for design services deposit | | | — | | | — | | | (5,450,000 | ) |
Payments for construction deposit | | | — | | | — | | | (2,500,000 | ) |
Refund of construction deposit | | | — | | | — | | | 2,450,000 | |
Payments for certificates of deposit | | | (100,000 | ) | | — | | | (1,950,000 | ) |
Proceeds from maturing certificates of deposit | | | 1,950,000 | | | — | | | 1,950,000 | |
Net cash used for investing activities | | | (480,397 | ) | | (500,495 | ) | | (16,088,448 | ) |
| | | | | | | | | | |
Cash Flows from Financing Activities | | | | | | | | | | |
Proceeds from (payments on) revolving notes payable | | | — | | | 434,000 | | | — | |
Loan commitment fees | | | — | | | (25,000 | ) | | (25,000 | ) |
Members’ contributed capital | | | — | | | — | | | 31,968,000 | |
Payments for offering costs | | | (6,329 | ) | | (38,386 | ) | | (186,428 | ) |
Net cash provided by (used for) financing activities | | | (6,329 | ) | | 370,614 | | | 31,756,572 | |
| | | | | | | | | | |
Net (Decrease) Increase in Cash and Equivalents | | | (316,460 | ) | | (207,620 | ) | | 15,928,351 | |
| | | | | | | | | | |
Cash and Equivalents at Beginning of Period | | | 16,244,811 | | | 209,537 | | | — | |
| | | | | | | | | | |
Cash and Equivalents at End of Period | | $ | 15,928,351 | | $ | 1,917 | | $ | 15,928,351 | |
| | | | | | | | | | |
Supplemental Cash Flow Information | | | | | | | | | | |
Capitalized interest paid | | $ | — | | $ | 86,443 | | $ | 133,556 | |
| | | | | | | | | | |
Supplemental Schedule of Noncash Investing and Financing Activities | | | | | | | | | | |
Construction-in-progress included in accounts payable | | $ | 101,131 | | $ | 711,195 | | $ | 101,131 | |
Construction-in-progress applied against design services deposit | | $ | 48,675 | | $ | — | | $ | 963,675 | |
Offering costs included in accounts payable | | $ | — | | $ | 71,705 | | $ | — | |
Capitalized interest included in accrued expenses | | $ | — | | $ | 24,699 | | $ | — | |
Design services deposit applied against accounts payable to related party | | $ | 431,696 | | $ | — | | $ | 431,696 | |
Notes to Unaudited Condensed Financial Statements are an integral part of this Statement.
F-16
SOY ENERGY, LLC
(A Development Stage Company)
Notes to Unaudited Condensed Financial Statements
April 30, 2008 and 2007
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Soy Energy, LLC (a development stage Iowa limited liability company) was organized to develop, own and operate a 30 million gallon per year (MGY) production biodiesel facility between Cleghorn and Marcus, Iowa in Cherokee County. The Company was formed December 15, 2005 to have a perpetual life. As of April 30, 2008, Soy Energy is in the development stage with its efforts being principally devoted to organizational, financing, and project development activities. Construction began in June 2007 with completion originally expected in the first calendar quarter of 2009. In November 2007, the Company suspended construction on the project until debt financing can be secured as described in Notes 2 and 4. In April 2008, the Company’s members voted to reduce the project from a 30 MGY to a 15 MGY production biodiesel facility. The Company anticipates this change in the project to affect the carrying value of certain construction-in-progress assets and construction related amounts and has estimated impairment to be approximately $4,000,000 to $7,000,000. The Company has recorded an impairment charge of $4,000,000 at the end of the current quarter, which includes estimates related to being able to use certain construction-in-progress assets and receiving a refund of amounts paid to the former general contractor. The Company will continue to monitor and evaluate the usage of these long-lived assets to determine if any additional impairment is warranted.
In the opinion of management, the interim condensed financial statements reflect all adjustments, consisting of only normal recurring adjustments, considered necessary for fair presentation of the Company’s financial position as of April 30, 2008 and the results of operations and cash flows for all periods present.
