UNITED STATES ~~SECURITIES AND EXCHANGE COMMISSION~~

~~Washington,~~SECURITIES ~~D.C.~~AND ~~20549~~ EXCHANGE COMMISSION

~~FORM~~Washington, ~~10-K~~ D.C. 20549

þFORM ~~Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934.~~10-K

For the fiscal year ended September 30, 2010



x	Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

	For the fiscal year ended	September 30, 2011

	OR

o	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

	For the transition period from to .

	COMMISSION FILE NUMBER 000-52428

oIOWA ~~Transition~~RENEWABLE ~~report~~ENERGY, ~~under Section 13 or 15(d) of the Exchange Act.~~LLC

~~For~~(Exact ~~the~~name ~~transition~~of ~~period~~registrant ~~from to~~ as specified in its charter)

Commission file number 000-52428



Iowa				20-3386000
(State or other jurisdiction of incorporation or organization)				(I.R.S. Employer Identification No.)

1701 East 7th Street, P.O. Box 2, Washington, Iowa 52353
(Address of principal executive offices)

(319) 653-2890
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
None.

Securities registered pursuant to section 12(g) of the Act:
Limited Liability Company Membership Units

~~IOWA~~Indicate ~~RENEWABLE~~by ~~ENERGY~~check mark if the registrant is a well-known seasoned issuer, ~~LLC~~ as defined in Rule 405 of the Securities Act.

~~(Name~~o ofYes x ~~small business issuer in its charter)~~No

Iowa (State or other jurisdiction of		20-3386000 (I.R.S. Employer Identification No.)
incorporation or organization)
1701 East 7th Street, Washington, Iowa (Address of principal executive offices)		52353 (Zip Code)

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

~~(319) 653-2890 (Issuer’s~~o ~~telephone~~Yes x ~~number)~~ No

~~Securities~~Indicate ~~registered~~by ~~under~~check mark whether the registrant (1) has filed all reports required to be filed by Section 13 12or 15(bd) of the Securities Exchange Act: of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

~~None~~ x Yes o No

~~Securities~~Indicate ~~registered~~by ~~under~~check ~~Section~~mark 12whether 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 (g)§232.405 of this chapter) during the ~~Exchange~~preceding ~~Act:~~ 12 months (or for such shorter period that the registrant was required to submit and post such files).

~~26,331~~ x Yes o No

Indicate by check mark if ~~the~~disclosure ~~registrant~~of isdelinquent afilers ~~well~~pursuant to Item 405 of Regulation S-~~known~~K ~~seasoned~~(§229.405 ~~issuer~~of this chapter) is not contained herein, asand ~~defined~~will not be contained, to the best of registrant's knowledge, in ~~Rule 405~~definitive proxy or information statements incorporated by reference in Part III of ~~the~~ ~~Securities~~this ~~Act.~~Form o10-K ~~Yes~~or þany No amendment to this Form 10-K. x

Indicate by check mark ifwhether the registrant is ~~not~~a ~~required~~large toaccelerated ~~file~~filer, ~~reports~~an ~~pursuant~~accelerated tofiler, ~~Section 13~~a non-accelerated filer, or ~~15(d)~~ ofa ~~the~~smaller ~~Exchange~~reporting ~~Act~~company. oSee ~~Yes~~the þdefinitions No of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act:

~~Note~~Large —Accelerated ~~Checking~~Filer ~~the~~o ~~box~~Accelerated ~~above~~Filer ~~will~~o ~~not~~Non-Accelerated ~~relieve~~Filer ~~any~~o ~~registrant~~Smaller ~~required~~Reporting toCompany ~~file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.~~ x

Indicate by check mark whether the registrant ~~(1) filed~~is ~~all~~a ~~reports~~shell ~~required~~company to(as bedefined ~~filed~~in byRule ~~Section 13~~12b-2 ~~or 15(d)~~ of the Exchange Act ~~during the past 12 months (or for such shorter period that the registrant was required to file such reports~~)~~, and (2) has been subject to such filing requirements for the past 90 days~~. ~~þ Yes o No~~

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). o Yes x o No

~~Indicate~~As ~~by check mark if disclosure~~ of ~~delinquent~~March ~~filers~~31, ~~pursuant~~2011, tothe ~~Item 405~~aggregate ofmarket ~~Regulation S-K (§229.405~~value of ~~this~~the ~~chapter)~~membership isunits ~~not~~held ~~contained~~by ~~herein,~~non-affiliates ~~and~~(computed ~~will~~by ~~not~~reference ~~be contained,~~ to the ~~best~~most ~~of registrant’s~~recent ~~knowledge,~~offering inprice ~~definitive proxy or information statements incorporated by reference in Part III~~ of ~~this~~the ~~Form~~membership ~~10-K~~units) orwas ~~any~~approximately ~~amendment to this Form 10-K~~$25,056,000. o

Indicate ~~by check mark whether~~ the ~~registrant~~number isof ashares ~~large~~outstanding ~~accelerated~~of ~~filed,~~each anof ~~accelerated filed, a non-accelerated filer, or a smaller reporting company. See~~ the ~~definitions~~registrant's classes of ~~“large~~common ~~accelerated filer~~stock,” ~~“accelerated~~as ~~filer” and “smaller reporting company” in Rule 12b-2~~ of the ~~Exchange~~latest ~~Act.~~ practicable date:

~~Large~~As ~~accelerated~~of ~~filer~~January 13, o2012, ~~Accelerated~~there ~~filer~~were o26,331 ~~Non-accelerated~~membership ~~filer~~units ~~o Smaller reporting company þ (Do not check if a smaller reporting company)~~outstanding.

~~Indicate~~DOCUMENTS byINCORPORATED ~~check~~BY ~~mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes þ No~~ REFERENCE

AsThe ofregistrant ~~March 31,~~has ~~2010,~~incorporated ~~the~~by ~~aggregate~~reference ~~market~~into ~~value~~Part III of ~~the~~this ~~membership~~Annual ~~units~~Report ~~held~~on byForm ~~non~~10-~~affiliates (computed~~K byportions ~~reference~~of toits ~~the~~definitive ~~issuer’s~~proxy ~~offering~~statement ~~price~~to ofbe ~~such~~filed ~~membership~~with ~~units~~the inSecurities ~~its~~and ~~2006~~Exchange ~~state registered~~Commission ~~offering,~~within as120 nodays ~~current~~after ~~trading~~the ~~market~~close ~~exists~~of ~~for~~the ~~such~~fiscal ~~membership~~year ~~units)~~covered ~~was $23,581,000~~by this Annual Report.

~~As of December 28, 2010, there were 26,331 membership units outstanding.~~ 1

~~DOCUMENTS~~Table ~~INCORPORATED~~of ~~BY REFERENCE~~Contents

The registrant has incorporated by reference into Part III of this Annual Report on Form 10-K its definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year covered by this Annual Report. INDEX

Table of Contents



	Page Number
PART I.	3
Item 1. Business	3
Item 1A. Risk Factors	8
Item 2. Properties	13
Item 3. Legal Proceedings	13
Item 4. (Removed and Reserved)	13
PART II.	14
Item 5. Market for Registrant's Common Equity, Related Member Matters and Issuer Purchases of Equity Securities	14
Item 6. Selected Financial Data	14
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations	14
Item 7A. Quantitative and Qualitative Disclosures about Market Risk	19
Item 8. Financial Statements and Supplementary Data	20
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	32
Item 9A. Controls and Procedures	32
Item 9B. Other Information	32
PART III	32
Item 10. Directors, Executive Officers and Corporate Governance	32
Item 11. Executive Compensation	33
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Member Matters	33
Item 13. Certain Relationships and Related Transactions, and Director Independence	33
Item 14. Principal Accounting Fees and Services	33
PART IV	33
Item 15. Exhibits, Financial Statement Schedules	33
SIGNATURES	35

PART I			3
ITEM 1. BUSINESS			3
ITEM 1A. RISK FACTORS			18
ITEM 2. PROPERTIES			27
ITEM 3. LEGAL PROCEEDINGS			27
ITEM 4. REMOVED AND RESERVED			28
PART II			28
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED MEMBER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES			28
ITEM 6. SELECTED FINANCIAL DATA			29
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			29
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			39
ITEM 8. FINANCIAL STATEMENTS			F-1
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE			40
ITEM 9A. CONTROLS AND PROCEDURES			40
ITEM 9B. OTHER INFORMATION			40
PART III			41
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE			41
ITEM 11. EXECUTIVE COMPENSATION			41
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER MATTERS			41
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE			41
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES			41
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES			41
SIGNATURES			42
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

2 Table of Contents

~~Table~~Forward ofLooking ~~Contents~~Statements

~~AVAILABLE~~This ~~INFORMATION~~ report contains forward-looking statements that involve future events, our future performance and our expected future operations and actions. In some cases you can identify forward-looking statements by the use of words such as "may," "will," "should," "anticipate," "believe," "expect," "plan," "future," "intend," "could," "estimate," "predict," "hope," "potential," "continue," or the negative of these terms or other similar expressions. These forward-looking statements are only our predictions and involve numerous assumptions, risks and uncertainties, including, but not limited to those listed below and those business risks and factors described elsewhere in this report and our other Securities and Exchange Commission filings.

~~Our~~•Failure ~~website address is http://www.iowarenewableenergy.com. Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments~~ to ~~those~~comply reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), are available, free of charge, on our website under the link “SEC Filings,” as soon as reasonably practicable after we electronically file such materials with, orloan ~~furnish~~covenants ~~such materials~~contained ~~to,~~in ~~the Securities and Exchange Commission. The contents of~~ our ~~website~~financing ~~are not incorporated by reference in this annual report on Form 10-K.~~ agreements;

~~PART~~•Our I ability to continue to export our biodiesel;

~~ITEM~~•The 1.continued ~~BUSINESS.~~imposition of tariffs or other duties on biodiesel imported into Europe;

~~Business~~•Decreases ~~Development~~ in the demand for biodiesel;

We•Actual ~~began producing~~ biodiesel ~~on July 10, 2007. The plant was operating at full capacity until the end of September 2007; with only minor temporary shut downs for maintenance~~ and ~~a weather-related~~glycerin ~~power~~production ~~outage.~~varying ~~Since~~from the beginning of October 2007, we have only been operating to produce biodiesel to satisfy existing contracts for the sale of our biodiesel and have not been producing biodiesel for speculation. This has allowed us to avoid excess inventory, but also resulted in several plant shutdowns. During the fourth quarter of fiscal year 2010, we did not operate our plant. expectations;

~~During~~•Economic ~~the~~consequences ~~fourth quarter~~ of ~~fiscal year 2010,~~ the ~~Company~~domestic ~~was in a “warm shutdown” status, which means we maintained a minimal staff to allow for repairs~~ and ~~maintenance~~global aseconomic well as performed load out function for “spot market” sales of our existing inventory. The Company did operate minimally to maintain our BQ-9000 certification. In the quarter ended June 30, 2010, the Company ran “black esters” product through the plant. Black esters are product that has previously been run through production and recaptured to create usable biodiesel. We anticipate the recaptured product, while meeting the ASTM standards, will be blended into new biodiesel when the plant is able to begin operating again, which we anticipate may occur in 2011 due to the renewal for 2011 of the biodiesel tax credit and the retroactive application of the biodiesel tax credit for 2010. downturn;

~~From~~•Availability ~~July 1, 2010 through September 30, 2010 we did not produce new biodiesel~~ and wecost did not have any revenues. We anticipate we may have operating interruptions throughout our 2011 fiscal year due to instability the biodiesel industry has experienced from government supports such as the Renewable Fuels Standard and the biodiesel tax credit. This biodiesel tax credit amounted to $1.00/gallon of ~~biodiesel~~products ~~blended~~ and ~~allowed~~raw ~~biodiesel to stay competitive with petroleum diesel. This tax credit expired on December 31~~materials, ~~2009,~~particularly ~~and~~soybean ~~was only recently reinstated in December 2010. This reinstatement was made retroactive to January 1~~oil, ~~2010~~animal ~~and will again expire on December 31~~fats, ~~2011.~~ Innatural ~~addition,~~gas favorable RFS2 regulations were released in February 2010; however, application of the RFS2 has remained unclear. On December 21, 2010, however, a lawsuit challenging the RFS2 regulations was dismissed in full, which we anticipate may provide more certainty for the program. For more information on the RFS2 regulations, please see “Revenues” below. To the extent RFS2 and ~~the~~ biodiesel tax credit are not swiftly and effectively implemented, or if either of these supports are allowed to expire again, we will likely continue (or begin again) to experience lack of demand and instability in our business. methanol;

~~From~~•Changes ~~October 1,~~in ~~2009 through September 30, 2010 we produced approximately 2,300,000 gallons of biodiesel, which is only approximately 7.7% of our plant’s capacity. We anticipate operating~~ the ~~plant~~ at increased levels during our fiscal year 2011, given the 800 million gallon requirement for biodiesel under RFS2 in 2011; however, our ability to operate depends upon many factors outside of our control, such as demand for biodiesel, price ~~for biodiesel, cost of feedstock, possible expiration of the biodiesel tax credit in 2012,~~ and ~~the~~market ~~speed with which required parties begin to purchase biodiesel~~ for ~~their RFS2 requirements. If demand for~~ biodiesel ~~remains~~and at its ~~current low levels~~co-products, or drops further during our 2011 fiscal year, we will likely operate our plant even less during our 2011 fiscal year than in our 2010 fiscal year. We do not anticipate speculatively producing biodiesel in the next 12 months. Therefore, if demand does not increase such ~~that we can obtain contracts for at least the same number of gallons~~ as produced during fiscal year 2010, then we may operate at a lower production rate than during fiscal year 2010. In addition, we have been experiencing liquidity difficulties since beginning operations and if these conditions do not improve, or get worse, during our 2011 fiscal year, then we will likely be unable to purchase sufficient feedstock to operate our plant at the levels we operated during fiscal year 2010. glycerin;

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

~~Table~~•Changes in or elimination of ~~Contents~~governmental laws, tariffs, trade or other controls or enforcement practices such as:

Since our start-up of operations we have been dealing with short term liquidity issues. We haven’t had any contracts to sell any biodiesel since our third quarter. We do not currently have any executed contracts for our second quarter in our fiscal year 2011◦national, ~~however;~~state weor ~~anticipate~~local ~~that we~~energy ~~will execute contracts for our biodiesel in the near future and will then re-start operations at our plant.~~ policy;

We◦federal ~~are currently in compliance with our revised loan agreement (see “Short~~ and ~~Long~~state ~~Term~~biodiesel ~~Debt Obligations”~~tax below for details on the amendments to our loan agreement). However, our revised loan agreement requires that we maintain an equity level described in the revised agreement which is set at $7,000,000. With our current sales experience and our high fixed costs structure we believe we will fall below the $7,000,000 threshold in our first quarter of fiscal year 2011. We are currently in discussions with our lead bank regarding the possibility of waiving or modifying this required equity level. incentives;

~~As discussed in~~ ◦the ~~accompanying~~RFS ~~financial~~or ~~statements,~~other welegislation ~~have~~mandating ~~generated accumulated losses of $15,256,097 since inception and undertaken significant borrowings to finance~~ the ~~construction~~use of ~~our~~ biodiesel ~~plant. These liquidity issues raise doubts about our ability to continue as a going concern (See Note 6 to the financial statements). We are uncertain how often we will be able to operate the plant,~~ or ifother welubricity ~~will~~additives; ~~be able to operate at all as our operations will depend largely on how long it takes for obligated parties to begin to purchase biodiesel under RFS2.~~ or

~~General~~◦environmental ~~Demand~~ laws and regulations that apply to our plant operations and their enforcement;

~~The~~• ~~biodiesel~~Total industry is still relatively new and unknown especially when compared to the ethanol industry. In 2009, the Renewable Fuels Association reported that a record 10.6 billion gallons of ethanol were produced in the United States. However, the biodiesel industry produced only approximately 545 million gallons of biodiesel in 2009, constituting only a small part of the U.S. ~~diesel~~consumption ~~fuel market and a fraction~~ of ~~the~~diesel amount of 2009 ethanol production. Total 2009 biodiesel production is also significantly less than that produced in 2008, which was approximately 700 million gallons. Biodiesel production overall is currently less than current national biodiesel production capacity. The Biodiesel Magazine website estimates that as of December 12, 2010, national biodiesel production capacity totaled approximately 2.83 billion gallons per year. According to the Biodiesel Magazine website there are 167 plants already operational, of these 58 are currently not producing biodiesel, and some do not currently operate at full capacity due to this excess production capacity and other economic factors. fuel;

~~While~~• ~~there~~Fluctuations ~~has been some uncertain or negative public opinion regarding biodiesel,~~ in ~~July 2008 there was a change to the ASTM standards which allows up to 5% biodiesel to be blended in with~~ petroleum ~~diesel~~ and ~~the product to still be labeled as petroleum~~ diesel. This may continue to provide demand for biodiesel, especially in conjunction with the renewed biodiesel tax credit and RFS2, and offset some of the negative public opinions the biodiesel industry has faced. prices;

~~Principal~~• ~~Products~~Changes ~~and~~in ~~Markets~~ plant production capacity or technical difficulties in operating the plant;

~~The~~• ~~principal~~Changes ~~products~~in ~~produced at~~ our ~~plant~~business ~~are biodiesel and crude glycerin. Iowa Renewable Energy’s biodiesel facility is able to pre-treat crude vegetable oils and animal fats. Our plant~~strategy, ~~however,~~ ~~does~~capital ~~not~~improvements ~~have~~or adevelopment soybean crushing facility and we are not capable of producing pharmaceutical grade glycerin. The plant is capable of having an annual capacity to process approximately 160,000,000 pounds of soybean oil and 70,000,000 pounds of animal fats and grease into approximately 30 million gallons of biodiesel and 3 million gallons of crude glycerin per year. Our equipment does, however, allow a variance from this ratio to compensate for changes in feedstock cost and availability. During the fiscal year ended September 30, 2010 we processed approximately 14,000,000 pounds of soybean oil and 2,000,000 pounds of animal fats and grease into 2,300,000 gallons of biodiesel and 1,900,000 pounds of crude glycerin. plans;

We• ~~anticipate~~Results ~~that~~of we will continue to operate the plant at a similar ratio in the upcoming fiscal year, so long as feedstock costs remain at similar levels. If feedstock costs fluctuate, we will adjust what feedstocks we use accordingly so as to produce our ~~biodiesel~~hedging ~~in the most cost-effective manner.~~ strategies;

4 • Competition with other manufacturers in the biodiesel industry;

~~Table~~• Our ability to generate free cash flow to invest in our business and service our debt (and the flexibility of ~~Contents~~our lender in regards to our debt);

~~Primary~~• ~~Product-~~Our ~~Biodiesel~~ liability resulting from litigation;

~~Biodiesel~~• isOur aability ~~clean-burning~~to ~~alternative~~retain ~~fuel~~key ~~produced~~employees ~~from domestic, renewable resources. Biodiesel is primarily used in compression ignition (diesel) engines~~ and ~~biodiesel~~maintain ~~can~~labor also be used as home heating oil. Biodiesel is comprised of mono-alkyl esters of long chain fatty acids derived from vegetable oils or animal fats, that can be used as feedstock for our facility. A chemical process called transesterification removes the free fatty acids from the base oil and creates the desired esters. Transesterification is the reaction of vegetable oil or animal fat with an alcohol, such as methanol or ethanol, in the presence of a catalyst. The process yields four products: mono-alkyl ester (biodiesel), glycerin, feed quality fat, and methanol. The methanol can be used again in the process. Biodiesel can then be used in neat (pure) form, or blended with petroleum diesel. relations;

~~Biodiesel~~• ~~that~~Changes isand inadvances ~~neat (pure) form is typically designated~~ in ~~the marketplace as B100. The 100 indicates that the fuel is 100%~~ biodiesel. ~~Biodiesel~~production is frequently blended with petroleum based diesel. When biodiesel is blended, it is typically identified in the marketplace according to the percentage of biodiesel in the blend. For instance, B20 indicates that 20% of the fuel is biodiesel and 80% is petroleum-based diesel. technology;

~~Biodiesel’s~~• ~~physical~~Competition and chemical properties, as they relate to operations of diesel engines, are similar to petroleum-based diesel fuel. As a result, biodiesel, in its pure form or blended with petroleum diesel, may be used in most standard diesel engines without making any engine modifications. Biodiesel demonstrates greater lubricating properties, referred to as lubricity, than petroleum-based diesel. This could lead to less engine wear in the long-run as biodiesel creates less friction in engine components than petroleum-based diesel. Biodiesel also demonstrates greater solvent properties. With higher percentage blends of biodiesel, this could lead to break downs in certain rubber engine components such as seals. The solvent properties of biodiesel also can cause accumulated deposits from ~~petroleum-based~~alternative ~~diesel~~fuels inand ~~fuel~~alternative ~~systems to break down. This could lead to clogged~~ fuel filters in the short-term. Fuel filters should initially be checked more frequently when using biodiesel blends. These problems are less prevalent in blends that utilize lower concentrations of biodiesel compared to petroleum-based diesel. additives;

~~Glycerin~~ • Our ability to generate profits; and

~~Glycerin~~• isOther ~~the~~factors ~~primary~~described ~~co-product~~elsewhere of biodiesel production. Glycerin is produced at a rate of approximately 10% of the quantity of biodiesel produced. Glycerin possesses a unique combination of physical and chemical properties that make it suitable for use in athis ~~wide variety of products~~report. It is highly stable under typical storage conditions, compatible with a wide variety of other chemicals and comparatively non-toxic. Glycerin has many applications, including as an ingredient or processing aid in cosmetics, toiletries, personal care, drugs, and food products. Our glycerin, however, cannot be used in pharmaceutical products without further processing, and we do not have the capabilities to refine our glycerin into pharmaceutical quality.

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

~~Biodiesel~~PART is primarily used as fuel for compression ignition (diesel) engines. It is produced using renewable resources and provides environmental advantages over petroleum-based diesel fuel, such as reduced vehicle emissions. Our ability to market our biodiesel is heavily dependent upon the price of petroleum-based diesel fuel as compared to the price of biodiesel, in addition to the availability of economic incentives to produce and use biodiesel. I

~~Biodiesel~~ITEM ~~is frequently used as fuel in transport trucks, ships, trains, in farming activities and in many government vehicles~~1. Government legislation that seeks to encourage the use of renewable fuels could lead to an expansion of the market for biodiesel in the future. Biodiesel has been identified as a potentially good substitute for diesel fuel in underground mining operations because it burns cleaner and leads to less air pollution, a feature that is very important in confined places such as mines. Further, biodiesel may be safer to handle in a mine setting where fire can be disastrous. Additional markets may become available as a result of growing environmental concerns by American consumers as well as an increased awareness of energy security and the United States’ ability to supply its own fuel needs. However, biodiesel still only accounts for a very small percentage of the diesel fuel market as a whole. The biodiesel industry will need to continue to grow demand in order to sustain the price of biodiesel into the future. BUSINESS

5 Business Development

~~Table~~On ofApril ~~Contents~~14, 2005, Iowa Renewable Energy, LLC was organized as an Iowa limited liability company. We began producing biodiesel on July 10, 2007.

~~Wholesale~~We ~~Market~~did /not ~~Biodiesel~~operate ~~Marketers~~ the biodiesel plant during the first quarter of our 2011 fiscal year due to uncertainty regarding biodiesel demand, however, we commenced operations at the end of the second quarter of our 2011 fiscal year and have been operating the biodiesel plant ever since. Our first biodiesel sales during our 2011 fiscal year occurred during April 2011. From our inception through September 30, 2011, we have generated accumulated losses of approximately $20.1 million. Following the end of our

The wholesale market involves selling biodiesel directly to fuel blenders or through biodiesel marketers. Fuel blenders purchase neat (B100) biodiesel from biodiesel production plants, mix it with petroleum diesel fuel according to specifications, and deliver a final product to retailers. There are few wholesale biodiesel marketers in the United States. Three examples are World Energy of Chelsea, Massachusetts, Eco-Energy, Inc. of Franklin, Tennessee, and REG, Inc. of Ames, Iowa. These companies use their existing marketing relationships to market the biodiesel of individual plants to end users for a fee. On June 30, 2010, our management and operational services agreement with Renewable Energy Group, Inc. (“REG”) terminated, and the term of our management services agreement (“Management Agreement”) with WMG Services LLC (“WMG”) began. The Management Agreement provides that WMG will provide certain facility administration services; accounting services; and marketing, sales, feedstock sourcing and logistic services for IRE in exchange for a monthly asset utilization fee and a monthly performance fee. The Management Agreement shall continue for a term of twenty-four (24) months from the Effective Date. Thereafter, the Agreement shall automatically renew for additional successive terms of twelve (12) months, unless either party gives ninety (90) days notice of its desire not to renew. The Management Agreement may also be terminated for a failure to cure a material breach of the Agreement thirty (30) days after receipt of notice of the breach, or for a change of control. If WMG cannot sell our biodiesel, or sell it at profitable prices, we will likely continue to experience losses. 3

~~Retail~~Table ~~Market~~ of Contents

~~The~~2011 ~~retail~~fiscal ~~market consists of biodiesel distribution primarily through fueling stations to transport trucks and jobbers~~year, ~~which~~we ~~are~~have ~~individuals~~continued ~~that buy products from manufacturers and sell them~~ to ~~retailers,~~operate ~~for~~ the ~~purpose~~biodiesel ofplant ~~supplying farmers, maritime customers~~ and ~~home~~produce ~~heating~~biodiesel ~~oil users. Retail level distributors include oil companies, independent station owners, marinas~~ and ~~railroad~~ ~~operators. The biodiesel retail market is still in~~ its ~~very~~co-products ~~early stages as compared to other types of fuel. If demand~~ for ~~biodiesel were to increase, then the present marketing and transportation network must expand significantly in order for our company to effectively market our biodiesel to retail users~~sale. ~~Areas that would require expansion include, but are not limited to:~~

•Since ~~additional~~February ~~storage~~2009, ~~facilities~~we ~~for~~have ~~biodiesel;~~been involved in an arbitration with Renewable Energy Group (REG) who had previously provided us with management and operational services. The arbitration included claims we had against REG and counter-claims that REG brought against us. The arbitration was scheduled to start at the end of October 2011. On October 28, 2011, we entered into a settlement agreement with REG and dismissed the arbitration. As part of the dismissal of the arbitration, we agreed to negotiate with REG with respect to a long-term toll manufacturing arrangement with REG. We were not required to enter into an agreement with REG with respect to toll manufacturing in the event we secured a more favorable contract from another party.

•On ~~expansion~~December in9, ~~refining~~2011, ~~and~~we ~~blending~~gave ~~facilities~~notice to ~~handle~~REG that we were proceeding with a long-term biodiesel; production agreement with Gavilon, LLC (Gavilon) for production during calendar year 2012. Our agreement with Gavilon provides that we will purchase from Gavilon all of the feedstock that we require to produce biodiesel during calendar year 2012 and that we will sell all of the biodiesel we produce to Gavilon. This is an exclusive relationship where we have agreed not to produce biodiesel for any other customers during calendar year 2012. In exchange for this exclusive relationship, Gavilon has agreed to purchase a minimum amount of biodiesel from us during calendar year 2012 which equals approximately 50% to 70% of our total production capacity, depending on feedstock. In the event Gavilon does not purchase the minimum amount of biodiesel from us during any month, Gavilon has agreed to make a minimum cash payment to us. Management anticipates that the Gavilon agreement will allow us to recommence making payments on our long-term loan with our primary lender.

•During ~~growth~~our in2011 ~~service~~fiscal ~~stations~~year, ~~equipped~~we had two loans outstanding with our primary lender, MLIC Asset Holdings, LLC ("MLIC"), a term loan and a revolving line of credit. Due to ~~handle~~our lack of liquidity and poor operating conditions in the biodiesel ~~fuels~~industry, we were in default of our loans with MLIC throughout our 2010 fiscal year. As a result, we entered into a forbearance agreement with MLIC where it agreed to waive our non-compliance with our credit agreements until January 2, 2012 at which time all amounts outstanding on our loans with MLIC were scheduled to be due in full. On December 28, 2011, we entered into a term sheet with MLIC which provided for a restructuring of our term loan and a new revolving line of credit. On January 11, 2012, we entered into an agreement with MLIC to extend the maturity date of our term loan until January 5, 2013 subject to certain financial and nonfinancial covenants. We have also secured a $1 million line of credit and repaid the balance of our prior line of credit. Management believes that as a result of the agreement we executed with Gavilon and our agreement with MLIC, we will be in compliance with our credit agreements for the remaining quarters of our 2012 fiscal year. Pursuant to our agreement with MLIC, we will pay a variable interest rate on our term loan at a rate of 6% above on the one month London Interbank Offered Rate (LIBOR), adjusted monthly and we will pay 6% interest on our $1 million line of credit. Our agreement with MLIC is described in greater detail below in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources."

~~With~~We ~~greater~~currently ~~consumer~~have ~~awareness~~a ofManagement ~~renewable~~Services ~~fuels,~~Agreement wewith ~~anticipate~~WMG ~~that the availability of biodiesel may increase in the future. However~~Services, ~~substantial~~LLC ~~investments required for these infrastructure changes and expansions may not be made or they may not occur on a timely basis~~("WMG"). Pursuant ~~Any delay~~to orour ~~failure~~Management inServices ~~making~~Agreement, ~~the~~WMG ~~changes~~agreed to orprovide ~~expansion~~certain offacility ~~infrastructure~~administration ~~could~~services; ~~hurt~~accounting ~~the~~services; ~~demand~~and ~~or prices~~marketing, ~~for our products~~sales, ~~impede~~feedstock ~~our~~sourcing ~~delivery~~and oflogistic ~~products,~~services ~~impose~~for ~~additional costs on~~ us ~~or otherwise~~in ~~have~~exchange for a ~~material~~monthly ~~adverse~~asset ~~effect~~utilization onfee ~~our~~and ~~results~~a ofmonthly ~~operations~~performance orfee. The ~~financial~~Management ~~position.~~Services ~~Our business~~Agreement is ~~dependent~~scheduled onto ~~the~~expire ~~continuing availability of infrastructure and any infrastructure disruptions could have a material adverse effect~~ on ~~our~~June ~~business~~30, 2012.

~~International~~During ~~Markets~~ our 2011 fiscal year, the biodiesel industry was benefited by a tax incentive called the Volumetric Ethanol Excise Tax Credit ("VEETC"). This tax incentive is commonly referred to as the biodiesel blenders' credit. The biodiesel blenders' credit provided a $1 credit to fuel blenders for each gallon of biodiesel that they blended with petroleum based diesel. The biodiesel blenders' credit expired on December 31, 2011. However, management believes that so long as the biodiesel use requirements of the Federal Renewable Fuels Standard (RFS) continue, including the requirement specifically for biomass-based diesel, there will be demand for biodiesel and the price of biodiesel will remain at levels that will allow us to operate the biodiesel production facility, despite the expiration of the biodiesel blenders' credit. Further, due to our agreement with Gavilon, we anticipate being able to profitably operate the biodiesel plant during the rest of our 2012 fiscal year.

~~Through~~Principal ~~our~~Products marketer, WMG, we expect that a portion of our biodiesel may be sold abroad to international markets, particularly Canada. In some instances, we believe that international biodiesel sales may return greater profits than domestic biodiesel sales. However, demand for international sales have been greatly reduced as a result of anti-dumping and anti-subsidy tariffs imposed by the European Commission on all biodiesel produced in the United States. The tariffs went into effect March 13, 2009 and the European Commission determined in July 2009, that the tariffs would be extended through 2014. According to the May 2009 issue of the Biodiesel Magazine, the tariffs could result in an additional charge of $30 to $265 per metric ton of biodiesel. Because of these tariffs, we do not anticipate any sales to Europe. Markets

~~Government/Public~~The ~~Sector~~ principal products we produce are biodiesel and crude glycerin. Due to our current financial condition, we have been supplementing our ordinary production with toll manufacturing and other similar types of agreements which allow us to produce biodiesel without incurring the significant costs associated with purchasing feedstock. This has allowed us to maintain our liquidity and operate the biodiesel plant at a higher rate than we could if we were required to purchase feedstock for all of the biodiesel that we produce. Further, we have primarily produced biodiesel pursuant to established production contracts and have not produced biodiesel speculatively for the market. For calendar year 2012, we have entered into an exclusive biodiesel sales agreement with Gavilon, which has agreed to purchase a minimum amount of biodiesel from us or alternatively, make cash payments to us. Therefore, during the rest of our 2012 fiscal year, we anticipate only selling biodiesel to Gavilon.

