UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A-2

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from __________ to ____________.

Commission file number: 000-52614

Show Me Ethanol, LLC

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

Missouri		20-4594551
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)

P. O. Box 9

26530 Highway 24 East, Carrollton, Missouri 64633

(Address of principal executive offices)

(660) 542-6493

(Issuer’s telephone number)

Check whether the small business issuer (1) 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 small business issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes o No x

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).

Yes o No o

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 definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

As of March 31, 2009, the latest practicable date, 1,498 of the issuer’s Class A Membership Units, were issued and outstanding.

EXPLANATORY NOTE

This Amendment No. 2 on Form 10-Q/A (the “Amendment”) amends Show Me Ethanol, LLC’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, originally filed on May 15, 2009 and subsequently amended on July 1, 2009 by Amendment No. 1 on Form 10-Q/A. The Amendment is being filed solely to correct the certifications that were submitted as attached exhibits.

We have repeated the entire text of the Quarterly Report in this Amendment. However, there have been no changes to the text of the Quarterly Report, other than (1) the updating of page numbers in the table of contents and (2) the new certifications by the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002.

Except as expressly set forth above, this Amendment does not, and does not purport to, amend, update or restate the information in any other item of the Form 10-Q or reflect any events that have occurred after the filing of the original Form 10-Q or Form 10-Q/A.

TABLE OF CONTENTS

			Page
PART I -FINANCIAL INFORMATION			4

	Item 1.	Financial Statements (Unaudited)	4

		Balance Sheet	4

		Statements of Operations	5

		Statement of Members’ Equity	6

		Statements of Cash Flows	7

		Notes to Unaudited Financial Statements	8

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Result of Operations	16

	Item 3.	Quantitative and Qualitative Discussion of Market Risks	21

	Item 4.	Controls and Procedures	21

PART II - OTHER INFORMATION			23

	Item 1.	Legal Proceedings	23

	Item 1a.	Risk Factors	23

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34

	Item 3.	Defaults Upon Senior Securities	34

	Item 4.	Submission of Matters to a Vote of Security Holders	34

	Item 5.	Other Information	34

	Item 6.	Exhibits	35

PART 1 - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SHOW ME ETHANOL, LLC

CONDENSED BALANCE SHEETS

March 31, 2009 and December 31, 2008

	March 31, 2009			December 31, 2008
	(unaudited)

ASSETS
CURRENT ASSETS
Cash	$	6,447,708		$	608,143
Accounts receivable		2,290,535			2,304,855
Prepaid expenses		321,703			537,141
Inventory		4,265,773			4,101,379
Total current assets		13,325,719			7,551,518

PROPERTY, PLANT AND EQUIPMENT
Operating equipment		69,619,289			69,265,196
Land and buildings		11,732,018			11,732,018
Accumulated depreciation		(6,814,400	)		(4,822,163	)
Property, plant and equipment, net		74,536,907			76,175,051

OTHER ASSETS		605,116			616,665
Total assets	$	88,467,742		$	84,343,234

LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES
Accounts payable, including related party; 2009 - $2,290,792, 2008 - $938,751	$	3,073,855		$	1,361,804
Accrued expenses		428,571			449,223
Accrued loss on forward contracts		-			14,135,849
Current portion of long term debt and revolving line of credit		8,627,656			50,702,495
Total current liabilities		12,130,082			66,649,370

LONG-TERM DEBT		58,879,524			3,711,465
Total liabilities		71,009,606			70,360,835

MEMBERS' EQUITY
Class A capital units, 1,498 issued		26,132,300			22,969,600
Class B capital units, 422 issued		8,317,365			6,317,365
Class C capital units, 213 issued		3,889,386			3,189,118
Retained earnings (deficit)		(20,880,915	)		(18,493,684	)
Total members' equity		17,458,136			13,982,399
Total liabilities and members' equity	$	88,467,742		$	84,343,234

See Notes to Condensed Financial Statements

SHOW ME ETHANOL, LLC

CONDENSED STATEMENTS OF OPERATIONS

For the Three Months Ended March 31

(unaudited)

	2009			2008

SALES
Ethanol Sales	$	16,950,134		$	-
Distillers Sales to related parties		3,999,702			-
Ethanol producer credit		209,924			-
Total sales		21,159,760			-
COST OF SALES
Cost of sales (Note 10)		21,410,756			-
Loss on forward contracts		1,364,152			-
Total cost of sales		22,774,908			-
Gross loss		(1,615,148	)		-
GENERAL AND ADMINISTRATIVE
EXPENSES
General and administrative expenses		537,532			215,035
Total general and administrative expenses		537,532			215,035
Operating loss		(2,152,680	)		(215,035	)
OTHER INCOME (EXPENSE)
Interest expense		(608,010	)		-
Grant income
Interest and other income		373,459			26,733
Net other income (expense)		(234,551	)		26,733
Net loss	$	(2,387,231	)	$	(188,301	)

Net loss per unit - basic and diluted	$	(1,119.19	)	$	(88.28	)

Weighted average units outstanding - basic and diluted
		2,133			2,133

See Notes to Condensed Financial Statements

SHOW ME ETHANOL, LLC

CONDENSED STATEMENTS OF MEMBERS' EQUITY

For the Three Months Ended March 31, 2009 (unaudited) and the Year ended December 31, 2008

	Class A				Class B				Class C				Retained
Balance January 1, 2008		1,498	$	22,969,600		422	$	6,317,365		213	$	3,189,118	$	488,670		$	32,964,753
Net loss		-		-		-		-		-		-		(18,982,354	)		(18,982,354	)
Balance, December 31, 2008		1,498	$	22,969,600		422	$	6,317,365		213	$	3,189,118	$	(18,493,684	)	$	13,982,399
Capital contribution			$	3,162,700			$	2,000,000			$	700,268					5,862,968
Net loss		-		-		-		-		-		-		(2,387,231	)		(2,387,231	)
Balance, March 31, 2009		1,498	$	26,132,300		422	$	8,317,365		213	$	3,889,386	$	(20,880,915	)	$	17,458,136

See Notes to Condensed Financial Statements

SHOW ME ETHANOL, LLC

CONDENSED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31

(unaudited)

	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(2,387,231	)	$	(188,302	)
Items not requiring (providing) cash:
Depreciation and amortization		2,012,962

Changes in:
Accounts receivable		14,320			(19,311	)
Prepaid expenses		215,438			35,322
Accounts payable and accrued expenses		1,691,399			(20,148	)
Inventories		(164,394	)		-
Accrued loss on forward contracts		(135,849	)
Other assets and liabilities		825			-
Net cash provided (used) by operating activities		1,247,470			(192,439	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment		(354,094	)		(16,598,804	)
Net cash used in investing activities		(354,094	)		(16,598,804	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt and revolving line of credit		1,123,000			14,643,960
Payments on capital lease obligations		(7,744	)
Payments for financing costs		(10,000	)		(11,880	)
Principal payments on long-term debt		(22,035	)		-
Voluntary capital contribution		3,862,968			-
Net cash provided by financing activities		4,946,189			14,632,080
Net change in cash		5,839,565			(2,159,163	)
Cash, beginning of period		608,143			4,652,087
Cash, end of period	$	6,447,708		$	2,492,924

Supplemental Cash Flow Information
Interest paid (net of amount capitalized)	$	526,441
Settlement of accrued loss on forward contracts by issuance of long-term debt		12,000,000
Settlement of accrued loss on forward contracts in lieu of capital contribution		2,000,000
Construction in progress included in accounts payable				$	3,032,071
Loan fees included in other assets capitalized in construction in progress					254,688

See Notes to Condensed Financial Statements

SHOW ME ETHANOL, LLC

NOTES TO CONDENSED FINANCIAL STATEMENTS

March 31, 2009

(Unaudited)

1.	SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation: The accompanying condensed financial statements reflect all adjustments that are, in the opinion of the Company's management, necessary to fairly present the financial position, results of operations and cash flows of the Company. Those adjustments consist only of normal recurring adjustments. The results of operations for the period are not necessarily indicative of the results to be expected for a full year. The condensed balance sheet as of December 31, 2008 has been derived from the audited balance sheet of the Company as of that date. Certain information and note disclosures normally included in the Company's annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed financial statements should be read in conjunction with the financial statements and notes thereto in the Company's Form 10-K Annual Report for 2008 filed with the Securities and Exchange Commission, as amended.

Description of business: Show Me Ethanol, LLC is a limited liability company organized in the State of Missouri for the purpose of developing, owning and operating a 55 million gallon per year dry-mill ethanol plant and a related co-products processing facility in west central Missouri. Show Me Ethanol, LLC was organized on January 24, 2006 and began operations May 22, 2008 and ceased reporting as a development stage company as of that date. The total deficit accumulated during the development stage amounted to approximately $57,000. The financial statements are presented in accordance with generally accepted accounting principles in the United States of America.

Fiscal reporting period: The Company has adopted a fiscal year ending December 31st for reporting financial operations.

Management estimates: Management uses estimates and assumptions in preparing these financial statements in accordance with U.S. generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from the estimates that were used.

Cash: Cash consists principally of a collateralized interest bearing repurchase account which provides the Company security on balances that exceed the FDIC insurance limit on demand deposit accounts.

Land easement and engineering services: Costs incurred for the purchase of the land easements are capitalized. Engineering costs that relate to future acquisition of property and equipment are capitalized. Depreciation or amortization of engineering costs is computed using the straight line method over the estimated useful life of the related assets when the assets are placed in service.

Property, plant and equipment: Property, plant and equipment is stated at cost. Depreciation is computed using the straight-line method over their estimated useful lives of three to twenty years.

Accounts receivable: Accounts receivable are stated at the amount billed to customers. The Company, if necessary, provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. Accounts receivable are ordinarily due in 15 and 7 days for distillers and ethanol products, respectively after the issuance of the invoice. Accounts past due more than 30 days are considered delinquent. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the customer.

Capitalized interest: Interest costs incurred on borrowings during the construction period were capitalized as part of the cost of the ethanol plant. Total interest and fees capitalized during the year ended December 31, 2008 was $967,847. No interest was capitalized during first quarter 2009. Capitalized interest from inception through startup at May 22, 2008, was $1,532,303.

Income taxes: The Company is organized as a limited liability company under Missouri law. As a limited liability company that has elected to be taxed as a partnership, the Company’s earnings pass through to the members and are taxed at the member level. Accordingly, no income tax provision has been included in these financial statements. Differences between the financial statement basis of assets and the tax basis of assets is related to depreciation and the capitalization and amortization of organization and start-up costs for tax purposes, whereas these costs were expensed for financial statement purposes.