Accounting Estimates
Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported revenues and expenses. Significant estimates include long-lived asset impairment analysis, amounts expended for construction-in-progress assets and construction related amounts as significant changes are expected to take place on the project. The Company noted that certain construction-in-progress assets and construction related amounts were impaired and has recorded a charge of $4,000,000 during the current quarter based on current plans to allow the use of corn oil as the primary feedstock and to reduce the plant size. The Company has recorded an anticipated refund of $3,300,000 for amounts paid to the former general contractor as other receivables, less amounts previously included with accounts payable. Actual results could differ from these estimates and it is at least reasonably possible that the estimates will change in the near term.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Equipment is depreciated over estimated service lives of related assets, three to seven years, using the straight-line method of accounting. Property, plant and equipment undergoing development that is not in service is shown on the balance sheet as construction-in-progress and is not depreciated. As the project has changed significantly, the Company recognized an impairment charge on construction-in-progress and other construction related amounts of $4,000,000 during the quarter ended April 30, 2008.
Ordinary maintenance and repairs are expensed as incurred. Cost of renewals and betterments are capitalized in appropriate property and equipment accounts and depreciated as discussed above.
F-17
SOY ENERGY, LLC
(A Development Stage Company)
Notes to Unaudited Condensed Financial Statements
April 30, 2008 and 2007
Long-Lived Assets
The Company reviews property and equipment and other long-lived assets for impairment in accordance with Statement of Financial Accounting Standards No. 144 (SFAS No. 144), Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of its carrying amount to future undiscounted cash flows the assets are expected to generate. In addition, the Company compares the carrying value of assets to similar assets to aid in determining the fair value. If property and equipment and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair value. As the project has changed significantly when the Company decided to change technologies to allow for corn oil as the primary feedstock and to reduce the size of the plant, the Company estimated to have an impairment charge of approximately $4,000,000 to $7,000,000 on construction-in-progress and other construction related amounts. During the quarter ended April 30, 2008, the Company recorded an impairment charge of $4,000,000 related to construction-in-progress.
2. LIQUIDITY
The Company is a developmental stage company and has no operating revenues. The Company does not currently produce biodiesel, as its project is under development. In November 2007, the Company suspended construction of the biodiesel plant while it worked to secure additional or new debt financing and to consider changes to the Company’s plant design including reducing the size of the plant. The Company’s current equity reserves will be sufficient to fund operations for the next year if it does not resume construction of the biodiesel plant. The Company does not plan on recommencing construction, at its current planned size, until new project agreements and financing plans have been signed.
3. CONSTRUCTION-IN-PROGRESS
The Company anticipated the construction to originally cost approximately $53,112,000 with approximately $41,286,000 remaining to be incurred at April 30, 2008. As the project was changed from a 30 MGY to a 15 MGY plant, construction is now anticipated to cost approximately $32,334,000. Due to the significant project changes, the Company estimated impairment of approximately $4,000,000 to $7,000,000. The Company has recorded an impairment charge of $4,000,000 during the quarter ended April 30, 2008 related to construction-in-progress.
Amounts included in construction-in-progress are as follows.
| | April 30,
2008 | | October 31,
2007* | |
Construction costs | | $ | 8,428,851 | | $ | 10,944,264 | |
Capitalized interest | | | 133,556 | | | 133,556 | |
Insurance and other costs | | | 18,037 | | | 15,447 | |
| | $ | 8,580,444 | | $ | 11,093,267 | |
* Derived from audited financial statements | | | | | | | |
Construction costs in accounts payable include approximately $101,000 and $502,000 of retainage at April 30, 2008 and October 31, 2007, respectively. The Company capitalized interest of approximately $134,000 since inception through October 31, 2007 and none during the six months ended April 30, 2008.
F-18
SOY ENERGY, LLC
(A Development Stage Company)
Notes to Unaudited Condensed Financial Statements
April 30, 2008 and 2007
4. COMMITMENTS AND CONTINGENCIES
Construction Contracts
The original total cost of the project, including the construction and start-up expenses of the biodiesel plant was expected to be approximately $60,686,000 with approximately $53,112,000 for construction costs and approximately $7,574,000 of start-up expenses and project costs. Due to the project changing from a 30 MGY to a 15 MGY plant, construction is now anticipated to cost approximately $55,003,000, with approximately $47,539,000 for construction costs, including a construction contingency of $1,646,000, and approximately $7,464,000 of start up expenses and project costs. The Company terminated the existing construction contracts when it decided to change technologies to allow for corn oil as the primary feedstock and to reduce the size of the plant. The Company is in the process of signing agreements with a new construction contractor.