The government has increased its use of biodiesel since the implementation of the Energy Policy Act (EPACT) of 1992, amended in 1998, which authorized federal, state and public agencies to use biodiesel to meet the alternative fuel vehicle requirements of EPACT. Although it is possible that individual plants could sell directly to various government entities, it is unlikely our plant could successfully market our biodiesel through such channels. Government entities have very long sales cycles based on the intricacies of their decision making and budgetary processes. 4

6 Table of Contents

~~Table of Contents~~Biodiesel

~~Glycerin~~Biodiesel ~~Markets~~is a clean-burning alternative fuel produced from domestic, renewable resources. Biodiesel is primarily used in compression ignition (diesel) engines and ~~Demand~~ biodiesel can also be used as home heating oil. Biodiesel is comprised of mono-alkyl esters of long chain fatty acids derived from vegetable oils or animal fats, that can be used as feedstock for our facility. A chemical process called transesterification removes the free fatty acids from the base oil and creates the desired esters. Transesterification is the reaction of vegetable oil or animal fat with an alcohol, such as methanol or ethanol, in the presence of a catalyst. The process yields four products: mono-alkyl ester (biodiesel), glycerin, feed quality fat, and methanol. The methanol can be used again in the process. Biodiesel can then be used in neat (pure) form, or blended with petroleum diesel.

InBiodiesel's ~~2006,~~physical ~~excess~~and ~~production~~chemical ofproperties, ~~glycerin~~as ~~caused~~they ~~the~~relate ~~price~~to operations of ~~crude~~diesel ~~glycerin~~engines, are similar to ~~decline dramatically~~petroleum-based diesel fuel. As a result, tobiodiesel, ~~the~~in ~~point~~its ~~that~~pure ~~some~~form ~~producers~~or ~~had~~blended towith ~~pay~~petroleum todiesel, ~~dispose~~may ofbe ~~their~~used ~~glycerin.~~in ~~Since~~most ~~then glycerin~~standard ~~prices~~diesel ~~have~~engines ~~been~~without ~~experiencing~~making anany ~~increase~~engine modifications. AsBiodiesel ofdemonstrates ~~mid~~greater ~~December 2010~~lubricating properties, ~~according~~referred to as lubricity, than petroleum-based diesel. This could lead to less engine wear in the ~~Jacobsen~~ ~~Biodiesel~~long-run ~~Bulletin,~~as ~~average~~biodiesel ~~crude~~creates ~~glycerin~~less ~~prices~~friction ~~were~~in ~~approximately~~engine 14components tothan 16petroleum-based ~~cents~~diesel. ~~per pound~~Biodiesel also demonstrates greater solvent properties than petroleum-based diesel. ~~WMG~~With ~~currently~~higher ~~markets~~percentage ~~the~~blends ~~glycerin~~of ~~produced~~biodiesel, atthis ~~our~~could ~~plant pursuant~~lead to ~~our~~break ~~Management~~downs ~~Agreement~~in certain rubber engine components such as seals. ~~If oversupply~~The solvent properties of ~~glycerin~~biodiesel ~~and~~also ~~low~~can ~~glycerin~~cause ~~prices~~accumulated ~~occurs~~deposits itfrom ~~may~~petroleum-based ~~limit~~diesel ~~our~~in ~~ability~~fuel systems to ~~generate~~break ~~revenues through~~down. ~~the~~This ~~sale~~could oflead ~~our~~to ~~primary~~clogged cofuel filters in the short-~~product~~term. These ~~This~~problems ~~may~~are ~~negatively~~less ~~affect~~prevalent ~~the~~in ~~profitability~~blends that utilize lower concentrations of ~~our business~~biodiesel compared to petroleum-based diesel.

Relatively higher refined glycerin prices, averaging approximately 40 to 42 cents per pound according to the Jacobsen Biodiesel Bulletin in December 2010, have prompted some of our competitors, such as Cargill Inc. (Cargill) and Archer Daniels Midland Co. (ADM) to expand their glycerin refining capacities. These biodiesel producers may therefore have a competitive advantage over plants like ours that do not have glycerin refining capabilities. Glycerin

~~Additional~~Glycerin ~~uses~~is ~~for~~the ~~glycerin~~primary ~~are~~co-product ~~being~~of ~~researched~~biodiesel production. ~~Research~~Glycerin ~~has~~is ~~been~~produced ~~underway~~at toa ~~develop technology~~rate ~~that~~of ~~converts~~approximately ~~glycerin,~~10% aof ~~byproduct~~the quantity of biodiesel ~~production, into ethanol~~produced. ~~Ethanol~~Glycerin ~~made from~~possesses ~~glycerin~~a ~~may~~unique becombination ~~cheaper~~of tophysical ~~produce~~and ~~than~~chemical ~~ethanol~~properties ~~made~~that ~~from~~make ~~corn,~~it assuitable ~~glycerin~~for ~~does~~use ~~not~~in ~~require the~~a ~~extensive~~wide ~~pre-processing~~variety ~~steps~~of ~~required for corn~~products. ~~Research~~It ~~has~~is ~~also~~highly ~~been~~stable ~~underway~~under totypical ~~develop methods~~storage ~~of converting glycerin into propylene glycol~~conditions, ~~which~~compatible iswith a ~~compound~~wide ~~used in a~~ variety of ~~industrial~~ ~~products,~~other ~~including~~chemicals ~~paints,~~and ~~polyester~~comparatively ~~resins,~~non-toxic. ~~lubricants,~~Glycerin ~~antifreeze~~has ~~and~~many ~~cosmetics. Accordingly~~applications, ~~development~~including ofas ~~these~~an ~~technologies~~ingredient ~~could~~or ~~increase~~processing ~~the~~aid ~~demand~~in ~~for~~cosmetics, ~~glycerin. However~~toiletries, ~~such~~ ~~technologies~~personal ~~are~~care, ~~still~~drugs, ~~currently under development~~ and ~~there~~food isproducts. noOur ~~assurance~~glycerin, ~~that~~however, ~~such technologies~~cannot ~~will~~be ~~become~~used ~~readily~~in ~~available~~pharmaceutical orproducts ~~that~~without ~~they~~further ~~would~~processing, ~~increase~~and ~~demand~~we ~~for~~do ~~glycerin. Moreover,~~not ~~there~~have isthe nocapabilities ~~assurance~~to ~~that~~refine our glycerin ~~would~~into ~~work~~pharmaceutical toquality. Our beagreement ~~processed~~with ~~into~~Gavilon ~~ethanol,~~does ~~and taking~~not ~~advantage~~include any of ~~such~~the ~~technology~~glycerin ~~may~~we ~~require~~anticipate ~~additional~~producing. As ~~equipment~~a orresult, ~~equipment modification. If~~ we ~~did~~anticipate ~~not~~that ~~have~~we ~~the~~will ~~resources~~be able to ~~purchase~~separately ~~additional~~market ~~equipment~~the orglycerin ~~make~~we ~~equipment~~produce ~~modifications, such~~which ~~technology~~we ~~developments~~anticipate ~~could~~will ~~result~~be inan ~~our~~additional ~~glycerin~~source ~~being~~of atrevenue afrom ~~competitive~~our ~~disadvantage~~operations.

Distribution Methods of Principal Products

Our ~~Management~~products ~~Agreement~~can ~~with~~be ~~WMG~~delivered ~~requires~~by ~~WMG~~truck toor ~~provide~~rail. ~~certain~~Our ~~facility~~property ~~administration services;~~is ~~accounting~~located ~~services;~~approximately ~~and~~thirty-five ~~marketing,~~miles ~~sales,~~from ~~feedstock~~Interstate ~~sourcing~~80 and ~~logistic~~thirty ~~services~~miles ~~for IRE in exchange for a monthly asset utilization fee and a monthly performance fee. The Management Agreement shall continue for a term of twenty-four (24) months~~ from the ~~Effective~~Mississippi ~~Date~~River. ~~Thereafter, the~~We ~~Agreement~~have ~~shall~~established ~~automatically~~rail ~~renew~~service ~~for~~directly ~~additional~~to ~~successive~~the ~~terms~~plant ofso ~~twelve~~that ~~(12) months, unless~~we ~~either~~are ~~party~~able ~~gives~~to ~~ninety~~ship ~~(90) days~~biodiesel ~~notice~~to ofour ~~its~~customers ~~desire~~by ~~not to renew~~rail. ~~The~~Rail ~~Management Agreement~~service ~~may~~is ~~also~~provided beby ~~terminated~~the ~~for~~Canadian aPacific ~~failure~~Railroad. We toanticipate ~~cure~~that aduring ~~material breach of~~ the ~~Agreement~~remaining ~~thirty (30) days~~quarters ~~after receipt~~ of ~~notice~~our of2012 ~~the~~fiscal ~~breach~~year, orGavilon ~~for~~will acoordinate ~~change~~shipment of ~~control.~~the Ifbiodiesel ~~WMG~~that ~~cannot~~we ~~sell~~produce ~~our biodiesel,~~and orwe ~~sell~~will itcoordinate atshipment ~~profitable~~of ~~prices,~~the weother ~~will~~products ~~likely~~that ~~continue~~we toanticipate ~~experience losses~~producing.

~~Our~~New products can be delivered by truck or rail. Our property is located approximately thirty-five miles from Interstate 80 and thirty miles from the Mississippi River. We have established rail service directly to the plant so that we are able to ship biodiesel to our customers by rail. Rail service is provided by the Iowa, Chicago and Eastern Railroad, and WMG coordinates all of our transportation services pursuant to our Management Agreement. Products

7 We did not introduce any new products during our 2011 fiscal year and we do not anticipate introducing any new products during our 2012 fiscal year.

~~Table~~Competition ofin ~~Contents~~Biodiesel Industry

~~Sources~~The ~~and~~products ~~Availability~~that ofwe ~~Raw~~sell ~~Materials~~ are commodity products where competition is typically based on price. In addition to price, consistent fuel quality is important to our customers along with delivery service to a lesser extent. Currently, there is significantly more biodiesel production capacity in the United States than there is biodiesel demand. This has led to many biodiesel producers ceasing operations or producing at a reduced rate. This has created even more competition in the biodiesel industry.

~~Feedstock~~In ~~Cost~~addition to competition based on the products we sell, we also compete with other biodiesel producers with respect to raw material purchases. Biodiesel is typically produced using vegetable oils or animal fats. As biodiesel production has increased, demand for these feedstocks has increased along with increased prices for these raw materials. Since we anticipate producing biodiesel for Gavilon going forward and ~~Supply~~ it has agreed to supply all of the feedstock that we require to produce biodiesel during calendar year 2012, we do not anticipate that our operations will be subject to the same competitive forces as we have experienced in the past. However, to the extent Gavilon cannot secure feedstock for us at reasonable prices, we may not produce biodiesel beyond the minimum production requirements in the Gavilon agreement which may negatively impact our profitability.

The cost of feedstock is the largest single component of the cost of biodiesel production, accounting for 70% to 90% of the overall cost of producing biodiesel. As a result, increased prices for feedstock greatly impact the biodiesel industry. Our plant is capable of pretreating crude vegetable oil, including soybean oil and corn oil, and animal fats and utilizing the same to produce biodiesel. Animal fat has been less expensive to acquire than soybean oil and, accordingly, we attempt to use as much animal fat feedstock as possible so long as producing our biodiesel from animal fat would return greater profit margins. Animal fat biodiesel demand, however, does typically decline in the colder fall and winter months and, accordingly, our use of animal fats have been declining during such months. We anticipate that we will continue to use corn oil as a feedstock source for so long as its use returns greater profit margins as compared to soybean oil. The USDA December 13, 2010 Oil Crops Outlook report provides that the average November 2010 price for corn oil was 51.00 cents per pound, which was slightly higher than the November 2010 price for soybean oil of 47.62 cents per pound and more than the November 2010 prices for lard and edible tallow, which were 37.32 and 41.75 cents per pound, respectively 5

InTable ~~the event we cannot obtain adequate supplies~~ of feedstock at affordable prices, our ability to operate profitably may be materially impaired. We may be forced to shut down the plant temporarily or even permanently. Due to the increased prices for our inputs, decreased demand for biodiesel and our liquidity issues, we have experienced temporary shutdowns and are currently operating well below our capacity. For the fourth quarter of the year ended September 30, 2010, our plant did not operate, but averaged 7.7% capacity production during the twelve months ended September 30, 2010. Continued plant shutdowns and increased feedstock costs may reduce our revenues and the value of your investment. Contents

~~Soybean~~We ~~Oil~~ believe that our plant competes favorably with other biodiesel producers due to the fact that we have the ability to pre-treat many different types of feedstock that are used to produce biodiesel. Some biodiesel production facilities only have the ability to use certain types of feedstock to produce biodiesel. Due to our pre-treatment capabilities, we may be able to produce biodiesel using lower cost feedstock that other biodiesel producers cannot use. This capability also makes us an attractive biodiesel production facility for toll manufacturing or similar type agreements.

~~The~~We ~~ten-year~~compete ~~average~~in ~~price~~the ~~for~~biodiesel ~~soybean~~industry ~~oil~~with isa ~~approximately~~few 28large ~~cents~~producers ~~per~~who ~~pound.~~control ~~However, soybean~~a ~~oil~~significant ~~prices~~portion ~~have~~of ~~been~~the ~~extremely~~biodiesel ~~volatile,~~production ~~reaching record highs~~ in the ~~summer~~United ~~of 2008 and sharply declining thereafter~~States. Examples ~~The~~of ~~USDA December 13, 2010 Oil Crops Outlook report provides that~~ the ~~average~~larger ~~November 2010~~producers ~~soybean~~with ~~oil~~which ~~price~~we ~~was~~compete ~~approximately~~are ~~47.62~~Archer ~~cents~~Daniels ~~per~~Midland ~~pound~~(ADM), ~~which~~Cargill, isAg ~~below the~~Processing ~~July 2008 peak prices of 62~~Inc.~~54.~~ ~~The~~(AGP) ~~drop~~and inRenewable ~~soybean~~Energy ~~oil~~Group ~~prices~~(REG). These ~~was~~larger ~~likely~~companies ~~caused~~have bymore ~~the changing~~access ~~global~~to ~~economic~~capital ~~conditions~~and ~~triggered~~have bygreater ~~the~~resources ~~recent~~than ~~failure~~we ~~of various major U~~do.S. This ~~financial institutions,~~may ~~the~~allow ~~passage~~them ofto ~~the~~enter ~~federal~~into ~~government’s~~more ~~$700 billion~~favorable ~~bailout~~biodiesel ~~plan,~~sales ~~the~~or ~~tightening~~feedstock ~~of credit~~purchase ~~markets~~contracts ~~and~~that ~~the~~we ~~economic~~can ~~downturn experienced by the U~~secure.S. This ~~and~~may ~~other~~also ~~countries.~~allow ~~According~~them to ~~the~~ ~~USDA’s~~compete ~~National~~more ~~Weekly~~effectively ~~Ag Energy Round-Up report, crude soybean oil prices~~ in ~~Iowa for~~ the ~~week of~~biodiesel ~~December 10,~~industry ~~2010~~than ~~ranged~~we ~~from~~are 49able.90 Further, tosome ~~51.15~~of ~~cents per pound. The USDA forecasted that~~ these ~~soybean~~ ~~oil~~larger ~~prices~~biodiesel ~~will~~producers ~~remain~~also inproduce ~~this~~feedstock ~~range~~used ~~during the 2009/2010 marketing season, with a predicted price range of 45~~ to 49make ~~cents per pound~~biodiesel. This ~~The~~vertical ~~charts~~integration ~~below~~may ~~show~~allow ~~U.S.~~them ~~soybean~~to ~~oil~~compete ~~prices over~~more ~~the~~favorably ~~past~~in ~~ten years and for each month from~~ the ~~beginning~~biodiesel ofindustry ~~the~~than ~~2009/2010~~we ~~marketing~~are ~~year~~able to ~~November 2010:~~ compete.

U.S. Soybean Oil Average Prices for the Past 10 Years
Marketing Year	Price (cents)
1999/00		15.60
2000/01		14.15
2001/02		16.46
2002/03		22.04
2003/04		29.97
2004/05		23.01
2005/06		23.41
2006/07		31.02
2007/08		52.03
2008/09		32.16
2009/10		35.95
2010/11		45.0-49.0	(1)

We also compete with other biodiesel producers in the sale of the biodiesel production co-products, including glycerin. Due to increased production of biodiesel, glycerin supplies in the United States have increased which has negatively affected the price of glycerin. The glycerin we produce is not refined glycerin which demands premium prices in the glycerin market. Certain biodiesel producers, such as Cargill and ADM, have expanded their glycerin refining capacities due to relatively higher prices for refined glycerin as compared to the price of crude glycerin. These biodiesel producers may therefore have a competitive advantage over plants like ours that do not have glycerin refining capabilities.

U.S. Soybean Oil Average Prices for 2009-2010
Marketing Year
Month	Price (cents)
October 2009		33.15
November 2009		36.59
December 2009		36.81
January 2010		34.88
February 2010		34.69
March 2010		36.39
April 2010		37.11
May 2010		35.41
June 2010		34.47
July 2010		35.07
August 2010		37.57
September 2010		39.21
October 2010		44.02
November 2010(1)		47.62

Sources and Availability of Raw Materials and Suppliers

~~(1)~~Biodiesel ~~Preliminary~~Production ~~Price~~Feedstock

8 Producing biodiesel requires feedstock, typically vegetable oils or animal fats, along with chemicals, water, electricity and natural gas. The single largest cost of producing biodiesel is the feedstock. Due to our current liquidity issues, we have been supplementing our biodiesel production through toll manufacturing and other similar agreements which allow us to avoid purchasing the feedstock necessary to produce biodiesel, and instead we produce biodiesel for other companies where they either purchase and deliver the feedstock we require or they bear the risk of feedstock price changes.

~~Table~~Pursuant to our agreement with Gavilon for our 2012 calendar year, Gavilon will be responsible for securing all of ~~Contents~~the feedstock necessary to operate our biodiesel plant. We have agreed to purchase all of the feedstock supplied by Gavilon and use it to produce biodiesel at our plant.

~~Data provided by USDA, Oil Crops Outlook Report, December 13, 2010~~ Utilities

~~Because~~Our itbiodiesel ~~takes~~plant ~~more~~requires ~~than~~a ~~seven~~significant ~~pounds~~and ofuninterrupted ~~soybean~~supply ~~oil to make a gallon~~ of ~~biodiesel~~electricity, ~~increases~~ innatural ~~soybean~~gas ~~oil costs significantly reduce the potential profit margin on each gallon of biodiesel produced from soybean oil~~ and ~~sold.~~water ~~Any increase in the cost of soybean oil will negatively impact our ability~~ to ~~generate revenues and profits~~operate. We ~~Conversely,~~do ifnot ~~the soybean oil price drops, this would~~ have aany ~~positive~~long ~~impact~~term onagreements ~~our revenues. Due to high soybean oil costs throughout most of the 2010 fiscal year, we have been using alternative forms of feedstock as substitutes~~ for ~~soybean~~our ~~oil~~utilities tobut ~~the~~receive ~~greatest~~them ~~extent~~on ~~possible.~~a ~~These~~monthly ~~substitutes~~invoice ~~include animal fat and used cooking oil~~basis. We ~~Used~~do ~~cooking~~not ~~oil~~anticipate ~~tends~~encountering toany ~~have~~difficulty ~~a reduced yield due to a higher water content and other particles~~ in ~~the~~securing ~~raw stock. However, prices for these alternative feedstocks have tended to increase along with~~ the ~~cost of soybean oil. Accordingly~~electricity, wenatural ~~will~~gas ~~continue to explore additional low-cost feedstocks~~ and ~~utilize~~water ~~soybean~~we ~~oil~~need to ~~the extent it remains a profitable and marketable option~~operate.

~~Increased~~Electricity. ~~competition~~We ~~with~~require ~~other~~a ~~biodiesel~~significant ~~plants~~supply ~~for~~of ~~soybean~~electricity ~~oil may result in prices again increasing~~ to ~~2008~~operate ~~prices~~our ~~for soybean oil~~plant. ~~Accordingly,~~Alliant ~~the~~Energy ~~number~~supplies ofus ~~acres~~with ofour ~~soybeans~~electricity ~~planted and harvested can impact the price of and competition for soybean oil. In its December 13~~needs, ~~2010~~on ~~Oil Crops~~a ~~Outlook~~monthly ~~report,~~basis ~~the~~at ~~USDA~~variable ~~reported that 76~~rates.8 million soybean acres were harvested in the 2010-2011 crop year. The portion of that used to make biodiesel is not expected to increase significantly due to the competition from other vegetable oils and animal fats being used as alternative sources of feedstock.

~~Animal~~Water ~~Fats~~and Sewer. We require a significant supply of water to operate our plant. The City of Washington supplies us with water, on a monthly basis at variable rates. We have entered into an agreement to have our wastewater handled by the cities of Cedar Rapids, Muscatine and ~~Other~~Des ~~Alternative~~Moines ~~Feedstocks~~ until the City of Washington has the capacity to handle our wastewater.

~~Our~~Natural ~~plant is also capable of utilizing animal fats to produce biodiesel and, like soybean oil, animal fat costs have also increased over the past several years~~Gas. ~~Animal~~We ~~fat~~require ~~costs~~a ~~peaked~~significant insupply ~~the summer~~ of ~~2008,~~natural ~~and have since fallen as domestic and global economic conditions have worsened~~gas. ~~Although~~ ~~prices~~Alliant ~~for~~Energy ~~animal~~supplies ~~fats~~us ~~have~~with ~~declined~~natural ~~from~~gas ~~their~~on ~~recent~~a ~~peak,~~monthly ~~animal~~basis ~~fat~~at ~~costs~~variable ~~are nonetheless higher than their historical average~~rates. The USDA December 13, 2010 Oil Crops Outlook report provides that the average November 2010 prices for lard and edible tallow were 37.32 and 41.75 cents per pound, respectively. The USDA predicted lard and edible tallow prices could increase slightly for 2010/2011, ranging from 41 to 45 cents per pound for lard and 38.5 to 42.5 cents per pound for edible tallow. If animal fat prices increase such that it is not profitable to use this feedstock, we may again increase our use of soybean oil.

~~The charts below show U~~Rail.S. ~~lard~~The ~~and~~Canadian ~~edible~~Pacific ~~tallow~~Railroad ~~prices~~supplies ~~over~~our ~~the~~plant ~~past~~with ~~ten~~rail ~~years and for each month from the beginning of the 2009/2010 marketing year to November 2010:~~ service.

Lard & Edible Tallow Average Prices for Past Ten Years
Marketing Year	Lard			Edible Tallow
	(cents)			(cents)
1999/00		13.64			13.21
2000/01		14.61			13.43
2001/02		13.55			13.87
2002/03		18.13			17.80
2003/04		26.13			22.37
2004/05		21.80			18.48
2005/06		21.74			18.16
2006/07		28.43			27.32
2007/08		40.85			41.68
2008/09		26.72			25.47
2009/2010		31.99			32.26
2010/11		41.0-45.0	(1)		38.5-42.5	(1)

Dependence on Customers

Lard & Edible Tallow Average Prices for 2009-2010
Marketing Year
Month	Lard			Edible Tallow
	(cents)			(cents)
October 2009		25.75			27.63
November 2009		30.07			29.65
December 2009		28.75			29.99
January 2010		28.60			29.48
February 2010		28.25			29.42
March 2010		32.95			33.73
April 2010		33.95			35.14
May 2010		34.24			35.33
June 2010		32.98			35.72
July 2010		31.42			32.50
August 2010		33.33			33.54
September 2010		43.59			35.02
October 2010		46.64			37.00
November 2010		37.32	(1)		41.75	(1)

We entered into an agreement with Gavilon who will supply all of the feedstock necessary for us to produce biodiesel at the plant during calendar year 2012 and to purchase all of the biodiesel that we produce during the same period of time. Gavilon has agreed to purchase a minimum amount of biodiesel from us during our 2012 calendar year and if it fails to purchase that minimum amount of biodiesel, Gavilon has agreed to make a minimum cash payment to us in lieu of purchasing biodiesel. If

~~(1) Preliminary Prices~~6

9 Table of Contents

~~Table~~Gavilon ofwere ~~Contents~~to fail, we do not anticipate having any other contracts to purchase feedstock or sell biodiesel.

~~Data~~Government ~~provided~~Approvals byand ~~USDA, Oil Crops Outlook Report, December 13, 2010~~ Regulations

WeThe ~~have~~United ~~also~~States ~~been~~biodiesel ~~using~~industry ~~corn~~is ~~oil~~benefited ~~that~~by wenumerous ~~obtain~~federal ~~from~~and ~~ethanol~~state ~~plants~~government asprograms anand ~~alternative feedstock from time to time~~incentives. ~~We expect that, like animal fats, corn oil may be a less costly feedstock alternative to soybean oil.~~ The ~~National~~most ~~Weekly~~significant Aggovernment ~~Energy~~programs ~~Round-Up~~and ~~for~~incentives ~~the week of December 10, 2010 indicates~~ that ~~crude~~benefit ~~corn~~the ~~oil~~biodiesel ~~costs~~industry inare the ~~Midwest~~Federal ~~ranged~~Renewable ~~from~~Fuels 53Standard ~~cents~~(RFS) toand ~~54 cents~~the ~~per~~VEETC ~~pound.~~federal ~~Corn~~blenders' ~~oil-based~~tax ~~biodiesel has cold flow properties similar to those of soybean oil-based biodiesel and accordingly~~credit, wewhich ~~may~~is befrequently ~~able~~referred to ~~continue to use corn oil~~ as ~~feedstock in~~ the ~~fall~~ ~~and winter months when demand for animal fat-based~~ biodiesel ~~could~~blenders' ~~decrease~~credit. Without ~~Corn~~these ~~oil, however,~~government ~~tends~~programs toand ~~cause a waxy substance to build-up during the production process. Due to this build-up~~incentives, we ~~expect~~may ~~that we will~~ not be able to ~~produce~~continue ~~any biodiesel blends containing greater than 5% corn oil. The unique characteristic of corn oil could cause it~~ to beprofitably aoperate ~~less desirable feedstock then other feedstocks. The amount of corn oil that we will be able to acquire will likely depend upon~~ the ~~rate~~biodiesel ~~in which ethanol plants begin installing corn oil extraction equipment at their plants and the extent to which they market their corn oil~~plant. ~~Production of corn oil at ethanol plants may be inhibited due to a patent lawsuit related to certain technology used by some ethanol plants to extract corn oil.~~

InFederal ~~the~~Renewable ~~event~~Fuels we cannot obtain adequate supplies of feedstock at affordable costs for sustained periods of time, then we may be forced to shut down the plant temporarily or permanently. Shut downs and increased feedstock costs may reduce our revenues from operations which could decrease or eliminate the value of our units. Standard

~~Feedstock~~The ~~Cold~~RFS ~~Flow~~is ~~Properties~~ a federal program that requires a certain amount of renewable fuels, including biodiesel, to be used in the United States each year. The RFS requires that approximately 14 billion gallons of renewable fuels must be used in the United States during 2011 increasing to 15.2 billion gallons of renewable fuels in 2012. The RFS continues to increase incrementally to 36 billion gallons of renewable fuels by 2022. Further, on July 1, 2010, a change to the RFS was implemented which, among other provisions, specifically required the use of biomass-based diesel, which includes the biodiesel that we produce. This revised RFS is referred to RFS2. RFS2 required the use of 800 million gallons of biomass-based diesel in the United States in 2011 which increases to one billion gallons in 2012. This requirement creates a market for biodiesel which might disappear with the RFS2. Recently, there has been legislation introduced to either reduce or eliminate the renewable fuels use requirements in RFS2. While management does not believe that these pieces of legislation will be passed into law, if there is a change in the composition of Congress or a change of administration after the next United States Presidential election, it is possible that the RFS2 could be eliminated. If the RFS2 use mandates are reduced or eliminated, it may prevent us from profitably operating the biodiesel plant. Pursuant to RFS2, the EPA is charged with setting the amount of biomass-based diesel that is required to be used in 2013 and beyond. This ability of the EPA to adjust the amount of biomass-based diesel that is used is subject to a floor of one billion gallons. Recently, the EPA increased the biomass-based diesel requirement for 2013 to 1.28 billion gallons.

~~Because~~In ~~biodiesel~~addition ~~has~~to ~~different~~the ~~cold~~specific ~~flow~~requirement ~~properties~~for ~~depending~~use ~~on the type~~ of ~~feedstock~~biomass-based ~~used in~~diesel ~~its~~discussed ~~manufacture~~above, ~~cold~~biodiesel ~~flow~~can ~~also~~be ~~becomes~~used ato ~~primary~~meet ~~factor~~other incategories ~~determining the type~~ of ~~feedstock~~renewable ~~to use.~~fuels ~~“Cold~~under ~~flow”~~RFS2, ~~refers~~specifically toadvanced abiofuels. This ~~fuel’s~~may ~~ability~~lead to ~~flow easily at colder temperatures and is~~ an ~~important~~ ~~consideration~~additional in500 ~~producing~~million ~~and~~gallons ~~blending~~of biodiesel ~~for~~demand ~~use~~during ~~in colder climates and in colder seasons~~2012. The ~~pour~~demand ~~point~~that ~~for~~results afrom ~~fuel~~RFS2 ismay ~~the~~continue ~~temperature~~to atlead ~~which~~to ~~the~~strong ~~flow~~biodiesel ofdemand ~~the~~in ~~fuel~~2012 ~~stops. Therefore,~~which amanagement ~~lower~~anticipates ~~pour~~will ~~point~~support ~~temperature~~biodiesel ~~means~~prices ~~the~~and ~~fuel~~allow isus ~~usable~~to incontinue ~~colder~~to ~~temperatures.~~operate ~~The following table represents~~ the ~~pour~~biodiesel ~~points for different types of fuels:~~ plant.

Type of Fuel	Pour Point
Soy-based Biodiesel (B100)		30ºF
Tallow-based Biodiesel (B100)		61ºF
No. 2 Petro Diesel (B0)		-30ºF
B2 Soy Blend with No. 2 Diesel		-25ºF

In order to track compliance with RFS2, the EPA created a numbering system called the renewable identification number (RIN). Biodiesel producers who are registered with the EPA are required to generate RINs for each gallon of biodiesel produced. These RINs are typically sold along with the biodiesel so that certain fuel blenders who are required to use renewable fuels under RFS2 can redeem these RINs in order to comply with RFS2. However, it is possible to separate the RINs from the biodiesel that is produced and sell the RINs separately. The RINs have value to fuel blenders who use less renewable fuels than they are required to use under the RFS2. These fuel blenders can purchase RINs to meet their requirements under the RFS2 without actually using renewable fuels. This may occur in regions of the United States where it is impossible or impractical to use renewable fuels directly.

ToVEETC ~~provide~~Biodiesel ~~biodiesel~~Blenders' ~~with~~Tax an acceptable pour point in cold weather, we will need to blend our biodiesel with petroleum-based diesel. Generally, biodiesel that is used in blends of 2% to 20% will provide an acceptable pour point for the Iowa market. We expect that our marketer will sell our biodiesel throughout the nation and abroad. Cold flow additives can also be used seasonally to provide a higher level of cold weather protection, similar to the current practice with conventional diesel fuel. Demand for our biodiesel may diminish in colder climates and during the colder months as a result of cold flow concerns. We are capable of producing biodiesel from soybean oil, corn oil, and animal fats. Approximately 14% of our biodiesel production for fiscal year 2010 was animal fat or other alternative feedstock biodiesel blends, which is a significant decrease from the 86% in fiscal year 2009. Credit

10 The American Jobs Creation Act of 2004 originally created the biodiesel blenders' excise tax credit under the VEETC. Known as the biodiesel blenders' credit, it provided a tax credit of $1.00 per gallon for biodiesel. The biodiesel blenders' credit expired on December 31, 2011 and management does not believe that it will be renewed. However, many in the biodiesel industry believe that due to the biodiesel use requirements in RFS2, demand for biodiesel will continue during 2012, despite the loss of the biodiesel blenders' credit.