Earnings per capital unit: For purposes of calculating basic earnings per capital unit, capital units subscribed for and issued by the Company are considered outstanding on the effective date of issuance. As a result of the March 31, 2009 voluntary capital fundraising, the Company has modified the allocation method for distributions and earnings. As of March 31, 2009 distributions and earnings will be allocated based on individual member’s contributed capital as a percentage of total capital contributed. The Company maintains capital accounts by individual members. For purposes of calculating diluted earnings per capital unit, subscribed units are included in the calculation of earnings per unit based on the treasury unit method. There were no differences between basic and diluted earnings per unit for any periods from inception through March 31, 2009.

Capital contributions: On March 31, 2009 the Company completed a fundraising totaling $3,862,968 in cash and $2,000,000 in settlement of corn forward contract liability as part of a voluntary capital fundraising from current members (the “Fundraising”). As part of the Fundraising, participating member’s capital accounts were credited by the amount of each member’s capital contribution, resulting in such contributing members owning a greater percentage of the business in the form of voting rights and distributions than before the fundraising, however no additional membership units were issued.

Revenue recognition: Revenue from the production of ethanol and related products is recorded at the time title to the goods and all risks of ownership transfers to the customers. This generally occurs upon shipment to customers. Interest income is recognized as earned. Income from government incentive programs is recognized as ethanol is produced and requests for reimbursement are filed by the Company.

Missouri tax credits: The Company has recognized $371,021 in Missouri Enhanced Enterprise Zone tax credits in Other Income on the Condensed Statement of Operations at March 31, 2009.

Fair value of financial instruments: Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2009, and December 31, 2008. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due primarily to their short-term nature or variable interest rate terms. These financial instruments include cash, accounts receivable, accounts payable, and long-term debt. Fair values were assumed to approximate carrying values for these financial instruments.

Recently issued accounting pronouncements: On March 19, 2008, The FASB issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities – an Amendment of FASB Statement 133. Statement 161 enhances required disclosures regarding derivatives and hedging activities, including enhanced disclosures regarding how: (a) an entity uses derivative instruments; (b) derivative instruments and related hedged items are accounted for under FASB Statement 133, Accounting for Derivative Instruments and Hedging Activities; and (c) derivative instruments and related hedged items effect an entity’s financial position, financial performance, and cash flows. Specifically, Statement 161 requires:

Disclosure of the objective for using derivative instruments be disclosed in terms of underlying risk and accounting designation;

Disclosure of the fair values of derivative instruments and their gains and losses in a tabular format;

Disclosure of information about credit-risk related contingent features; and

Cross-reference from the derivative footnote to other footnotes in which derivative-related information is disclosed.

Statement 161 is effective for fiscal years and interim periods beginning after November 15, 2008. As of March 31, 2009, the Company does not hold any derivative instruments. As a result, the adoption of this Statement had no impact on the financial statements of the Company.

Forward contracts: The Company has used forward contracts to manage the exposure to price risk related to corn purchases and ethanol sales. At March 31, 2009, the Company had no forward purchase contracts. Settlement of forward sales contracts occurs through delivery of quantities expected to be sold by the Company over a reasonable period in the normal course of business. As a result, these forward contracts qualify for the normal purchases and sales exception under the provision of Statement of Financial Accounting Standards No. 133 Accounting for Derivative Instruments and Hedging Activities. This exception exempts these contracts from being recorded at fair value and instead subjects them to a lower of cost or market evaluation. Should the cost of forward contracts exceed the market value of contracts that qualify for the normal purchases and sales exception, an unrealized loss will be recognized by the Company in results of operations in the period the loss occurs. The Company recorded unrealized losses on forward contracts totaling approximately $14,136,000 for the year ended December 31, 2008. See also Note 12.

2.	RELATED PARTIES

On April 30, 2007 the Company entered into an agreement of right of first purchase and right of first refusal with Ray-Carroll County Grain Growers, Inc. (also herein as “Ray-Carroll”), an investor (the “buy-sell agreement”). Pursuant to the buy-sell agreement, the Company has granted a right of first purchase and a right of first refusal to purchase all or any part of the property comprising the ethanol plant. In exchange, Ray-Carroll County Grain Growers, Inc. has granted the Company a right of first purchase and a right of first refusal to purchase all or any part of certain grain elevator property. The buy-sell agreement’s term is through April 30, 2027.

The Company also has multiple agreements in place with Ray-Carroll County Grain Growers, Inc., as noted in Note 10 and has sold subordinated secured notes to investors as more fully described in Note 7.

3.	INVENTORIES

Inventories are physically counted at each month end and are valued using the lower of first-in first-out (FIFO) cost or market. They consisted of the following at March 31, 2009:

Ethanol	$	1,868,259
Corn		229,299
Distillers dried grains		281,611
Work in process		1,192,534
Production chemicals		270,070
Other		424,000
Total	$	4,265,773

4.	INTANGIBLE ASSETS

Intangible assets are recorded at cost. Loan origination costs are being amortized over the term of the related loans using the interest method. The carrying basis and accumulated amortization of recognized intangible assets recorded in other assets at March 31, 2009 and December 31, 2008, were:

	March 31, 2009				December 31, 2008
	Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated
Amortized intangible assets	Amount		Amortization		Amount		Amortization
Loan origination costs	$	541,217	$	106,760	$	531,217	$	86,036
Permits		98,832		-		95,857		-
Total	$	640,049	$	106,760	$	627,074	$	86,036

Amortization expense for the three months ended March 31, 2009 and 2008 was $20,724 and zero dollars respectively. Estimated amortization expense for each of the following five years is:

2010	$	78,369
2011		70,083
2012		61,797
2013		53,511
2014		45,226

6. REVOLVING CREDIT AGREEMENT

On November 6, 2007, the Company entered into a revolving credit agreement with FCS for up to $5 million. Borrowings under the revolving credit agreement are subject to availability under a borrowing base calculation based on accounts receivable, inventory and accounts payable. Each borrowing, at the option of the Company, can be a revolving base rate loan or a revolving LIBOR rate loan plus 3.5% at December 31, 2008, and 2.5% at March 31, 2009. The interest rates at December 31, 2008 and March 31, 2009 were 5.4% and 3.0%, respectively. The revolving credit agreement includes a 0.50% closing fee, paid at closing on the entire amount of the revolving loan commitment and an unused commitment fee of 0.30% of the unused portion of the revolving loan commitment, payable monthly. During the three month periods ended March 31, 2009 and 2008, the Company paid $1,653 and $22,704, respectively, of unused commitment fees. The amount paid in 2008 was capitalized as property, plant and equipment prior to the plant becoming operational in May, 2008. The revolving credit agreement is secured by all of the Company’s real property and personal property now owned or hereafter acquired by the Company. On March 31, 2009, the Company amended its revolving credit agreement among the Company and the Senior Lender executed on November 6, 2007 (the “Revolving Loan”) to modify the maturity date of the Revolving Loan to be due in full on June 2, 2010. As of March 31, 2009 and December 31, 2008, the outstanding balance of the credit agreement was $3,775,245 and $2,652,245, respectively.

Under the terms of the revolving credit agreement, the Company may request that FCS issue one or more letters of credit, subject to borrowing availability. The Company agrees to pay FCS a fee of 2.5%, payable quarterly, on the face amount of each letter of credit issued. As of March 31, 2009, a $120,000 undrawn letter of credit was issued by FCS on behalf of the Company to cover bonding provisions. The letter of credit had a one-year term and was considered a portion of the revolving credit agreement. At December 31, 2008 there were no letters of credit outstanding.

7. FINANCING ARRANGEMENTS

Construction note and Term Loan (A)	$	48,000,000
Subordinated related party note (B)		12,000,000
Equipment notes (C)		61,198
Capital lease obligations (D)		80,737
Subordinated related party notes (E)		3,590,000
Total long term debt		63,731,935
Less current maturities		4,852,411
	$	58,879,524

(A) On March 1, 2007, the Company entered into a credit agreement with FCS Financial, PCA (FCS) under which FSC will perform agent and servicing responsibilities in the closing and funding of a $48 million construction and term loan agreement for the Company. Under the terms of the loan agreement, the Company was obligated to spend a minimum of $15,800,000 on the ethanol project using equity funds before requesting draws on the construction loan. The loan is secured by all of the Company’s real property and personal property now owned or hereafter acquired by the Company. The construction loan accrued interest at a variable rate.

The construction loan was converted to a term loan October 7, 2008 and is being repaid over ten years starting on the conversion date. The Company will make quarterly principal payments of $1,200,000 beginning February 1, 2009, with interest payable monthly at the prime rate at December 31, 2008, and at LIBOR plus 3.5% at March 31, 2009 (4.0% at December 31, 2008, and March 31, 2009, respectively). The Company will also be required to pay fifty percent of its excess cash flow, as defined in the loan agreement, on an annual basis to repay the loan until such time as $15,000,000 of excess cash flow has been used to reduce the principal balance of the loan.

On March 31, 2009, the term loan and revolving credit agreement were amended. The amendment permits the Company to defer up to four term loan principal payments, delays the excess cash flow sweep until January 1, 2011, requires the Company to comply with new cash flow reporting and hedging policy obligations, requires the Company to hire a plant manager and a risk manager, and requires the Company to make a commercially reasonable inquiry into amending its existing air permit. The amendment also deletes the Minimum Equity and the Minimum Net Worth covenants after March 31, 2009 until the maturity date of the loan. The amendment also resets the financial requirements of the Minimum Working Capital and the Minimum Fixed Charge Coverage covenants. Pursuant to the term loan amendment, the Company deferred its February 1, 2009 term loan payment.

The Company was in compliance with the loan covenants as of March 31, 2009.

(B) Simultaneous with the closing of the Fundraising and financing amendments, the Company entered into a Conversion Agreement, dated as of March 31, 2009 with Ray-Carroll County Grain Growers, Inc. to settle the outstanding forward corn purchase contracts at $15.5 million, make payment to Ray-Carroll on the corn contracts in the amount of $1.5 million, provide settlement of $2.0 million of the corn contracts liability in exchange for a $2.0 million capital contribution and settle the remaining liability through the Company’s issuance of a $12 million subordinated secured promissory note to Ray-Carroll. Ray-Carroll is the largest equity owner of the Company, the Company’s sole distributor of distillers’ grains and the Company’s sole supplier of corn (See Note 11). In addition, the Conversion Agreement also establishes certain financial conditions whereby a previously issued $1 million 9% Subordinated Secured Promissory Note issued by the Company to Ray-Carroll on June 5, 2008 may mature on June 5, 2011 instead of June 5, 2010 (see section D). In return for the potential delayed maturity of the $1 million note, the Company may not make financial distributions to its members until such $1 million note is repaid.