In May 2008, the Company signed a letter of intent with a general contractor, an unrelated party, to construct a 15 MGY biodiesel facility for approximately $33,530,000 which is contingent upon obtaining adequate financing, and feedstock supplies. This amount includes infrastructure costs of approximately $1,196,000 already incurred. The general contractor will provide on-site technical assistance for one year from the start of operations and feedstock procurement services. In addition, the general contractor will provide ongoing technology and operational support services for $300,000 per year. The letter of intent provides that the general contractor would complete the plant by June 10, 2009 assuming the Company entered into a construction agreement with the general contractor by April 2008 and paid approximately $4,950,000 by June 10, 2008. The Company has not entered a construction agreement and has not paid any amounts to this general contractor.
In August 2006, the Company entered into an agreement for an unrelated party to construct a boiler system for approximately $3,173,000, of which approximately $2,023,000 were incurred at April 30, 2008.
In October 2007, the Company entered into an agreement for an unrelated party to construct an office building for approximately $382,000, of which approximately $59,000 was incurred at April 30, 2008.
Debt Placement Agent
In December 2007, the Company entered into an agreement with Piper Jaffray to act as participating debt placement agent to structure and market senior debt participations in a total amount of approximately $23,000,000. The Company will pay a placement fee of 1.0% of the aggregate amount of senior debt participations raised by Piper Jaffray at financial close. The agreement can be terminated by either party with 30 days written notice. If the agreement is terminated, the Company shall pay reasonable out-of-pocket expenses incurred to date by Piper Jaffray.
5. RELATED PARTY TRANSACTIONS
In January 2006, the Company entered into an agreement with a related party to serve as temporary project manager, providing organizational and development services. Services totaling approximately $1,000 and $17,000 were provided during the six months ended April 30, 2008 and 2007, respectively. The related party is an investor and serves on the Company’s board of directors.
In May 2006, the Company entered into a consulting agreement with a related party to assist its temporary project manager. Services totaling approximately $13,000 were provided during the six months ended April 30, 2007. No costs were incurred under this agreement during the six months ended April 30, 2008. The related party is an investor and serves on the Company’s board of directors.
6. SUBSEQUENT EVENTS
The Company entered into a termination agreement with the former general contractor in July 2008. The agreement provided for the refund of approximately $4,500,000. As of April 30, 2008 we estimated only $3,300,000 of this amount was refundable. We had estimated that approximately $1,200,000 of the $4,500,000 in design service deposit paid was incurred by the general contractor for construction costs. The Company entered into a redemption agreement at the same time in which the Company redeemed at fair value 750 member units held by the general contractor. In addition, further analysis of long-lived assets indicated approximately $1,920,000 of additional impairment. This amount was expensed in the three months ended July 31, 2008.
F-19
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
King, Reinsch, Prosser & Co., L.L.P., Certified Public Accountants (“KRP”), has been the company’s accountant’s since its inception. KRP’s accountants reports on the company’s March 31, 2007 compiled financial statements did not contain an adverse disclaimer or modification. Soy Energy LLC’s decision to use Boulay, Heutmaker, Zibell & Co., P.L.L.P. to audit Soy Energy, LLC’s October 31, 2007 financial statement was approved by the company’s board of directors. There are no disagreements with KRP on any matter of accounting principles or practices, financial statement disclosure, auditing scope or procedure, which, if not resolved to KRP’s satisfaction, would have caused it to make reference to the subject matter of the disagreement(s) in connection with its report. A copy of this disclosure has been provided to KRP and we have not received a response disagreeing with the terms of this disclosure. Boulay, Heutmaker, Zibell & Co., P.L.L.P., Certified Public Accountants, has been the company’s independent registered public accounting firm since December 10, 2007.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
The following exhibits and financial statements are filed as part of, or are incorporated by reference into, this report:
The financial statements appear beginning at page F-3 of this report.
| (2) | Financial Statement Schedules |
All supplemental schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.