~~Table~~State ~~of Contents~~Programs

~~Hedging~~ Several states have enacted various pieces of legislation that are designed to benefit the biodiesel industry, including production incentives or biodiesel use mandates. These state incentives may support biodiesel demand in the future, even if federal biodiesel use incentives or programs are repealed. We are directly benefited by a piece of legislation that Iowa adopted in May 2011. The Iowa law provides a biodiesel production incentive of $0.03 per gallon in 2012, $0.025 per gallon in 2013, and $0.02 per gallon in 2014, for each gallon of biodiesel produced in an Iowa biodiesel production facility. This biodiesel production incentive is capped at the first 25 million gallons of biodiesel produced per biodiesel production facility. Further, the Iowa law provides a credit for biodiesel retailers in Iowa. In 2012, retailers earn $0.02 per gallon for B2 blends, which is a fuel blend which contains 2% biodiesel and 98% diesel. The Iowa legislation also provides that in 2012, retailers can earn $0.045 per gallon for B5 blends, which is a fuel blend that contains 5% biodiesel and 95% diesel. For 2013 through 2017, Iowa retailers earn $0.045

Due to fluctuations in the price and supply of feedstock, we have utilized forward contracting and hedging strategies to manage our commodity risk exposure and optimize finished product pricing and supply, however; as of the date of this report we do not have any forward contracts. Hedging means protecting the price at which we buy feedstock and the price at which we will sell our products in the future. It is a way to attempt to reduce the risk caused by price fluctuations. The effectiveness of such hedging activities is dependent upon, among other things, the cost of feedstock and our ability to sell sufficient amounts of biodiesel. Although we attempt to link hedging activities to sales plans and pricing activities, such hedging activities can themselves result in costs because price movements in feedstock contracts are highly volatile and are influenced by many factors that are beyond our control. We may incur such costs and they may be significant. The market for soybean oil trades 18 months into the future. The animal fats market has no futures trade. However, there is a quoting system through the USDA that provides for price discovery for animal grease. There is not enough volume of biodiesel produced to currently justify a futures market. As such, there is no spot biodiesel price, making current price discovery limited. See “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Commodity Price Risk Protection.” 7

~~Pretreatment~~Table ~~Costs~~ of Contents

~~Crude~~per ~~soybean~~gallon oil and all animal fats need to be pretreated before being processed into biodiesel. Pretreatment takes crude soybean oil, corn oil and any animal fat or grease, removes the impurities and prepares the feedstock to go through the biodiesel production process. Some types of ~~feedstock~~ ~~need more treatment than others~~B5. For example, virgin soybean oil can be easier and cheaper to pretreat than turkey fat, and turkey fat can be easier and cheaper to pretreat than beef tallow. The cost of the process is driven by the structure of the feedstock and the impurities in the feedstock.

~~For~~Commodity ~~soybean~~Credit ~~oil,~~Corporation ~~the~~Bioenergy pretreatment process results in refined and bleached (RB) oil. The price differential between RB oil and crude soy oil is ordinarily 5 cents per pound. Our processing plant has pretreatment capabilities allowing us to utilize crude vegetable oil and many types of fat or grease as feedstock in our facility. This added flexibility allows us to choose the feedstock that will produce biodiesel in the most cost-effective manner possible. Transitioning between feedstocks or to new feedstocks, however, does require our employees to spend time adjusting our equipment and determining the specific process to most profitably use a different feedstock takes time and resources. Program

~~Feedstock~~The ~~Procurement~~ Farm, Nutrition and Bioenergy Act of 2008 reauthorized the Commodity Credit Corporation, or CCC, Bioenergy Program. The program provided $55.0 million in funding in both 2009 and 2010, $85.0 million in funding in 2011 and $105.0 million in funding in 2012 for producers of advanced biofuels derived from renewable biomass, including biodiesel, other than corn kernel. Biodiesel producers must apply for this credit and will be paid based on the quantity and duration of advanced biofuels production and on net non-renewable energy content of the advanced biofuel. Funding to a single eligible producer may be limited to ensure equitable distribution of funding. Producers with production capacity of less than 150 million gallons will be eligible for 95% of the funds provided under the program. We received approximately $385,000 in funds pursuant to the CCC Bioenergy Program in our 2011 fiscal year and we anticipate receiving additional funds in our 2012 fiscal year.

WeFuture entered into the Management Agreement with WMG to provide marketing services for our products. The inability of WMG to obtain adequate feedstock for our facility at economical prices, or at all, could have significant negative impacts on our ability to produce biodiesel and on our revenues. Legislation

~~Utilities~~ Environmental regulations that may affect our company change frequently. It is possible that the government could adopt more stringent federal or state environmental rules or regulations, which could increase our operating costs and expenses. The government could also adopt federal or state environmental rules or regulations that may have an adverse effect on the use of biodiesel. Furthermore, the Occupational Safety and Health Administration (OSHA) governs our plant operations. OSHA regulations may change such that the costs of the operation of the plant may increase. Any of these regulatory factors may result in higher costs or other adverse effects on our operations, cash flows and financial performance. These adverse effects could decrease or eliminate the value of our units.

~~Our~~Research ~~biodiesel plant requires a significant~~ and ~~uninterrupted supply of electricity, natural gas and water to operate. We do not have any long term agreements for our utilities but receive them on a monthly invoice basis.~~ Development

~~Electricity.~~ We ~~require~~do anot ~~significant~~conduct ~~supply~~any ofresearch ~~electricity~~and todevelopment ~~operate~~activities ~~our~~associated ~~plant.~~with ~~Alliant Energy~~the ~~supplies~~development usof ~~with~~new ~~our~~technologies ~~electricity~~for ~~needs,~~use onin aproducing ~~monthly~~biodiesel ~~basis~~and ~~at variable rates~~glycerin.

~~Water~~Costs ~~and Sewer. We require a significant supply~~ of ~~water~~Compliance ~~to operate our plant. The City of Washington supplies us~~ with ~~water,~~Environmental on a monthly basis at variable rates. We have entered into an agreement to have our wastewater handled by the Cities of Cedar Rapids, Muscatine and Des Moines until the City of Washington has the capacity to handle our wastewater. Laws

~~Natural~~We ~~Gas~~are subject to extensive air, water and other environmental regulations and we have been required to obtain a number of environmental permits to construct and operate the plant. We ~~require~~have obtained all of the necessary permits for plant operations including air emissions permits, a ~~significant~~NPDES ~~supply~~Permit, ofstorm ~~natural~~water ~~gas~~discharge permits, and boiler permits. ~~Alliant~~During ~~Energy~~our ~~supplies~~2011 usfiscal ~~with natural~~year ~~gas~~we spent approximately $20,000 on aenvironmental ~~monthly~~costs. Any ~~basis~~retroactive change in environmental regulations, either at ~~variable~~the ~~rates~~federal or state level, could require us to obtain additional or new permits or spend considerable resources complying with such regulations.

~~Rail~~We are subject to oversight activities by the EPA. ~~Our~~ ~~rail~~We ~~access~~have isobtained ~~complete~~an ~~and~~identification wenumber ~~are~~from ~~capable~~the ofEPA ~~shipping~~for any hazardous waste that may result from our production of biodiesel. There byis ~~both~~always ~~rail~~a risk that the EPA may enforce certain rules and ~~truck.~~ ~~The~~regulations differently than Iowa's environmental administrators. Iowa or EPA rules are subject to change, ~~Chicago~~and &any ~~Eastern~~such ~~Railroad~~changes ~~supplies~~could ~~our~~result in greater regulatory burdens on plant ~~with~~operations. ~~rail~~We ~~service~~could ~~and~~also ~~WMG~~be ~~makes~~subject ~~all of~~to ~~our~~environmental ~~transportation~~or ~~arrangements~~nuisance claims from adjacent property owners or residents in the area arising from possible foul smells or other air or water discharges from the plant. Such claims could have an adverse result in court if we are deemed to engage in a nuisance that substantially impairs the fair use and enjoyment of real estate.

~~New Products and Services~~ Employees

WeAs ~~have~~of ~~not~~September 30, ~~introduced~~2011 ~~any~~we ~~new~~had ~~products~~20 orfull-time ~~services during the fiscal year ended September 30, 2010~~employees.

11 ITEM 1A. RISK FACTORS

~~Table~~You should carefully read and consider the risks and uncertainties below and the other information contained in this report. The risks and uncertainties described below are not the only ones we may face. The following risks, together with additional risks and uncertainties not currently known to us or that we currently deem immaterial could impair our financial condition and results of ~~Contents~~operations.

~~Government~~Risks ~~Regulation~~Related ~~and~~to ~~Federal~~Our ~~Biodiesel Supports~~ Business

~~Federal~~We ~~Biodiesel~~are ~~Supports~~ experiencing liquidity issues which could require us to cease operations. We are experiencing liquidity issues associated with the high cost of our raw materials, decreased demand for biodiesel, and the delay between when we purchase those

We expect demand for biodiesel in the United States to grow due to the demand for cleaner air, an emphasis on energy security, and the Renewable Fuels Standard and other government support of renewable fuels. The Energy Policy Act of 2005 and Jobs Bill established the groundwork for biodiesel market development. The Energy Independence and Security Act of 2007 was designed to further encourage the production and use of biodiesel in the United States. 8

~~Renewable~~Table ~~Fuels~~of ~~Standard~~ Contents

~~The~~raw ~~Energy~~materials ~~Policy Act of 2005 created the Renewable Fuel Standard (RFS) which required refiners to use 7.5 billion gallons of renewable fuels by 2012. The Energy Independence~~ and ~~Security~~ ~~Act~~when ofwe ~~2007~~receive ~~(EISA) expanded~~payments ~~the~~for ~~existing~~sales ~~RFS to require the use~~ of ~~9 billion~~our ~~gallons~~finished ~~of renewable fuel in 2008, increasing to 36 billion gallons of renewable fuel by 2022 (RFS2)~~products. We ~~The RFS2~~recently ~~requires~~restructured ~~that~~our ~~600 million gallons of renewable fuel used in 2009 must come from advanced biofuels other than corn~~long-~~based~~term ~~ethanol,~~debt ~~such~~and asentered ~~ethanol~~into ~~derived~~an ~~from~~agreement ~~cellulose,~~with ~~sugar~~Gavilon ~~or crop residue and biomass-based diesel (~~which ~~includes~~will ~~biodiesel~~provide ~~and renewable diesel), increasing to 21 billion gallons in 2022. The RFS2 further includes~~ a ~~requirement~~minimum ~~that~~level ~~500 million gallons~~ of ~~biodiesel~~ ~~and~~production ~~biomass-based~~at ~~diesel fuel be blended into~~ the ~~national~~plant ~~diesel~~during ~~pool~~calendar inyear ~~2009, gradually increasing to one billion gallons by~~ 2012. However, ~~in November 2008,~~ the ~~EPA~~outstanding ~~announced~~balance ~~that the RFS2 program in 2009 would continue to be applicable to producers and importers~~ of ~~gasoline~~our ~~only. This meant that the 500 million gallons of biomass~~long-~~based~~term ~~diesel~~debt ~~required by the RFS2 did not have to be blended into U.S. fuel supplies in 2009. This~~ is due toin ~~the~~full ~~fact~~on ~~that~~January ~~the~~5, ~~regulatory structure of the original RFS program did not provide a mechanism for implementing the EISA requirement for the use of 500 million gallons of biomass-based diesel~~2013. ~~On February 3~~ Further, ~~2010~~we ~~the EPA~~may ~~issued~~experience ~~final~~conditions ~~rules~~which ~~under~~prevent ~~RFS2.~~us ~~The~~from ~~final~~operating ~~rules~~profitably ~~addressed~~during ~~this~~our ~~issue~~2012 byfiscal combining the 2010 biomass-based diesel requirement of 0.65 billion gallons with the 2009 biomass-based diesel requirement of 0.5 billion gallons to require that obligated parties meet a combined 2009/2010 requirement of 1.15 billion gallons by the end of the 2010 compliance year. ~~We anticipate that there will again be a roll-over of some of the 2010 requirement into 2011~~ and ~~also~~thereafter ~~that~~which ~~some of the cellulosic requirements that cannot be achieved due to lack of technology~~ may beresult ~~allowed~~in toour ~~be filled~~failure bywhich ~~biodiesel.~~could ~~Thus,~~decrease weor ~~anticipate~~eliminate ~~that biodiesel requirements under~~ the ~~2011~~value ~~RFS2~~of ~~may exceed~~our ~~the standard 800 million gallon requirement~~units.

~~Part~~We have a history of ~~RFS2~~losses ~~required~~and ~~that~~may ~~advanced~~not ~~biofuels~~ever ~~reduce~~operate ~~life~~profitably. For ~~cycle~~the ~~greenhouse~~fiscal ~~gas~~year ~~emissions~~ended bySeptember 30, ~~50% relative~~2011, towe ~~gasoline~~incurred ~~sold~~a ornet ~~distributed~~loss inof ~~transportation~~approximately $4.8 Inmillion. While ~~May 2009,~~we ~~the~~have ~~EPA~~entered ~~proposed~~into ~~rules that~~an ~~took~~agreement ~~into~~with ~~account~~Gavilon ~~indirect~~which ~~land~~provides ~~use~~for ~~changes~~a ~~when~~minimum ~~calculating~~guaranteed ~~greenhouse~~amount ~~gas~~of ~~emissions.~~production ~~Based on~~or ~~the~~an ~~EPA’s~~equivalent ~~preliminary~~cash ~~findings,~~payment ~~soy-based~~for ~~biodiesel~~calendar ~~was~~year ~~found~~2012, tothere ~~reduce~~is ~~greenhouse~~no ~~gas~~assurance ~~emissions by~~that ~~only~~we ~~22%,~~will ~~which~~be ~~would~~successful ~~disqualify~~in itour ~~from~~efforts ~~counting~~to ~~towards~~continue to operate the ~~RFS2~~biodiesel plant. Further, ~~Biodiesel~~we ~~from~~may ~~animal~~not ~~fat was~~be ~~found~~able to ~~reduce~~secure ~~greenhouse~~a ~~gas~~comparable ~~emissions~~agreement byfor ~~approximately~~calendar ~~80%.~~year ~~The~~2013 ~~EPA~~if ~~did~~we ~~not~~cannot ~~measure biodiesel~~reach ~~produced~~an ~~from~~agreement ~~corn~~with ~~oil.~~Gavilon ~~However,~~to ~~when~~renew the ~~EPA~~2012 ~~issued~~agreement. These ~~its~~factors ~~final~~may ~~determinations~~lead ~~under~~to ~~the RFS2,~~our itinability ~~found~~to ~~that~~continue ~~soy~~to ~~oil~~service ~~complies~~our ~~with~~debt and operate the ~~50%~~biodiesel ~~greenhouse~~plant ~~gas~~profitably ~~emission~~which ~~reduction~~could ~~requirements~~result in our failure which could decrease or eliminate the value of our units.

~~The RFS2 program recently gained additional certainty when on December 21, 2010, a lawsuit challenging the RFS2 regulations was dismissed.~~ We anticipate ~~that~~being ~~the~~dependent ~~RFS2~~on ~~may~~Gavilon ~~increase demand for biodiesel~~ in ~~the~~order ~~long-term,~~to asprofitably itoperate ~~sets~~the ~~a minimum usage requirement for~~ biodiesel ~~and other types of biomass-based diesel~~plant. We ~~However,~~recently ~~there~~entered ~~can~~into bean noagreement ~~assurances~~with ~~that~~Gavilon ~~demand~~to ~~for~~sell ~~biodiesel~~all ~~will be increased by the RFS2. As~~ of ~~December 12, 2010,~~ the ~~Biodiesel~~biodiesel ~~Magazine website estimated~~ that ~~national~~ ~~biodiesel~~we ~~production~~produce ~~capacity~~at ~~was~~the ~~approximately~~plant ~~2.83 billion~~during ~~gallons~~calendar ~~per~~ year, ~~which already exceeds the~~ 2012. We ~~biodiesel~~have ~~and~~also ~~biomass-based~~agreed ~~diesel~~to ~~use~~purchase ~~mandate~~all ~~contained~~of in the ~~EISA. Accordingly,~~feedstock ~~there is no assurance~~ that ~~additional~~we ~~production~~require ofto produce biodiesel ~~and~~from ~~biomass-based~~Gavilon ~~diesel will~~during ~~not~~calendar ~~continually~~year ~~outstrip~~2012. As ~~any~~a ~~additional~~result, ~~demand~~we ~~for~~anticipate ~~biodiesel~~ that ~~might~~nearly beall ~~created~~of byour ~~this~~revenue ~~new law. We also anticipate that the expanded RFS2~~ will be ~~primarily~~derived ~~satisfied~~from bysales ~~ethanol,~~of ~~including~~biodiesel ~~both~~to ~~corn-based and other types of ethanol~~Gavilon. If ~~The~~Gavilon ~~amount~~were ~~of corn-based ethanol that may be used~~ to ~~satisfy~~fail ~~the~~or ~~RFS2 requirements~~if isit ~~capped~~does atnot ~~15 million~~purchase ~~gallons~~all ~~starting~~of inthe ~~2015~~biodiesel ~~and,~~we ~~accordingly~~produce, ~~other~~it ~~types~~may ~~of ethanol,~~negatively ~~including~~impact ~~cellulose-based~~our ~~ethanol,~~ability ~~will likely be used~~ to ~~satisfy~~profitably ~~any~~operate ~~requirements over and above~~ the ~~15 million~~biodiesel ~~gallon corn-based ethanol cap~~plant. Our ~~Furthermore,~~inability weto ~~have~~profitably ~~not~~operate ~~yet significantly benefited from RFS2 because~~ the biodiesel ~~tax~~plant ~~credit~~may ~~was~~decrease ~~expired~~or ~~when the~~eliminate ~~final RFS2 regulations were released. Because~~ the ~~biodiesel~~ ~~tax~~value ~~credit~~of ~~was~~our ~~only recently reinstated and extended, we are still not certain if this measure will be enough to re-stimulate the biodiesel market~~units.

12 We may be required to write down our long-lived assets and these impairment charges would adversely affect our operating results. We account for the impairment of long-lived assets to be held and used in accordance with ASC Topic 360. In accordance with ASC Topic 360, an asset (other than goodwill and indefinite-lived intangible assets) is considered impaired when estimated future cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is not deemed recoverable, the asset is adjusted to its estimated fair value. Fair value is generally determined based upon estimated discounted future cash flows. At September 30, 2011, the carrying amount of our fixed assets is approximately $30.8 million. In determining if there has been an impairment, we have projected future cash flows based on our anticipated 2012 demand for biodiesel created by RFS2 along with our agreement with Gavilon. However, conditions in the biodiesel industry may change which may require us to adjust our cash flow projections. This change may require us to recognize an impairment of the value of our assets, which impairment could have a material adverse effect on our reported financial results for the period in which the charge is taken.

~~Table~~Our business is not diversified. Our success depends largely upon our ability to profitably operate our biodiesel plant. We do not have any other lines of ~~Contents~~business or other sources of revenue if we are unable to operate our biodiesel plant and manufacture biodiesel and its co-products. If biodiesel production becomes unprofitable, for example, with the loss of the biodiesel use mandates in RFS2, it may result in our failure which could decrease or eliminate the value of our units.

~~Biodiesel~~We ~~Tax~~have ~~Credit~~ limited experience in the biodiesel industry, which increases the risk of our inability to operate the biodiesel plant. We are presently, and will likely continue to be, dependent upon our directors to manage our business. Most of our directors are experienced in business generally, but have limited experience in operating a biodiesel plant or in governing and operating a public company. In addition, certain directors on our board of directors are presently engaged in business and other activities that impose substantial demands on the time and attention of such directors. If we cannot recruit, hire and retain skilled management for our plant, and if our directors are unable to manage our operations, the value of our units may be decreased or eliminated.

~~The~~We ~~American~~may ~~Jobs~~incur ~~Creation~~costs ~~Act~~to ofmaintain ~~2004 originally created~~ the biodiesel ~~blender’s~~plant ~~excise~~which ~~tax credit~~could ~~under~~negatively ~~the~~impact ~~Volumetric Ethanol Excise Tax Credit (“VEETC”). Known as~~ the ~~biodiesel~~value ~~tax credit, it provided a tax credit~~ of ~~$1.00~~our ~~per gallon for biodiesel~~units. From ~~The~~time ~~biodiesel~~to ~~credit~~time ~~may~~we beneed ~~claimed~~to ~~in both~~perform ~~taxable~~maintenance ~~and~~on ~~nontaxable markets, including exempt fleet fuel programs and off-road diesel markets. The desired effect of~~ the biodiesel ~~tax~~plant ~~credit was to streamline the use of biodiesel~~ and ~~encourage~~ ~~petroleum~~we ~~blenders~~may ~~to blend biodiesel as far upstream as possible, which will allow more biodiesel to~~ be ~~used~~required ~~in the marketplace. The biodiesel tax credit also streamlined the tax refund system for below-the-rack blenders~~ to ~~allow~~replace aequipment ~~tax~~at ~~refund of~~ the ~~biodiesel~~plant ~~tax~~which ~~credit~~is ondamaged ~~each gallon of biodiesel blended with diesel (dyed~~ or ~~undyed)~~worn ~~to be paid within 20 days of blending~~out. ~~Below-the-rack~~ These ~~blenders~~maintenance ~~are~~activities ~~those~~may ~~blenders~~result ~~that~~in ~~market~~additional ~~fuel~~capital ~~that~~expenditures is for ~~ground~~which ~~transportation engines~~we ~~and~~do is not inhave ~~the~~sufficient ~~bulk transfer system~~cash. If ~~The~~we ~~biodiesel~~are ~~credit~~unable ~~expired~~to onsecure ~~December 31, 2009. Only in December 2010 was~~ the ~~biodiesel~~capital ~~tax~~we ~~credit~~require ~~reinstated retroactively for 2010 and extended through December 31, 2011. Due~~ to maintain the ~~recent~~biodiesel ~~nature of this change~~plant, it ~~remains~~may ~~uncertain~~operate ~~whether~~at ~~a one~~less ~~year~~than ~~extension~~full ofcapacity ~~the~~or ~~biodiesel~~it ~~tax~~may ~~credit~~not ~~will~~operate beat ~~sufficient to stimulate demand for biodiesel~~all. Any ~~Moreover,~~inability ~~we do not anticipate~~ to ~~benefit~~maintain ~~very much from~~ the ~~retroactive~~biodiesel ~~application~~production ~~of the~~facility ~~biodiesel~~could ~~tax~~negatively ~~credit~~impact inthe ~~2010,~~value ~~because~~ of our ~~limited number of sales during the year~~units.

~~Commodity~~Changes ~~Credit~~in ~~Corporation~~production ~~Bioenergy~~technology ~~Program~~ could require us to commit resources to updating the biodiesel plant or could otherwise hinder our ability to compete in the biodiesel industry or to operate at a profit. We expect advances and changes in the technology of biodiesel production to occur. Such advances and changes may make our biodiesel production technology less desirable or obsolete. The plant is a single-purpose facility and likely has no use other than the production of biodiesel and associated products. Much of the cost of the plant is attributable to the cost of production technology which may be impractical or impossible to update. The value of our units could decline if changes in technology cause us to operate the plant at less than full capacity for an extended period of time or cause us to abandon our business. Further, more efficient technologies might be developed in the

The Farm, Nutrition and Bioenergy Act of 2008 reauthorized the Commodity Credit Corporation, or CCC, Bioenergy Program. The program provides $55.0 million in funding in both 2009 and 2010, $85.0 million in funding in 2011 and $105.0 million in funding in 2012 for producers of advanced biofuels derived from renewable biomass, including biodiesel, other than corn kernel. Biodiesel producers must apply for this credit and will be paid based on the quantity and duration of advanced biofuels production and on net nonrenewable energy content of the advanced biofuel. Funding to a single eligible producer may be limited to ensure equitable distribution of funding. Producers with production capacity of less than 150 million gallons will be eligible for 95% of the funds provided under the program. We received approximately $216,000 in funds pursuant to the CCC Bioenergy Program in 2009 and approximately $280,000 during 2010. 9

~~State~~Table ~~Legislation~~ of Contents

~~Several~~future ~~states,~~that ~~including~~we ~~Iowa,~~cannot ~~are~~implement currently researching and considering legislation to increase the amount of biodiesel used and produced in their states. Minnesota was the first state to mandate biodiesel use. The Minnesota legislation, which became effective in September 2005, required that ~~all~~would ~~diesel~~allow ~~fuel~~our ~~sold~~competitors ~~in the state contain a minimum of 2% biodiesel. In 2008, Minnesota passed additional legislation~~ to ~~increase~~produce biodiesel ~~content of diesel fuel sold~~ in ~~the state from 2% to 20%, which is the highest in the nation, by 2015. In 2009, Minnesota increased its biodiesel blend requirements to mandate all diesel fuel contain~~ a ~~minimum~~more ofcost 5%effective ~~biodiesel,~~manner ~~however;~~than ~~the state has occasionally had to suspend this requirement during winter months, due to cold flow concerns~~us. Similarly, in July 2008, Massachusetts signed a law that requires all home heating oil and diesel fuel in the state to consist of 2% biodiesel by 2010 and 5% biodiesel by 2013. However, the Massachusetts Department of Energy Resources will be entitled to delay those requirements if it determines that fuels are not available to meet these requirements.

~~Originally~~Because ~~passed~~our innatural ~~May 2006,~~gas ~~and~~provider ~~updated~~will innot ~~2009,~~allow ~~Iowa~~us ~~passed~~to ~~legislation~~enter ~~that~~into ~~creates~~forward ~~a renewable~~contracts ~~fuels~~for ~~standard~~our ~~(IRFS) that~~natural ~~requires~~gas, ~~10%~~we ofmay ~~the~~pay ~~fuel~~higher ~~used~~prices infor ~~Iowa~~our tonatural begas ~~from~~than ~~renewable sources~~other bybiodiesel ~~2009~~producers, ~~and~~which ~~increasing~~puts ~~the~~us ~~renewable~~at ~~fuel~~a ~~standard~~competitive todisadvantage ~~25%~~and bymay ~~2021~~increase our losses. Our ~~While~~natural ~~this~~gas provider does not ~~require~~ ~~biodiesel~~allow ~~use~~us to enter into forward contracts for our natural gas, itand ~~may~~management ~~significantly~~has ~~increase~~determined ~~renewable~~that ~~fuels~~it is not feasible to use ina ~~Iowa~~different natural gas provider. Many biodiesel producers can and do enter into forward contracts for their natural gas, which may ~~include increased~~allow ~~biodiesel~~them ~~use~~to lock in ~~Iowa.~~their ~~The~~natural ~~Iowa~~gas ~~legislation~~costs ~~includes~~at ~~tax~~a ~~credits~~lower price. Our inability to ~~help~~enter ~~retailers~~into ~~meet this~~forward ~~requirement~~contracts for our natural gas may put us at a competitive disadvantage which may increase our losses.

~~For~~Our ~~example,~~operations ~~Iowa~~may ~~provides~~be ~~for~~negatively animpacted ~~incentive~~by ofnatural ~~three~~disasters, ~~cents~~severe ~~per~~weather ~~gallon~~conditions ofand ~~biodiesel~~other ~~sold~~unforeseen ~~for retailers~~plant ~~who~~shutdowns ~~sell~~which atcan ~~least~~negatively ~~50%~~impact ~~biodiesel~~our ~~blends~~operations. Our ~~This~~operations ~~incentive,~~may ~~known~~be negatively impacted by events outside our control such as ~~the~~natural ~~Biodiesel~~disasters, ~~Blended Fuel~~severe ~~Tax~~weather, ~~Credit~~strikes, istrain ~~also~~derailments ~~expected~~and toother ~~support~~unforeseen ~~biodiesel~~events ~~sales~~which ~~and~~may ~~production~~negatively impact our operations. If ~~This~~we ~~incentive~~experience isany ~~set to~~of ~~expire~~these inunforeseen ~~2012~~circumstances which negatively impact our operations, it may affect our cash flow and negatively impact the value of our units.

13 We may incur casualty losses which are not covered by insurance which could negatively impact the value of our units. We have purchased insurance which we believe adequately covers our losses from foreseeable risks. However, there are risks that we may encounter for which there is no insurance or for which insurance is not available on terms that are acceptable to us. If we experience a loss which materially impairs our ability to operate the biodiesel plant which is not covered by insurance, the value of our units may be negatively impacted.

~~Table~~Risks ofRelated ~~Contents~~to Biodiesel Production

InDecreases ~~addition,~~ in ~~2009,~~the ~~Iowa~~price ~~passed~~of ~~the~~and ~~Ethanol~~demand ~~Promotion~~for ~~Tax~~biodiesel ~~Credit,~~may ~~which~~negatively ~~began~~impact inour ~~2009~~ability ~~and ends~~to ~~after~~profitably ~~calendar~~operate ~~year~~the ~~2020~~biodiesel plant. Our ~~The~~operations ~~incentive~~depend ~~each~~on ~~site~~a isfavorable ~~eligible~~spread ~~for~~between ~~will~~the bemarket ~~directly~~price ~~tied~~of tobiodiesel and the ~~IRFS~~ ~~schedule~~raw ~~with~~material ~~amounts~~costs toassociated bewith ~~paid~~producing ~~only~~biodiesel. Recently, ~~for~~biodiesel ~~“pure”~~production ~~ethanol~~has ~~gallons~~been ~~(E100).~~profitable, ~~The~~in ~~law~~part ~~allows~~due ~~“pure” biodiesel~~to ~~gallons~~government ~~(B-100)~~incentives to ~~count~~produce ~~toward~~biodiesel ~~achieving~~such as the ~~threshold~~biodiesel ~~schedule.~~blenders' credit and RFS2. However, the biodiesel ~~gallons~~ ~~are~~blenders' credit expired on December 31, 2011 and management anticipates it will not ~~eligible~~be renewed. This may impact the market price of biodiesel. While management believes that a market for ~~these~~biodiesel ~~credits;~~will ascontinue ~~they~~to ~~are~~exist ~~covered~~due byto the ~~Biodiesel~~renewable ~~Blended~~fuel ~~Fuel~~use ~~Tax Credit.~~mandates ~~The~~in ~~schedule~~RFS2, if RFS2 is ~~based~~reduced onor ~~E-100~~eliminated ~~plus~~it ~~B-100~~may ~~divided~~significantly byreduce ~~total~~demand ~~gasoline~~for ~~gallons~~biodiesel. If ~~The~~the ~~amount~~spread between market biodiesel prices and the cost of the ~~credit~~raw materials necessary to produce biodiesel shrink or become negative, we anticipate that we will benot ~~determined~~operate ~~each~~the ~~year~~biodiesel ~~using:~~ plant. This may result in our failure which may reduce or eliminate the value of our units.

•Feedstock ~~6.5~~prices ~~cents~~have ~~per~~been ~~gallon~~volatile which can negatively impact our ability to profitably operate the biodiesel plant. The cost of ~~E100~~feedstock ifis ~~retailer~~the ~~meets~~single largest cost associated with producing biodiesel. Feedstock prices have been volatile over the ~~biofuel~~past ~~standard~~several ~~threshold~~years ~~percentage~~and •management 4anticipates that feedstock prices may continue to be volatile.5 This ~~cents~~volatility ~~per~~may ~~gallon~~result in periods of ~~E100~~time ifwhen ~~retailer~~biodiesel production is ~~within~~not ~~1-2%~~profitable. While we have entered into an agreement with Gavilon to purchase all of ~~threshold~~the ~~percentage~~feedstock •that ~~2.5~~we ~~cents~~require ~~per~~to ~~gallon~~produce biodiesel at the plant, and there are certain minimum purchase requirements in the agreements, Gavilon may fail and we may not be able to secure feedstock from another provider which could negatively impact the value of ~~E100~~our ifunits. Further, ~~retailer~~our agreement with Gavilon only lasts through calendar year 2012. If this agreement is ~~within~~not ~~3-4%~~renewed ofand ~~threshold~~we ~~percentage~~cannot •find 0an ~~cents~~alternate iffeedstock ~~more~~supplier, ~~than~~we 4%may ~~below~~be unable to profitably operate the ~~threshold~~biodiesel ~~percentage~~plant.

If we are unable to maintain compliance with the requirements of our loans with MLIC, we may fail which could negatively impact the value of our units. We ~~anticipate~~recently entered into an agreement with MLIC to restructure our current credit facilities. This agreement provides a new schedule of payments for calendar year 2012. Further, this ~~program~~agreement provides that the entire outstanding balance of our loans with MLIC is due in full on January 5, 2013. If we are unable to refinance our loans with MLIC prior to January 5, 2013 or extend this maturity date, we may ~~also~~be ~~support~~in default of our loans and MLIC could foreclose on all of our assets, including the biodiesel ~~demand~~plant. Further, if we fail to maintain compliance with the financial and ~~growth~~business covenants in our ~~industry~~credit agreements with MLIC during calendar year 2012, we may also fail and MLIC may foreclose on our assets. If we fail to maintain compliance with our loans, the value of our units may decrease or be eliminated.