The $12 million note will mature on March 31, 2014 and bears interest, payable quarterly, at the rate of LIBOR plus 4.5%. Principal is due at maturity; however, the note also contains an excess quarterly cash sweep that is effective upon the end of the first quarter in 2011, granting Ray-Carroll 50% of all such excess quarterly cash as defined. The $12 million note is secured by a leasehold deed of trust pledged by the Company to Ray-Carroll as defined for the ethanol plant’s real property. The $12 million note is also secured by a security agreement which grants a security interest to Ray-Carroll over substantially all the Company’s current or future personal property as collateral for the $12 million note.

In connection with the settlement of the outstanding corn contracts with Ray-Carroll and the credit agreement amendments with FCS, on March 31, 2009, Ray-Carroll, FCS and the Company entered into an Intercreditor Agreement to contractually establish that the obligations of the term loan and revolving loan to FCS are senior to the obligations of the $12 million Note to Ray-Carroll. The Intercreditor Agreement also establishes the rights and obligations of each party should the Company declare bankruptcy or default under its existing agreements.

(C) In March 2007, the Company purchased a piece of equipment for $113,800 with $106,300 being financed by the equipment manufacturer. The Company is required to make five annual payments of $23,383, including interest at 5.0% with the last payment being due in March 2011. As of March 31, 2009, the outstanding balance on this loan is $43,466. The Company has an equipment note payable totaling $17,732. This note is due in 36 monthly installments of principal and interest of $701, with the final installment due July, 2011. The note accrues interest at a variable rate of Citibank, N. A. prime plus 0.60% (3.85% at December 31, 2008, and March 31, 2009). These loans are collateralized by the equipment.

(D) The Company leases office equipment under a capital lease for a term of four years expiring in February 2012. The lease obligation is payable in monthly installments of $636 with a final installment of $2,891 at maturity. The Company also leases lab equipment under a capital lease for a term of four years expiring March, 2012. The lease obligation is payable in monthly installments of $1,507 with a final installment of $8,210 at maturity.

(E) On June 5, 2008, the Company entered into a purchase agreement whereby approximately 40 accredited investors named therein purchased approximately $3.6 million worth of 9% subordinated secured notes issued by the Company. The Subordinated Notes bear interest at 9% per annum computed on the basis of a 360-day year for the actual number of days elapsed and will mature on June 4, 2010. Principal of $2,590,000 is due at maturity; however as disclosed in section (B), $1 million of the principal amount due Ray-Carroll County Growers, Inc. may be extended to June 5, 2011 based on the financial conditions of the Company. Interest is payable annually, with the first installment being payable on June 5, 2009, including the maturity date. The Subordinated Notes are secured pursuant to a loan and security agreement among the Company as debtor, the State Bank of Slater as agent and the holders from time to time as a party thereto as lenders dated June 5, 2008, whereby the Company granted a second lien security interest over substantially all of Company’s personal property in support of the obligation to repay the Subordinated Notes. The Subordinated Notes are also secured by a leasehold deed of trust, assignment of rents and security agreement, among the Company as grantor, Thomas Kreamer as trustee and the Bank of Slater as grantee dated June 5, 2008. The Company also agreed that debt created by the issuance of the Subordinated Notes is subordinate to loans provided primarily by FCS Financial, PCA, as specified in the Intercreditor/Subordination Agreement executed on June 5, 2008 among the Company, the Senior Lender and the Investors. In connection with the issuance of Subordinated Notes, the Company amended its construction term loan agreement among the Company and the Senior Lender, as administrative agent and the other lenders thereto, executed on March 7, 2007. The Term Loan was amended on June 2, 2008 by the Company and the Senior Lender, as administrative agent and the other lenders thereto, to permit the issuance of Subordinated Notes by the Company.

The estimated maturities of long-term debt during the years ending March 31, are as follows:

	Revolving line
	of credit and
	Long Term		Capital Lease
	Debt		Obligations
2010	$	4,828,778	$	25,720
2011		7,420,263		25,720
2012		5,802,157		34,040
2013		4,800,000
2014		16,800,000		-
Thereafter		24,000,000		-
Total long-term debt	$	63,651,198		85,480
Less amount representing interest				(4,743	)
Present value of future minimum lease payments			$	80,737

As of March 31, 2009 property, plant, and equipment included equipment under capital lease totaling $105,520 with accumulated depreciation of $16,555.

8. CHAPTER 100 BONDS

In September 2006, the Company entered into an Economic Development Agreement with the County of Carroll, Missouri to implement a tax abatement plan under Missouri Statutes Chapter 100. The plan provides for 100% abatement of real property taxes for twenty years (through December 2028) to improve the Company’s cash flow and savings of expenses. Under the plan, legal title of the Company’s real property will be transferred to the County. On April 29th, 2008 the County issued bonds under Chapter 100 of the Missouri Revised Statutes in the aggregate amount of $88.5 million. The bonds were issued to the Company, so no cash exchanged hands. The County then leased the real estate back to the Company. The lease payments will equal the amount of the payments on the bonds. All of the Company’s right, title, and interest in the bonds are pledged to their finance company as additional security for the term loan. At any time, the Company has the option to purchase the real property by paying off the bonds, paying the trustee fees, plus $1,000.

In return for the abatement of property taxes by the County, the Company has agreed to pay the County an issuance fee of $10,000 and an additional $10,000 on each anniversary date thereafter until the bonds are no longer outstanding. In addition, the Company has agreed to make annual grant payments in lieu of property taxes beginning in 2009 in the amount of $90,000 for twenty years, the expected term of the bonds. The Company also agrees to pay the fees of the bond counsel for the transaction and any financial advisor selected by the County. Due to the form of the transaction, the Company has not recorded the bond or the capital lease associated with sale lease-back transaction. The original cost of the Company’s property and equipment is being recorded on the balance sheet and will be depreciated accordingly. To correlate with the mortgaged debt, the bond has also been assigned to the senior lender as collateral.

9. REGULATION

The construction of the plant requires various state and local permits to comply with existing governmental regulations designed to protect the environment and worker safety. The Company is subject to regulation on emissions of the United States Environmental Protection Agency (EPA) which require the Company to obtain air, water and other permits or approvals in connection with the construction and operation of the Company’s business. State and federal rules can and do change and such changes could result in greater regulatory burdens on the Company.

Ethanol production will require the Company to emit a significant amount of carbon dioxide into the air. Current Missouri law regulating emission does not restrict or prevent the Company from emitting carbon dioxide in to the air, but this could change in the future.

The Company has obtained the necessary air and water permits to operate the plant, including a permit to discharge wastewater from the plant.

In addition to the foregoing regulations affecting air and water quality, the Company is subject to regulation for fuel storage tanks. If the Company is found to have violated federal, state or local environmental regulations in the future, the Company could incur liability for clean-up costs, damage claims from third parties and civil and criminal penalties that could adversely affect its business.

10. COMMITMENTS, CONTINGENCIES AND SUBSEQUENT EVENTS

The Company has taken assignment from Ray-Carroll County Grain Growers, Inc. of an agreement with U.S. Energy Services, Inc. for energy management and engineering services. The initial term of the agreement began on December 1, 2005 and will continue until May, 2009. Thereafter the agreement will be month-to-month. The agreement currently provides for fees of $3,262 per month with an annual increase of 4% each year on the anniversary date. Total fees for the three months ended March 31, 2009, and 2008 were $9,536 and $9,411, respectively.

As of March 31, 2009 and December 31, 2008, amounts due Ray-Carroll County Grain Growers, Inc. included in accounts payable totaled approximately $2,291,000 and $939,000, respectively. As of December 31, 2008, the Company entered into forward purchase contracts under this agreement with Ray-Carroll County Grain Growers totaling 4.9 million bushels for delivery through May, 2009 at prices ranging from $5.80 to $7.20 per bushel. These contracts were written down to the lower of cost or market which resulted in recording an unrealized loss on forward purchase contracts of $14,135,849 at December 31, 2008. As part of the Company’s negotiations with FCS related to debt covenant solutions, the Company was required to settle the corn forward purchase contracts. Pursuant to the requirement, the Company entered into a conversion agreement with Ray-Carroll County Grain Growers, Inc. to settle the corn forward purchase contracts for $15.5 million resulting in an additional loss of $1,364,151 for the three months ended March 31, 2008. For terms of settlement on the corn forward purchase contracts, see Note 7.

At March 31, 2009, the Company had variable priced ethanol forward sales contracts totaling 5,712,000 gallons for delivery through May, 2009.

The Company has entered into a marketing agreement with a marketing company for the exclusive rights to market, sell and distribute the entire ethanol inventory produced by the Company. The agreement extends for a period of five years from the time the Company originally ships ethanol. The Company pays the marketing company 1% per net gallon for each gallon of ethanol sold by the marketing company. Marketing expense recorded by the Company related to the agreement totaled approximately $196,403 for the three months ended March 31, 2009.

In August 2007, the Company entered into a marketing agreement with Ray-Carroll County Grain Growers, Inc. that specifies that Ray-Carroll will be the exclusive marketer of all distiller grain products produced by the Company. The Company agrees to pay a marketing fee to Ray-Carroll of 2.5% to 4.5% of the net price of the distiller grains, depending on type; however, the fee shall not be less than $1 per ton. The contract began May 22, 2008 and has an initial term of three years. Amounts totaling approximately $137,000 and 594,000 due the Company for distiller grain marketed under this agreement are included in accounts receivables as of March 31, 2009 and December 31, 2008, respectively.

11. ETHANOL PRODUCER CREDIT

The State of Missouri sponsors the Missouri Qualified Fuel Ethanol Producer Incentive Program that pays $0.20 per gallon produced for the first 12,500,000 gallons and then $0.05 per gallon produced for the next 12,500,000 gallons for a total incentive payment of $3,125,000 during a program year beginning July 1st. Our production reached the 25,000,000 gallon limit in February, 2009. We will receive no further payments until the new program begins on July 1, 2009. Generally, we will be qualified to participate in this program for a total of 60 months. Credits totaling approximately $150,000 and $197,000 are included in accounts receivable as of March 31, 2009 and December 31, 2008, respectively.

12. MANAGEMENT’S CONSIDERATION OF LIQUIDITY AND WORKING CAPITAL

In an effort to cure financing covenant defaults, the Company negotiated amendments to its existing credit agreements with FCS Financial, PCA. The amendments reset the financial requirements of the minimum working capital and the minimum fixed charge coverage covenants and delete the minimum equity and the minimum net worth covenants after March 31, 2009 until the maturity date of each loan. The term loan amendment permits the Company to defer up to four principal payments, delays the excess cash flow sweep until January 1, 2011, requires the Company to comply with new cash flow reporting and hedging policy obligations.