Exhibit No. | Exhibit | | Filed Herewith | | Incorporated by Reference |
3.1 | Articles of Organization of Soy Energy, LLC, filed with the Iowa Secretary of State on December 15, 2005. | | | | Incorporated by reference to the exhibit of the same number in the Registrant’s Form 10 registration statement filed with the Commission on February 28, 2008. |
| | | | | |
3.2 | Operating Agreement of the registrant, dated December 15, 2005. | | | | Incorporated by reference to the exhibit of the same number in the Registrant’s Form 10 registration statement filed with the Commission on February 28, 2008. |
| | | | | |
10.1 | Proposal to Provide Environmental Permitting Services between Stanley Consultants, Inc. and Soy Energy, LLC, dated July 7, 2006 | | | | Incorporated by reference to the exhibit of the same number in the Registrant’s Form 10 registration statement filed with the Commission on February 28, 2008. |
| | | | | |
10.2 | Bio-Diesel Marketing Contract between Eco-Energy, Inc. and Soy Energy, LLC, dated August 29, 2006. | | | | Incorporated by reference to the exhibit of the same number in the Registrant’s Form 10 registration statement filed with the Commission on February 28, 2008. |
58
10.3 | Master Contract between Iowa Department of Economic Development to Soy Energy, LLC, dated January 10, 2007. | | | | Incorporated by reference to the exhibit of the same number in the Registrant’s Form 10 registration statement filed with the Commission on February 28, 2008. |
| | | | | |
10.4 | Commitment Letter between AgStar Financial Services, ACA and Soy Energy, LLC, dated June 7, 2007. | | | | Incorporated by reference to the exhibit of the same number in the Registrant’s Form 10 registration statement filed with the Commission on February 28, 2008. |
| | | | | |
10.5 | PEF Pellet Supply Contract between Cherokee County Solid Waste Commission and Soy Energy, LLC, dated June 13, 2007. | | | | Incorporated by reference to the exhibit of the same number in the Registrant’s Form 10 registration statement filed with the Commission on February 28, 2008. |
| | | | | |
10.6 | Standard Form Design-Build Agreement and General Conditions Between Owner and Contractor between The Ken Bratney Company and Soy Energy, LLC, dated June 20, 2007. + | | | | Incorporated by reference to the exhibit of the same number in the Registrant’s Form 10 registration statement filed with the Commission on February 28, 2008. |
| | | | | |
10.7 | Water User’s Agreement for New Member between Cherokee County Rural Water District No. One and Soy Energy, LLC, dated December 26, 2007. | | | | Incorporated by reference to the exhibit of the same number in the Registrant’s Form 10 registration statement filed with the Commission on February 28, 2008. |
| | | | | |
10.8 | Letter of Intent between BEST BioDiesel, Inc. and Soy Energy, LLC, dated May 12, 2008. | | | | Incorporated by reference to the exhibit of the same number in the Amendment No. 1 to Registration Statement on Form 10 filed with the Commission on June 16, 2008. |
| | | | | |
10.9 | Crude Corn Oil Purchase Agreement dated June 24, 2008, between Soy Energy, LLC and Little Sioux Corn Processors LLLP | | X | | |
| | | | | |
10.10 | Termination Agreement dated July 23, 2008, between Soy Energy, LLC and The Ken Bratney Company. | | X | | |
| | | | | |
10.11 | Limited Liability Company Membership Unit Redemption Agreement dated July 23, 2008, between Soy Energy, LLC and K.B.C. Group, Inc. | | X | | |
| | | | | |
10.12 | Crude Corn Oil Purchase Agreement dated August 15, 2008, between Soy Energy, LLC and Siouxland Ethanol, LLC. | | X | | |
| | | | | |
16.1 | Letter from King, Reinsch, Prosser & Co., L.L.P., regarding change in certifying accountant. | | | | Incorporated by reference to the exhibit of the same number in the Registrant’s Form 10 registration statement filed with the Commission on February 28, 2008. |
+ Confidential Treatment Requested.
59
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
| | SOY ENERGY, LLC |
Date: September 12, 2008
| | By: |
/s/
| Charles Sand |
| | | | Charles Sand, Chairman |
60