~~Other~~An ~~states~~investigation ~~have~~by ~~enacted~~the ~~legislation~~European Commission into whether the U.S. biodiesel industry has been engaging in unfair trade practices has led to ~~encourage~~the ~~(but~~imposition ~~not~~of ~~require)~~tariffs on biodiesel ~~production~~imported ~~and use~~into Europe, which could result in further losses from our business. ~~Several~~The ~~states~~European ~~provide~~Commission ~~tax~~conducted ~~incentives~~anti-subsidy and ~~grants~~anti-dumping ~~for~~investigations on U.S. biodiesel~~-related~~ ~~studies~~imports ~~and~~into ~~biodiesel production~~Europe. Based on complaints from the European Biodiesel Board (EBB), ~~blending~~the European Commission claims that U.S. biodiesel producers, ~~and~~after ~~use~~claiming maximum U.S. Insubsidies ~~addition~~for B99 biodiesel, ~~several~~have ~~governors~~been dumping biodiesel in the European market, where it may also be eligible for European subsidies. The European Commission states that these factors have ~~issued~~adversely ~~executive~~affected ~~orders directing~~the ~~state~~European ~~agencies~~biodiesel toindustry, ~~use~~causing adverse effects on the prices and market share of European biodiesel ~~blends~~producers. toThe ~~fuel~~EBB ~~their~~claims ~~fleets~~that subsidized B99 exports are a trade practice that breaches World Trade Organization rules. The tariffs went into effect

~~Future Legislation~~ 10

~~Environmental~~Table regulations that may affect our company change frequently. It is possible that the government could adopt more stringent federal or state environmental rules or regulations, which could increase our operating costs and expenses. The government could also adopt federal or state environmental rules or regulations that may have an adverse effect on the use of biodiesel. Furthermore, the Occupational Safety and Health Administration (OSHA) governs our plant operations. OSHA regulations may change such that the costs of the operation of the plant may increase. Any of these regulatory factors may result in higher costs or other adverse effects on our operations, cash flows and financial performance. These adverse effects could decrease or eliminate the value of our units. Contents

~~Competition~~March 13, ~~with~~2009 ~~Other~~and ~~Biodiesel~~the ~~Producers~~ European Commission determined in July 2009 that the tariffs would be extended through 2014. These tariffs have virtually eliminated our ability to make profitable sales in Europe. This has reduced demand for biodiesel which could continue and may result in a decrease or elimination of the value of our units.

WeIf ~~operate~~the supply of biodiesel in athe ~~very~~United ~~competitive~~States ~~environment.~~exceeds ~~Biodiesel~~demand, isit amay ~~relatively~~result ~~uniform~~in ~~commodity where~~a ~~competition~~decrease in the ~~marketplace~~market isprice ~~predominantly~~of ~~based~~biodiesel onwhich ~~price,~~could ~~consistent~~impair ~~fuel~~our ~~quality,~~ability ~~and~~ to aprofitably ~~lesser~~operate ~~extent~~the ~~delivery~~biodiesel ~~service~~plant. Currently, Wethere ~~compete~~is ~~with~~more ~~large,~~biodiesel ~~multi-product~~production ~~companies~~capacity ~~and~~in ~~other biodiesel~~the ~~plants~~United ~~with~~States ~~varying~~than ~~capacities.~~there ~~Some~~is ofbiodiesel ~~these~~demand. This ~~companies~~has ~~can~~resulted ~~produce~~in biodiesel inproducers areducing ~~more efficient~~operating ~~manner~~capacity ~~than~~or weceasing ~~are~~operations ~~able~~altogether. This Wesituation ~~face~~may ~~competition~~continue, ~~for~~despite ~~capital,~~recent ~~labor,~~demand ~~management,~~increases ~~feedstock and~~associated ~~other~~with ~~resources~~RFS2. If ~~Some~~biodiesel ofsupply ~~our~~and ~~competitors~~production ~~have~~capacity ~~greater~~continue ~~resources~~to ~~than~~exceed webiodiesel ~~currently~~demand, ~~have~~lower orbiodiesel ~~will have~~prices inmay ~~the~~result ~~future.~~which ~~Some~~could ofnegatively impact our ~~competitors~~ability ~~have~~to ~~soy-crushing~~profitably ~~facilities~~operate ~~and~~the ~~are~~biodiesel ~~therefore~~plant ~~not reliant~~and ~~upon~~may ~~third~~negatively ~~parties~~impact ~~for~~the ~~their~~value ~~soybean~~of ~~oil~~our ~~supply~~units.

InExcess ~~2009,~~production ~~approximately 545 million gallons~~ of ~~biodiesel~~glycerin, ~~were produced in~~ the ~~United~~primary ~~States, which~~co-product isof ~~down from~~ the ~~approximately~~biodiesel ~~700 million~~production ~~gallons~~process, ~~produced~~may incause ~~2008.~~the Asprice of ~~December 12,~~glycerin ~~2010~~to decline, ~~the~~ ~~Biodiesel~~thereby ~~Magazine~~adversely ~~website~~affecting ~~reported~~our ~~that~~ability ~~there~~to ~~were~~generate ~~167~~revenue ~~biodiesel~~from ~~plants in~~ the ~~United~~sale ~~States, but that only 109~~ of ~~these plants are currently operating~~glycerin. It ~~The~~is ~~total~~estimated ~~annual~~that ~~production~~every ~~capacity~~million gallons of ~~all~~ ~~167~~biodiesel ~~plants~~produced isadds ~~2.82 billion~~approximately ~~gallons,~~another ~~the~~one ~~production~~hundred ~~capacity~~thousand gallons of ~~those~~crude ~~currently~~glycerin ~~operating~~into ~~is 1.94 billion~~the ~~gallons~~market. ~~Two~~As ~~plants~~biodiesel ~~are~~production ~~undergoing~~has ~~expansion~~increased, tothe ~~increase~~glycerin ~~their~~market ~~annual~~has ~~production capacity~~become ~~and~~increasingly ~~another~~saturated, 11resulting ~~plants~~in ~~were~~significant ~~reported~~declines ~~to be~~ in the ~~planning~~price ~~stages or under construction as~~ of ~~December 12, 2010~~glycerin. ~~The~~In ~~additional~~the ~~combined capacity of these plants under construction or expansion is estimated at 386 million gallons per year. Accordingly~~past, biodiesel ~~supply~~producers ~~may~~have ~~already far~~been ~~exceed~~forced ~~demand~~to ~~for~~give ~~biodiesel.~~away ~~Currently,~~glycerin ~~there~~they ~~are~~have 12produced ~~existing~~or ~~biodiesel plants~~ in ~~Iowa, including~~some ~~our~~cases ~~plant;~~pay ~~however, according~~ to ~~the~~dispose ~~Biodiesel Magazine website only 6~~ of ~~these~~the ~~are currently operating and several of these plants may not be operating at full capacity~~glycerin. While Weprices ~~expect that~~for ~~additional~~glycerin ~~biodiesel~~have ~~producers~~risen, ~~may~~they ~~enter~~could ~~the~~decrease ~~market~~again ifin the ~~demand for biodiesel increases~~future. If ~~As additional~~we ~~biodiesel plants~~ are ~~constructed~~unable ~~and~~to ~~brought~~secure ona ~~line,~~reasonable weprice ~~expect~~for the ~~supply~~glycerin ofwe ~~biodiesel to~~produce, ~~increase.~~it ~~The~~will ~~absence~~negatively ofimpact ~~increased~~our ~~demand~~ability ~~may~~to ~~cause~~profitably ~~prices~~operate ~~for~~the biodiesel toplant ~~decrease.~~which Wecould ~~may not~~reduce ~~be able to compete successfully~~ or ~~such~~eliminate ~~competition may reduce our ability to generate~~ the ~~profits necessary~~value toof ~~operate~~ our ~~plant~~units.

~~While~~The ~~WMG~~biodiesel ~~markets~~manufacturing ~~our~~industry ~~biodiesel~~is toa ~~end~~feedstock ~~users~~limited ~~both~~industry. ~~domestically~~As ~~and~~more ~~internationally, biodiesel~~ plants inare ~~Iowa~~developed ~~are~~and ~~direct~~go ~~competitors~~into ~~for~~production ~~local~~there ~~end~~may ~~users~~not ~~and~~be ~~resources~~an ~~other~~adequate ~~than~~supply ~~customers.~~of ~~We compete~~feedstock ~~with~~to supply the ~~plants~~demands inof ~~Iowa~~the ~~for capital~~industry, ~~labor~~which ~~and~~could ~~management.~~threaten ~~These~~the ~~resources~~viability ~~tend~~of toour ~~be utilized~~plant. As ~~from~~more aplants ~~local~~are ~~market~~developed and go into production, and ~~additional~~as ~~strains~~more ~~placed~~existing onplants ~~these~~expand ~~resources~~their byproduction ~~increased competition~~capacities, inthere ~~Iowa~~may ~~could~~not ~~result~~be inan ~~our~~adequate ~~company~~supply ~~being~~of ~~forced~~feedstock to ~~expend~~supply ~~additional~~the ~~funds~~demand ~~on recruiting~~of ~~labor~~the ~~and~~biodiesel ~~management~~industry. Consequently, the cost of feedstock may rise to ~~relocate~~the ~~from~~point ~~other~~where ~~areas~~it threatens the viability of our plant. InThis ~~addition,~~is ~~while~~because wethere ~~may~~is ~~receive feedstock~~little ~~from~~or ~~areas~~no ~~beyond~~correlation between the ~~state~~cost of ~~Iowa,~~feedstock and the ~~most~~market ~~cost-efficient~~price of biodiesel. We cannot pass along increased feedstock ~~will~~costs ~~likely~~to ~~come from~~our ~~local~~biodiesel ~~suppliers~~customers because in order to stay competitive in the diesel industry, asbiodiesel ~~this~~must ~~will~~be ~~reduce~~competitively ~~transportation~~priced ~~costs~~with petroleum-based diesel. WeTherefore, ~~directly~~biodiesel ~~compete~~prices fluctuate more in relation to petroleum-based diesel market prices then with ~~Iowa biodiesel~~feedstock ~~plants~~market ~~for~~prices. ~~business~~If ~~from~~we experience a ~~limited~~sustained ~~number~~period of ~~local~~high feedstock ~~suppliers~~costs or reduced biodiesel prices, such pricing and costs may reduce our ability to generate revenues and our profit margins may significantly decrease or be eliminated.

14 The biodiesel industry is becoming increasingly competitive and we compete with some larger, better financed entities which could impact our ability to operate profitably. We face a competitive challenge from larger biodiesel plants and from biodiesel plants owned and operated by the companies that supply our inputs. These large biodiesel producers are capable of producing significantly greater quantities of biodiesel than the amount we expect to produce. Moreover, some of these producers may not face the same competition we do for inputs as the companies that own them are suppliers of the inputs. While we anticipate the agreements we entered into with Gavilon will allow us to operate the biodiesel plant during the 2012 calendar year, we may not be able to operate past that time. Further, in light of the competitive advantage of these larger biodiesel producers, the market price of biodiesel may be lower which could adversely affect our ability to generate profits and adversely affect our financial obligations.

~~Table~~We are at a disadvantage in marketing our glycerin because our plant cannot produce pharmaceutical grade glycerin, thereby decreasing the market for the glycerin we produce. A major use of ~~Contents~~glycerin is in the production of drugs. The glycerin our plant produces, however, is not pharmaceutical grade glycerin. This limits our ability to market the glycerin produced by our biodiesel plant. The glycerin we produce has to be purified in order for it to be used in pharmaceutical applications. Since the market in which we can sell our glycerin is limited, we might not be able to sell all of the glycerin we produce or we may not be able to sell our glycerin at a favorable price. If we cannot sell all of the glycerin we produce or cannot sell it at a favorable price, our ability to operate our biodiesel plant profitably might be adversely affected which could decrease the value of our units.

WeConcerns ~~must~~about ~~compete~~fuel ~~with~~quality ~~other~~may ~~biodiesel~~impact ~~producers~~our inability ~~the~~to ~~industry~~successfully ~~not~~market ~~just in the sale of~~ our ~~biodiesel,~~ ~~but also in the acquisition of soybean oil, animal fats and other feedstocks and raw materials. A majority of~~ biodiesel ~~plants, including many of the largest biodiesel producers, utilize soybean oil~~. Industry ~~This~~standards ~~may~~impose ~~change~~quality ~~over~~specifications ~~time~~for ~~as high soybean oil prices are encouraging~~ biodiesel ~~producers to find ways to utilize alternative and less costly types of feedstock~~fuel. ~~Furthermore,~~ Actual ~~producers~~or ~~may~~perceived ~~increasingly~~problems ~~design~~with ~~their~~quality ~~plants~~control ~~with~~in the ~~capability~~industry tomay ~~use~~lead ~~multiple feedstocks. Nonetheless, we expect that increased biodiesel production will continue~~ to ~~increase the~~a ~~demand~~lack ~~and cost~~ of ~~not~~consumer ~~only~~confidence ~~soybean~~in ~~oil,~~the ~~but~~product ~~also animal fats~~ and ~~other~~hinder ~~inputs.~~our Weability ~~expect this will make it more expensive for us~~ to ~~produce~~successfully ~~our~~market ~~biodiesel and will reduce~~ our ~~profit margins from~~ biodiesel. An ~~This~~inability isto ~~because~~successfully ~~there is little or no correlation between the cost of feedstock and the~~ market ~~price of biodiesel and, therefore, we cannot pass along increased feedstock costs to~~ our ~~biodiesel~~ ~~customers. In order to stay competitive in the diesel industry,~~ biodiesel ~~must~~will ~~be competitively~~lead ~~priced with petroleum-based diesel. Therefore, biodiesel prices fluctuate more in relation~~ to ~~petroleum-based diesel market prices than with feedstock market prices. As a result, increased feedstock costs and reduced biodiesel prices result in~~ decreased ~~profit~~revenues ~~margins. If we experience high feedstock costs or reduced biodiesel prices for a sustained period of time, such pricing~~ and ~~costs~~ may ~~reduce~~adversely impact our ability to ~~generate~~operate ~~revenues~~at ~~and our profit margins may significantly decrease or be eliminated~~all.

~~Many~~Seasonal ~~current~~demand ~~plants~~decreases ~~are~~for ~~capable~~biodiesel ofmay ~~using~~negatively ~~only~~impact ~~vegetable~~our ~~oil for feedstock~~operations. The ~~Our~~chemical ~~plant~~characteristics ~~is able~~of tobiodiesel ~~use~~may ~~both~~make ~~vegetable~~certain ~~oils~~biodiesel ~~and~~less ~~animal~~desirable ~~fats~~during towinter ~~produce~~months ~~biodiesel,~~due ~~allowing us~~ to ~~use~~the ~~whichever types~~tendency of ~~feedstock~~biodiesel ~~provides~~to ~~the~~gel ~~greatest~~(or ~~return~~change atfrom ~~any~~a ~~given~~liquid ~~time.~~to ~~This~~a issolid) ~~beneficial~~at ~~because~~a ~~the cost~~lower oftemperature ~~feedstock~~compared isto ~~the~~petroleum-based ~~highest~~diesel ~~cost associated with biodiesel production~~fuel. While ~~Our~~management ~~ability~~believes tothat ~~utilize animal~~provided ~~fats~~the isratio ~~also~~of ~~significant~~biodiesel ~~because~~to ~~animal fat~~petroleum-based ~~biodiesel~~diesel ~~has~~is ~~some~~within ~~favorable~~an ~~advantages over~~acceptable ~~soybean~~range, ~~oil-based~~the ~~biodiesel,~~ability ~~such~~to asuse ~~better~~biodiesel ~~lubricity~~in ~~and~~cold ~~lower~~weather ~~nitrogen~~climates ~~oxide~~is ~~(NOx) emissions.~~not ~~However~~compromised, some ~~purchasers~~seasonal ofdecreases ~~animal~~in ~~fat-based~~demand ~~biodiesel may believe that it is not suitable for use~~ during the winter months inmay ~~colder climates due to its tendency to gel at higher temperatures~~result. This ~~could~~may ~~limit~~result ~~our~~in ~~ability~~decreased ~~to sell animal fat-based biodiesel during winter months.~~

We compete with large, multi-product companies and other biodiesel plants with varying capacities. Some of our competitors have greater resources than we currently have or will have in the future. Large plants with which we compete include the 85 million gallon per year Archer Daniels Midland Co (ADM) canola-based plant in Velva, North Dakota; the 90 million gallon per year Green Earth Fuels multi-feedstock plant in Galena Park, Texas; the 100 million gallon per year multi-feedstock Imperium Grays Harbor plant in Grays Harbor, Washington; the 100 million gallon per year multi-feedstock plant in Las Vegas, Nevada; and the 180 million gallon per year multi-feedstock RBF Port Neches plant in Port Neches, Texas which became operational in the fourth quarter of 2008. 11

~~Although~~Table ~~most biodiesel plants are not equipped to process raw materials (such as soybeans) into feedstock (such as soybean oil), there are several~~ of our competitors that have soy-crushing facilities and are therefore not reliant upon third parties for their feedstock supply like we are. As a result, we face a competitive challenge from biodiesel plants owned and operated by the companies that supply our inputs, such as Cargill, Inc., Ag Processing, Inc. (AGP) and ADM. Cargill, AGP and ADM have significant crush capabilities throughout North America and are large suppliers of soybean oil that own and operate their own biodiesel plants in the Midwest. Cargill owns a 37.5 million gallon plant in Iowa Falls, Iowa and AGP owns a 30 million gallon per year plant in Sergeant Bluff, Iowa, both of which process soy oil into biodiesel. ADM has constructed an 85 million gallon plant in Velva, North Dakota which processes canola oil into biodiesel. Also, increasing feedstock costs have spurred, and will likely continue to spur, additional development of crush facilities throughout the country. Such vertical integration provides these plants with greater control over their feedstock supplies, thereby providing them with a competitive advantage over plants like ours that do not have soy-crushing capabilities, especially as prices and competition for soybean oil and other feedstocks have increased. Contents

~~Competition~~biodiesel ~~from~~revenue ~~Other~~during ~~Fuel~~the ~~Sources~~ winter months which could negatively impact our cash flow and our ability to profitably operate the biodiesel plant.

~~The~~Automobile ~~biodiesel~~manufacturers ~~industry~~and isother inindustry ~~competition~~groups ~~with~~have ~~the~~expressed ~~diesel~~reservations ~~fuel~~regarding ~~segment of~~ the ~~petroleum industry.~~use ~~Historically,~~of biodiesel, ~~prices~~which ~~have~~could ~~correlated~~negatively toimpact ~~the~~our ~~prices~~ability ofto ~~petroleum-based~~market ~~diesel~~our biodiesel. ~~Over~~ Because ~~the~~it ~~past~~is ~~several~~still ~~years,~~a ~~according~~relatively tonew ~~the Energy Information Administration~~product, the ~~price~~research ~~of diesel~~on ~~fuel~~biodiesel ~~steadily~~use ~~increased~~in ~~until~~automobiles ~~reaching~~and ~~record~~its ~~high~~effect ~~prices~~on inthe ~~July 2008~~environment ofis ~~approximately $4~~ongoing.70 Some ~~per~~industry ~~gallon for No. 2 ultra low sulfur diesel~~groups, ~~and~~including ~~thereafter~~the ~~declined~~World ~~sharply~~Wide ~~to approximately~~Fuel ~~$3.23 as of December 13~~Charter, ~~2010.~~have ~~Although~~recommended ~~the~~that ~~price~~blends of ~~diesel~~no ~~fuel~~more ~~has~~than ~~decreased~~5% ~~over the~~biodiesel ~~past~~be ~~several~~used ~~months,~~for ~~diesel~~automobile fuel ~~prices~~due ~~per~~to ~~gallon~~concerns ~~remain~~about atfuel ~~levels~~quality, ~~below~~engine orperformance ~~equal~~problems toand ~~the~~possible ~~price of~~detrimental ~~biodiesel.~~effects ~~Following the trend~~ of ~~diesel prices,~~ biodiesel ~~prices~~on ~~steadily~~rubber ~~increased~~components toand ~~their~~other ~~peak~~parts inof the ~~summer~~engine. Although ofsome ~~2008,~~manufacturers ~~after~~have ~~which~~encouraged ~~time~~use ~~they decreased. As~~ of ~~December 10, 2010,~~biodiesel ~~the~~fuel ~~National~~in ~~Weekly~~their Agvehicles, ~~Energy~~cautionary ~~Roundup~~pronouncements ~~reports~~by ~~that~~others ~~B100~~may ~~biodiesel~~impact ~~prices~~our inability ~~Iowa~~to ~~ranged~~market ~~from $4.00~~our ~~to $4~~product.26 In ~~per gallon~~addition, ~~which~~studies ishave upshown ~~from~~that anitrogen ~~range~~oxide ofemissions ~~$3.25~~increase toby ~~$3.50~~10% ~~approximately~~when ~~one~~pure ~~year~~biodiesel ~~ago~~is used. If ~~the~~Nitrogen ~~diesel~~oxide ~~fuel~~is ~~industry~~the ischief ~~able~~contributor to ~~produce~~ozone ~~petroleum-based~~or ~~diesel~~smog. New ~~fuel~~engine ~~with~~technology ~~acceptable environmental~~is ~~characteristics,~~available weand ~~may~~is ~~find~~being itimplemented ~~difficult~~ to ~~compete~~eliminate ~~with~~this ~~diesel fuel~~problem. ~~In addition~~ However, ~~other~~ ~~more~~these ~~cost-efficient~~emissions ~~domestic alternative fuels~~ may bedecrease ~~developed~~the ~~and~~appeal ~~displace~~of ~~biodiesel~~our asproduct ~~an environmentally-friendly alternative. If diesel prices do not continue~~ to ~~increase~~environmental orgroups aand ~~new~~agencies ~~fuel~~who ~~is developed~~have tobeen ~~compete~~historic ~~with~~supporters ~~biodiesel,~~of itthe ~~may be difficult to market our~~ biodiesel industry, which ~~could~~ may result in ~~the loss of some or all of~~ our ~~ability~~inability to ~~operate~~market ~~profitably~~our biodiesel.

15 Risks Related to Our Financing Plan

~~Table~~We have limited access to liquid funds which may impair our ability to operate the biodiesel plant at full capacity and may impact our ability to operate profitably. We have very limited access to cash in order to purchase raw materials and operate our business. As a result, we have been working to secure contracts with counter-parties, such as the agreement we executed with Gavilon, which allows us to reduce our raw materials costs so we can operate the biodiesel plant at a higher capacity. However, our lack of ~~Contents~~liquidity has impacted our operations and may continue to affect our ability to profitably operate the biodiesel plant. This may reduce or eliminate the value of our units.

~~One~~We ~~advantage~~have ~~biodiesel~~had ~~has~~difficulty inmeeting the ~~petroleum~~covenants ~~diesel~~in ~~market~~our iscredit ~~the~~agreements ~~marketability~~with ~~and~~MLIC ~~value of~~which ~~RINs.~~could ~~The~~result ~~RFS2~~in ~~system~~our isfailure. We ~~enforced~~operated ~~through~~under a ~~system~~forbearance ofagreement ~~registration,~~with ~~recordkeeping~~MLIC ~~and~~during ~~reporting requirements~~our ~~for~~entire ~~obligated~~2011 ~~parties~~fiscal year and ~~renewable~~the ~~producers~~first ~~(“RIN~~quarter ~~generators”), as well as any party that procures or trades renewable identification numbers, either as part~~ of ~~their~~our ~~renewable purchases~~2012 orfiscal ~~separately~~year. Recently, ~~Any~~we ~~person~~entered ~~who~~into ~~violates~~an ~~any~~agreement ~~prohibition~~with orMLIC ~~requirement of the RFS2 program may be subject~~ to ~~civil~~restructure ~~penalties~~our ~~for~~credit ~~each~~facilities ~~day~~in ofa ~~each~~manner ~~violation.~~that ~~For~~management ~~example,~~believes awill ~~failure to~~allow ~~acquire~~us ~~sufficient RINs~~ to ~~meet~~remain ain ~~party’s~~compliance ~~renewable~~with ~~fuels~~our ~~obligation~~loans ~~would constitute a separate day of violation for each day the violation occurred~~ during ~~the~~our ~~annual~~2012 ~~averaging~~fiscal ~~period~~year. However, ~~The enforcement provisions are necessary to ensure~~ the ~~RFS2~~maturity ~~program~~date ~~goals~~of ~~are~~our ~~not~~long-term ~~compromised~~loan ~~by illegal~~is ~~conduct~~January in5, ~~the creation and transfer of RINs~~2013. At ~~The~~that ~~EPA~~time ~~has~~we ~~assigned~~will ~~“equivalence~~either ~~values”~~need to ~~each~~ ~~type~~refinance ofour ~~renewable~~long-term ~~energy~~loan ~~fuel~~or insecure ~~order~~MLIC's consent to ~~determine~~an ~~compliance~~extension ~~with~~of the ~~RFS2~~agreement. If ~~The~~we ~~equivalence values~~are ~~used~~unable ~~ethanol~~to asextend the ~~base-line~~maturity ~~measurement~~date ~~(such that one gallon~~ of ~~ethanol~~our islong-term ~~equivalent~~loan ~~to one~~past ~~credit~~January ~~towards RFS2 compliance) and assigned biodiesel an equivalence value of 1.~~5, ~~such~~2013, ~~that each~~we ~~gallon~~may offail ~~biodiesel used by an obligated party will be equal to one~~ and ~~one-half~~MLIC ~~gallons credit~~may ~~towards~~foreclose ~~its~~on ~~RFS2~~our ~~compliance.~~assets, Aincluding ~~market has established in~~ the ~~petroleum~~biodiesel ~~diesel~~production ~~industry~~facility. This ~~for trading~~may ~~these~~reduce ~~RINs.~~or ~~Thus,~~eliminate the value of ~~the~~our ~~RIN can sometimes offset higher biodiesel pricing, which can make biodiesel more competitive on the market with petroleum diesel~~units.

~~Management~~Our ~~estimates~~credit agreements with MLIC contain restrictive covenants which we ~~accumulated~~may ~~over~~violate ~~400,000~~which ~~RINs~~could ~~from~~result in our ~~2009~~failure. Our ~~calendar-year~~loan ~~production~~agreements with MLIC contain restrictive covenants which, ~~however~~ among other things, ~~these~~require ~~RINs~~us ~~will~~to ~~not~~maintain beminimum ~~available~~levels ~~for~~of ustangible net worth and cash flow ratios. These covenants restrict our ability to ~~trade~~make ~~until~~distributions on the units without the prior consent of our ~~arbitration~~lender. In addition, failure to comply with ~~REG~~these ~~(see “Legal~~covenants ~~Proceedings”)~~may ~~below~~constitute isan ~~resolved~~event of default under our loan agreements. We ~~have~~are ~~not~~currently ~~sold~~in ~~any~~compliance ~~RINs~~with ~~during~~all of our material loan covenants, however, we may default on these loan covenants in the ~~2010~~future. If ~~calendar~~we ~~year~~default on our loan covenants and MLIC refuses to grant us a waiver of these covenant defaults, we may fail which could reduce or eliminate the value of our units.

AtWe ~~least~~may ~~one~~be ~~large~~unable ~~oil~~to ~~company~~raise ~~has~~additional ~~previously~~capital ~~announced~~in ~~its~~the ~~intent~~event toour ~~produce~~funds ~~renewable diesel,~~from ~~another~~operations ~~form~~and ofour ~~diesel~~credit ~~with~~facilities ~~which~~are weinsufficient ~~may~~to befund ~~required~~our tooperations ~~compete.~~for ~~Renewable~~the ~~diesel~~next ~~has characteristics~~twelve ~~similar~~months. In tothe event that the board of ~~petroleum-based~~directors ~~diesel~~deems ~~fuel~~it ~~and~~necessary ~~can~~to beobtain ~~co-processed~~additional ~~at traditional~~capital ~~petroleum~~in ~~refineries~~order ~~from~~to ~~vegetable~~fund ~~oils~~plant operations or ~~animal~~to ~~fats~~otherwise ~~mixed~~comply with ~~crude~~the ~~oil~~covenants ~~through~~contained ~~a thermal~~in ~~de-polymerization~~our ~~process.~~financing ~~However,~~agreements aswith aour ~~result~~lender ofduring anthe ~~Internal~~next ~~Revenue~~12 ~~Service interpretation~~months, of the ~~application~~board of ~~certain~~directors ~~biodiesel~~may ~~tax~~decide ~~credits,~~to ~~renewable~~attempt ~~diesel~~to ~~processed~~issue additional membership units in ~~traditional~~ ~~petroleum-refining~~our ~~equipment~~company isthrough ~~eligible~~one ~~for~~or ~~the~~more ~~biodiesel~~private ~~tax~~placements. ~~credit,~~In ~~but~~such ~~only~~event, athowever, ~~a reduced~~there ~~rate~~is ofno 50guarantee ~~cents~~that ~~per~~such ~~gallon.~~an ~~Opponents~~offering of ~~the~~our ~~IRS~~membership ~~interpretation~~units ~~argue~~would ~~that~~be ~~the~~successful ~~biodiesel tax~~in ~~credit~~raising ~~was~~the ~~intended~~desired ~~for~~capital. ~~specific,~~Due ~~limited~~to ~~production~~current ~~technologies,~~market ~~including~~conditions in the ~~methyl ester~~ biodiesel ~~production process~~industry, ~~and~~we ~~that~~may ~~the~~not ~~recent~~be ~~interpretation~~able ~~will~~to ~~allow~~attract asufficient ~~large~~numbers ~~subsidy~~ of ~~conventional~~ ~~petroleum~~investors ~~refinery~~to ~~capacity~~provide atus with the ~~expense~~necessary ofamount ~~free-standing producers~~ of ~~biodiesel~~additional capital. ~~Because~~ ~~renewable~~For ~~diesel~~the issame ~~currently~~reasons, ~~eligible~~we ~~for~~may ~~the~~be ~~biodiesel~~unable ~~tax~~to ~~credit~~obtain ~~(although~~additional ~~only~~debt atfinancing ~~a reduced~~for ~~credit~~operations ofin 50the ~~cents~~event ~~compared~~we tocannot ~~the~~raise $1sufficient capital.00 In ~~credit~~such ~~available for biodiesel)~~event, ~~other~~we ~~large oil companies~~ may ~~also~~be ~~decide~~forced to ~~add~~shut ~~production~~down ~~capacity~~the ~~for~~plant, ~~renewable~~either ~~diesel.~~temporarily ~~These~~or ~~large~~permanently, ~~petroleum refiners~~or ~~likely have greater financial resources than~~ we ~~do and~~ may be ~~able~~unable to ~~devote~~comply ~~greater production~~with ~~capacity to~~ the ~~production~~loan ofcovenants ~~renewable~~contained ~~diesel~~in ~~than~~our ~~the~~credit ~~typical~~agreements ~~biodiesel~~with ~~plant~~MLIC, which on ~~average~~entitles ~~has~~our anlender ~~annual~~to ~~production~~accelerate ~~capacity~~payments ofunder ~~30 million~~our ~~gallons.~~credit ~~Accordingly,~~agreements ifor ~~renewable diesel~~foreclose ~~proves~~on toour beassets, ~~more~~including ~~cost-effective~~the ~~than~~ biodiesel, ~~our~~production ~~revenues and our ability to operate profitably may be adversely affected~~facility.

~~Glycerin~~Our ~~Competition~~ auditor has raised doubts about our ability to continue as a going concern and if we are unable to continue our business, our units may have little or no value. As discussed in the accompanying financial statements, we have generated accumulated losses of approximately $20.1 million since our inception, have experienced significant increases in our input costs and undertaken significant borrowings to finance the construction of our biodiesel plant. These liquidity issues raise doubts about our ability to continue as a going concern. See Note 7 to the financial statements. Further, our loan agreements with our lender contained covenants which we were not in compliance with as of September 30, 2011. However, on January 11, 2012 our lender

Excess production of glycerin, a co-product of the biodiesel production process, may cause the price of glycerin to decline, thereby adversely affecting our source of revenue from glycerin. It is estimated that every one million gallons of biodiesel produced adds approximately another 100,000 gallons of crude glycerin into the market. Accordingly, as biodiesel production has increased, the glycerin market has become increasingly saturated. As a result, glycerin prices dropped dramatically in 2006, with crude glycerin prices hovering around 2 cents per pound or less. Some plants were forced to give away glycerin, and according to the Jacobsen Publishing Company’s Biodiesel Bulletin, others paid 3 cents to 4 cents per pound to dispose of crude glycerin. However, as of mid December 2010, according to the Jacobsen Biodiesel Bulletin, average crude glycerin prices increased to approximately 14 to 16 cents per pound. WMG will market the glycerin produced at our plant under our Management Agreement. 12

16 Table of Contents

~~Table~~waived these violations and entered into a new agreement which extends the maturity date of ~~Contents~~the debt through January 5, 2013. In the event our lender declared a default under the Loan Agreement and elected to accelerate our payments or take possession of our assets securing the loans, we may be forced to shut down the plant and our members could lose some or all of their investment. These factors have raised doubts as to our ability to continue as a going concern.