The Company obtained additional capital in a fundraising simultaneously with the amendment to the credit agreements, totaling $3,862,968 in cash from current members. The Company also received additional capital in the form of a $2,000,000 write off of forward purchase corn contracts with Ray-Carroll County Grain Growers, Inc. as part of a conversion agreement.

The conversion agreement required the settlement of the outstanding forward corn purchase contracts. The agreement fixed the value of outstanding forward purchase contracts of corn at $15.5 million, and required the Company to make payment to Ray-Carroll on the corn contracts in the amount of $1.5 million, accept a write-off of $2.0 million worth of corn contracts in exchange for $2.0 worth of capital contribution and settle the remaining debt by the Company’s issuance of a $12 million secured promissory note to Ray-Carroll. In addition, the Conversion Agreement also establishes certain financial conditions of the Company upon which the $1 million 9% Subordinated Secured Promissory Note previously issued by the Company to Ray-Carroll may mature on June 5, 2011 instead of June 5, 2010. In return for the potential delayed maturity of the $1 million note, the Company may not make financial distributions to its members until such $1 million note is repaid.

As a result of the additional capital raised and the amended financing agreements, the Company believes it has adequate capital and financing arrangements to meet its current needs.

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. This Quarterly Report includes statements regarding our plans, goals, strategies, intent, beliefs or current expectations. These statements are expressed in good faith and based upon a reasonable basis when made, but there can be no assurance that these expectations will be achieved or accomplished. These forward looking statements can be identified by the use of terms and phrases such as “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,” etc.). Items contemplating or making assumptions about, actual or potential future sales, market size, collaborations, and trends or operating results also constitute such forward-looking statements.

Although forward-looking statements in this Quarterly Report reflect the good faith judgment of management, forward-looking statements are inherently subject to known and unknown risks, business, economic and other risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in the our reports filed with the Securities and Exchange Commission which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation and cash flows. This discussion should be read in conjunction with the financial statements including the related footnotes. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected. Such risks and factors include, but are not limited to, the risk factors set forth in the section below entitled “RISK FACTORS”.

The following discussion should be read in conjunction with the accompanying unaudited financial statements and footnotes and our December 31, 2008 audited financial statements included in Show me Ethanol, LLC’s annual report on Form 10-K, as amended. Those financial statements include additional information about our significant accounting policies and practices and the events that underlie our financial results. Except for the historical information contained herein, the matters discussed below are forward-looking statements that involve certain risks and uncertainties.

Overview

Show Me Ethanol, LLC (the “Company”) is a Missouri limited liability company that processes corn into and sells fuel grade ethanol and distillers grains. Our plant has an approximate production capacity of 55 million gallons per year (mgpy) and is located in Carroll County, Missouri (the “Ethanol Plant”). We began construction of the Ethanol Plant in June 2007 and began operations in late May 2008. The total cost of our Ethanol Plant was about $81.4 million and we currently employ thirty-seven full time employees.

Since we became operational in May 2008, we do not yet have comparable income, production or sales data for the three months ended March 31, 2009. Accordingly, we do not provide a comparison of our financial results between reporting periods in this report. If you undertake your own comparison of the first three months of 2008 and the first three months of 2009, it is important that you keep this in mind.

Selected Financial Information

The following table shows some results of our operations for the three months ended March 31, 2009:

	Quarter Ended March 31, 2009 (Unaudited)		Percent
Sales	$	20,949,836		99.0	%
Ethanol Producer Credit		209,924		1.0	%
Total Sales		21,159,760		100	%

Cost of Sales		21,410,756		101.2	%
Loss on Forward Contracts		1,364,152		6.5	%
General and Administrative Expenses		537,532		2.5	%
Interest Expense		608,010		2.9	%
Interest and other income		373,459		1.8	%
		¾		¾
Net Loss	$	2,387,231		11.3	%

Sales

Our sales are divided into two categories: sales of fuel ethanol and sales of distillers grains. For the three months ended March 31, 2009, we received approximately 80% of our sales from the sale of fuel ethanol and approximately 19% of our sales from the sale of distillers grains. We expect the sale price of our fuel ethanol to remain relatively consistent with current levels based on information from our marketer and other factors, including the price of gasoline and petroleum.

We continue to explore, through our ethanol marketer, ways to expand into market areas in the southeastern United States. Should we be successful in selling our product into a new geographical region we believe we will attain higher margins for our product than we are currently getting. At this time, our efforts have only been preliminary and we cannot predict the likelihood of expanding our sales into the southeastern United States nor predict what profit levels we may be able to attain.

Ethanol Producer Credit

The State of Missouri sponsors the Missouri Qualified Fuel Ethanol Producer Incentive Program that pays $0.20 per gallon produced for the first 12,500,000 and then $0.05 per gallon produced for the next 12,500,000 gallons for a total incentive payment of $3,125,000 during a program year beginning July 1st. Our production exceeded the 25,000,000 gallon limit in February, 2009. We will receive no further payments until the new program cycle begins on July 1, 2009. We expect that we will be qualified to participate in this program for a total of 60 months.

Cost of Sales

Our cost of sales as a percentage of total sales was 108%, including the loss on forward contracts, for the three months ended March 31, 2009. Our average cost paid for corn per bushel was $3.96 for this period. Our two largest costs of production are corn and natural gas. Both of these costs are affected by factors largely out of our control.

We do not have any views as to the projected cost of natural gas.

Please see the analysis below under “Trends and Uncertainties Impacting the Corn and Natural Gas Markets and Our Future Cost of Goods Sold”.

General and Administrative Expenses

Our general and administrative expenses as a percentage of total sales was 2.5% for the three months ended March 31, 2009. We expect that general and administrative expenses will remain relatively constant for the rest of the fiscal year.

Interest Expense

Interest expense as a percentage of total sales was 2.9% for the three months ended March 31, 2009. On October 7, 2008 our construction loan, which we refer to below as the “Term Loan,” was converted to a variable rate loan based on the prime rate. After December 31, 2008, the interest rate was changed to LIBOR + 3.5%. The current rate applied to outstanding balances is 4%.

Additional Operational Data

For the quarter ended on March 31, 2009, our operating statistics are as follows:

Ethanol sold (gallons)		11,513,654
Dried distillers grains sold (tons)		27,785
Modified distillers grains sold (tons)		9,049
Ethanol average price per gallon	$	1.49
Dried distillers grain average price per ton	$	127.90
Modified distillers grain average price per ton	$	65.51
Average corn cost per bushel	$	3.96

The average corn cost per bushel is determined by the cost of the corn that was used in the production of ethanol during the period reported and not a reflection of corn that was bought during the period of this report.

Trends and Uncertainties Impacting the Ethanol Industry and Our Future Operations

We continue to be subject to industry-wide factors, as well as factors affecting the economy at large, that affect our operating and financial performance. The industry-wide factors include, but are not limited to, the available supply and cost of corn from which our ethanol and distillers grains are processed; the cost of natural gas, which we use in the production process; dependence on our ethanol marketer (Eco-Energy) and distillers grains marketer (Ray-Carroll County Grain Growers, Inc.) to market and distribute our products; the cost of gasoline and petroleum; the intensely competitive nature of the ethanol industry, including ethanol imported from Caribbean basin countries and Brazil; possible legislation at the federal, state and/or local level; changes in federal ethanol tax incentives and the cost of complying with extensive environmental laws that regulate our industry.

We expect ethanol sales to constitute the bulk of our future revenues. We expect to benefit from federal ethanol supports and federal tax incentives. Changes to these supports or incentives could significantly impact demand for ethanol.

Trends and Uncertainties Impacting the Corn and Natural Gas Markets and Our Future Cost of Goods Sold

Our cost of goods sold consists primarily of costs relating to the corn and natural gas supplies and depreciation necessary to produce ethanol and distillers grains for sale. Variables such as planting dates, rainfall, and temperatures will likely cause market uncertainty and create corn price volatility throughout the year.

In March 2006, the Company entered into a grain supply agreement with Ray-Carroll County Grain Growers, Inc. Under the agreement, the Company agrees to purchase all corn needed to operate a 50-65 million gallon per year ethanol facility, up to twenty-two million bushels per year. The Company agreed to pay $0.116 per bushel over Ray-Carroll County Grain Growers, Inc.’s posted bid at their Carrollton facility, with the rate increasing annually by 3.0%. At March 31, 2009 the rate was $0.1268. The term of this agreement is twenty years from the first delivery of the product by the supplier to the Company. Corn costs included in cost of sales related to the agreement for the three months ended March 31, 2009 were approximately $15,900,000. The Company had entered into forward purchase contracts under this agreement with Ray-Carroll County Grain Growers, Inc. totaling 4.9 million bushels for delivery through May, 2009 at prices ranging from $5.20 to $7.20 per bushel. These contracts were written down to the lower of cost or market which resulted in recording unrealized losses on future contracts. The Company entered into a Conversion Agreement, dated as of March 31, 2009 with Ray-Carroll County Grain Growers, Inc. to settle the outstanding forward corn purchase contracts at $15.5 million, make payment to Ray-Carroll on the corn contracts in the amount of $1.5 million, provide settlement of $2.0 million of the corn contracts liability in exchange for a $2.0 million capital contribution and settle the remaining liability through the Company’s issuance of a $12 million subordinated secured promissory note to Ray-Carroll.

Natural gas is also an important input commodity to our manufacturing process. We estimate that our natural gas usage will be approximately 10% to 15% of our annual total production cost. We expect continued volatility in the natural gas market. Any ongoing increases in the price of natural gas will increase our cost of production and may negatively impact our future profit margins.

Liquidity and Capital Resources

As of March 31, 2009, we had total assets of $88,467,742 consisting primarily of cash, prepaid expenses, inventories and property, plant and equipment. We had current liabilities of $12,130,082, which was the current portion of long-term debt and accounts payable. Total members’ equity as of March 31, 2009, was $17,458,136.

The financial statements have been prepared assuming the Company will continue as a going concern, realizing assets and liquidating liabilities in the ordinary course of business.

On March 31, 2009 the Company completed a fundraising totaling $3,862,968 in cash and $2,000,000 in settlement of corn forward contract liability as part of a voluntary capital fundraising from current members (the “Fundraising”). As part of the Fundraising, participating member’s capital accounts were credited by the amount of each member’s capital contribution, resulting in such contributing members owning a greater percentage of the business in the form of voting rights and distributions than before the Fundraising; however, no additional membership units were issued.