~~Excess~~Risks ~~glycerin~~Related ~~production capacity may limit our ability~~ to ~~market~~Regulation ~~our glycerin co-product,~~ and weGovernmental may even be forced to pay to dispose of our glycerin if prices decrease as they did in 2006. Low glycerin prices may also limit our ability to generate revenues through the sale of our co-product. This may negatively affect the profitability of our business. Additionally, some of our competitors, such as Cargill and ADM, have expanded their glycerin refining capacities due to relatively higher prices for refined glycerin when compared to the price of crude glycerin. In Iowa Falls, Iowa, Cargill has built a 30 million pound per year glycerin refinery near its 37.5 million gallon per year biodiesel production plant. These biodiesel producers may therefore have a competitive advantage over plants like ours that do not have glycerin refining capabilities. Action

~~Research~~RFS2 may be reduced or eliminated which could significantly impact the demand for and ~~Development~~ market price of biodiesel which could result in our failure. The biodiesel industry is currently benefited by the biodiesel use requirements in RFS2 which has created demand for biodiesel which may disappear without this government incentive. Recently, there has been legislation introduced in Congress which seeks to reduce or eliminate the renewable fuels mandates in the RFS2. While management believes that these pieces of legislation do not have sufficient support to be enacted into law, the composition of Congress and the White House may change in the future which could result in the decrease or elimination of RFS2. If this were to occur, demand for biodiesel may be significantly affected and we may fail. If we fail, the value of our units may be reduced or eliminated.

WeLoss doof ~~not~~the ~~conduct~~biodiesel ~~any~~blenders' ~~research~~credit ~~and~~may ~~development~~negatively ~~activities~~impact ~~associated~~our ability to profitably operate the biodiesel plant. The biodiesel blenders' credit of $1.00 per gallon of biodiesel which is blended with petroleum-based gasoline expired on December 31, 2011. While management believes that the ~~development~~minimum biodiesel use requirements of ~~new~~ ~~technologies~~the RFS2 will result in demand for ~~use~~biodiesel, even after the expiration of the biodiesel blenders' credit, demand for biodiesel may be lower than it otherwise would be if the credit was still in ~~producing~~existence. If we are unable to compete due to the loss of the biodiesel ~~and~~blenders' ~~glycerin~~credit or other negative market factors, we may fail which could decrease or eliminate the value of our units.

~~Dependence~~State onincentives ~~One~~for ~~Major~~biodiesel ~~Customers~~ may be repealed which may negatively impact demand for biodiesel. Biodiesel demand and the market price of biodiesel is currently benefited by state incentives to produce and sell biodiesel. These state incentives include state biodiesel use mandates, tax credit and retailer incentives. If these state incentives were to be eliminated, especially incentives for biodiesel producers located in Iowa, our ability to profitably operate the biodiesel plant may be negatively impacted which could decrease or eliminate the value of our units.

WeA ~~have~~change ~~entered~~in ~~into~~environmental aregulations ~~Management~~or ~~Agreement~~violations ~~with~~thereof ~~WMG~~could toresult ~~market~~in ~~all~~the devaluation of our ~~products~~units. ~~and~~We ~~procure all~~are ofsubject ~~our~~to ~~inputs~~extensive air, water and other environmental regulations. We ~~Any~~have ~~failure~~obtained byall ~~WMG~~of tothe ~~comply~~permits ~~with~~required to construct the ~~terms~~plant ofand ~~our~~have ~~Management~~obtained ~~Agreement~~all ~~could negatively~~the ~~impact~~permits ~~our~~currently ~~ability~~required to ~~generate~~operate ~~revenues~~the plant. ~~The~~Environmental ~~Management~~laws ~~Agreement~~and ~~does~~regulations, ~~not~~both ~~prohibit~~at ~~WMG from~~the ~~providing~~federal ~~services~~and tostate ~~our competitors~~level, are subject to change and ~~its~~changes ~~does~~can ~~not~~be ~~provide~~made ~~any~~retroactively. ~~procedures~~Consequently, aseven toif ~~how~~we ~~WMG will~~have ~~address~~the ~~any~~proper ~~conflicts~~permits ofat ~~interest~~the ~~that~~proper time, we may ~~arise~~be ~~during~~required ~~WMG’s~~to ~~service~~spend considerable resources to ~~our~~comply ~~plant~~with ~~and competitor~~future ~~plants.~~environmental Ifregulations ~~WMG~~or ~~places~~new ~~the~~or ~~interests~~modified interpretations of ~~other~~those ~~biodiesel~~regulations, ~~plants~~ which itmay ~~manages~~increase ~~ahead of~~ our ~~interests,~~losses ~~our~~and ~~profitability~~could ~~may~~reduce beor ~~negatively~~eliminate ~~impacted~~the value of our units.

~~Costs~~ITEM ~~and Effects of Compliance with Environmental Laws~~ 2. PROPERTIES

WeOur ~~are~~property ~~subject~~consists toprimarily ~~extensive air, water and other environmental regulations and we have been required to obtain a number~~ of ~~environmental~~the ~~permits~~biodiesel toplant ~~construct~~ and ~~operate~~ the ~~plant.~~real Weestate ~~have obtained~~upon ~~all~~which of the ~~necessary permits for~~ plant ~~operations~~sits ~~including~~in ~~air emissions permits~~Washington, ~~a NPDES Permit, storm water discharge permits, and boiler permits~~Iowa. All ~~During~~of our ~~2010~~operations ~~fiscal~~are ~~year~~located weat ~~expended approximately~~our ~~$20,000~~biodiesel onplant ~~environmental costs~~site. Our ~~Any~~property ~~retroactive~~meets ~~change~~our incurrent ~~environmental~~needs ~~regulations, either at the federal or state level, could require us~~ to ~~obtain~~operate ~~additional~~our orbusiness ~~new~~and ~~permits~~produce orbiodiesel ~~spend considerable~~and ~~resources~~its ~~complying~~co-products ~~with~~for ~~such regulations~~sale.

WeAll ~~are~~of ~~subject~~our totangible ~~oversight~~and ~~activities~~intangible byproperty, ~~the~~real ~~EPA.~~and Wepersonal, ~~have~~serves ~~obtained~~as ~~an identification number from~~ the ~~EPA~~collateral for ~~any~~the ~~hazardous~~debt ~~waste~~financing ~~that~~with ~~may~~MLIC ~~result~~Assets ~~from~~Holdings, ~~our~~LLC ~~production of biodiesel~~(MLIC). ~~There~~Money ~~is always~~borrowed aunder ~~risk that~~ the ~~EPA may enforce certain rules and regulations differently than~~ Iowa~~’s environmental~~ ~~administrators.~~Department ~~Iowa~~of orEconomic ~~EPA~~Development ~~rules~~loan ~~are~~is ~~subject to change, and any such changes could result in greater regulatory burdens on plant operations. We could~~ also besecured ~~subject~~by tosubstantially ~~environmental or~~all ~~nuisance~~of ~~claims~~our ~~from~~assets, ~~adjacent~~but ~~property~~is ~~owners~~subordinate ~~or residents in the area arising from possible foul smells or other air or water discharges from the plant. Such claims could have an adverse result in court if we are deemed~~ to ~~engage in a nuisance that substantially impairs~~ the ~~fair~~agreements ~~use and~~with ~~enjoyment of real estate~~MLIC.

~~Employees~~ ITEM 3. LEGAL PROCEEDINGS

AsIn February 2009, we gave notice to REG that it had breached our management and operational services agreement (MOSA) in a variety of ~~September 30~~manners and requested the annual review of the MOSA, ~~2010~~as provided for in the MOSA. After not receiving requested information and being unable to resolve any disputes, in June 2009, we ~~had~~gave 10notice ~~full-time~~to ~~employees~~REG that we intended to ~~operate~~proceed ~~our~~with ~~biodiesel facility~~arbitration to resolve disputes arising under the MOSA. The arbitration was originally set for August 22, ~~which~~2011 isthrough aSeptember 2, ~~reduction~~2011 in ~~staff~~Des ~~from~~Moines, ~~our~~Iowa. However, ~~2009~~the ~~fiscal~~arbitration ~~year~~was continued until October 31, 2011 through November 11, 2011. Prior Weto ~~have~~arbitration, ~~been~~we ~~forced~~reached a settlement agreement with REG. We agreed to ~~reduce our~~dismiss ~~staff~~the inarbitration ~~order~~and REG agreed to ~~save~~dismiss ~~costs~~its ~~when~~counterclaims. ~~the~~The ~~plant~~parties isalso ~~not~~agreed ~~operating~~to atattempt ~~full~~to ~~capacity~~negotiate a long-term toll manufacturing agreement with REG. We ~~recently~~were ~~had~~ not required to ~~again~~enter ~~reduce~~into ~~our~~an ~~staff~~agreement ~~and~~with ~~currently~~REG ~~only~~with ~~have~~respect ~~two~~to ~~full-time~~toll ~~employees,~~manufacturing ~~although~~in wethe ~~anticipate~~ event we ~~will~~secured bea ~~able~~more tofavorable ~~quickly~~contract ~~increase~~from ~~this~~another ~~number~~party. We ~~when~~recently ~~plant~~gave ~~operations~~REG renotice that we were proceeding with a more favorable long-~~start~~term biodiesel manufacturing agreement and therefore have satisfied our obligations under the settlement agreement.

~~During 2010~~ITEM ~~fiscal year, IRE also made changes to its management~~4. J. William Pim was appointed to the Chief Financial Officer and Chief Operating Officer position and subsequently resigned from the Board of Directors to serve only in the CFO / COO capacity. Todd Willson, the previous Chief Financial Officer for the Company, is no longer with the Company. Glen Hansel, who previously served as the Company’s Operations Manager, as provided by and employed by Renewable Energy Group, Inc. (~~REG) pursuant~~REMOVED toAND the now expired management and operational services agreement between REG and IRE, was appointed the Plant Manager and is now an IRE employee. Al Yoder, who previously served as the Company’s General Manager, as provided by and employed by REG pursuant to the management and operational services agreement between REG and IRE, is no longer with the Company. RESERVED)

~~The board also appointed two new directors to fill vacancies on the board — Steven Powell and Larry Rippey.~~ 13

17 Table of Contents

~~Table~~PART ~~of Contents~~II

ITEM 1A5. MARKET ~~RISK~~FOR ~~FACTORS.~~REGISTRANT'S COMMON EQUITY, RELATED MEMBER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

~~You~~Market should carefully read and consider the risks and uncertainties below and the other information contained in this report. The risks and uncertainties described below are not the only ones we may face. The following risks, together with additional risks and uncertainties not currently known to us or that we currently deem immaterial could impair our financial condition and results of operations. Information

~~Risks~~There ~~Related~~is no public trading market for our units. We have created a private qualified online matching service in order to facilitate trading of our units, however; as of the date of this report no trades have been completed on our private qualified online matching service. Our ~~Business~~ online matching service consists of an electronic bulletin board that provides information to prospective sellers and buyers of our units. We do not receive any compensation for creating or maintaining the matching service. We do not become involved in any purchase or sale negotiations arising from our qualified matching service. In advertising our qualified matching service, we do not characterize Iowa Renewable Energy as being a broker or dealer or an exchange. We do not give advice regarding the merits or shortcomings of any particular transaction. We do not receive, transfer or hold funds or securities as an incident of operating the online matching service. We do not use the bulletin board to offer to buy or sell securities other than in compliance with the securities laws, including any applicable registration requirements. We have no role in effecting the transactions beyond approval, as required under our amended and restated operating agreement, and the issuance of new certificates. So long as we remain a public reporting company, information about the Company will be publicly available through the SEC's filing system. However, if at any time we cease to be a public reporting company, we anticipate continuing to make information about the Company publicly available on our website.

WeUnit are experiencing liquidity issues which could require us to cease operations. We are experiencing liquidity issues associated with the high cost of our raw materials, decreased demand for biodiesel, and the delay between when we purchase those raw materials and when we receive payments for sales of our finished products. We received a six million dollar line of credit from our lender, received forbearance from our lender for certain covenants contained in our loan agreement, and refinanced our loan agreement during our 2010 fiscal year, however; our financial position is still not certain. Our term loan is now due in full at September 5, 2011. Should we not be able to secure the cash we require to operate the plant and pay our obligations as they become due, we may have to cease operations, either on a permanent or temporary basis, which would decrease or eliminate the value of our units. Holders

WeAs ~~have a history~~ of ~~losses and may not ever operate profitably. For the fiscal year ended September~~January 3013, ~~2010 we incurred a net loss of $4~~2012,~~372,056.~~ ~~There is no assurance that~~ we ~~will~~had ~~be successful~~approximately in614 ~~our~~unit ~~efforts~~holders ~~to continue to operate the biodiesel plant. Even if we successfully meet all~~ of ~~our objectives, there is no assurance that we will be able to operate profitably~~record. We have experienced very high raw material costs and low biodiesel prices that in some cases have been less than our production costs. Should our raw material costs increase without an increase in the price we receive for our biodiesel or glycerin, or if demand for biodiesel does not increase, we may have to scale back or cease operations at the biodiesel plant, either on a temporary or permanent basis. This may affect our ability to generate revenues and could decrease or eliminate the value of our units.

WeDistributions may be required to write down our long-lived assets and these impairment charges would adversely affect our operating results. We account for the impairment of long-lived assets to be held and used in accordance with ASC Topic 360. In accordance with ASC Topic 360, an asset (other than goodwill and indefinite-lived intangible assets) is considered impaired when estimated future cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is not deemed recoverable, the asset is adjusted to its estimated fair value. Fair value is generally determined based upon estimated discounted future cash flows. At September 30, 2010 the carrying amount of our fixed assets is $33 million. In determining if there has been an impairment, we have projected future cash flows assuming that we are able to obtain sufficient working capital to operate our plant, and our expectations related to the extension of the biodiesel tax credit. If conditions or events change and we have to reconsider our plans, the projected cash flows could change, requiring the assets to be adjusted to the estimated fair value. As a result, the amount of any annual or interim impairment could be significant and could have a material adverse effect on our reported financial results for the period in which the charge is taken.

~~Our~~We ~~business~~have is not ~~diversified.~~declared ~~Our~~or ~~success~~paid ~~depends~~any ~~largely~~distributions ~~upon~~on our ~~ability~~units. Our toboard ~~profitably operate~~of ~~our~~directors ~~biodiesel~~has ~~plant.~~complete Wediscretion doover ~~not~~the ~~have~~timing ~~any~~and ~~other~~amount ~~lines~~ of ~~business~~distributions orto ~~other~~our ~~sources~~unit ofholders, ~~revenue if~~subject weto ~~are~~certain ~~unable~~restrictions toin ~~operate~~ our ~~biodiesel~~credit ~~plant~~agreement ~~and~~with ~~manufacture~~MLIC ~~biodiesel~~ and ~~glycerin.~~restrictions Wecontained ~~have~~in ~~no other~~Iowa ~~line~~law. ofHowever, ~~business~~our tosecond ~~fall~~amended ~~back~~and onrestated ifoperating agreement requires the ~~biodiesel~~board ~~business~~of ~~declines~~directors orto ifendeavor ~~our~~to ~~biodiesel~~make ~~plant cannot~~cash ~~operate~~distributions at ~~full~~such ~~capacity~~times ~~for~~and ~~any~~in ~~extended~~such ~~period~~amounts ofas ~~time.~~will ~~Should~~permit ~~we continue to experience difficulty operating~~ our ~~biodiesel~~unit ~~plant,~~holders ~~the~~to ~~value~~satisfy oftheir ~~our~~income ~~units~~tax ~~may~~liability ~~decrease~~in ora betimely ~~eliminated~~fashion.

18 Equity Compensation Plans

~~Table~~We do not have any equity compensation plans under which equity securities of ~~Contents~~Iowa Renewable Energy are authorized for issuance.

WeSale ~~have limited experience in the biodiesel industry, which increases the risk~~ of ~~our inability~~Unregistered toSecurities operate the biodiesel plant. We are presently, and will likely continue to be, dependent upon our directors to manage our business. Most of our directors are experienced in business generally, but have limited or no prior experience in operating a biodiesel plant or in governing and operating a public company. Most of our directors have no expertise in the biodiesel industry. In addition, certain directors on our board of directors are presently engaged in business and other activities that impose substantial demands on the time and attention of such directors. As a result of the management change over when our management agreement with REG terminated, we have hired J. William Pim, who previously served on our board of directors, to serve as our Chief Financial Officer / Chief Operations Officer and Glen Hansel, who previously served as the Operations Manager provided to us by REG, as our Plant Manager. We may have difficulty in attracting other competent personnel to relocate to Iowa in the event that such personnel are not retained. If we cannot retain skilled management for our plant, our members could lose all or substantially all of their equity interest.

We ~~engage~~did innot ~~hedging~~make ~~transactions~~any ~~which~~sales involve risks that can harm our business. We are exposed to market risk from changes in commodity prices. Exposure to commodity price risk results from our dependence on soybean oil or other feedstocks for the biodiesel production process. In addition, we have engaged in hedging transactions for home heating oil, in an attempt to lock in profit margins on the sale of ~~our~~equity ~~biodiesel,~~securities because home heating oil has historically tracked with the price of biodiesel. The effectiveness of our hedging strategies is dependent upon the cost of soybean oil and home heating and our ability to sell sufficient amounts of our products. There is no futures market for animal fats. There is no assurance that ~~our~~were ~~hedging~~unregistered ~~activities~~during ~~will successfully reduce~~ the ~~risk~~fiscal ~~caused~~year byended ~~price fluctuation which may leave us vulnerable to volatile soybean oil and home heating oil prices. As a result~~September 30, ~~our results of operations and financial conditions may also be adversely affected during periods in which soybean oil prices increase~~2011. ~~Alternatively, we may choose not to engage in hedging transactions, which is our situation currently.~~

~~Hedging~~Repurchases activities themselves can result in increased costs because price movements in soybean oil contracts and home heating oil contracts are highly volatile and are influenced by many factors that are beyond our control. There are several variables that could affect the extent to which our derivative instruments are impacted by price fluctuations in the cost of ~~soybean~~Equity ~~oil~~Securities and home heating oil. However, it is likely that commodity cash prices will have the greatest impact on the derivative instruments with delivery dates nearest the current cash price. We may incur such costs and they may be significant. If we realize losses with respect to our derivative instruments, our net loss could increase.

~~Risks~~Neither ~~Related~~we, tonor ~~Operation~~anyone acting on our behalf, has repurchased any of ~~the~~our ~~Biodiesel~~outstanding ~~Plant~~ units.

WeITEM ~~depend on key suppliers, whose failure to perform could force us to abandon business, hinder our ability to operate profitably or decrease the value of our units~~6. SELECTED WeFINANCIAL are highly dependent upon WMG for the operations of the plant. Should WMG fail to perform in any manner significant to our operations, our project could fail and our members could lose some or all of the value of their investment. DATA

We are ~~highly~~a ~~dependent~~smaller ~~upon~~reporting ~~WMG~~company toas ~~procure~~defined ~~our~~by ~~inputs~~Rule ~~and~~12b-2 ~~market our products. WMG has not completed any sales~~ of ~~our~~the ~~biodiesel~~Securities ~~since~~Exchange ~~the~~Act ~~beginning~~ of ~~our~~1934 ~~Management~~and ~~Agreement~~are ~~with them. If WMG does~~ not ~~perform~~required ~~its obligations pursuant~~ to ~~our~~provide ~~management~~information ~~agreement we~~under ~~may~~this ~~be unable to specifically enforce our agreement which could negatively affect the value of our units~~item.

~~Changes~~ITEM ~~in production technology could require us to commit resources to updating the biodiesel plant or could otherwise hinder our ability to compete in the biodiesel industry or to operate at a profit~~7. MANAGEMENT'S WeDISCUSSION ~~expect~~AND ~~advances~~ANALYSIS ~~and~~OF ~~changes~~FINANCIAL inCONDITION ~~the~~AND ~~technology~~RESULTS ofOF biodiesel production to occur. Such advances and changes may make our biodiesel production technology less desirable or obsolete. The plant is a single-purpose facility and likely has no use other than the production of biodiesel and associated products. Much of the cost of the plant is attributable to the cost of production technology which may be impractical or impossible to update. The value of our units could decline if changes in technology cause us to operate the plant at less than full capacity for an extended period of time or cause us to abandon our business. Further, more efficient technologies might be developed in the future that we cannot implement that would allow our competitors to produce biodiesel in a more cost effective manner than us. OPERATIONS

~~Because~~This ~~our~~report ~~natural~~contains ~~gas~~forward-looking ~~provider~~statements ~~will~~that ~~not~~involve ~~allow~~future usevents, toour ~~enter~~future ~~into~~performance ~~forward~~and ~~contracts for~~ our ~~natural~~ ~~gas,~~expected wefuture ~~may~~operations ~~pay~~and ~~higher~~actions. ~~prices~~In ~~for~~some ~~our~~cases ~~natural~~you ~~gas~~can ~~than~~identify ~~other~~forward-looking ~~biodiesel~~statements ~~producers,~~by ~~which puts~~the ususe atof awords ~~competitive~~such ~~disadvantage~~as ~~and~~ "may," ~~increase~~"will," ~~our~~"should," ~~losses.~~"anticipate," ~~Our~~"believe," ~~natural~~"expect," ~~gas~~"plan," ~~provider~~"future," ~~does not~~"intend," ~~allow~~"could," us"estimate," to"predict," ~~enter~~"hope," ~~into~~"potential," ~~forward contracts for our natural gas~~"continue," ~~and~~or ~~management~~the ~~has~~negative ~~determined that~~of itthese isterms ~~not~~or ~~feasible~~other tosimilar ~~use~~expressions. aThese ~~different~~forward-looking ~~natural~~statements ~~gas~~are ~~provider.~~only ~~Many~~our ~~biodiesel~~predictions ~~producers can~~ and do ~~enter~~involve ~~into~~numerous ~~forward contracts for their natural gas~~assumptions, ~~which~~risks ~~may~~and ~~allow them to lock in their natural gas costs at a lower price~~uncertainties. Our ~~inability~~actual toresults ~~enter~~or ~~into~~actions ~~forward contracts for our natural gas~~ may ~~put~~differ usmaterially atfrom athese ~~competitive disadvantage which may increase our losses.~~ forward-

19 14

Table of Contents

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

~~The~~Results ~~downturn in the U.S. economy has caused demand for biodiesel to decline, which may adversely affect our ability to generate revenues. The U.S. stock markets tumbled in the Fall~~ of ~~2008~~ ~~upon~~Operations the collapse of multiple major financial institutions, the federal government’s takeover of two major mortgage companies, Freddie Mac and Fannie Mae, and the President’s enactment of a $700 billion bailout plan pursuant to which the federal government directly invested in troubled financial institutions. Financial institutions across the country have lost billions of dollars due to the extension of credit for the ~~purchase~~Fiscal ~~and~~Years ~~refinance~~Ended ~~of over-valued real property. Other large corporate giants~~September 30, such as the big three auto makers, have also received government bailout money. These factors have caused significant economic stress and upheaval in the financial and credit markets in the United States, as well as abroad. Credit markets have tightened and lending requirements have become more stringent. Oil prices have dropped rapidly as demand for fuel has decreased. Although demand for biodiesel typically declines in colder winter months due to its cold flow properties, we believe that these economic factors have contributed to an even greater decrease in demand for biodiesel, which may persist throughout all or parts of fiscal year 2011~~. It~~ ~~is uncertain for how long~~ and to what extent these economic troubles may negatively affect biodiesel demand in the future. If demand for biodiesel declines, we may be forced to temporarily or permanently cease operations and you may lose some or all of your investment. 2010

~~Several~~The ~~biodiesel~~following ~~companies~~table ~~throughout~~shows the ~~country~~results ~~have~~of ~~filed for Chapter 1l bankruptcy due to industry and economic conditions, and we may also be forced to consider filing for bankruptcy protection in the event that economic conditions and~~ our ~~liquidity~~operations ~~problems do not improve. In November 2008, Freedom Fuels, LLC, a biodiesel plant located near Mason City, Iowa, filed for Chapter 11 bankruptcy~~ and then proceeded from a Chapter 11 bankruptcy into Chapter 7 bankruptcy. Beatrice Biodiesel, a biodiesel plant near Beatrice, Nebraska, filed for Chapter 11 bankruptcy. A Chapter 11 bankruptcy is an option in which a company attempts to reorganize with the ~~intent~~approximate ~~that it~~percentage ~~will continue to operate. A Chapter 11 bankruptcy differs from a Chapter 7 bankruptcy because under Chapter 7 the assets~~ of ~~a company are liquidated and it is not anticipated that the business will continue to operate. Unfavorable worldwide economic conditions~~revenues, ~~the~~costs ~~decreasing availability~~ of ~~credit~~sales, ~~and~~operating ~~volatile~~expenses ~~biofuel prices~~ and ~~input~~other ~~costs~~items ~~have likely contributed~~ to ~~the~~total ~~necessity~~revenues ~~of these bankruptcy filings. We are experiencing liquidity problems, which are resulting primarily from the general decrease~~ in ~~demand for biodiesel that the industry is currently experiencing,~~ our ~~lack~~ statements of ~~biodiesel~~operations sale contracts, the unfavorable economic conditions that are currently prevailing in the U.S. and abroad and the other factors identified in this report. We anticipate operating at significantly below our nameplate production capacity for the ~~first~~fiscal ~~quarter~~years ofended September 30, 2011 ~~based on our historical performance~~ and ~~lack of seasonal demand. If our current liquidity problems persist and we are unable to generate sufficient revenues from the sale of our biodiesel~~September 30, ~~we may also have to consider bankruptcy as an option to cope with our financial difficulties. This could reduce or eliminate the value of our members’ investments in the Company.~~ 2010:

The decline in oil and diesel prices may affect our ability to sell biodiesel at profitable prices. The price for biodiesel is correlated to the price for diesel, as biodiesel is used primarily as a diesel additive. The price of biodiesel tends to increase as the price of diesel increases, and the price of biodiesel tends to decrease as the price of diesel decreases. Diesel prices are typically influenced by oil prices. The recent global economic downturn has resulted in a rapid decline in oil and diesel prices. In November 2008, oil prices fell to their lowest level in more than three years, dropping below $50 a barrel, down from approximately $150 a barrel in July 2008, and the current December 2010 average is up slightly at approximately $90 per barrel. Additionally, average retail diesel prices declined by approximately 40% from July 2008 to November 2008, and the price of biodiesel went down also. Since then diesel and biodiesel prices have risen slightly from the November 2008 lows, with diesel fuel at approximately $3.23 per gallon in early December 2010, according to the Energy Information Administration and biodiesel prices at approximately $4.00 to $4.26 per gallon in Iowa as of December 10, 2010, according to the National Weekly Ag Energy Roundup. If oil and diesel prices remain low or decline even further, biodiesel prices will also likely remain low or decline further. This could make it difficult for us to produce and sell biodiesel at a profit and you could lose some or all of your investment as a result.



	Fiscal Year Ended					Fiscal Year Ended
	September 30, 2011					September 30, 2010
Statement of Operations Data	Amount			Percent		Amount			Percent
Revenues	$	32,680,420		100.0	%	$	9,234,866		100.0	%
Cost of Sales	34,554,491			105.7	%	12,070,190			130.7	%
Gross (Loss)	(1,874,071		)	(5.7	)%	(2,835,324		)	(30.7	)%
Operating Expenses	849,489			2.6	%	887,187			9.6	%
Operating (Loss)	(2,723,560		)	(8.3	)%	(3,722,511		)	(40.3	)%
Other Income	385,649			1.2	%	460,104			5.0	%
Interest Expense	(2,490,717		)	(7.6	)%	(1,109,649		)	(12.0	)%
Net (Loss)	$	(4,828,628	)	(14.8	)%	$	(4,372,056	)	(47.3	)%

20 Revenues

~~Table~~The following table shows the sources of ~~Contents~~our revenue for the fiscal years ended September 30, 2011 and September 30, 2010.

An investigation by the European Commission into whether the U.S. biodiesel industry has been engaging in unfair trade practices has led to the imposition of tariffs on biodiesel imported into Europe, which could result in further losses from our business. The European Commission conducted anti-subsidy and anti-dumping investigations on U.S. biodiesel imports into Europe. Based on complaints from the European Biodiesel Board (EBB), the European Commission claims that U.S. biodiesel producers, after claiming maximum U.S. subsidies for B99 biodiesel, have been dumping biodiesel in the European market, where it may also be eligible for European subsidies. The European Commission states that these factors have adversely affected the European biodiesel industry, causing adverse effects on the prices and market share of European biodiesel producers. The EBB claims that subsidized B99 exports are a trade practice that breaches World Trade Organization rules. The tariffs went into effect March 13, 2009 and the European Commission determined in July 2009 that the tariffs would be extended through 2014. According to the May 2009 issue of the Biodiesel Magazine, the tariffs could result in an additional charge of $30 to $265 per metric ton of biodiesel. These tariffs have virtually eliminated our ability to make profitable sales in Europe.



	Fiscal Year Ended				Fiscal Year Ended
	September 30, 2011				September 30, 2010
Revenue Source	Amount		% of Revenues		Amount		% of Revenues
Biodiesel Sales	$	28,484,617	87.16	%	$	8,820,946	95.52	%
Co-product Sales	627,200		1.92	%	226,288		2.45	%
Federal Incentives	1,260,188		3.86	%	187,632		2.03	%
RINs	2,305,973		7.06	%	—		—	%
Other Revenue	2,442		0.01	%	—		—	%
Total Sales Revenue	$	32,680,420	100.00	%	$	9,234,866	100.00	%

IfOur ~~demand~~primary ~~for~~sources ~~biodiesel~~of ~~fails~~revenue toare ~~grow~~sales atof ~~the~~biodiesel, ~~same~~sales ~~rate~~of co-products such as ~~planned~~glycerin ~~supply~~and soap-stocks, ~~the~~federal ~~excess production~~and ~~capacity~~state ~~will~~biodiesel ~~adversely~~production ~~impact~~incentives ~~our~~and ~~financial~~sales ~~condition~~of RINs. We Ingenerated ~~2009,~~significantly ~~approximately~~more ~~545 million~~revenue ~~gallons~~during ofour ~~biodiesel~~2011 ~~were~~fiscal ~~produced~~year incompared ~~the~~to ~~United~~our ~~States,~~2010 ~~according~~fiscal year due to ~~the~~increased ~~National Biodiesel~~production ~~Board.~~at ~~Our~~the biodiesel plant. We ~~alone~~sold ~~could~~more ~~produce~~gallons ~~almost 6%~~ of ~~the~~ ~~2009~~biodiesel ~~domestic production.~~during ~~The~~our ~~Biodiesel~~2011 ~~Magazine~~fiscal ~~website~~year ~~estimates~~compared ~~the~~to ~~current~~our ~~dedicated~~2010 Ufiscal year.S. During ~~biodiesel production~~our ~~capacity~~2011 offiscal ~~existing~~year, ~~biodiesel~~we ~~plants~~supplemented asour ofproduction ~~December 12,~~by ~~2010~~entering isinto ~~approximately~~toll ~~2.83 billion~~manufacturing ~~gallons~~contracts ~~per~~in ~~year.~~order ~~Further,~~to ~~plants~~minimize ~~under~~the ~~construction~~amount ~~and~~of ~~expansion~~cash aswe ofused ~~December 12, 2010,~~to ifpurchase ~~completed,~~raw ~~are~~materials ~~expected~~which helped us to ~~result~~maintain inliquidity. Due ~~another~~to ~~386 million~~our ~~gallons~~limited ofworking ~~annual~~capital ~~U.S.~~during ~~biodiesel production~~our ~~capacity~~2011 fiscal year, ~~for~~we ~~total~~could ~~annual~~not ~~production~~operate ~~capacity~~at offull ~~approximately~~capacity ~~3.22 billion~~if ~~gallons. Thus,~~we ~~the~~were ~~current~~required ~~annual~~to ~~production~~purchase ~~capacity~~all of ~~existing~~the ~~plants~~feedstock ~~far~~necessary ~~exceeds~~to ~~2008~~produce ~~annual~~ biodiesel ~~consumption~~. In addition, ~~and~~we ~~will~~increased ~~likely~~the ~~far~~amount ~~exceed~~of ~~2009~~revenue ~~biodiesel~~that ~~consumption.~~we Asgenerated ~~production~~from ~~capacity increases,~~co-product ~~our~~sales ~~competition~~during ~~with~~our ~~other~~2011 ~~biodiesel~~fiscal ~~producers~~year ~~for~~compared to the ~~sale~~same period of ~~our~~2010. We ~~products~~also ~~increases, especially~~generated ifsignificantly ~~there~~more isrevenue ~~not~~from afederal ~~corresponding~~and ~~increase~~state inproduction ~~demand~~incentives ~~for~~during ~~biodiesel.~~our ~~Many~~2011 ~~biodiesel~~fiscal ~~plants do~~year ~~not~~compared ~~operate~~to atthe ~~full~~same ~~capacity~~period of 2010, primarily due to ~~the~~increased ~~discrepancy~~production ~~between~~of ~~annual~~biodiesel ~~domestic~~during ~~biodiesel consumption~~our ~~and~~2011 ~~annual~~fiscal Uyear.S. We ~~biodiesel~~also ~~production~~generated ~~capacity.~~revenue ~~Several~~during ~~biodiesel~~our ~~plants~~2011 ~~have~~fiscal ~~even~~year ~~been forced~~related to ~~completely~~sales ~~shut~~of ~~down~~RINs. We ordid ~~declare~~not ~~bankruptcy,~~have ~~which~~any ~~may~~revenue befrom ~~due~~RINs insales ~~part~~during toour an2010 ~~increase~~fiscal ~~in national~~year ~~excess~~and ~~production~~we ~~capacity~~do ~~without~~not aanticipate ~~corresponding~~having ~~increase~~any inrevenue ~~biodiesel~~from ~~demand~~RINs during our 2012 fiscal year. We had revenue from RINs in ~~combination~~ ~~with~~our 2011 fiscal year due to the ~~worsening~~fact ~~economic~~that ~~conditions.~~we Ifwere required to purchase biodiesel ~~production~~in ~~capacity~~the ~~continues~~market in order to ~~expand~~ atsatisfy ~~its~~certain ~~current~~contracts ~~pace,~~that ~~and~~we ~~demand~~had ~~does~~in ~~not~~place ~~grow~~during toMarch, ~~meet~~April ~~the~~and ~~available~~May ~~supply,~~of 2011 which we ~~may~~could benot ~~forced to~~completely ~~suspend~~fill. As ~~production~~a atresult, ~~our~~we ~~plant~~were ~~and~~allowed ~~the~~to ~~value~~sell ofthe ~~your~~RINs ~~units~~associated ~~could~~with bethis ~~decreased~~purchased orbiodiesel ~~eliminated.~~

Excess capacity in the biodiesel industry may cause increased competition for inputs and decreased market prices for biodiesel. Biodiesel production at our plant requires significant amounts of soybean oil, animal fats and other inputs. If overproduction of biodiesel occurs, we will face increased competition for inputs which means we may be either unable to acquire the inputs that we need or unable to acquire them at profitable prices. In addition, if excess capacity occurs, we may also be unable to market our products at profitable prices. If the demand for biodiesel does not grow at the same pace as increases in supply, we would expect the price for biodiesel to decline. Any decrease in the price at which we can sell our biodiesel will negatively impact our future revenues. Increased expenses and decreased sales prices for biodiesel will result in decreased revenues and increased losses. 15

~~Excess~~Table ~~production~~ of glycerin, the primary co-product of the biodiesel production process, may cause the price of glycerin to decline, thereby adversely affecting our ability to generate revenue from the sale of glycerin. It is estimated that every million gallons of biodiesel produced adds approximately another one hundred thousand gallons of crude glycerin into the market. As biodiesel production has increased, the glycerin market has become increasingly saturated, resulting in significant declines in the price of glycerin. In 2006, glycerin prices dropped dramatically, with crude glycerin prices hovering around 2 cents per pound or less. According to the September 2006 issue of Biodiesel Magazine, some smaller plants were even forced to essentially give away glycerin and some even had to pay to dispose of the glycerin. Since then, however, there has recently been a steady, gradual increase in glycerin prices. The Jacobsen Company reported average glycerin prices of 14 to 16 cents in mid December 2010. However, if the price of glycerin declines again, our revenues will be adversely affected and we could even be forced to pay to dispose of our glycerin as plants were required to do in the past. Any further excess glycerin production capacity may limit our ability to market our glycerin co-product and could negatively impact our future revenues. Contents

21 separately which resulted in additional revenue during our 2011 fiscal year.

~~Table~~The biodiesel blenders' credit expired on December 31, 2011 and management does not anticipate that this biodiesel production incentive will be renewed. Management believes that the loss of ~~Contents~~this tax incentive could negatively impact biodiesel demand and prices going forward, however, management also believes that due to the mandatory biodiesel use requirements of the Renewable Fuels Standard (RFS), there will continue to be demand for biodiesel during our calendar year 2012, despite the loss of the biodiesel blenders' credit. We have entered into an agreement with Gavilon which provides a minimum level of production during the 2012 calendar year which we believe will positively impact our revenue during that period. The minimum purchase requirement equals approximately 50% to 70% of our total production capacity depending on which feedstocks are used. Management believes that the Gavilon contract will allow us to operate at a profit during our 2012 fiscal year and will allow us to recommence making payments on our long-term loan with MLIC.

~~The~~Cost ~~biodiesel manufacturing industry is a feedstock limited industry. As more plants are developed and go into production there may not be an adequate supply~~ of feedstock to supply the demands of the industry, which could threaten the viability of our plant. As more plants are developed and go into production, and as more existing plants expand their production capacities, there may not be an adequate supply of feedstock to supply the demand of the biodiesel industry. Consequently, the cost of feedstock may rise to the point where it threatens the viability of our plant. This is because there is little or no correlation between the cost of feedstock and the market price of biodiesel and, therefore, we cannot pass along increased feedstock costs to our biodiesel customers. We cannot pass along increased feedstock costs to our biodiesel customers because in order to stay competitive in the diesel industry, biodiesel must be competitively priced with petroleum-based diesel. Therefore, biodiesel prices fluctuate more in relation to petroleum-based diesel market prices then with feedstock market prices. As a result, increased feedstock costs or decreased biodiesel prices may result in decreased revenues. If we experience a sustained period of high feedstock costs or reduced biodiesel prices, such pricing and costs may reduce our ability to generate revenues and our profit margins may significantly decrease or be eliminated. Sales

~~The~~Our ~~biodiesel~~cost ~~industry~~of issales ~~becoming~~was ~~increasingly~~significantly ~~competitive~~higher ~~and~~for weour ~~compete~~2011 ~~with~~fiscal ~~some~~year ~~larger, better~~compared ~~financed~~to ~~entities~~the ~~which~~same ~~could~~period ~~impact~~of ~~our~~2010 ~~ability~~due to ~~operate~~increased ~~profitably.~~raw Wematerial ~~face~~costs. These ~~a competitive~~higher ~~challenge~~raw ~~from~~material ~~larger~~costs ~~biodiesel~~were ~~plants~~due ~~and~~to ~~from biodiesel plants owned and operated by the companies that supply~~ our ~~inputs.~~increased ~~Cargill,~~production ~~Inc., a large supplier~~ of ~~soybean~~biodiesel ~~oil,~~along ~~owns~~with ahigher ~~37.5 million~~raw ~~gallon~~material ~~plant~~prices induring ~~Iowa~~the ~~Falls,~~2011 ~~Iowa~~period. For ~~Another~~our ~~large~~2012 ~~corporation~~fiscal ~~and~~year, ~~supplier~~we ofanticipate ~~soybean~~continued ~~oil, Archer~~volatility ~~Daniels~~in ~~Midland~~feedstock Cocosts. However, ~~has~~due ~~constructed~~to anour ~~85 million~~feedstock ~~gallon~~procurement ~~plant~~agreement inwith ~~Velva~~Gavilon, ~~North~~we ~~Dakota~~anticipate ~~to process~~that ~~canola~~we ~~oil~~will ~~into~~be ~~biodiesel.~~able ~~Additionally, Biodiesel of Las Vegas was expected~~ to ~~begin operations~~purchase ~~of a 100 million gallon per year multi-~~feedstock ~~plant~~at inprices ~~the~~that ~~fourth~~will ~~quarter~~allow ofus ~~2009, but~~to itprofitably isoperate ~~currently~~the ~~still~~biodiesel ~~listed as under construction~~plant. Further, ~~Imperium~~management ~~Renewables~~anticipates ~~operates~~that aour ~~100 million gallon~~cost ~~per~~of ~~year~~sales, ~~biodiesel~~other ~~plant~~than infeedstock ~~Grays Harbor~~costs, ~~Washington,~~will ~~and~~remain ~~RBF~~stable ~~Port~~in ~~Neches~~our ~~operates~~2012 afiscal ~~180 million gallon per~~ year ~~multi-feedstock~~which ~~plant~~based inon ~~Port~~current ~~Neches,~~management ~~Texas~~projections ~~making~~will ~~these~~allow ~~plants~~us ~~some~~to ofprofitably ~~the largest~~operate ~~biodiesel~~during ~~producers~~our in2012 ~~the~~fiscal ~~country~~year. However, ~~These~~if ~~plants~~we ~~will~~were beto ~~capable~~experience ~~of producing~~ significantly ~~greater~~ ~~quantities~~higher offeedstock ~~biodiesel~~costs, ~~than~~especially ~~the~~if ~~amount~~biodiesel weprices ~~expect~~do tonot ~~produce.~~increase ~~Moreover~~comparatively, ~~some~~we ~~of these plants~~ may not ~~face~~produce ~~the~~more ~~same~~biodiesel ~~competition~~than wethe dominimum ~~for~~requirements ~~inputs~~in as the ~~companies~~Gavilon ~~that~~agreement ~~own~~which ~~them~~could ~~are suppliers~~limit ofour ~~the inputs~~profitably. In ~~light~~addition, ofif ~~such~~Gavilon ~~competition~~fails, ~~lower~~we ~~prices~~may ~~for~~not ~~biodiesel~~be ~~may~~able ~~result~~to ~~which would~~profitably ~~adversely~~operate ~~affect~~the ~~our~~biodiesel ~~ability~~plant towithout ~~generate~~the ~~profits~~guaranteed ~~and~~minimums ~~adversely~~in ~~affect~~the ~~our~~Gavilon ~~financial obligations~~agreement.

~~Risks~~Operating ~~Related~~Expense ~~to Biodiesel Production~~

~~Declines~~Our inoperating ~~the~~expenses ~~demand~~were lower for ~~and~~our ~~prices~~2011 offiscal ~~biodiesel~~year ~~and~~compared ~~its~~to ~~primary~~the ~~co-product~~same ~~will~~period ~~have~~of ~~a significant~~2010 ~~negative~~due ~~impact~~to oncost ~~our~~cutting ~~financial~~measures ~~performance.~~we ~~Our~~implemented ~~revenues~~in ~~will~~order beto ~~greatly~~maintain ~~affected by the price at which we can sell~~ our ~~biodiesel and its primary co-product, glycerin~~liquidity. These ~~prices can~~operating beexpenses ~~volatile~~represented as a ~~result~~smaller ofpercentage ~~a number~~ of ~~factors~~our over which we have no control. These factors include the overall supply and demand, the price of diesel fuel, level of government support, and the availability and price of competing products, and domestic and global economic conditions. The total ~~production~~revenue ~~capacity~~during ofour ~~biodiesel~~2011 ~~continues~~fiscal toyear ~~expand~~compared ~~at this time. Demand may not rise~~ to ~~meet~~ the ~~increase~~same inperiod ~~supply, and increased production~~ of ~~biodiesel~~2010 ~~may~~due ~~lead~~ to ~~lower~~the ~~prices.~~fact ~~Any lowering~~that ofwe ~~biodiesel~~had ~~prices~~more ~~may~~revenue ~~negatively~~during ~~impact~~the ~~our~~2011 ~~ability~~fiscal ~~to generate profits~~year.

WeInterest ~~believe~~Expense that the recent U.S. recession and global financial market turmoil may also depress biodiesel demand and prices. Biodiesel prices have significantly declined over recent months. We expect that we will operate below our nameplate capacity throughout our fiscal year 2011. If we continue to operate at less than full capacity, this would have a negative impact on our revenues.

InInterest ~~addition,~~expense increased ~~biodiesel production has lead~~ to ~~increased~~$2,490,717 ~~supplies~~for ofthe ~~co-products~~fiscal ~~such as~~year ~~glycerin.~~ended ~~While~~ended ~~prices~~September 30, ~~have~~2011 ~~been~~compared ~~increasing~~to ~~after~~$1,109,649 aduring ~~dramatic~~the ~~drop~~same period in ~~2006,~~2010. ~~prices~~Our ~~are~~interest ~~still lower~~expense ~~than~~increased ~~ten~~due ~~year~~to ~~historical~~increased ~~prices.~~borrowing Ifon ~~the~~our ~~price~~revolving line of ~~glycerin~~credit ~~declines,~~and ~~our~~the ~~revenue~~higher ~~from glycerin~~interest ~~may~~rates ~~substantially~~we ~~decrease.~~are ~~Increased~~paying ~~expenses~~on ~~and~~our ~~decreased~~loans ~~sales~~as ~~prices~~a ~~for~~result of our ~~products~~ ~~will~~forbearance ~~result~~agreements inwith ~~decreased revenues~~MLIC.

~~Because~~Changes of volatile soybean oil prices, we have attempted to use alternative feedstocks, such as corn oil, to produce our biodiesel, which may have risks and disadvantages of which we are not yet fully aware. We have previously produced some of our biodiesel from corn oil that we obtain from ethanol plants or other sources. Corn oil, however, poses several unique challenges due to its moisture and solid content, as well as its elevated free-fatty-acid levels. Furthermore, unlike many other oil sources, corn oil from ethanol plants contains waxy compounds and sterols. This tends to cause a waxy substance to build-up in ~~the~~Financial ~~process~~Condition ~~equipment during the production process. Unless a process~~ for ~~removing this waxy substance is developed, we expect that we will not be able to produce any biodiesel blends containing greater than 5% corn oil. The technology utilized by~~ the ~~ethanol~~Fiscal ~~plant~~Years ~~which~~Ended extracts the corn oil may also cause the suitability of the corn oil for the biodiesel production process to vary. These characteristics of corn oil could cause corn oil-based biodiesel to be less desirable than other types of biodiesel. FurthermoreSeptember 30, ~~special~~ ~~technologies~~2011 ~~may~~and beSeptember ~~necessary to pretreat corn oil for utilization in the biodiesel production process. Accordingly~~30, our use of alternative feedstocks, such as corn oil, may require us to make modifications to our equipment, purchase new equipment or repair equipment that could unexpectedly be damaged by the use of different feedstocks. There may be disadvantages to the use of corn oil as a feedstock of which we are not yet aware. If as a result of the unique characteristics of corn oil, the demand for or price we are able to receive for biodiesel produced from corn oil is less than what we can receive for biodiesel produced from other types of feedstock, our revenues could be negatively affected. 2010

22 The following table highlights the changes in our financial condition for the fiscal years ended September 30, 2011 and 2010:



	September 30, 2011		September 30, 2010
Current Assets	$	11,151,527	$	1,233,887
Net Property and Equipment	30,763,055		33,376,312
Other Assets	816		1,068,462
Current Liabilities	14,296,932		27,769,336
Long-Term Liabilities	24,537,769		—
Members' Equity	3,080,697		7,909,325

The decreasing availability and volatile cost of feedstock may hinder our ability to profitably produce biodiesel and may result in plant shut downs and decreased revenues. On December 13, 2010, the USDA reported the November average cost of soybean oil was approximately 47.62 cents per pound, which is below the July 2008 peak prices but higher than a year ago. Although prices have sharply dropped from the record high prices experienced in the summer of 2008, the November average is still higher than historical averages. The ten-year average price for soybean oil is approximately 28 cents per pound. In the USDA December 13, 2010 Oil Crops Outlook Report, it was forecasted soybean oil prices will likely remain close to current prices during the 2010/2011 marketing season, with a predicted price range of 45.0-49.0 cents per pound. Soybean oil prices have been extremely volatile over the recent years. The declining global economic conditions brought on by the collapse of major U.S. financial institutions in the fall of 2008 and the disruption of the financial and credit markets likely contributed to the sharp drop in prices from the summer of 2008 through fall of 2008. However, demand, supply, acres planted, weather, soybean crush rates and many other factors can contribute to price volatility. Prices for animal fats have also been volatile in recent months, as they tend to correlate to the prices of soybean oil. In a December 2010 Oil Crops Outlook Report, the USDA provided that the average November 2010 prices for lard and edible tallow were 37.32 cents and 41.75 cents per pound, respectively, which are down from their peak prices in the summer of 2008. These average prices, however, still exceed their historical averages. We expect that this volatility in feedstock costs will continue through the 2011 fiscal year. In the event we cannot obtain adequate supplies of feedstock at affordable costs for sustained periods of time, then we may be forced to shut down the plant, either temporarily or permanently. Shut downs or the persistence of recent high feedstock costs, or any further increase of feedstock costs, may reduce our revenues from operations which could decrease or eliminate the value of our units. Assets

IfOur wecurrent ~~are~~assets ~~forced~~were tohigher ~~continue~~at toSeptember 30, ~~have~~2011 compared to ~~temporarily cease operating our biodiesel plant~~September 30, ~~we might~~2010 ~~not~~primarily berelated ~~able~~ to ~~meet~~ our ~~current liabilities and our losses may be~~ increased. Ifaccounts ~~we are forced to temporarily cease operations at our biodiesel plant~~receivable, ~~either~~inventory ~~due~~and toprepaid ~~our~~and ~~inability~~other toassets ~~sell~~as ~~the biodiesel~~of ~~we are producing~~September 30, ~~feedstock~~2011. This ~~costs,~~increase ~~defects~~ in our ~~equipment~~accounts atreceivable ~~the~~and ~~plant,~~inventory ~~violations~~was ~~of environmental~~due ~~law, or any other reason, our ability~~ to ~~produce~~the ~~revenue~~fact ~~would~~that bewe ~~adversely~~were ~~affected. We~~operating dothe ~~not have any source of revenues other than production of~~ biodiesel ~~and glycerin at our biodiesel~~ plant. Ifas ~~our plant were to cease production for any significant period~~ of ~~time~~September 30, we2011 ~~would not generate any revenue~~ and we ~~might~~were not beoperating ~~able to pay our debts~~ as ~~they~~of ~~become due~~September 30, ~~including payments~~2010. The ~~required~~increase ~~under~~in our ~~loan~~prepaid ~~agreements~~and ~~with~~other ~~our~~assets ~~lender.~~at IfSeptember 30, ~~the~~2011 ~~plant~~compared ~~ceases~~ to ~~operate for enough time~~September 30, we2010 ~~might not be able to re-start operations at the plant and our members could lose some or all of their investment.~~

We are at a disadvantage in marketing our glycerin because our plant will not produce pharmaceutical grade glycerin, thereby decreasing the market for the glycerin we produce. A major use of glycerin is in the production of drugs. The glycerin our plant produces, however, is not pharmaceutical grade glycerin. This limits our ability to market the glycerin produced by our biodiesel plant. The glycerin we produce has to be purified in order for it to be used in pharmaceutical applications. Since the market in which we can sell our glycerin is limited, we might not be able to sell all of the glycerin we produce or we may not be able to sell our glycerin at a favorable price. If we cannot sell all of the glycerin we produce or cannot sell it at a favorable price, our ability to operate our biodiesel plant profitably might be adversely affected which could decrease the value of our units. 16

~~Competition~~Table ~~from other sources~~ of fuel may decrease the demand for our biodiesel. Diesel fuel prices per gallon remain at levels below or equal to the price of biodiesel making it difficult for the biodiesel industry to compete with the diesel fuel industry without government support programs. In addition, other more cost-efficient domestic alternative fuels may be developed and displace biodiesel as an environmentally-friendly alternative. If diesel prices do not continue to increase or a new fuel is developed to compete with biodiesel, it may be difficult to market our biodiesel, which could result in increased losses for our company. Contents

~~Concerns~~was ~~about~~due ~~fuel~~to ~~quality~~payments ~~may~~we ~~impact~~made ~~our~~for ~~ability~~inventory, toincluding ~~successfully~~feedstock ~~market~~and chemicals. We had no amount due from our ~~biodiesel. Industry~~commodities ~~standards~~broker ~~impose~~as ~~quality~~of ~~specifications~~September 30, ~~for~~2011 ~~biodiesel~~because ~~fuel.~~we ~~Actual~~did ornot ~~perceived~~have ~~problems with~~any ~~quality~~derivative ~~control~~instrument inpositions ~~the~~as ~~industry~~of ~~may~~September 30, ~~lead~~2011. Our property and equipment was lower at September 30, 2011 compared to aSeptember 30, ~~lack~~2010 because of ~~consumer~~depreciation. The ~~confidence~~cash we had in ~~the~~our ~~product~~restricted ~~and hinder~~cash ~~our~~account ~~ability~~in other assets was lower at September 30, 2011 compared to ~~successfully~~September 30, ~~market~~2010 because our ~~biodiesel.~~lender Anhas ~~inability~~used that cash to ~~successfully~~make ~~market~~payments on our ~~biodiesel~~ ~~will~~credit ~~lead~~facilities. We continue to ~~decreased~~amortize ~~revenues~~the ~~and~~costs ~~may~~associated ~~adversely~~with ~~impact~~ our ~~ability~~credit tofacilities ~~operate~~which decreased the value of our other assets at ~~all~~September 30, 2011 compared to September 30, 2010.

23 Liabilities

~~Table~~Our current liabilities were lower at September 30, 2011 compared to September 30, 2010 because we reclassified our term loan as long-term debt at September 30, 2011 due to our recent extension agreement with MLIC which provided a maturity date of ~~Contents~~January 5, 2013 for our loans. Offsetting this decrease was increased borrowing on our line of credit due to raw material purchases we made in order to produce biodiesel and operate the plant. Our accounts payable was also higher at September 30, 2011 compared to September 30, 2010 because we were operating the biodiesel plant as of September 30, 2011 and we had no operations at September 30, 2010.

~~Cold~~Liquidity weather may cause biodiesel to gel, which could have an adverse impact on our ability to successfully market our biodiesel. The pour point for a fuel is the temperature at which the flow of the fuel stops. A lower pour point means the fuel is usable in colder weather. The pour point of 100% soy-based biodiesel is approximately 27ºF to 30ºF. The pour point for 100% tallow-based biodiesel is approximately 61ºF. The pour point for No. 2 petroleum diesel fuel, the non-biodiesel fuel currently used in machines, is approximately -30ºF. When diesel is mixed with soy-based biodiesel to make a 2% biodiesel blend, the pour point is -25ºF. Therefore, we believe we will need to blend soy-based biodiesel and ~~animal~~Capital fat-based biodiesel with petroleum diesel in order to provide a biodiesel product that will have an acceptable pour point in cold weather. Generally, biodiesel that is used in blends of 2% to 20% is expected to provide an acceptable pour point for colder markets comparable to the No. 2 petroleum diesel pour point. In colder temperatures, lower blends are recommended to avoid fuel system plugging. This may cause the demand for our biodiesel in northern markets to diminish during the colder months. Resources

~~The~~Liquidity ~~tendency~~and ofCapital biodiesel to gel in colder weather may also result in long-term storage problems. At low temperatures, fuel may need to be stored in a heated building or heated storage tanks. This may result in a decrease in demand for our product in colder climates due to increased storage costs. Resources

~~Automobile~~We ~~manufacturers~~have ~~and~~very ~~other~~limited ~~industry~~access ~~groups~~to ~~have~~liquid ~~expressed~~assets ~~reservations~~that ~~regarding~~we ~~the~~ can use ofto ~~biodiesel,~~purchase ~~which~~raw ~~could~~materials ~~negatively~~and ~~impact~~operate our ~~ability~~plant. Our toonly ~~market~~sources of liquidity are cash from our ~~biodiesel.~~operations, ~~Because~~including itpayments ~~is still~~we aexpect ~~relatively~~to ~~new~~receive ~~product,~~from ~~the~~Gavilon ~~research~~pursuant onto our biodiesel ~~use~~production inagreement ~~automobiles~~ and ~~its~~our ~~effect~~$1 onmillion ~~the environment~~line isof ~~ongoing.~~credit ~~Some~~with ~~industry~~Washington ~~groups,~~State ~~including~~Bank ~~the~~and ~~World~~Federation ~~Wide~~Bank. We ~~Fuel~~do ~~Charter,~~not have ~~recommended~~ ~~that~~sufficient ~~blends~~liquid ofassets noin ~~more~~order ~~than~~to 5%operate the biodiesel beplant ~~used~~at capacity for ~~automobile~~the ~~fuel~~next ~~due~~12 months. In order to ~~concerns about~~preserve ~~fuel~~our ~~quality~~liquidity, ~~engine~~we ~~performance~~may ~~problems~~be ~~and~~required ~~possible~~to ~~detrimental~~reduce ~~effects~~plant ofoperations ~~biodiesel~~or ~~on rubber~~cease ~~components~~operating ~~and~~altogether ~~other~~at ~~parts~~times ofwhen we do not have sufficient liquid assets to continue to operate the ~~engine~~biodiesel plant. Management ~~Although~~continues ~~some~~to ~~manufacturers~~work ~~have~~to ~~encouraged~~maximize ~~use~~ the value of our liquid assets so we can continue to operate the biodiesel ~~fuel~~plant. We indo ~~their~~not ~~vehicles,~~anticipate ~~cautionary~~making ~~pronouncements~~any bysignificant ~~others~~capital ~~may~~expenditures ~~impact~~in ~~our~~the ~~ability~~near term that are not necessary to ~~market~~ ~~our~~continue ~~product~~operating the biodiesel plant.

InCash ~~addition,~~Flow ~~studies~~from ~~have~~Operating shown that nitrogen oxide emissions increase by 10% when pure biodiesel is used. Nitrogen oxide is the chief contributor to ozone or smog. New engine technology is available and is being implemented to eliminate this problem. However, these emissions may decrease the appeal of our product to environmental groups and agencies who have been historic supporters of the biodiesel industry, which may result in our inability to market our biodiesel. Activities

~~Competition~~Our ~~from~~operating ~~other~~activities ~~diesel~~used ~~fuel~~approximately ~~lubricity additives for ultra low sulfur diesel may be a less expensive alternative to our biodiesel~~$6,920,000 ~~which~~in ~~would~~cash ~~cause~~for ~~us to lose market share and adversely affect~~ our ~~ability~~2011 tofiscal ~~generate revenues~~year. During ~~The Environmental Protection Agency (EPA) has issued regulations to reduce~~ the ~~amount~~comparable ofperiod ~~sulfur in diesel fuel in order to improve air quality. These regulations affect all diesel fuel available for retail sale since October 2006. The removal~~ of ~~sulfur~~2010, ~~from~~our ~~diesel~~operating ~~fuel~~activities ~~also~~provided ~~reduces~~us ~~its~~approximately ~~lubricity which must be corrected with fuel additives~~$2, ~~such~~044,000 asin ~~biodiesel which has inherent lubricating properties~~cash. The ~~Our~~primary ~~biodiesel~~difference ~~plant~~between isthe ~~expected~~two ~~to compete~~periods ~~with~~was ~~producers~~that ofwe ~~other~~had ~~diesel~~a ~~additives~~smaller ~~made~~net ~~from~~loss ~~other~~during ~~raw~~the ~~materials~~2010 ~~having~~period ~~similar lubricity~~and ~~values~~our asaccounts ~~biodiesel,~~receivable ~~such as petroleum-based lubricity additives. Many major oil companies produce these petroleum-based lubricity additives~~ and ~~strongly~~inventory ~~favor~~were ~~their~~decreasing ~~use~~during ~~because they may be used in lower concentrations than biodiesel. In addition, much of~~ the ~~infrastructure in~~2010 ~~place~~period iswhile ~~for petroleum-based additives. As a result, petroleum-based additives may be more cost-effective than biodiesel. Therefore, it may be difficult to market~~ our ~~biodiesel~~accounts asreceivable ~~a lubricity~~and ~~additive,~~inventory ~~which~~were ~~could~~increasing ~~adversely~~during ~~affect~~the ~~our~~2011 ~~ability to generate revenues~~period.

~~Risks~~Cash ~~Related~~Flow tofrom ~~Our~~Investing ~~Financing Plan~~ Activities

We ~~are experiencing liquidity issues which could require us to cease operations.~~ We ~~are experiencing~~used ~~liquidity~~cash ~~issues~~from ~~associated~~investing ~~with~~activities ~~the~~during ~~high cost of~~ our ~~raw~~2011 ~~materials,~~fiscal ~~decreased~~year ~~demand for~~due ~~biodiesel,~~to ~~and~~debt ~~the~~payments ~~delay~~made ~~between~~from ~~when~~our werestricted ~~purchase~~cash ~~those raw materials~~ and ~~when~~capital we ~~receive payments~~used for ~~sales~~general maintenance of ~~our~~the ~~finished~~biodiesel ~~products~~plant. During Wethe ~~received~~comparable aperiod ~~six million dollar line~~ of ~~credit from our lender~~2010, ~~received~~the ~~forbearance~~amount ~~from~~we ~~our~~were ~~lender~~required ~~for~~to ~~certain~~maintain ~~covenants contained~~ in our ~~loan agreement,~~restricted ~~received~~cash ~~forbearance~~account ~~from~~decreased ~~our~~and ~~lender~~we ~~from~~used ~~taking~~the ~~action~~cash ~~on existing~~in ~~events~~our ofoperations. We ~~default~~had ~~under~~a ~~the~~comparable ~~loan~~amount ~~agreement~~of ~~through~~capital ~~February 2011,~~investments ~~and refinanced our loan agreement~~ during our 2010 fiscal year, ~~however;~~compared ~~our financial position is still not certain. Should we not be able~~ to ~~secure the cash we require to operate the plant and pay~~ our ~~obligations~~2011 ~~as they~~fiscal ~~become due, we may have to cease operations, either on a permanent or temporary basis, which would decrease or eliminate the value of our units~~year.

24 Cash Flow from Financing Activities

~~Table~~Our financing activities provided us a significant amount of ~~Contents~~cash during our 2011 fiscal year due to funds we received from our revolving line of credit. Due to our forbearance agreements with MLIC, we did not make any significant payments on our long-term debt during our 2011 fiscal year. During our 2010 fiscal year, we used a significant amount of cash related to our financing activities due to payments we made on our long-term debt. We did not have a line of credit during our 2010 fiscal year.