Term Loan

On March 7, 2007, the Company entered into a $48,000,000 construction loan (the “Term Loan”) pursuant to a Construction and Term Loan Agreement (the “Term Loan Agreement”) with FCS Financial, PCA serving as the administrative agent for the transaction. The participating banks in the Term Loan include FCS Financial, PCA, AgriBank, FCB, Southwest Bank, CoBank, ACB, 1st Farm Credit Services, FLCA, Bank Midwest, N.A. and Progressive FCS (collectively, the “Banks”). The Term Loan has a maturity date of October 7, 2018. The Term Loan is secured by a first priority security interest in our real and personal property, including our interest in the Ethanol Project. Under the terms of the Term Loan Agreement, 50% of our Excess Cash Flow, as defined in the Term Loan Agreement, is to be applied on an annual basis to prepay the Term Loan until such time as $15,000,000 of our Excess Cash Flow has been used to prepay the Term Loan.

On March 31, 2009, the Company’s Term Loan was amended. The amendment permits the Company to defer up to four term loan principal payments, delays the excess cash flow sweep until January 1, 2011, requires the Company to comply with new cash flow reporting and hedging policy obligations, requires the Company to hire a plant manager and a risk manager, and requires the Company to make a commercially reasonable inquiry into amending its existing air permit. The amendment also deletes the Minimum Equity and the Minimum Net Worth covenants after March 31, 2009 until the maturity date of the loan. The amendment also resets the financial requirements of the Minimum Working Capital and the Minimum Fixed Charge Coverage covenants. Pursuant to the term loan amendment, the Company deferred its February 1, 2009 term loan payment.

At March 31, 2009, the Company was in compliance with Term Loan covenants.

Revolving Loan

On November 6, 2007, the Company as borrower entered into a revolving credit agreement with FCS Financial, PCA (“FCS”) as lender for a total borrowing up to $5 million (the “Revolving Credit Agreement”). The purposes of the Revolving Credit Agreement is to (i) fund proper corporate business purposes of the Company, (ii) fund the Company’s maintenance capital expenditures and (iii) to finance letters of credit. Borrowings under the Revolving Credit Agreement are subject to availability under a borrowing base calculation based on accounts receivable, inventory and accounts payable. Each borrowing, at the option of the Company, can be either a revolving base rate loan or a revolving LIBOR rate loan plus 3.5% at December 31, 2008, and 2.5% at March 31, 2009 (in either case, a “Revolving Loan”). The Company may select interest periods of one, two, three or six months for LIBOR loans. The Revolving Loan is secured by all of the Company’s real property and personal property now owned or hereafter acquired by the Company, secured equally and ratably with the Term Loan on the same lien priority basis. On March 31, 2009 the Company amended its Revolving Credit Agreement to, among other things, modify the maturity date of the Revolving Loans to be due in full on June 2, 2010. The financial covenants in the Revolving Credit Agreement were also amended in the same way as in the Term Loan.

On March 31, 2009, the Company was in compliance with all Revolving Credit Agreement covenants.

The 2010 Notes

On June 5, 2008, the Company entered into a purchase agreement whereby approximately 40 accredited investors named therein purchased approximately $3.6 million worth of 9% subordinated secured notes (the “Notes”) issued by the Company. The Notes bear interest at 9% per annum computed on the basis of a 360-day year for the actual number of days elapsed and will mature on June 4, 2010. Interest will be payable annually, with the first installment being payable on June 5, 2009, and thereafter on June 4, 2010, at which time the entire outstanding principal balance, together with all accrued and unpaid interest, will be immediately due and payable in full. The Notes are secured pursuant to a loan and security agreement among the Company as debtor, the State Bank of Slater as agent and the holders from time to time as a party thereto as lenders dated June 5, 2008, whereby the Company granted a second lien security interest over substantially all of Company’s personal property in support of the obligation to repay the Notes. The Notes are also secured by a leasehold deed of trust, assignment of rents and security agreement, among the Company as grantor, Thomas Kreamer as trustee and the Bank of Slater as grantee dated June 5, 2008, whereby the Company granted a second lien security interest over substantially all of Company’s personal property in support of the obligation to repay the Notes. The Company also agreed that debt created by the issuance of the Notes is subordinate to loans provided primarily by FCS. On March 31, 2009, the Company entered into a Conversion Agreement that established certain financial conditions whereby a previously issued $1 million 9% Subordinated Secured Promissory Note issued by the Company to Ray-Carroll on June 5, 2008 may mature on June 5, 2011 instead of June 5, 2010. In return for the potential delayed maturity of the $1 million note, the Company may not make financial distributions to its members until such $1 million note is repaid.

Chapter 100 Bonds

In September 2006, the Company entered into an Economic Development Agreement with the County of Carroll, Missouri to implement a tax abatement plan under Missouri law. The plan provides for 100% abatement of real property taxes for approximately twenty years. On April 29, 2008, the County issued bonds under Chapter 100 of the Missouri Revised Statutes in a maximum amount of $88,500,000. Legal title of our real and personal property was transferred to the County and the County then leased the property back to us. The bonds were issued to the Company so no cash was exchanged. The lease payments are equal to the amount of the debt service payments on these bonds. The Banks, and agents under the Term Loan Agreement received an assignment of the Chapter 100 Bonds and retained their first priority position against the real property over the Chapter 100 Bonds. We have an option to purchase the real property by paying off these bonds, paying the trustee fees, plus $1,000. In return for the abatement of property taxes by the County, we have agreed to pay the County $10,000 on each anniversary date of the Chapter 100 Bonds issuance until the bonds are no longer outstanding. In addition and commencing in 2009, we have agreed to make annual grant payments in lieu of property taxes in the amount of $90,000 for the period during which the bonds are outstanding.

The 2014 Note

On March 31, 2009 the Company issued a $12 million subordinated secured promissory note to Ray-Carroll County Grain Growers, Inc. The $12 million note will mature on March 31, 2014 and bears interest, payable quarterly, at the rate of LIBOR plus 4.5%. Principal is due at maturity; however, the note also contains an excess quarterly cash sweep that is effective upon the end of the first quarter in 2011, granting Ray-Carroll 50% of all such excess quarterly cash as defined in the $12 million note. The $12 million note is secured by a leasehold deed of trust pledged by the Company to Ray-Carroll for the ethanol plant’s real property. The $12 million note is also secured by a security agreement which grants a security interest to Ray-Carroll over substantially all the Company’s current or future personal property as collateral for the $12 million note.

Off-Balance Sheet Arrangements

The Company has variable priced ethanol forward sales contracts not shown on the balance sheet. The Company believes that due to the variable price and limited nature of the contracts, such contracts do not have an affect on the financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors. Pursuant to the marketing agreement between the Company and Eco-Energy, Inc. (previously filed as Exhibit 10.5 to the Company’s Form 10-SB, and incorporated herein by reference), the Company contracts to sell ethanol to Eco-Energy, Inc. under forward sales contracts with a typical forward delivery date of two weeks. An entry of a sale and receivable onto the Company’s balance sheet is made only at the time of delivery. The price of the ethanol subject to the forward contract is based on OPIS index pricing. These forward sales contracts are used in order to ensure that the Company will have a buyer for its ethanol product, once produced. All revenue and cash flows sourced to sales of ethanol are comprised of spot priced contracts and forward sales contracts. These contracts are subject to the Eco-Energy, Inc. marketing agreement and are expected to continue through the duration of the contract (May 2013). Due to the relatively short time frame between entering into the sale contract and recording the sale, the nature of OPIS index pricing and the prevalence of this sale process in the industry the Company does not view these forward sales contracts as a source of risk to the Company’s financial position or financial reporting, nor does it view these forward sales contracts as material information for investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is not required to provide information under this item as it is a small reporting company, pursuant to the exclusion provided in S-K Item 305(e).

ITEM 4. CONTROLS AND PROCEDURES

Disclosures Controls and Procedures

We have adopted and maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods required under the SEC’s rules and forms and that the information is gathered and communicated to our management, including our General Manager (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), as appropriate, to allow for timely decisions regarding required disclosure.

As required by SEC Rule 15d-15(b), our Principal Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period covered by this report. Based on the foregoing evaluation, our Principal Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are not effective in timely alerting them to material information required to be included in our periodic SEC filings and to ensure that information required to be disclosed in our periodic SEC filings is accumulated and communicated to our management, including our Principal Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure as a result of the deficiency in our internal control over financial reporting discussed below.

At December 31, 2008 and as of March 31, 2009, management identified material weaknesses in the Company’s disclosure controls and procedures and internal control over financial reporting regarding proper (1) inventory accounting and (2) preparation of financial statements. Management also identified significant deficiencies relating to (1) the Company’s use of information technology, (2) adjustments to accounts receivable and (3) lack of segregation of accounting duties by the Chief Financial Officer.

The identified material weaknesses are being remediated as follows: (1) the Company now counts physical inventory using consistently applied accounting procedures as well as implementing additional supervisory oversight and (2) the Company is currently evaluating the cost-benefit trade-off of using external consultants to provide advice regarding the preparation of complete and adequate financial disclosures.

The identified significant deficiencies are being remediated as follows: (1) the Company’s significant deficiencies regarding the use of information technology (including lack of oversight for financial data entry, over-reliance on electronic spreadsheets, password control, lack of review of Chief Financial Officer’s information technology access privileges, lack of review of master file changes and lack of due diligence on information technology service providers), each are under review and procedures will be modified where possible to remediate the deficiency, (2) future adjustments to accounts receivable will be reviewed and compared to physical shipments for proper treatment of accounts receivable timing and value and (3) lack of segregation of accounting duties under the responsibility of the Chief Financial Officer is under review as well; the Company is considering the viability and cost of hiring additional personnel to segregate accounting duties.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

Our business is subject to a number of risks and uncertainties. If any of the events contemplated by the following risks actually occur, then our business, financial condition or results of operations could be materially and adversely affected. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, financial condition and results of operations.

Risk Factors Related to The Industry

Overcapacity in the industry may result in a decrease in the price of ethanol and dried distiller’s grains with solubles (“DDGS”).

Excess capacity in the ethanol industry would have an adverse impact on our results of operations, cash flows and general financial condition. Excess capacity may also result or intensify from increases in production capacity coupled with insufficient demand. If the demand for ethanol does not grow at the same pace as the supply increase, we expect the price for ethanol to decline. If excess capacity in the ethanol industry occurs, the market price of ethanol may decline to a level that is inadequate to generate sufficient cash flow to cover our costs. In addition, because ethanol production produces DDGS as a co-product, increased ethanol production may lead to increased supplies of DDGS. An increase in the supply of DDGS, without corresponding increases in demand, could lead to lower prices for, or an inability to sell, our DDGS. Any decline in the price of DDGS or in the demand for DDGS generally could have a material adverse effect on our business and financial condition.

The United States ethanol industry is highly dependent upon a myriad of federal and state legislation and regulation and any changes in such legislation or regulation could have a material adverse effect on our results of operations and financial condition.

The elimination or significant reduction in the Federal Excise Tax Credit could have a material adverse effect on our results of operations.

The production of ethanol is made significantly more profitable by federal tax incentives. The federal excise tax incentive program, which is scheduled to expire on December 31, 2010, allows gasoline distributors who blend ethanol with gasoline to receive a federal excise tax rate reduction for each blended gallon they sell regardless of the blend rate. The current federal excise tax on gasoline is $0.184 per gallon, and is paid at the terminal by refiners and marketers. If the fuel is blended with ethanol, the blender may claim a $0.51 per gallon tax credit for each gallon of ethanol used in the mixture. The federal excise tax incentive program may not be renewed prior to its expiration in 2010, or if renewed, it may be renewed on terms significantly less favorable than current tax incentives. The elimination or significant reduction in the federal excise tax incentive program could have a material adverse effect on our results of operations.

Waivers or repeal of the national Renewable Fuel Standards (RFS) minimum levels of renewable fuels included in gasoline could have a material adverse affect on our results of operations and financial condition.

Shortly after passage of the Energy Independence and Security Act of 2007, which increased the minimum mandated required usage of ethanol, a Congressional sub-committee held hearings on the potential impact of the new national RFS on commodity prices. While no action was taken by the sub-committee towards repeal of the new national RFS, any attempt by Congress to re-visit, repeal or grant waivers of the new national RFS could adversely affect demand for ethanol and could have a material adverse effect on our results of operations and financial condition.

While the Energy Independence and Security Act of 2007 imposes the national RFS, it does not mandate only the use of ethanol.

The Energy Independence and Security Act of 2007 imposes the national RFS, but does not mandate only the use of ethanol. While the Renewable Fuels Association (“RFA”) expects that ethanol should account for the largest share of renewable fuels produced and consumed under the national RFS, the national RFS is not limited to ethanol and also includes biodiesel and any other liquid fuel produced from biomass or biogas. An increase in the availability of alternative sources of renewable fuels meeting federal standards may adversely affect demand for ethanol and could have a material adverse effect on our results of operations and financial conditions.

The elimination or significant reduction in the Missouri Qualified Fuel Ethanol Producer Incentive Program could have a material adverse effect on our results of operations.

The State of Missouri sponsors the Missouri Qualified Fuel Ethanol Producer Incentive Program that pays $0.20 per gallon produced for the first 12,500,000 gallons and then $0.05 per gallon produced for the next 12,500,000 gallons for a total incentive payment of $3,125,000 during a program year beginning July 1st. Our production exceeded the 25,000,000 gallon limit in February 2009 and we will receive no further payments until the new program begins on July 1, 2009. Generally, we will be qualified to participate in this program for a total of 60 months. The elimination or significant reduction in this Program could have a material adverse effect on our results of operations. Further, once the 60 months allowed by the program lapses, our profitability may be impacted. Also, because we will produce more than the 25,000,000 gallons of ethanol eligible for this credit in any one calendar year, our profit margin on each gallon produced over 25,000,000 gallons will decrease.

The market price of ethanol is dependent on many factors, including the price of gasoline, which is in turn dependent on the price of petroleum. Fluctuations in these prices may cause our results of operations to fluctuate significantly.

Petroleum prices are highly volatile and difficult to forecast due to frequent changes in global politics and the world economy. The distribution of petroleum throughout the world is affected by incidents in unstable political environments, such as Iraq, Iran, Kuwait, Saudi Arabia, the Russian Federation, Venezuela and other countries and regions. The industrialized world depends on oil from these areas and any disruption or other reduction in oil supply can cause significant fluctuations in the prices of oil and gasoline. The unpredictability of the future price of oil or wholesale gasoline may lead to fluctuations in the market price of ethanol, causing our profitability to fluctuate significantly.

The current weakened global economy has placed added downward pressures on the price of oil due to a lessened demand therefor. The decreased demand and price of oil may continue to result in a substantial decrease in the demand for, or price of, ethanol, which would significantly and adversely affect our sales and profitability.

Ethanol industry growth is dependent on the changes to and expansion of related infrastructure which may not occur on a timely basis, if at all.

Substantial development of infrastructure will be required by persons and entities outside of our control for the ethanol industry to grow. Areas requiring expansion include, but are not limited to:

•

additional rail capacity;

•

additional storage facilities for ethanol;

•

increases in truck fleets capable of transporting ethanol within localized markets;

•

expansion of refining and blending facilities to handle ethanol;

•

growth in service stations equipped to handle ethanol fuels; and

•

growth in the fleet of flexible fuel vehicles.

The lack of infrastructure prevents the use of ethanol in certain areas where there might otherwise be demand and results in excess ethanol supply in areas with more established ethanol infrastructure, depressing ethanol prices in those areas.

Substantial investments required for the development and expansion of infrastructure may not be made or they may not be made on a timely basis. Any delay or failure in the development or expansion of infrastructure could hurt the demand or prices for products, impede delivery of products, impose additional costs or otherwise have a material adverse effect on results of operations or financial position. Our business is dependent on the continuing availability of infrastructure and any infrastructure disruptions could have a material adverse effect on our business.

Ethanol competes with other existing products and other alternative products could be developed for use as fuel additives.

Our revenue is derived primarily from the sale of ethanol. Ethanol competes with MTBE (methyl tertiary butyl ether) as an oxygenate in gasoline to meet both oxy-fuel and reformulated gasoline requirements. Historically, MTBE has been the most widely used oxygenate to meet the requirements of the Clean Air Act Amendments of 1990. However, MTBE has shown significant adverse environmental and health safety characteristics that have led to the decision by several key States to ban its use.

We expect to be completely focused on the production of ethanol and its co-products for the foreseeable future. We may be unable to shift our business focus away from the production of ethanol to other renewable fuels or competing products. Accordingly, an industry shift away from ethanol or the emergence of new competing products may reduce the demand for ethanol. A downturn in the demand for ethanol would significantly and adversely affect our sales and profitability.

The spread between ethanol and corn prices can vary significantly.

Corn costs significantly impact our cost of goods sold. The spread between the price of ethanol and the price we pay per bushel of corn has fluctuated significantly in the past and may fluctuate significantly in the future leading to volatility in our net income. Any reduction in the spread between ethanol and corn prices, whether as a result of an increase in corn prices or a reduction in ethanol prices, would adversely affect our results of operations and financial condition.

The price of ethanol is not necessarily correlated to gasoline prices and/or corn

The relative immaturity of the ethanol market, coupled with its recent volatility, make predicting the future price of ethanol nearly impossible. While some industry experts suggest that the main factor affecting the market price of ethanol is corn, others suggest it is gasoline. However, neither factor seems to have a perfect correlative effect. Thus, because the factors affecting the price of ethanol are indeterminable, we cannot predict or protect ourselves from drastic fluctuations in the market price. Fluctuations in the market price of ethanol may cause our profitability to fluctuate significantly.

Ethanol imported from Caribbean basin countries and Brazil may be a less expensive alternative to our ethanol.

Ethanol produced or processed in certain countries in Central America and the Caribbean region is eligible for tariff reduction or elimination upon importation to the United States under a program known as the Caribbean Basin Initiative. Large ethanol producers, such as Cargill, have built dehydration plants in participating Caribbean Basin countries, such as El Salvador, which convert ethanol into fuel-grade ethanol for shipment to the United States. Ethanol imported from Caribbean Basin countries may be a less expensive alternative to domestically produced ethanol. Competition from ethanol imported from Caribbean Basin countries may affect our ability to sell our ethanol profitably, adversely affecting our results of operations and financial condition.

Brazil is currently the world’s largest exporter of ethanol and, until recently, was also the world’s largest producer of ethanol. In Brazil, ethanol is produced primarily from sugarcane, which is also used to produce food-grade sugar. Ethanol imported from Brazil may be a less expensive alternative to domestically produced ethanol, which is primarily made from corn. Tariffs presently protecting U.S. ethanol producers may be reduced or eliminated. Competition from ethanol imported from Brazil may affect our ability to sell our ethanol profitably, adversely affecting our results of operations and financial condition.

Corn-based ethanol may compete with cellulose-based ethanol in the future, which could make it more difficult for us to produce ethanol on a cost-effective basis.

Most ethanol is currently produced from corn and other raw grains, such as milo or sorghum-especially in the Midwest. The current trend in ethanol production research is to develop an efficient method of producing ethanol from cellulose-based biomass, such as agricultural waste, forest residue, municipal solid waste, and energy crops. This trend is driven by the fact that cellulose-based biomass is generally cheaper than corn, and producing ethanol from cellulose-based biomass would create opportunities to produce ethanol in areas which are unable to grow corn. Although current technology is not sufficiently efficient to be competitive, new conversion technologies may be developed in the future. If an efficient method of producing ethanol from cellulose-based biomass is developed, we may not be able to compete effectively. If we are unable to produce ethanol as cost-effectively as cellulose-based producers, our ability to generate revenue will be negatively impacted.

Carbon dioxide may be regulated in the future by the EPA as an air pollutant requiring us to obtain additional permits and install additional environmental mitigation equipment, which could adversely affect our financial performance.

In an April 2007 decision, the United States Supreme Court ruled that carbon dioxide is an air pollutant under the Clean Air Act for the purposes of motor vehicle emissions. The lawsuit sought to require the Environmental Protection Agency (the “EPA”) to regulate carbon dioxide in vehicle emissions. Similar lawsuits have been filed seeking to require the EPA to regulate carbon dioxide emissions from stationary sources such as our ethanol plant under the Clean Air Act. Our plant produces a significant amount of carbon dioxide. While there are currently no regulations applicable to us concerning our carbon dioxide emissions, if the EPA or the State of Missouri elects to regulate carbon dioxide emissions by plants such as ours, we may have to apply for additional permits or we may be required to install carbon dioxide mitigation equipment or take other steps to comply with these potential regulations. Compliance with any future regulation of carbon dioxide emissions could be costly and may prevent us from operating our ethanol plant profitably which could decrease or eliminate the value of our units.

In addition to selling ethanol, we also intend to sell carbon dioxide, a co-product of ethanol production, and the markets for this product may decrease in the future.

Carbon dioxide is produced during the fermentation stage of the ethanol production process. This excess gas is captured and sold to carbon dioxide resellers. The carbon dioxide market is well established and consists of three major segments: the beverage market (27%), the food market (43%), and the industrial market (30%). The market is cyclical in that demand increases during the summer as beverage and food demands create shortages and higher spot prices. Transportation is a limiting factor when sourcing carbon dioxide. On average, transportation costs account for 50% of the delivered cost of carbon dioxide. For that reason, customers generally must be located within 200 miles of the plant. As increasing volumes of ethanol production come on-line, it is possible that the market prices for carbon dioxide will soften due to a finite amount of demand and an increasing supply.