~~The~~Short-Term loan agreement under which we obtained financing for the construction of our biodiesel plant contains restrictive covenants. We have undertaken significant borrowings to finance the construction of the biodiesel plant. Our loan agreements with our lender contain restrictive covenants which, among other things, require us to maintain minimum levels of working capital, as well as debt coverage and ~~fixed~~Long-Term ~~charge~~Debt coverage financial ratios. These covenants may restrict our ability to make distributions on the units without the prior consent of our lender. In addition, failure to comply with these covenants may constitute an event of default under our loan agreements. The loan agreement currently contains a covenant that requires a minimum ratio of current assets to current liabilities (working capital ratio), minimum debt coverage and fixed charge coverage ratios. We are not in compliance with these covenants at September 30, 2010 and it is projected that the we will fail to comply with one or more of the loan covenants throughout fiscal 2011. Failure to comply with these loan covenants constitutes an event of default under the Company’s loan agreements which, at the election of the lender, could result in the acceleration of the unpaid principal loan balance and accrued interest under the loan agreements or the loss of the assets securing the loan in the event the lender elected to foreclose its lien or security interest in such assets. In addition, the Company’s loan agreement allows the lender to consider the Company in default of the loan at any point for poor financial performance. While we have received forbearance from our lender for certain covenants contained in the loan agreement, unless our business improves substantially, we will still likely be in violation of these covenants after the forbearance has expired. Sources

WeDuring ~~may be unable to raise additional capital in the event~~ our ~~funds~~2011 ~~from~~fiscal ~~operations~~year, ~~and~~we ~~our credit~~had ~~facilities~~two ~~are~~loans ~~insufficient~~outstanding towith ~~fund~~ our ~~operations~~primary ~~for~~lender ~~the~~MLIC, ~~next~~a ~~twelve~~$6 ~~months.~~million ~~In the~~revolving ~~event~~line ~~that the board~~ of ~~directors~~credit ~~deems~~and ita ~~necessary~~term toloan ~~obtain~~which ~~additional~~was ~~capital~~used ~~in order~~ to ~~fund~~ ~~plant~~finance ~~operations or to otherwise comply with~~ the ~~covenants~~construction ~~contained~~and instart-up ~~our~~of ~~financing agreements with our lender during~~ the ~~next~~biodiesel ~~12 months, the board of directors may decide to attempt to issue additional membership units in our company through one or more private placements~~plant. On InJanuary ~~such event~~11, ~~however~~2012, ~~there~~we isentered nointo ~~guarantee~~a ~~that~~restructured ~~such~~credit anagreement ~~offering~~with ofMLIC ~~our~~which ~~membership~~provides ~~units~~for ~~would~~an ~~be successful~~extension inof ~~raising~~ the ~~desired~~maturity ~~capital.~~date ~~Due to current market conditions in the biodiesel industry, such as the increasing costs~~ of ~~soybean~~our ~~oil,~~term ~~animal~~loan ~~fats,~~until ~~and~~January ~~methanol~~5, ~~and~~2013. Our ~~lack~~restructured ~~of demand~~credit ~~for~~agreement ~~our biodiesel, we may not be able to attract sufficient numbers of investors to provide us~~ with ~~the~~MLIC ~~necessary~~provided ~~amount~~for ofnew ~~additional~~financial ~~capital.~~covenants ~~For~~which ~~the~~management ~~same~~believes ~~reasons,~~ we ~~may~~will besatisfy ~~unable to obtain additional debt financing~~ for ~~operations in~~ the ~~event~~rest weof ~~cannot~~our ~~raise~~2012 ~~sufficient~~fiscal ~~capital~~year. In ~~such~~addition ~~event, we may be forced~~ to ~~shut down~~ the ~~plant,~~MLIC ~~either temporarily or permanently~~loan, or we ~~may~~ ~~continue~~executed toa benew ~~unable~~$1 tomillion ~~comply~~line ~~with~~of ~~the~~credit ~~loan~~with Washington ~~covenants~~State ~~contained~~Bank inand ~~our~~Federation Loan Agreement, which entitles our lender to accelerate payments under our Loan Agreement or foreclose its lien or security interest in the assets securing the Loan Agreement after the forbearance period has expiredBank.

Our auditor has raised doubts about our ability to continue as a going concern and if we are unable to continue our business, our units may have little or no value. As discussed in the accompanying financial statements, we have generated accumulated losses of $15,256,097 since our inception, have experienced significant increases in our input costs and undertaken significant borrowings to finance the construction of our biodiesel plant. These liquidity issues raise doubts about our ability to continue as a going concern. See Note 6 to the financial statements. Moreover, our term loan is listed as a current liability, as it now has a maturity date of September 5, 2011. In the event our lender declared a default under the Loan Agreement and elected to accelerate our payments or take possession of our assets securing the loans, we may be forced to shut down the plant and our members could lose some or all of their investment. These factors have raised doubts as to our ability to continue as a going concern. 17

~~Risks~~Table ~~Related~~of ~~to Regulation and Governmental Action~~ Contents

~~Loss~~The ofterm orloan ~~ineligibility~~was ~~for~~used ~~favorable tax benefits for biodiesel production could further hinder our ability~~ to ~~operate~~finance atthe aconstruction ~~profit~~ and ~~reduce~~start-up ~~the~~operations ~~value~~ of our ~~units. The~~ biodiesel ~~industry~~ ~~and our business are assisted by various federal biodiesel incentives~~plant. Currently, ~~One such incentive is~~ the ~~biodiesel~~maturity ~~tax~~date ~~credit, which provides a tax credit~~ of ~~$1.00~~the ~~per~~term ~~gallon~~loan ofis ~~biodiesel.~~January ~~The blenders credit expired on December 31~~5, ~~2009~~2013. Interest ~~and~~accrues ~~only~~pursuant into ~~December 2010~~the ~~was~~term itloan ~~extended~~at ~~for~~a ~~2011~~variable ~~and made~~rate ~~retroactive~~of ~~for~~6% ~~2010.~~above ~~These tax incentives for~~ the ~~biodiesel~~one ~~industry~~month ~~may~~London ~~not~~Interbank ~~continue,~~Offered ~~or, if~~Rate ~~they~~(LIBOR). We ~~continue,~~are ~~the~~required ~~incentives~~to ~~may~~commence ~~not~~making bemonthly atprincipal ~~the~~and ~~same~~interest ~~level.~~payments ~~The elimination or reduction~~ of ~~tax incentives to the biodiesel industry~~$350,000 ~~including~~on the ~~biodiesel~~term ~~tax~~loan ~~credit,~~starting ~~could~~in ~~significantly reduce~~February ~~the~~2012 ~~market for biodiesel~~ and ~~could~~continuing ~~materially~~until ~~impair our ability to profitably produce and sell biodiesel~~maturity. The ~~loss~~term orloan ~~reduction~~will ofalso ~~the~~be ~~biodiesel~~subject ~~tax~~to ~~credit~~an ~~would~~additional ~~make~~principal itpayment ~~more~~based ~~costly~~on ~~or difficult~~our toearnings ~~produce~~before ~~and~~taxes, ~~sell~~depreciation ~~biodiesel~~ and weamortization ~~could~~in beexcess ~~forced~~of to$300,000 ~~take~~per ~~significant~~month. As ~~cost~~of ~~savings measures~~September 30, or2011, ~~temporarily~~the oroutstanding ~~permanently~~balance ~~cease~~of ~~production at our plant. If~~ the ~~federal~~term ~~tax incentives~~loan ~~are~~was ~~eliminated~~approximately ~~or sharply curtailed~~$27,421,000 weand ~~believe~~the ~~that~~term aloan ~~continued~~accrued ~~decreased~~interest ~~demand~~at ~~for biodiesel~~a ~~will~~rate ~~result,~~of ~~which~~6.22% ~~could~~per ~~further depress biodiesel markets and negatively impact our financial performance~~year.

25 In addition to the term loan, during our 2011 fiscal year we had a $6 million revolving line of credit loan. This revolving line of credit was used to finance raw material purchases. Interest accrued on the revolving line of credit at a variable rate of 12% above the one month LIBOR. As of September 30, 2011, the outstanding balance of the revolving line of credit was approximately $5,974,000 and we had approximately $26,000 available to be drawn. As of September 30, 2011, the revolving line of credit accrued interest at a rate of 12.22% per year. On January 11, 2012, we entered into a new $1 million revolving line of credit and the entire balance of our prior line of credit was repaid. The maturity date of the $1 million revolving line of credit is January 5, 2013. Interest accrues on the line of credit at a fixed rate of 6% per year.

~~Table of Contents~~Covenants

AOur ~~change~~loan inagreements ~~environmental~~with ~~regulations~~MLIC orcontain ~~violations~~various ~~thereof~~covenants ~~could~~and ~~result~~financial inratios. As ~~the~~of ~~devaluation~~September 30, 2011, we were out of compliance with each of our ~~units.~~material Wefinancial ~~are~~covenants ~~subject~~and ratios due to ~~extensive~~our ~~air,~~current ~~water~~financial condition and ~~other~~the ~~environmental~~fact ~~regulations.~~that Wewe have ~~obtained~~ ~~all~~not ofbeen operating the ~~permits~~biodiesel ~~required~~plant toat ~~construct~~full ~~the~~capacity. Pursuant ~~plant~~to ~~and~~various ~~have~~agreements ~~obtained~~we ~~all~~executed ~~the~~with ~~permits currently~~MLIC, ~~required~~it agreed to ~~operate~~forbear from exercising its remedies under the ~~plant.~~loan ~~Environmental~~agreements ~~laws~~until ~~and~~January ~~regulations~~2, ~~both~~2012. We atsubsequently ~~the~~agreed ~~federal and~~to ~~state~~restructure ~~level,~~our ~~are~~credit ~~subject~~agreements towith ~~change~~MLIC ~~and~~in ~~changes~~order ~~can~~to beaddress ~~made~~the ~~retroactively~~expiring forbearance. Our ~~Consequently,~~material ~~even~~financial ~~if we~~covenant ~~have~~in ~~the~~effect ~~proper~~during ~~permits~~our at2011 ~~the~~fiscal ~~proper~~year ~~time,~~was weour ~~may~~tangible benet ~~required~~worth tocovenant. As ~~spend~~of ~~considerable~~the ~~resources to~~end ~~comply~~of ~~with~~our ~~future~~2011 ~~environmental~~fiscal ~~regulations~~year, orwe ~~new~~were orrequired ~~modified~~to ~~interpretations~~maintain oftangible ~~those regulations,~~net ~~which~~worth ~~may~~of ~~increase~~$5 ~~our~~million. As ~~losses~~of ~~and~~September 30, ~~could~~2011, ~~reduce~~we orhad ~~eliminate~~tangible ~~the~~net ~~value~~worth of ~~our~~approximately ~~units~~$3. 1 million.

~~Risks~~Management ~~Related~~attributes our previous inability to ~~Conflicts~~satisfy our financial covenants and ratios with unfavorable operating conditions in the biodiesel industry. Due to our restructured credit agreements with MLIC, we have new financial ratios and covenants that we must satisfy. Starting on January 11, 2012, we are required to maintain tangible net worth of ~~Interest~~ at least $2 million through June 30, 2012 and at least $2.25 million from July 1, 2012 until the maturity date of the loans on January 5, 2013. We are also required to maintain a cash flow coverage ratio, as defined in our amended credit agreement, on a monthly basis of 1.00 to 1.00 starting in February 2012. Management anticipates that we will be in compliance with our material financial covenants for the rest of our 2012 fiscal year as a result of our restructured credit agreements.

~~Our~~Grants directors may have relationships with individuals, companies or organizations with which we do business which may result in conflicts of interest. There may be business relationships between our directors and ~~other~~Government individuals, companies or organizations with which we do business that may pose potential conflicts of interest with us. These relationships may result in conflicts of interest with respect to transactions between us and the other individuals, companies or organizations if our directors and officers put their interests in other companies or their own personal relationships ahead of what is best for our company. Programs

~~Risks~~In ~~Related~~2006, we entered into a loan with the Iowa Department of Economic Development for $400,000. This loan is part of the Iowa Department of Economic Development's Value Added Program. One hundred thousand dollars of the loan is forgivable (and has been forgiven) and the remaining $300,000 of principal amount does not bear interest. We recently requested and were granted a six-month waiver on payments pursuant to ~~Tax~~this ~~Issues~~loan. This waiver began in aJanuary ~~Limited~~2011. In ~~Liability~~order ~~Company~~ to receive this waiver, we agreed to pay interest at an annual rate of 6.0% on the outstanding balance of the loan. The balance at September 30, 2011 was $55,000.

WeOn ~~expect to be taxed as a partnership~~May 14, ~~however~~2007, if we ~~are~~entered ~~taxed~~into as a ~~corporation~~Railroad weRevolving ~~could~~Loan ~~be subject~~and toGrant ~~corporate~~Program ~~level~~Agreement ~~taxes~~with ~~which~~the ~~could~~Iowa ~~decrease~~Department ~~our~~of ~~net~~Transportation for ~~income,~~a ifgrant ~~any, and decrease the amount~~ of ~~cash~~up ~~available~~ to ~~distribute~~$168,000 to(or ~~our members~~13.3% Weof ~~expect~~the ~~that~~cost ~~our~~for ~~company~~the railroad ~~will~~project, ~~continue~~whichever ~~to be~~is ~~taxed~~less) and as a ~~partnership.~~loan ~~This~~amount ~~means~~of ~~that~~up ~~our~~to ~~company does not pay any company level taxes. Instead~~$132,000 ~~the members are allocated any income~~ (or ~~losses~~10.5% ~~generated~~of bythe ~~our~~cost ~~company~~for ~~based on~~ the ~~member’s~~ ~~ownership~~railroad ~~interest~~project, ~~and~~whichever ~~could~~is ~~pay~~less). Interest ~~taxes~~ on the ~~member’s~~loan ~~share~~amount ofaccrues ~~our~~at ~~income, if any. If we are not taxed as~~ a ~~partnership,~~rate ~~our~~of ~~company~~3.67% ~~could~~per beyear ~~liable~~ for ~~corporate~~five ~~level~~years. We ~~taxes~~made ~~which would decrease~~ our ~~net~~first ~~income,~~payment ifunder ~~any,~~this ~~which~~loan ~~may~~in ~~decrease~~December ~~the~~2008. The ~~cash~~balance weat ~~have~~September 30, to2011 ~~distribute~~was toapproximately ~~our members~~$224,000.

~~Members~~Distribution ~~may be allocated a share of our taxable income that exceeds any cash distributions received, therefore members may have~~ to ~~pay~~Unit this tax liability using their personal funds. We expect to continue to be taxed as a partnership. This means members are allocated a percentage of our taxable income or loss based on their ownership interest in our company. Members may have tax liability based on their allocation of this income, if any. We may make distributions that are less than the amount of tax members owe based on their allocated percentage of our taxable income, or we may not make any distributions. If this is the case, members would have to satisfy this tax liability using their personal funds. Holders

IfAs we are audited by the IRS resulting in adjustments to our tax returns, this could cause the IRS to audit members’ tax returns, which could lead to additional tax liability for our members. The IRS could audit our tax returns and could disagree with tax decisions we have made on our returns. This could lead to the IRS requiring us to reallocate items of ~~income~~ September 30, ~~gain~~2011, ~~losses, deductions, or credits that could change~~ the ~~amount~~board of ~~our~~directors ~~income or losses that were allocated to members. This could require adjustments to members’ tax returns and could lead to audits~~ of ~~members’~~ ~~tax returns by~~ the ~~IRS.~~Company Ifhad ~~adjustments~~not ~~are~~declared ~~required~~or topaid ~~members’~~any ~~tax returns, this could lead to additional tax liabilities for members as well as penalties and interest being charged to members~~distributions.

WeCritical doAccounting ~~not~~Estimates anticipate declaring distributions to members in the foreseeable future. We have incurred a net loss of $4,372,056 as of our fiscal year ended September 30, 2010. We do not anticipate that our board of directors will be declaring distributions to members in the foreseeable future. Accordingly, members will not likely receive distributions on their units and, in the event that members incur any tax liability as a result of their ownership of units in the company, members may be required to satisfy such liability with their personal funds.

26 Management uses estimates and assumptions in preparing our financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported revenues and expenses.

~~Table of Contents~~18

~~ITEM~~Table 2.of ~~PROPERTIES.~~Contents

~~Our~~Revenue property consists primarily of the plant and the real estate upon which the plant sits near Washington, Iowa. The plant can be fully operational. The plant is currently blown down and winterized. We anticipate it will take us two to three weeks to bring the plant back online in the event we again begin producing biodiesel. The plant is located on an approximately 28 acre site located near Washington, Iowa. The site is approximately thirty-five miles from Interstate 80 and thirty miles from the Mississippi River. We paid $420,000 for the site. The plant’s address is 1701 East 7th Street, Washington, Iowa. The site is adjacent to the main line of the Iowa Chicago & Eastern Railroad, which serves the plant. The plant consists of the following buildings: Recognition

•Revenue ~~Administrative~~from ~~building~~the production of biodiesel and glycerin is recorded when title transfers to customers. Biodiesel and glycerin are generally shipped FOB from the plant.

•Derivative ~~Processing~~Instruments ~~building~~and Hedging Activities

•Accounting ~~Pretreatment~~Standards ~~building~~Codification (ASC) Topic 815, Derivatives and Hedging Activities, or ASC 815, requires a company to evaluate its contracts to determine whether the contracts are derivatives. Certain derivative contracts may be exempt under ASC 815 as normal purchases or normal sales, which are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Our forward contracts related to the purchase of soy oil that we enter into from time to time are considered normal purchases and, therefore, are exempted from the accounting and reporting requirements of ASC 815.

•Impairment ~~Storage~~of ~~tank~~Long-Lived ~~farm~~Assets

~~The~~We ~~site~~review ~~also~~long-lived ~~contains~~assets, ~~improvements~~including ~~such~~property asand ~~rail~~equipment ~~tracks~~for ~~and~~impairment ain ~~rail~~accordance ~~spur~~with ASC Topic 360, ~~landscaping~~Property, ~~drainage systems~~Plant, and ~~paved~~Equipment. ~~access~~Long-lived ~~roads.~~assets ~~Construction~~are reviewed for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In accordance with our policy we have estimated that the ~~plant~~future ~~was~~undiscounted ~~substantially~~cash ~~complete~~flows infrom ~~June~~operations of this facility exceed its carrying value at September ~~2007~~30, 2011, therefore no impairment loss was recognized.

~~All~~The estimate of ~~our~~cash ~~tangible~~flows ~~and~~that ~~intangible~~are ~~property~~used in the impairment analysis requires judgment regarding what we would expect to recover from the future use of the asset. Changes in judgment that could significantly alter the calculation of the recoverable amount of the asset may result from, ~~real~~but are not limited to, profitability of, and ~~personal~~continuance of the Gavilon agreement, ~~serves~~significant aschanges in the ~~collateral~~regulatory ~~for~~ environment, the ~~debt~~business ~~financing~~climate, ~~with~~management's ~~MLIC~~plans, ~~Assets~~legal ~~Holdings~~factors, ~~LLC~~the ~~(MLIC).~~future ~~Money~~price ~~borrowed~~of ~~under~~feedstock inputs in relation to the ~~Iowa~~future ~~Department~~ price of ~~Economic~~biodiesel ~~Development~~and ~~loan~~the isoverall ~~also~~pricing ~~secured~~and bydemand ~~substantially~~for ~~all~~biodiesel. Changes in the assumptions used within the analysis can have a significant effect on the determination of impairment given the ~~company’s~~sensitivity ~~assets,~~of ~~but~~the ~~is subordinate~~analysis toand the ~~agreements~~projected ~~with~~long ~~MLIC~~life of the asset.

~~ITEM~~Recently, 3the biodiesel blenders' credit was allowed to expire and management does not anticipate that it will be renewed. However, ~~LEGAL~~due ~~PROCEEDINGS~~to certain biodiesel use requirements in RFS2 and state requirements, management anticipates continued demand for biodiesel. In 2012, RFS2 requires the use of 1 billion gallons of biomass-based diesel, which primarily will be satisfied using biodiesel. Further, for 2013 the biodiesel use requirement under RFS2 will increase to 1.28 billion gallons. Our projections are based upon the anticipated demand that will be created by RFS2 along with our agreement with Gavilon. RFS2 requires that the biomass-based diesel requirement of the RFS2 will not be less than 1.0 billion per year through 2022. After 2022, future rulemaking by the EPA will set the minimum levels of biodiesel. Further, biodiesel is an advanced biofuel by designation and the minimum requirement under RFS2 by 2022 of advanced biofuel is 21.0 billion gallons per year. Biodiesel can be used to meet that obligation. As a result of the plant being able to utilize multiple feedstock sources, we believe that we are positioned nicely on the supply curve and will be one of the earlier plants to meet capacity requirements when the market opens. If we fail to see these economic improvements and feedstock prices continue to display intense volatility that are not recoverable in the pricing structure, then there could be significant adjustments to our projections which could lead to a future impairment charge.

In February 2009, we gave notice to REG that it had breached the Management and Operational Services Agreement (MOSA) in a variety of manners and requested the annual review of the MOSA, as provided for in the MOSA. After not receiving requested information and being unable to resolve any disputes, in June 2009, we gave notice to REG that we intended to proceed with arbitration to resolve disputes arising under the MOSA. On or about October 30, 2009, we delivered our Statement of Claims to REG and the selected arbiter alleging the following: (1) breach of the MOSA for failure to utilize best efforts; (2) breach of the covenant of good faith and fair dealing; (3) breach of fiduciary duties; (4) fraudulent nonOff-~~disclosure;~~balance ~~and~~Sheet (5) negligent misrepresentation. On or about December 7, 2009, REG responded to these claims and also asserted counterclaims for breach of written contract, breach of the covenant of good faith and fair dealing, breach of oral contract and promissory estoppel, all of which arise out of one customer issue. On or about December 16, 2009, we responded to the counterclaims. The parties have selected Wayne Mark as the arbiter. The parties have exchanged and provided initial responses to written discovery. The parties have entered a scheduling order setting the date of arbitration for August 22, 2011 through September 2, 2011 in Des Moines, Iowa. Arrangements

OnWe ~~November 4,~~have ~~2009,~~no ~~three~~off-balance ofsheet ~~our former directors, Denny Mauser, William J~~arrangements. Horan and Warren L. Bush, who are also members of The Biodiesel Group, LLC, (the TBG Directors), filed suit in the Iowa District Court for Washington County against the remaining directors of our board of directors: Michael J. Bohannan, Mark A. Cobb, Richard Gallagher, John Heisdorffer, Edwin Hershberger and J. William Pim (Defendants). The TBG Directors requested temporary and permanent injunctions against the Defendants, in an effort to reverse certain actions taken by Defendants, acting as a majority of the board of directors. These actions include the adoption of an Executive Committee Charter, the appointment of Defendants to the Executive Committee, and adoption of a Resolution adopting the Amended and Restated Director and Officer Compensation Plan.

~~The~~IITEM ~~TBG Directors claim that Defendants exceeded their authority, acting as a majority of the board, in taking these actions~~7A. QUANTITATIVE ~~Defendants~~AND ~~claim~~QUALITATIVE ~~that~~DISCLOSURES ~~under~~ABOUT ~~our~~MARKET amended and restated operating agreement, Defendants were permitted and justified in taking such actions, due to recent revelations regarding certain payments made in 2007 to the TBG Directors by predecessors in interest to REG, which Defendants claim constitute a conflict of interest and breach of our amended and restated operating agreementRISK. Defendants filed a motion for summary judgment on November 16, 2009, on which arguments were heard on December 18, 2009, and on March 3, 2010 the court issued an order denying the motion for summary judgment, which means the court determined that facts are in dispute that require further proceedings before a final judgment can be entered in favor of either party. This case was set for trial in December 2010, however, prior to this time, on October 7, 2010, the suit was dismissed without prejudice by the TBG Directors.

27 The Company is not required to include this information due to its status as a smaller reporting company.

~~Table of Contents~~19

~~ITEM~~Table 4.of ~~REMOVED AND RESERVED~~Contents

~~PART~~ITEM II 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

~~ITEM~~Report 5.of ~~MARKET~~Independent ~~FOR~~Registered ~~REGISTRANT’S~~Public ~~COMMON~~Accounting ~~EQUITY, RELATED MEMBER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.~~Firm

~~Market~~To ~~Information~~ the Board of Directors and Members

There is no public trading market for our units. We have created a private qualified online matching service in order to facilitate trading of our units, however; as of the date of this report no trades have been completed on our private qualified online matching service. Our online matching service consists of an electronic bulletin board that provides information to prospective sellers and buyers of our units. We do not receive any compensation for creating or maintaining the matching service. We do not become involved in any purchase or sale negotiations arising from our qualified matching service. In advertising our qualified matching service, we do not characterize Iowa Renewable Energy ~~as being a broker or dealer in an exchange. We do not give advice regarding the merits or shortcomings of any particular transaction. We do not receive~~, ~~transfer~~ or hold funds or securities as an incident of operating the online matching service. We do not use the bulletin board to offer to buy or sell securities other than in compliance with the securities laws, including any applicable registration requirements. We have no role in effecting the transactions beyond approval, as required under our amended and restated operating agreement, and the issuance of new certificates. So long as we remain a public reporting company, information about the Company will be publicly available through the SEC’s filing system. However, if at any time we cease to be a public reporting company, we will continue to make information about the Company publicly available on our website. No sales of our units have been completed under our qualified online matching service. LLC

~~Unit~~We ~~Holders~~ have audited the accompanying balance sheets of Iowa Renewable Energy, LLC as of September 30, 2011 and 2010, and the related statements of operations, members' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

AsWe conducted our audits in accordance with the standards of ~~September 30,~~the ~~2010~~Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we ~~had~~engaged ~~approximately~~to ~~614~~perform ~~unit~~an ~~holders~~audit of ~~record~~its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

~~Distributions~~ In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Iowa Renewable Energy, LLC as of September 30, 2011 and 2010, and the results of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

WeThe accompanying financial statements have ~~not~~been ~~declared~~prepared orassuming ~~paid~~that ~~any~~the ~~distributions~~Company onwill ~~our~~continue ~~units.~~as ~~Our~~a ~~board~~going ofconcern. ~~directors~~As ~~has complete~~discussed ~~discretion~~in ~~over~~Note 7 to the ~~timing~~financial ~~and~~statements, ~~amount~~the ofCompany ~~distributions~~has tosuffered ~~our~~recurring ~~unit~~losses ~~holders.~~from ~~However~~operations, ~~our second~~has ~~amended~~incurred significant debt and ~~restated~~has ~~operating~~experienced ~~agreement~~significant ~~requires~~liquidity ~~the~~issues. ~~board~~This ofraises ~~directors~~substantial todoubt ~~endeavor~~about the Company's ability to ~~make cash~~continue ~~distributions~~as ata ~~such~~going ~~times~~concern. Management's ~~and~~plans in ~~such~~regard ~~amounts~~to asthese ~~will~~matters ~~permit~~are ~~our~~also ~~unit~~described ~~holders~~in toNote ~~satisfy their~~7. ~~income~~The ~~tax~~financial ~~liability~~statements indo anot ~~timely~~include ~~fashion~~any adjustments that might result from the outcome of this uncertainty.

~~Equity~~/s/ ~~Compensation~~McGladrey ~~Plans~~ & Pullen, LLP

WeDavenport, ~~do not have any equity compensation plans under which equity securities of~~ Iowa ~~Renewable Energy are authorized for issuance.~~

~~Sale~~January of19, ~~Unregistered Securities~~ 2012

~~We did not make any sales of equity securities that were unregistered during the fiscal year ended September 30, 2010.~~ 20

~~Repurchases~~Table of ~~Equity Securities~~ Contents

~~Neither~~IOWA ~~we,~~RENEWABLE ~~nor anyone acting on our behalf~~ENERGY, ~~has repurchased any of our outstanding units.~~ LLC

28 BALANCE SHEETS



ASSETS	September 30, 2011			September 30, 2010
Current Assets
Cash and cash equivalents	$	210,533		$	479,309
Cash, restricted by loan agreement	929,520			—
Due from broker	—			310,390
Accounts receivable	2,461,379			—
Inventory	7,081,589			372,547
Prepaid and other assets	468,506			71,641
	11,151,527			1,233,887
Property and Equipment
Land	420,000			420,000
Plant and processing equipment	40,719,594			40,742,442
Office building, furniture and fixtures	627,916			588,965
Equipment and vehicles	240,216			240,241
	42,007,726			41,991,648
Accumulated depreciation	(11,244,671		)	(8,615,336		)
	30,763,055			33,376,312

Other Assets
Cash, restricted by loan agreement	816			730,288
Financing costs, net	—			338,174
	816			1,068,462
Total Assets	$	41,915,398		$	35,678,661

LIABILITIES AND MEMBERS' EQUITY
Current Liabilities
Current maturities of long-term debt	$	2,883,595		$	27,457,729
Revolving line of credit	5,974,473			—
Accounts payable and accrued expenses	5,438,864			311,607
Total current liabilities	14,296,932			27,769,336

Long-Term Debt	24,537,769			—



Members' Equity
Members' contributions, net of issuance costs, units outstanding 2011 and 2010 26,331	23,165,422			23,165,422
Accumulated (deficit)	(20,084,725		)	(15,256,097		)
	3,080,697			7,909,325
Total Liabilities and Members' Equity	$	41,915,398		$	35,678,661

~~ITEM~~See 6.Notes ~~SELECTED~~to ~~FINANCIAL~~Financial ~~DATA.~~Statements

~~We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.~~ 21

~~ITEM~~Table 7.of ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.~~Contents

~~Cautionary~~IOWA ~~Statements~~RENEWABLE ~~Regarding~~ENERGY, ~~Forward Looking Statements~~ LLC

~~Throughout~~STATEMENTS ~~this~~OF report, we make “forward-looking statements” that involve future events, our future performance, and our future operations and actions. In some cases, you can identify forward-looking statements by the use of words such as “may,” “should,” “plan,” “future,” “intend,” “could,” “estimate,” “predict,” “hope,” “potential,” “continue,” “believe,” “expect” or “anticipate” or the negative of these terms or other similar expressions. These forward-looking statements are only our predictions and involve numerous assumptions, risks and uncertainties. Our actual results may differ from these forward-looking statements for many reasons, including the following factors: OPERATIONS

Continuing decrease in the demand for biodiesel;



	September 30, 2011			September 30, 2010

Revenues:
Sales of biodiesel and related products	$	29,114,259		$	9,047,234
RINs	2,305,973			—
Federal incentives	1,260,188			187,632
	32,680,420			9,234,866

Cost of Sales	34,554,491			12,070,190

Gross (Loss)	(1,874,071		)	(2,835,324		)

Operating Expenses
General and administrative	807,650			849,187
Depreciation	41,839			38,000
	849,489			887,187

(Loss) before other income (expense)	(2,723,560		)	(3,722,511		)

Other Income (Expense)
Interest and other income	385,649			460,104
Interest expense	(2,490,717		)	(1,109,649		)
	(2,105,068		)	(649,545		)

Net (Loss)	$	(4,828,628	)	$	(4,372,056	)

Weight Average Units Outstanding	26,331			26,331

Net (Loss) Per Unit - basic and diluted	$	(183.38	)	$	(166.04	)

~~Failure~~See Notes to ~~comply~~Financial ~~with loan covenants contained in our financing agreements;~~ Statements

~~Our ability to continue to export our biodiesel;~~ 22

~~The~~Table ~~continued imposition~~ of ~~tariffs or other duties on biodiesel imported into Europe;~~ Contents

~~Loss~~Iowa ofRenewable ~~the~~Energy, ~~blenders tax credit again in 2012;~~ LLC

~~WMG’s~~Statements ~~ability~~of toChanges ~~market~~in ~~our~~Members' ~~product~~Equity ~~and procure feedstock;~~ (Deficit)

~~Actual~~Years ~~biodiesel~~Ended ~~and~~September ~~glycerin~~30, ~~production~~2011 ~~varying~~and ~~from expectations;~~ 2010

Economic consequences of the domestic and global economic downturn and the on-going financial crisis;



	Member Units	Member Contributions		Accumulated Deficit			Total Members' Equity (Deficit)
Balance, September 30, 2009	26,331	$	23,165,422	$	(10,884,041	)	$	12,281,381
Net (loss)	—	—		(4,372,056		)	(4,372,056		)
Balance, September 30, 2010	26,331	23,165,422		(15,256,097		)	7,909,325
Net (loss)	—	—		(4,828,628		)	(4,828,628		)
Balance, September 30, 2011	26,331	$	23,165,422	$	(20,084,725	)	$	3,080,697

~~Availability~~See ~~and~~Notes ~~cost~~to ofFinancial ~~products and raw materials, particularly soybean oil, animal fats, natural gas and methanol;~~ Statements

~~Changes in the price and market for biodiesel and its co-products, such as glycerin;~~ 23

~~Our~~Table ~~ability~~of ~~to market and our reliance on third parties to market our products;~~ Contents

~~Changes~~IOWA inRENEWABLE orENERGY ~~elimination of governmental laws~~, ~~tariffs, trade or other controls or enforcement practices such as:~~ LLC

•STATEMENTS ~~national,~~OF ~~state~~CASH or local energy policy; • federal and state biodiesel tax incentives; • the RFS or other legislation mandating the use of biodiesel or other lubricity additives; or • environmental laws and regulations that apply to our plant operations and their enforcement;FLOWS

Total U.S. consumption of diesel fuel;



	September 30, 2011			September 30, 2010

Cash Flows from Operating Activities
Net (loss)	$	(4,828,628	)	$	(4,372,056	)
Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities:
Depreciation	2,629,335			2,651,358
Amortization	338,174			121,891
Unrealized (gain) loss on derivative financial instruments	—			(66,762		)
Change in working capital components:
(Increase) in restricted cash, current	(929,520		)	—
(Increase) decrease in due from broker	310,390			166,669
(Increase) decrease in accounts receivable	(2,461,379		)	1,236,935
(Increase) decrease in inventory	(6,709,042		)	2,893,106
(Increase) decrease in prepaids and other assets	(396,865		)	45,709
Increase (decrease) in accounts payable and accrued expenses	5,127,257			(632,625		)
Net cash provided by (used in) operating activities	(6,920,278		)	2,044,225

Cash Flows from Investing Activities
Purchase of property and equipment	(16,078		)	(16,196		)
Decrease in restricted cash, noncurrent	729,472			470,830
Net cash provided by investing activities	713,394			454,634

Cash Flows from Financing Activity
Debt issuance costs	—			(121,000		)
Net proceeds from revolving line of credit	5,974,473			—
Payment on long-term borrowings	(36,365		)	(2,547,847		)
Net cash provided by (used in) financing activities	5,938,108			(2,668,847		)

Net increase (decrease) in cash and cash equivalents	(268,776		)	(169,988		)

Cash and cash equivalents:
Beginning	479,309			649,297
Ending	$	210,533		$	479,309

Supplemental Disclosure of Cash Flow Information
Cash payments for interest	$	2,229,406		$	510,957

~~Fluctuations~~See inNotes ~~petroleum~~to ~~and~~Financial ~~diesel prices;~~ Statements.