The price of DDGS is affected by the price of other commodity products, such as soybeans, and decreases in the price of these commodities could decrease the price of DDGS.

DDGS compete with other protein-based animal feed products. The price of DDGS may decrease when the price of competing feed products decrease. The prices of competing animal feed products are based in part on the prices of the commodities from which they are derived. Downward pressure on commodity prices, such as soybeans, will generally cause the price of competing animal feed products to decline, resulting in downward pressure on the price of DDGS. Because the price of DDGS is not tied to production costs, decreases in the price of DDGS will result in less revenue generated and lower profit margins.

The price of corn is affected by the price of other commodity products, such as soybeans.

The market price for other commodities will affect the price we pay for corn. If the price of soybeans or other commodities rises, decisions to plant soybeans or other commodities in lieu of corn will ensue, resulting in a decreased supply of corn and thus, upward pressure on the price for corn. Any change in corn price would have an effect on our profit margin and could adversely affect our results of operations and financial condition.

New technology may lessen the demand for ethanol and negatively impact our profitability.

Alternative fuels, gasoline oxygenates and ethanol production methods are continually under development. A number of automotive, industrial and power generation manufacturers are developing more efficient engines, hybrid engines and alternative clean power systems using fuel cells or clean burning gaseous fuels. Vehicle manufacturers are working to develop vehicles that are more fuel efficient and have reduced emissions using conventional gasoline. Vehicle manufacturers have developed and continue to work to improve hybrid technology, which powers vehicles by engines that utilize both electric and conventional gasoline fuel sources. If the fuel cell and hydrogen industries continue to expand and gain broad acceptance, and hydrogen becomes readily available to consumers for motor vehicle use, the demand for ethanol may decrease. Likewise, further development and use of vehicles running on electricity may lessen the demand for ethanol. This resulting decrease in the demand for ethanol may negatively impact our financial condition.

Consumer resistance to the use of ethanol based on the belief that ethanol is expensive, adds to air pollution, harms engines and takes more energy to produce than it contributes, may affect the demand for ethanol which could affect our ability to market our product.

Certain individuals believe that use of ethanol will have a negative impact on retail prices. Many also believe that ethanol adds to air pollution and harms car and truck engines. Still other consumers believe that the process of producing ethanol actually uses more fossil fuels than the amount of ethanol that is produced. If consumers choose not to buy ethanol, it would affect the demand for the ethanol that we produce and negatively affect our profitability.

Risk Factors Related to Our Operations

We have a limited operating history and our business may not be successful.

Our operating facility began producing ethanol in May, 2008. Accordingly, we have a limited operating history from which you can evaluate our business and prospects. In addition, our prospects must be considered in light of the risks and uncertainties encountered by a company with limited operating history in a rapidly evolving market, such as the ethanol market, where supply and demand may change significantly in a short amount of time.

Some of these risks relate to our potential inability to:

•

effectively manage business and operations;

•

adequately establish policies, procedures and oversight related to corporate governance, risk management and finance;

• successfully execute plans to sell ethanol;

•

recruit and retain key personnel;

•

successfully maintain a low-cost structure;

•

manage rapid growth in personnel and operations;

•

develop new products that complement existing business; and

•

successfully address the other risks to the business.

If we cannot successfully address these risks, our business, future results of operations and financial position may be materially adversely affected, and we may experience operating losses in the future.

We have a significant amount of debt, and our existing debt financing agreements contain, and our future debt financing agreements may contain, restrictive covenants that limit distributions and impose restrictions on the operation of our business. Our debt level and our failure to comply with applicable debt financing covenants and agreements could have a material adverse effect on our business, results of operations and financial condition.

The use of debt financing makes it more difficult for us to operate because we must make principal and interest payments on the indebtedness and abide by covenants contained in our debt financing agreements. The level of our debt may have important implications on our operations, including, among other things:

•

limiting our ability to obtain additional debt or equity financing;

•

making us vulnerable to increases in prevailing interest rates;

•

placing us at a competitive disadvantage because we may be substantially more leveraged than some of our competitors;

•

subjecting all or substantially all of our assets to liens, which means that there may be no assets left for shareholders in the event of a liquidation;

•

limiting our ability to adjust to changing market conditions, which could make us more vulnerable to a downturn in the general economic condition of our business; and

•

limiting our ability to make business and operational decisions regarding our business, including, among other things, limiting our ability to pay dividends, make capital improvements, sell or purchase assets or engage in transactions we deem to be appropriate and in our best interest.

The terms of our existing debt financing agreements contain, and any future debt financing agreement we enter into may contain, financial, maintenance, organizational, operational and other restrictive covenants. If we are unable to comply with these covenants or service our debt, we may lose control of our business and be forced to reduce or delay planned capital expenditures, sell assets, restructure our indebtedness or submit to foreclosure proceedings, all of which could result in a material adverse effect upon our business, results of operations and financial condition and thus, you could lose your entire investment. Our debt arrangements also include subordinated debt, which contain restrictions and be on less favorable terms than our senior debt. If we issue subordinated debt, we may have to give the lender the right to take control of our business in the event of a default or other rights and benefits as the lender may require, which may impose onerous financial restrictions on our business. The foregoing risks and hindrances are further exacerbated by the current global economic debt market conditions and may significantly impede or completely eliminate our access to capital markets.

We have incurred significant losses and negative operating cash flow in the past and we may incur significant losses and negative operating cash flow in the future. Continued losses and negative operating cash flow may negatively affect our operations and prevent us from expanding, or continuing to operate, our business.

We have incurred significant losses and negative operating cash flow in the past. We expect to rely on cash on hand, cash, if any, generated from our operations and cash, if any, generated from our financing activities to fund all of the cash requirements of our business. Continued losses and negative operating cash flow may negatively affect our operations and prevent us from expanding our business or may prevent us from continuing the business as a going concern. Continued losses and negative operating cash flow are also likely to make our capital raising needs more acute while limiting our ability to raise additional financing on satisfactory terms.

The raw materials and energy necessary to produce ethanol may be unavailable or may increase in price, adversely affecting our business, results of operations and financial condition.

The principal raw material we use to produce ethanol and its co-products is corn. Changes in the price of corn can significantly affect our business. In general, rising corn prices result in lower profit margins and, therefore, represent unfavorable market conditions. This is especially true since market conditions generally do not allow us to pass along increased corn prices to our customers because the price of ethanol is determined by many factors, including the supply of ethanol and the price of oil and gasoline. At certain levels, corn prices may even make ethanol production uneconomical depending on the prevailing price of ethanol.

The price of corn is influenced by general economic, market and regulatory factors. These factors include weather conditions, crop conditions and yields, farmer planting decisions, government policies and subsidies with respect to agriculture and international trade and global supply and demand. The significance and relative impact of these factors on the price of corn is difficult to predict. Any event that tends to negatively impact the supply of corn will tend to increase prices and potentially harm our business. Likewise, events that increase the supply of corn may cause the price of corn to decrease; however, the price of corn may not decrease fast enough to off-set the resulting decrease in the price of ethanol.

The production of ethanol also requires a significant and uninterrupted supply of other raw materials and energy, primarily water, electricity and natural gas. The prices of electricity and natural gas have fluctuated significantly in the past and may fluctuate significantly in the future. Local water, electricity and gas utilities may not be able to reliably supply the water, electricity and natural gas that our facility needs or may not be able to supply those resources on acceptable terms. Any disruptions in the ethanol production infrastructure network, whether caused by labor difficulties, earthquakes, storms, other natural disasters or human error or malfeasance or other reasons, could prevent timely deliveries of corn or other raw materials and energy and may require us to halt production which could have a material adverse effect on our business, results of operations and financial condition.

The crisis in the financial markets, considerable volatility in the commodities markets and sustained weakening of the economy could further significantly impact our business and financial condition and may limit our ability to raise additional capital.

As widely reported, financial markets in the United States and the rest of the world are experiencing extreme disruption, including, among other things, extreme volatility in securities and commodities prices, as well as severely diminished liquidity and credit availability. As a result, our ability to access the capital markets and raise funds required for our operations may be severely restricted at a time when we would like, or need, to do so, which could have an adverse effect on our ability to meet our current and future funding requirements and on our flexibility to react to changing economic and business conditions. Current economic and market conditions, and particularly, the significant decline in the price of crude oil, could also result in reduced demand for all of our products. We are not able to predict the duration or severity of the current disruption in financial markets, fluctuations in the price of crude oil or other adverse economic conditions in the United States. However, if economic conditions continue to worsen, it is likely that these factors would have an adverse effect on our results of operations and future prospects.

Our business is limited to the production and sale of fuel-grade ethanol and DDGS.

Our business is not well diversified; rather, it is principally limited to the production and sale of fuel-grade ethanol produced from corn and the sale of the related co-product, DDGS. The lack of diversification of our business may limit our ability to adapt to changing business and market conditions.

We will are dependent on Ray-Carroll Country Grain Growers Inc. for various services including our grain sourcing.

We depend on Ray-Carroll, a holder of our Class B Units, for our grain feedstock sourcing. If Ray-Carroll defaults on its agreement to timely provide us grain feedstock sourcing in sufficient quantities for our operation, we would be materially adversely affected as it would be very difficult to replace this feedstock source.

We are dependent on Eco-Energy for all Distribution of Our Ethanol

We depend on Eco-Energy for distribution and sales of all of our Ethanol. If Eco-Energy defaults on its agreement, fails to perform adequately, or is otherwise negligent in its duties owed to us, we would be materially adversely affected as it would be very difficult to, quickly, adequately, or otherwise, replace this service.

Our lack of long-term ethanol orders and commitments by our customers could lead to a rapid decline in our sales and profitability.

We cannot rely on long-term ethanol orders or commitments by our customers for protection from the negative financial effects of a decline in the demand for ethanol. The limited certainty of ethanol orders can make it difficult for us to forecast our sales and allocate our resources in a manner consistent with our actual sales. Moreover, our expense levels are based in part on our expectations of future sales and, if our expectations regarding future sales are inaccurate, we may be unable to reduce costs in a timely manner to adjust for sales shortfalls. Furthermore, because of the relatively small number of customers for our ethanol, the magnitude of the ramifications of these risks is greater than if our sales were less concentrated. As a result of our lack of long-term ethanol orders and commitments, we may experience a rapid decline in our sales and profitability.

We lack an effective hedging program.

Due to the relative immaturity of our business operations, we have not enacted a hedging program in the corn or ethanol futures markets. We intend to implement a hedging program to the extent possible, but due to the limited market for sales of ethanol with a future delivery date, such a program may be impossible to implement. The effectiveness of such hedging activities is dependent, among other things, upon the cost of corn and natural gas and our ability to sell sufficient products to utilize all of the corn and natural gas subject to the futures contracts. There is no assurance that our hedging activities will reduce the risk caused by price fluctuation which may leave us vulnerable to high corn and natural gas prices. In addition, we may choose not to take hedging positions in the future, which may adversely affect our financial condition if corn and natural gas prices increase. Our hedging activities can also result in increased costs because price movements in corn and natural gas are highly volatile and are influenced by many factors that are beyond our control.

We compete with other established ethanol production companies who have greater experience and resources than we currently have.

We have several significant competitors in the ethanol production industry. These companies are presently producing ethanol in substantial volume, have greater financial resources and have more experienced personnel than we presently do. Those competitors who are presently producing ethanol have greater capital resources than we currently do. As a result, this is a significant obstacle that we will need to overcome. In addition, our lack of experience in our chosen industry relative to many of our significant competitors may cause us to fail to anticipate or respond adequately to new developments and other competitive pressures. This failure could reduce our competitiveness and cause a decline in our market share, sales and profitability.

We may be adversely affected by environmental, health and safety laws, regulations and liabilities.

We are subject to various federal, state and local environmental laws and regulations, including those relating to the discharge of materials into the air, water and ground, the generation, storage, handling, use, transportation and disposal of hazardous materials, and the health and safety of our employees. In addition, some of these laws and regulations require our facilities to operate under permits that are subject to renewal or modification. These laws, regulations and permits can often require expensive pollution control equipment or operational changes to limit actual or potential impacts to the environment. A violation of these laws and regulations or permit conditions can result in substantial fines, natural resource damages, criminal sanctions, permit revocations and/or facility shutdowns.

We may be liable for the investigation and cleanup of environmental contamination at each of the properties that we own or operate and at off-site locations where we arrange for the disposal of hazardous substances. If these substances have been or are disposed of or released at sites that undergo investigation and/or remediation by regulatory agencies, we may be responsible under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, or other environmental laws for all or part of the costs of investigation and/or remediation, and for damages to natural resources. We may also be subject to related claims by private parties alleging property damage and personal injury due to exposure to hazardous or other materials at or from those properties. Some of these matters may require us to expend significant amounts for investigation, cleanup or other costs.

In addition, new laws, new interpretations of existing laws, increased governmental enforcement of environmental laws or other developments could require us to make additional significant expenditures. Continued government and public emphasis on environmental issues can be expected to result in increased future investments for environmental controls at our production facilities. Present and future environmental laws and regulations (and interpretations thereof) applicable to our operations, more vigorous enforcement policies and discovery of currently unknown conditions may require substantial expenditures that could have a material adverse effect on our results of operations and financial condition.

The hazards and risks associated with producing and transporting our products (such as fires, natural disasters, explosions and abnormal pressures and blowouts) may also result in personal injury claims or damage to property and third parties. As protection against operating hazards, we maintain insurance coverage against some, but not all, potential losses. However, we could sustain losses for uninsurable or uninsured risks, or in amounts in excess of existing insurance coverage. Events that result in significant personal injury or damage to our property or third parties or other losses that are not fully covered by insurance could have a material adverse effect on our results of operations and financial condition.

Operational difficulties at our production facilities could negatively impact our sales volumes and could cause us to incur substantial losses.

Our operations are subject to labor disruptions, unscheduled downtime and other operational hazards inherent in our industry, such as equipment failures, fires, explosions, abnormal pressures, blowouts, pipeline ruptures, transportation accidents and natural disasters. Some of these operational hazards may cause personal injury or loss of life, severe damage to or destruction of property and equipment or environmental damage, and may result in suspension of operations and the imposition of civil or criminal penalties. Our insurance may not be adequate to fully cover the potential operational hazards described above or we may not be able to renew this insurance on commercially reasonable terms or at all.

Moreover, our plant may not operate as planned or expected. Our plant is designed to operate at or above a certain production capacity. The operation of our plant is and will be, however, subject to various uncertainties. As a result, our plant may not produce ethanol and DDGS at the levels we expect. In the event our plant does not run at its expected capacity level, our business, results of operations and financial condition may be materially and adversely affected.

The slowing economy may decrease the consumer demand for animal protein and our DDGS.

The continued deterioration of the economy may decrease the demand for animal protein, which would decrease the demand for animal feedstock and thus would decrease the demand for our DDGS and negatively affect the price. Any decline in the price of DDGS or the DDGS market generally could have a material adverse effect on our business and financial condition.

We depend on a small number of customers for the majority of our sales. A reduction in business from any of these customers could cause a significant decline in our overall sales and profitability.

The majority of our sales are generated from a small number of customers. We expect that we will continue to depend for the foreseeable future upon a small number of customers for a significant portion of our sales. Our agreements with these customers generally do not require them to purchase any specified amount of ethanol or dollar amount of sales or to make any purchases whatsoever. Therefore, in any future period, our sales generated from these customers, individually or in the aggregate, may not equal or exceed historical levels. If sales to any of these customers cease or decline, we may be unable to replace these sales with sales to either existing or new customers in a timely manner, or at all. A cessation or reduction of sales to one or more of these customers could cause a significant decline in our overall sales and profitability.

We are subject to financial reporting and other requirements, and we will become subject to additional financial reporting and other requirements, in each case for which our accounting, internal audit and other management systems and resources may not be adequately prepared. We have experienced material weaknesses in our internal controls.

We are subject to reporting and other obligations under the Securities Exchange Act of 1934, as amended, including the requirements of Section 404 of Sarbanes-Oxley Act of 2002 (“SOX”). Section 404 of SOX requires annual management assessment of the effectiveness of a company’s internal controls over financial reporting and a report by its independent registered public accounting firm addressing the effectiveness of our internal controls over financial reporting. These reporting and other obligations place significant demands on our management, administrative, operational, internal audit and accounting resources. If we are unable to meet these demands in a timely and effective fashion, our ability to comply with our financial reporting requirements and other rules that apply to us could be impaired. Any failure to maintain effective internal controls could have a material adverse effect on our business, results of operations and financial condition.

In connection with the report of our financial statements for the year ended December 31, 2008, and quarter ended March 31, 2009, we identified several material weaknesses and significant deficiencies in our internal controls over financial reporting. A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. A “significant deficiency” is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness yet important enough to merit attention by those responsible for oversight of the Company’s financial reporting. We may have future deficiencies or weaknesses in our internal controls over financial reporting.

Any material weaknesses or significant deficiency could cause us to fail to meet our reporting obligations and subsequently impair our ability to raise money or operate the business.

We may be exposed to potential risks relating to our internal controls over financial reporting and our ability to have those controls attested to by our independent auditors.

As directed by Section 404 of SOX, the Securities and Exchange Commission adopted rules requiring public companies to include a report of management on the company’s internal controls over financial reporting in their annual reports, including Form 10-K.

While we have expended resources in identifying financial reporting risks, and controls that address them as required by Section 404 of SOX, there can be no positive assurance that we will receive a positive attestation from our independent auditors. In the event we are unable to receive a positive attestation from our independent auditors with respect to our internal controls, investors and others may lose confidence in the reliability of our financial statements and our ability to obtain equity or debt financing could suffer.

We are dependent upon our officers for management and direction, and the loss of any of these persons could adversely affect our operations and results.

We are dependent upon our officers for implementation of our business strategy and execution of our business plan. The loss of any of these officers could have a material adverse effect upon our results of operations and our financial position. We do not have employment agreements with our officers or other key personnel. In addition, we do not maintain “key person” life insurance for any of our respective officers. The loss of any of these officers could delay or prevent the achievement of our business objectives.

Competition for qualified personnel in the ethanol industry is intense and we may not be able to hire and retain qualified personnel to operate our ethanol plants.

Our success depends, in part, on our ability to attract and retain competent personnel. Qualified managers, engineers, operations and other personnel must be hired, which can be challenging in a rural community. Competition for both managers and plant employees in the ethanol industry is intense, and we may not be able to attract and retain qualified personnel. If we are unable to hire and retain productive and competent personnel, our strategy may be adversely affected, the amount of ethanol we produce may decrease and we may not be able to efficiently operate our ethanol plant and execute our business strategy.

Risk Factors Related to Our Units

There is no public market for the Class A Units.

There is currently no market for the Class A Units. We do not intend to apply for listing of the Class A Units on any stock exchange or quotation system. Our Articles of Organization and Operating Agreement contain restrictions on the transfer of Class A Units. In addition, federal and state law restricts transferability of the Class A Units. It may be difficult or impossible for you to liquidate your investment when you desire to do so. Therefore, you may be required to bear the economic risks of the investment for an indefinite period of time.

We do not anticipate payment of dividends, and investors will be wholly dependent upon the value of their units to realize economic benefit from their investment.

As holders of our units, you will only be entitled to receive those dividends that are declared by our board of managers out of retained earnings. We do not expect to have retained earnings available for declaration of dividends in the foreseeable future. There is no assurance that such retained earnings will ever materialize to permit payment of dividends to you. Our board of managers will determine future dividend policy based upon our results of operations, financial condition, capital requirements, reserve needs and other circumstances.

The value of our units may fluctuate significantly in the future.

The value of our units may fluctuate in response to one or more of the following factors, many of which are beyond our control:

•

the volume and timing of the receipt of orders for ethanol from major customers;

•

competitive pricing pressures;

•

our ability to produce, sell and deliver ethanol on a cost-effective and timely basis;

•

our inability to obtain construction, acquisition, capital equipment and/or working capital financing;

•

the introduction and announcement of one or more new alternatives to ethanol by our competitors;

• changing conditions in the ethanol and fuel markets;

•

changes in market valuations of similar companies;

•

regulatory developments;

•

future sales of our units or other securities; and

•

various other risks as articulated in our risk factors.

We do not have significant financial reporting experience, which may lead to delays in filing required reports with the Securities and Exchange Commission.

Because we do not have significant financial reporting experience, we may experience delays in filing required reports with the Securities and Exchange Commission. Delays may cause us to have additional difficulty in raising capital or growing our business. Such reports may also distract management from focusing on growing the operation and the business.

We cannot predict whether we will successfully effectuate our current business plan. Each investor is encouraged to carefully analyze the risks and merits of an investment in our units and should take into consideration when making such analysis, among others, the Risk Factors discussed above.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES & USE OF PROCEEDS

None.

ITEM 3. DEFAULTS ON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following exhibits are filed with or incorporated as part of this report as required by Item 601 of Regulation S-K:

Exhibit No.	Description	Reference

31.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

31.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

32	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

* Filed herewith.

SIGNATURES

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

SHOW ME ETHANOL, LLC

Date: January 22, 2009

By:	/s/ Richard A. Hanson
Name: Richard A. Hanson
Title: General Manager

Show Me Ethanol, LLC 10-Q/A