~~Changes in plant production capacity or technical difficulties in operating the plant;~~ 24

~~Changes~~Table inof ~~our business strategy, capital improvements or development plans;~~ Contents

~~Results~~Iowa ofRenewable ~~our~~Energy, ~~hedging strategies;~~ LLC

~~Competition~~Notes ~~with~~to ~~other~~Audited ~~manufacturers~~Financial ~~in the biodiesel industry;~~ Statements

~~Our~~Note ~~ability~~1. Nature toof ~~generate~~Business ~~free cash flow to invest in our business~~ and ~~service~~Significant ~~our~~Accounting ~~debt (and the flexibility of our lender in regards to our debt);~~ Policies

29 Nature of business:

~~Table~~Iowa Renewable Energy, LLC (the Company), located in Washington, Iowa, was formed in April 2005 to pool investors to build a biodiesel manufacturing plant with an annual capacity of ~~Contents~~between 25 and 30 million gallons, depending on the feedstock used. The Company was in the development stage until July 2007, when it commenced operations. See Note 7 for discussion of management's plans for current operations.

~~Our~~Significant ~~liability~~accounting ~~resulting from litigation;~~ policies:

~~Our~~Use ~~ability~~of estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to ~~retain~~make ~~key~~estimates ~~employees~~and assumptions that affect the reported amounts of assets and ~~maintain~~liabilities ~~labor~~and ~~relations;~~ disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

~~Changes~~Concentrations ~~and~~of ~~advances~~credit risk: The Company's cash balances are maintained in ~~biodiesel~~bank ~~production~~deposit ~~technology;~~ accounts which at times may exceed federally insured limits. The Company has not experienced any losses in such accounts.

~~Competition~~Cash ~~from~~and ~~alternative~~cash ~~fuels~~equivalents: The ~~and~~Company ~~alternative~~considers ~~fuel~~all ~~additives;~~ highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.

~~Our~~Restricted ~~ability~~cash: Included in other assets are deposits to ~~generate~~custodial ~~profits;~~accounts held by our lender. Debt service reserve: Commencing one month following the conversion date, the Company shall make monthly deposits to a debt service reserve until such time as the balance equals $1,319,265. Monthly deposits shall consist of not less than one-third of all available monthly projected EBITDA. Capital improvements reserve: Commencing one month after the conversion date, the Company shall make deposits into an account held by the Lender. The fund will be used to fund capital improvements. During the term of the loan, the capital improvements reserve must be maintained at $125,000. As part of the line of credit agreement, discussed in Note 4 below, the lenders will defer principal payments and pull interest payments from the debt service reserve. The lenders began taking interest payments from the debt service reserve in June of 2010. The balance in the debt service reserve at September 30, 2011 is $ 391 while the Capital Improvements reserve stands at $425. As part of the forbearance agreement with our lending bank, the Company was allowed to make term interest payments from the debt service reserve and capital improvements. The final interest draw from the accounts occurred on March 1, 2011 leaving the account balances at their current levels.

~~Other~~Proceeds ~~factors~~from ~~described~~the ~~elsewhere~~new line of credit in September 2010 and collections on accounts receivable are required to be deposited into a cash collateral account which is included in current assets. The Company may periodically, but not more than once each week, request the bank to transfer funds from the cash collateral account to the general operating account. Since access to this ~~report~~cash collateral account is subject to lender approval, the balance of $929,520 is shown as restricted cash as of September 30, 2011.

WeAccounts receivable: Accounts receivable are ~~not~~presented ~~under~~at ~~any~~face ~~duty~~value, tonet ~~update~~of the ~~forward-looking~~allowance ~~statements~~for ~~contained~~doubtful ~~in this report~~accounts. We ~~cannot~~The ~~guarantee~~allowance ~~future~~for ~~results,~~doubtful ~~levels~~accounts ofis ~~activity,~~established ~~performance~~through orprovisions ~~achievements.~~charged Weagainst ~~caution you~~income ~~not~~and tois ~~put~~maintained ~~undue~~at ~~reliance~~a onlevel ~~any~~believed ~~forward-looking~~adequate ~~statements,~~by ~~which~~management ~~speak~~to ~~only~~absorb asestimated ofbad ~~the~~debts ~~date~~based ~~of this~~on ~~report.~~historical ~~You~~experience ~~should read this report~~ and ~~the~~current ~~documents~~economic ~~that~~conditions. weAll ~~reference~~outstanding inaccounts ~~this~~receivable ~~report~~are ~~and have~~believed ~~filed~~to asbe ~~exhibits~~collectible ~~completely~~ and ~~with~~therefore ~~the~~there ~~understanding~~was ~~that~~no ~~our~~allowance ~~actual~~for ~~future~~doubtful ~~results~~accounts ~~may~~as ~~be materially different from those we currently expect. We qualify all~~ of ~~our~~September ~~forward-looking statements~~30, ~~by these cautionary statements~~2011.

~~Overview~~ The Company's policy is to charge simple interest on accounts receivable past due balances; accrual of interest is discontinued when management believes collection is doubtful. Receivables are considered past due based upon payment terms set forth at the date of the related sale. The Company had no accounts receivable accruing interest at September 30, 2011 and 2010.

~~Our~~Inventory: Inventory ~~plant~~ is ~~currently~~valued ~~blown~~at ~~down~~the ~~and~~lower ~~winterized,~~of ~~which~~cost weor ~~decided~~market tousing ~~do in response to our plant shut-down. Our plant is not currently operational and we anticipate it will take us two to three weeks to bring~~ the ~~plant back online~~ first-in ~~the event we again start producing biodiesel. We began producing biodiesel on July 10~~, ~~2007.~~first ~~After~~out ~~obtaining independent testing of our biodiesel to certify that our biodiesel meets the American Society for Testing and Materials~~ (~~ASTM~~FIFO) ~~standards,~~ ~~we began shipping our first lot of 7,200 gallons of biodiesel on July 12, 2007~~method. ~~The plant~~Inventory ~~was~~consists ~~operating at full capacity until the end~~ of ~~September 2007, with only minor temporary shut downs for maintenance and a weather-related power outage. Since~~ the ~~beginning~~following ofas ~~October 2007, we have only been operating to produce biodiesel to satisfy existing contracts for the sale~~ of ~~our biodiesel~~September ~~and have not been producing biodiesel for speculation. This has allowed us to avoid excess inventory~~30, ~~but~~2011 ~~also, resulted in several plant shutdowns. During the fourth quarter of fiscal year 2010~~ and ~~the first quarter 2011, we did not operate our plant.~~ 2010:

From October 1, 2009 through September 30, 2010 we produced approximately 2,300,000 gallons of biodiesel, which is only approximately 7.7% of our plant’s capacity. We anticipate operating the plant at increased levels during our fiscal year 2011, given the RFS2 800 million gallon requirement for 2011; however, our ability to operate depends upon many factors outside of our control, such as the demand for biodiesel, price for biodiesel, cost of feedstock, and timing for obligated parties to begin purchasing biodiesel under the RFS2. We do not however, anticipate speculatively producing biodiesel in the next 12 months. Therefore, if demand does not increase such that we can obtain contracts for the same amount of biodiesel that we produced during our fiscal year 2010, then we may operate at a lower production rate than during our fiscal year 2010. In addition, we have been experiencing liquidity difficulties since beginning our operations and if these conditions do not improve, or get worse, during our fiscal year 2011 then we will likely operate our plant at lower levels than we did during our fiscal year 2010. 25

~~Plan~~Table of ~~Operations for the Next 12 Months~~ Contents

~~Plant~~Iowa ~~Operations~~ Renewable Energy, LLC

WeNotes ~~expect~~ to ~~spend~~Audited ~~the~~Financial next 12 months engaging in the production of biodiesel and glycerin at our plant, if the reinstatement of the biodiesel tax credit is sufficient to stimulate demand for biodiesel and our marketer is able to obtain contracts for our biodiesel. Our plant is fully operational and we were previously actively producing biodiesel at our plant, although we have not operated during our last quarter of fiscal year 2010. Statements



	September 30, 2011		September 30, 2010
Raw material	$	1,585,750	$	111,951
Finished goods	5,495,839		260,596
	$	7,081,589	$	372,547

~~Table~~Property and equipment: Property and equipment is stated at cost. Depreciation of ~~Contents~~such amounts commenced when the plant began operations. Depreciation is computed using the straight-line method over the following estimated useful lives:

Results of Operations



	Years

Plant and processing equipment	10 - 20
Office building	10 - 20
Office equipment, furniture and fixtures	3 - 7
Other equipment and vehicles	3- 7

~~Comparison~~Maintenance ofand ~~Fiscal~~repairs ~~Years~~are ~~Ended~~expensed ~~September 30,~~as ~~2010~~incurred; major improvements and ~~September 30,~~betterments ~~2009~~ are capitalized.

The ~~following~~Company ~~table~~reviews ~~shows~~its property and equipment annually for impairment or whenever events indicate that the ~~results~~carrying amount of ~~our~~the ~~operations~~asset ~~and~~may not be recoverable. An impairment loss would be recorded if the ~~percentage~~sum of ~~revenues,~~the ~~costs~~ future undiscounted cash flows is less than the carrying amount of ~~goods~~the ~~sold,~~asset. ~~operating~~The ~~expenses~~amount ~~and~~of ~~other~~the ~~items~~loss towould ~~total~~be ~~revenues~~determined inby ~~our~~comparing ~~statements~~the fair market values of ~~operations for~~the asset to the ~~fiscal~~carrying amount of the asset. No loss has been recorded during the years ended September 30, ~~2010~~2011 ~~and~~or ~~September 30, 2009~~2010.

	Fiscal Year Ended					Fiscal Year Ended
Income Statement Data	September 30, 2010					September 30, 2009
Revenues	$	9,234,866		100.00	%	$	29,132,604		100.00	%
Cost of Goods Sold	$	12,070,190		130.70	%	$	29,795,410		102.28	%
Gross (Loss)	$	(2,835,324	)	(30.70	)%	$	(662,806	)	(2.28	)%
Operating Expenses	$	887,187		9.60	%	$	1,421,907		4.88	%
Interest and Other Income	$	460,104		4.98	%	$	36,579		0.13	%
Interest Expense	$	1,109,649		12.02	%	$	1,272,475		4.37	%
Net (Loss)	$	(4,372,056	)	(47.34	)%	$	(3,320,609	)	(11.40	)%

Financing costs: Deferred financing costs associated with the construction and revolving loans and the $34,715,000 construction loan (Note 4) include expenditures directly related to securing debt financing. These costs are being amortized using the effective interest method over the 6-year term of the related debt agreement. Deferred financings costs associated with the Company's line of credit are being amortized using the effective interest method over the 6 month term of the related agreement. Accumulated amortization as of September 30, 2011 and 2010 was $756,760 and $418,586, respectively.

~~Our~~Derivative ~~operating~~instruments: The ~~results~~Company ~~generally~~has ~~reflect~~at ~~the~~times ~~relationship~~entered ~~between~~into ~~the~~derivative ~~price~~contracts ~~of biodiesel and the costs of feedstocks used~~ to ~~produce~~hedge ~~our~~its ~~biodiesel.~~exposure ~~Because biodiesel is used as an additive or alternative~~ to ~~diesel~~price ~~fuel,~~risk ~~biodiesel~~related ~~prices are strongly correlated~~ to ~~petroleum-based~~forecasted ~~diesel~~soybean ~~fuel prices.~~oil ~~Historically,~~purchases ~~the~~and ~~price~~forecasted of biodiesel ~~has fluctuated with the price of diesel fuel~~sales. ~~In addition,~~These ~~the~~derivative ~~price~~contracts ofare ~~biodiesel~~to isbe ~~generally~~accounted ~~influenced~~for byunder ~~factors~~Accounting ~~such~~Standards asCodification Topic (ASC ~~general economic conditions~~815), ~~the~~Derivatives ~~weather,~~ and ~~government policies and programs~~Hedging. ~~Surplus~~ASC ~~biodiesel~~815 ~~supplies~~establishes ~~also tend~~accounting toand ~~put~~reporting ~~downward~~standards ~~price pressure on biodiesel. Additionally, prices~~ for ~~diesel~~derivative ~~and the costs of feedstock~~instruments, including ~~soybean~~certain ~~oil~~derivative orinstruments ~~animal~~embedded ~~fats,~~in ~~have~~other ~~been~~contracts, ~~volatile~~ and ~~such~~for ~~fluctuations~~hedging inactivities. ~~the cost~~It ofrequires ~~feedstock~~that ~~may~~an ~~significantly~~entity ~~affect~~recognize ~~our~~all ~~financial~~derivatives ~~performance.~~as ~~Our~~either ~~results~~assets ofor ~~operations will~~liabilities ~~benefit~~in ~~when~~ the ~~margin~~statement ~~between~~of ~~biodiesel~~financial ~~prices~~position and ~~feedstock~~measure ~~costs~~those ~~widens~~instruments ~~and~~at ~~will~~fair ~~be harmed when this margin narrows~~value. ~~The~~If ~~biodiesel~~certain ~~industry~~conditions ~~experienced~~are ~~very high feedstock costs during the summer of 2008~~met, ~~without~~a ~~corresponding~~derivative ~~increases~~may ~~in biodiesel prices, thereby causing profit margins to~~ be ~~small~~specifically ordesignated ~~nonexistent.~~as In(a) a ~~2010,~~hedge of the ~~biodiesel~~exposure ~~industry~~to ~~has~~changes ~~seen significant volatility~~ in ~~feedstock~~ ~~costs with prices for biodiesel dropping as well, given~~ the ~~excess~~fair ~~capacity~~value ~~and~~of ~~low demand.~~a Werecognized ~~expect~~asset ~~that~~or ~~feedstock~~liability ~~prices~~or ~~will~~an ~~rise~~unrecognized asfirm ~~more~~commitment, ~~certainty~~(b) a ~~enters~~hedge ~~the biodiesel industry with the extension~~ of the ~~biodiesel~~exposure ~~tax~~to ~~credit~~variable ~~through~~cash ~~December 31,~~flows ~~2011,~~of ana ~~additional~~forecasted ~~year under the RFS2~~transaction, ~~and~~or ~~clearer~~(c) a ~~expectations~~hedge of the ~~mandates.~~foreign Incurrency ~~addition,~~exposure ~~our revenues are also impacted by the intensely competitive nature~~ of ~~our~~a ~~industry;~~net ~~the~~investment ~~extensive~~in ~~environmental~~a ~~laws~~foreign ~~that~~operation, ~~regulate our~~an ~~industry;~~unrecognized ~~possible~~firm ~~legislation~~commitment, atan ~~the~~available-for-sale ~~federal~~security, ~~state and/~~or ~~local~~a ~~level;~~foreign-currency-denominated ~~and~~forecasted ~~changes in federal biodiesel tax incentives~~transaction.

~~Revenues~~ Although the Company believes its derivative positions are economic hedges, none have been designated as a hedge for accounting purposes and derivative positions are recorded on the balance sheet at their fair market value, with changes in fair value recognized in current period earnings. There are no open derivative contracts at September 30, 2011 or 2010. The following amounts have been included in cost of goods sold for the years ended September 30, 2011 and 2010:

		Fiscal Year Ended						Fiscal Year Ended
	September 30, 2011			September 30, 2010
		September 30, 2010						September 30, 2009
Realized (gain) loss	$	—		$	96,377
Revenue Source		Amount			% of Revenues			Amount		% of Revenues
Change in unrealized (gain) loss	—			(66,762		)
Biodiesel Sales		$	8,820,946			96.52	%	$	24,995,232		85.80	%
Net (gain) loss	$	—		$	29,615
Glycerin Sales			169,511			1.84	%		486,327		1.67	%
Fatty Acids and Soapstock Sales			56,777			0.61	%		424,978		1.46	%
Federal Incentives			187,632			2.03	%		3,226,067		11.07	%
Total Revenues from Sales		$	9,234,866			100.00	%	$	29,132,604		100.00	%

31 26

Table of Contents

~~Revenues~~Iowa ~~from~~Renewable ~~operations for the fiscal year ended September 30~~Energy, 2010 totaled $9,234,866 compared with $29,132,604 for the fiscal year ended September 30, 2009. Included within our total revenues for the fiscal year ended September 30, 2010 and 2009 are approximately $187,632 and $3,226,067 respectively, in incentives we received or which were receivable from certain federal government programs for the sale of our biodiesel. Revenues in fiscal year 2010 were approximately a third of the revenues in fiscal year 2009. The decrease in revenues was due primarily to decreased production and sales volume of biodiesel, glycerin, fatty acids and soapstock. The decrease in production volume was due to lack of demand and contracts for our biodiesel due in large part to the uncertainty surrounding the federal tax credit and slow implementation of RFS2. LLC

~~Lower~~Notes ~~biodiesel prices in fiscal 2010 compared~~ to ~~fiscal~~Audited ~~2009,~~Financial combined with a decrease in biodiesel sales volume, contributed to the lower total revenues in fiscal year 2010 as compared with fiscal year 2009. Average biodiesel sale prices during most of the year ended September 30, 2010 trended downward from the average biodiesel sale prices we experienced in the same period in 2009. The average biodiesel sale price we received for the year ended September 30, 2010 was approximately 2.0% lower than our average biodiesel sale price for the comparable period in 2009. Statements

~~Because~~Revenue ~~biodiesel~~recognition isand ~~primarily~~deferred ~~used~~revenue: Revenue asfrom ~~an additive to petroleum-based diesel, biodiesel prices have generally correlated to diesel fuel prices. Diesel prices have climbed over~~ the ~~past~~production ~~several years reaching record highs~~ of ~~over~~biodiesel ~~$4.70 per gallon in July 2008, but have since trended downward, as oil prices have plummeted~~ and ~~the~~related ~~U.S.~~products ~~economic~~is ~~downturn~~recorded ~~and~~upon ~~credit~~transfer crisis have contributed to a decrease in demand for fuel in general. According to the Energy Information Administration, average retail prices for No. 2 Ultra Low Sulfur Diesel peaked at over $4.70 per gallon in July 2008, but have since dropped to approximately $3.23 per gallon as of ~~early December 13, 2010. Biodiesel prices have followed a similar trend, peaking in~~ the ~~summer~~risks ~~of 2008~~ and ~~declining~~rewards ~~thereafter. Nonetheless, diesel fuel prices per gallon remain at levels below or equal to the price~~ of ~~biodiesel.~~ ~~For~~ownership ~~example,~~and ~~the~~delivery ~~price for soy B100 biodiesel in Iowa averaged approximately $4.52 per gallon for December 21, 2010, according~~ to ~~the Iowa Department of Transportation’s report~~customers. ~~However,~~ ~~according~~Interest toincome ~~the same report, No. 2 diesel fuel prices as of December 21, 2010 averaged approximately $2.56 per gallon, which~~ is ~~lower~~recognized than the price per gallon for B100 biodiesel. The premium of biodiesel prices over diesel prices could cause a reduction in the demand for biodiesel. Through most of fiscal year 2008, biodiesel prices steadily increased and were well above historical highs and, therefore helped, to a certain extent, to offset high input costs, such as ~~soybean~~ ~~oil~~earned. ~~However,~~Cash wereceived ~~expect that a continued drop~~ in ~~biodiesel~~advance ~~prices without a corresponding decrease in the cost~~ of ~~feedstock~~providing ~~and~~product other inputs will cause the profit margin on each gallon of biodiesel produced to continue to be small to nonexistent, which could result in significant losses. Due to the volatility of the global economic conditions and commodities markets, it is ~~uncertain~~ ~~whether~~recorded ~~biodiesel~~as ~~prices~~deferred ~~and input costs will continue to decrease or whether they will rebound to the higher prices experienced in the summer of 2008~~revenue.

~~Based~~RINs: Renewable onIdentification ~~historical~~Numbers ~~trends,~~(RINs) weare ~~anticipate~~identification numbers that ~~seasonal~~are ~~demand~~used ~~for~~to ~~biodiesel~~track ~~will~~production ~~decrease~~of ~~in the~~renewable ~~fall~~fuels ~~and~~under ~~winter~~the ~~months~~Federal ~~when~~Renewable ~~blenders~~Fuels ~~have~~Standard ~~typically~~(RFS). The ~~decreased~~RFS ~~their~~regulations ~~biodiesel~~provide ~~blend~~that ~~percentages due~~a toRIN ~~cold~~can ~~flow~~be ~~concerns.~~separated ~~Such~~from ~~decrease~~a ingallon ~~demand~~of ~~could~~biomass-based ~~cause~~diesel ~~downward~~and ~~pressure~~sold onas ~~biodiesel~~a ~~sale prices.~~separate Wecommodity ~~anticipate~~once the ~~RFS2~~biomass-based ~~will~~diesel ~~increase~~has ~~demand~~been ~~for~~blended ~~biodiesel;~~with ~~however,~~petroleum-based ~~while~~diesel ~~the~~and ~~2011 obligated~~certain ~~party~~other ~~requirement~~requirements ishave ~~800 million~~been ~~gallons~~met. Certain ~~under~~obligated ~~RFS2,~~parties wepurchase ~~are~~RINs ~~still~~in ~~several~~order ~~months~~to ~~away from~~satisfy ~~realization~~their ofrenewable ~~that~~fuels ~~requirement.~~obligations ~~Our~~under ~~financial~~RFS. The ~~condition~~Company ~~may~~sold beRINs ~~negatively~~from ~~affected~~purchased ~~by decreases~~biodiesel induring the ~~sales~~year ~~price~~ended ofSeptember ~~biodiesel~~30, 2011. Revenue ~~This~~from isthe ~~especially~~sale ~~true~~of ~~during~~RINs ~~periods~~is recognized when ~~feedstock costs~~ownership ~~for~~of ~~soybean~~the ~~oil~~RINs ~~and animal fats~~ are ~~relatively high, causing our profit margins to decrease even further~~transferred.

WeFederal ~~also~~incentive ~~believe~~payments: Revenue ~~that~~from federal incentive programs is recorded when the ~~U.S.~~Company ~~and~~has ~~global~~sold ~~economic~~blended ~~downturn~~biodiesel and satisfied the ~~financial~~reporting ~~crisis~~requirements ~~that~~under ~~led to~~the aapplicable ~~collapse~~program. ofWhen ait ~~variety~~is ofuncertain ~~major~~that ~~U.S.~~the ~~financial~~Company ~~institutions~~will receive full allocation and payment due under the federal ~~government’s passage~~incentive ofprogram, ait ~~bailout~~derives ~~plan~~an ~~may~~estimate ~~also~~of ~~place~~the ~~downward~~incentive ~~pressure~~revenue onfor the ~~demand~~relevant ~~for~~period ~~fuel,~~based ~~including biodiesel.~~on ~~These~~various factors ~~have~~including ~~caused~~the ~~significant~~most ~~upheaval~~recently inused ~~the~~payment ~~financial~~factor ~~markets~~applied ~~and~~to ~~economy of~~ the Uprogram.~~S.,~~ asThe ~~well~~estimate asis ~~abroad.~~subject ~~Credit~~to ~~markets~~change ~~have~~as ~~tightened~~management ~~and~~becomes ~~lending~~aware ~~requirements~~of ~~have~~increases ~~become more~~or ~~stringent.~~decreases ~~Commodity~~in ~~markets~~the ~~have~~amount ~~tumbled~~of asfunding aavailable ~~result~~under of the ~~recent~~incentive ~~economic~~programs ~~turmoil,~~or ~~causing oil~~other ~~and~~factors ~~other~~that ~~commodity~~affect ~~prices~~funding toor ~~drop~~allocation ~~significantly.~~of Wefunds ~~expect~~under ~~that~~such ~~these~~programs. ~~conditions~~The ~~may~~Federal ~~lead~~Blenders ~~to a~~credit ~~decline~~expired inon ~~biodiesel~~December ~~demand~~31, 2009 and itonly isin ~~uncertain~~December 2010 ~~for~~was ~~how~~it ~~long~~extended for 2011 and tomade ~~what~~retroactive ~~extent~~for ~~these~~2010. ~~financial troubles~~No ~~may~~2010 ~~negatively~~sales ~~affect~~after ~~biodiesel~~the ~~demand~~first inquarter ~~the~~included ~~future~~Federal Blenders Credit.

~~Excess~~Cost ~~production~~of ~~capacity in the biodiesel industry could make it difficult for us to market our products at profitable prices.~~ sales: The ~~Biodiesel~~primary ~~Magazine~~components ~~website estimates that current total biodiesel production capacity~~ of ~~existing~~cost ~~plants as~~ of ~~December 12,~~sales ~~2010 was about 2.83 billion gallons per year, which is up~~ from ~~approximately~~the ~~1.92 billion~~production ~~gallons~~of ~~per~~biodiesel ~~year~~products asare ofraw ~~September 2007.~~materials ~~The~~(soybean ~~Biodiesel~~oil, ~~Magazine~~animal ~~website~~fats, ~~also~~hydrochloric ~~estimates~~acid, ~~that~~methanol, ~~plants~~sodium ~~under~~methylate, ~~construction~~ and ~~expansion as of December 12~~chemicals), ~~2010~~energy ~~could~~(natural ~~add~~gas ~~another~~and ~~386 million gallons to U.S. biodiesel production capacity~~electricity), ~~for~~ aand ~~total annual production capacity of 3~~labor.~~22 billion~~ ~~gallons.~~Cost ~~Despite these significant increases in production capacity, the National Biodiesel Board estimates that only 545 million gallons~~ of ~~biodiesel~~sales ~~were~~detail ~~produced in 2009. Many biodiesel plants do not operate at full capacity due in part to the fact that total production capacity significantly exceeds demand. If the demand~~ for ~~biodiesel does not grow at~~ the ~~same~~years ~~pace~~ended asSeptember ~~increases in supply~~30, we2011 ~~expect~~and ~~the~~2010 ~~price~~is ~~for biodiesel~~as ~~to decline in the long-term.~~ follows:



	2011				2010
Cost of Sales	Dollars		Percentage		Dollars		Percentage

Input costs (soybean oil, chemicals, etc.)	$	29,611,166	85.69	%	$	7,961,421	65.96	%
Plant wages and salaries	629,487		1.82		448,908		3.72
Utilities and waste disposal	617,244		1.79		446,595		3.70
Fees-procurement	426,888		1.24		34,250		0.28
Gain (loss) on derivative financial instruments	—		—		29,615		0.25
Depreciation	2,587,496		7.49		2,613,358		21.65
Maintenance, supplies and other expenses	682,210		1.97		536,043		4.44
Total cost of sales	$	34,554,491	100.00	%	$	12,070,190	100.00	%

~~Table~~Shipping and handling costs: Shipping and handling costs are expensed as incurred and are included in the cost of ~~Contents~~sales.

~~Our~~Income ~~average~~taxes: The ~~sales~~Company ~~price~~is ~~for~~organized ~~glycerin~~as ina ~~our~~limited ~~fiscal~~liability ~~year~~company ~~2010~~which ~~was~~is ~~less~~accounted ~~than~~for inlike ~~our~~a ~~fiscal~~partnership ~~year 2009.~~for ~~These~~federal ~~lower~~and ~~sales~~state ~~prices~~income ~~were~~tax inpurposes ~~conjunction~~and ~~with~~generally usdoes ~~selling~~not ~~significantly~~incur ~~less~~income ~~glycerin~~taxes. ~~in our~~Instead, ~~fiscal~~the ~~year~~Company's ~~2010,~~earnings ~~because~~and welosses ~~produced~~are ~~less~~included ~~biodiesel~~ in ~~our~~the ~~fiscal~~income ~~year~~tax ~~2010~~returns ~~due~~of toits ~~decreased demand~~members. ~~for biodiesel~~Therefore, ~~which~~no ~~meant~~provision weor ~~had~~liability ~~less~~for offederal ~~our~~or ~~primary~~state ~~co-product,~~income ~~glycerin,~~taxes tohas ~~sell~~been included in these financial statements.

We(Loss) ~~expect~~per ~~our~~unit: (Loss) ~~results~~per ofunit ~~operations to benefit from federal and state biodiesel supports and tax incentives. Biodiesel~~ has ~~generally~~ been ~~more~~computed ~~expensive to produce than petroleum-based diesel and, as a result, the biodiesel industry depends~~ on ~~such incentives to be competitive. Changes to these supports or incentives, or continued instability with~~ the ~~same,~~basis ~~could significantly impact demand for biodiesel. The most significant~~ of ~~these are~~ the ~~biodiesel~~weighted ~~blender’s~~average ~~credit~~number ~~and~~of ~~the RFS2.~~units ~~See~~outstanding ~~“BUSINESS~~during —each ~~Government~~period ~~Regulation and Federal Biodiesel Supports~~presented.”

WeNote ~~are highly dependent upon WMG for the successful marketing of our products~~2. Major WeCustomer ~~do not have our own sales force~~ and weRelated do not have any other agreements or relationships with feedstock suppliers. If WMG breaches the agreement or does not have the ability, for financial or other reasons, to market all of the biodiesel and glycerin we produce, we will not have any readily available means to sell our biodiesel. Any loss of our relationship with WMG could have a significant adverse impact on our revenues. Party

~~Cost~~On ofJanuary 29, ~~Goods~~2010, ~~Sold~~ the Company and WMG Services LLC (WMG) entered into a Management Services Agreement (Agreement). The Agreement provides that WMG will provide certain facility administration services; accounting services; and marketing, sales,

The primary components of cost of goods sold from the production of biodiesel are raw materials (soybean oil, animal fats, corn oil, methanol and other chemicals), energy (natural gas and electricity), labor and depreciation on process equipment. Our business is sensitive to feedstock costs. The cost of feedstock is the largest single component of the cost of biodiesel production, typically accounting for 70-90% of the overall cost of producing biodiesel. Any fluctuation in the cost of feedstock will alter the return on investment that our members receive. Changes in the price or supply of feedstock are subject to and determined by market forces and other factors over which we have no control, such as crop production, carryout, exports, government policies and programs, and weather. Because biodiesel prices are strongly correlated to diesel fuel prices, the biodiesel industry is unlike many other industries where finished product prices are more strongly correlated to changes in production costs. This characteristic of the biodiesel industry makes it difficult for biodiesel producers to pass along increased feedstock costs and, therefore, increases in feedstock costs can significantly affect our ability to generate profits. 27

~~Cost~~Table of goods sold for our products for the year ended September 30, 2010 was $12,070,190, which is less than half that of cost of goods sold for the year ended September 30, 2009, which was equal to $29,795,410. The decrease is primarily attributed to our lowered production rate. As a percentage of revenues, our cost of goods sold increased from fiscal year 2009 to fiscal year 2010, which were 102.28% and 130.70%, respectively. This increase was due primarily to fixed costs being spread over significantly reduced sales volumes. Contents

~~Our~~Iowa ~~average~~Renewable ~~soybean oil costs per pound for the year ended September 30~~Energy, 2010 were approximately 2.0% higher than soybean oil costs for the year ended September 30, 2009. Conversely, animal fat costs per pound for the year ended September 30, 2010 were approximately 11.0% lower than animal fat costs for the fiscal year ended September 30, 2009. In fiscal year 2010, we also utilized approximately 1.5 million pounds of corn oil feedstock, which is consistent with the minimal amounts of corn oil used in fiscal year 2009. LLC

InNotes ~~order~~ to ~~minimize~~Audited ~~cost~~Financial of goods sold, we anticipate that if we begin to again produce biodiesel, we will attempt to utilize lower-cost feedstocks such as animal fats and corn oil in place of higher-cost feedstocks such as soybean oil. In fiscal year 2009, approximately 80% of the feedstock used in our biodiesel production was animal fats and 20% was soybean oil. In fiscal year 2010, by comparison, approximately 14.0% of feedstock used in biodiesel production was animal fats, and approximately 86.0% was soybean oil. Statements

Infeedstock ~~addition,~~sourcing ~~natural~~and ~~gas~~logistic ~~has~~services ~~recently~~for ~~been~~the ~~available~~Company ~~only~~in atexchange ~~prices~~for ~~exceeding~~a ~~historical averages~~monthly asset utilization fee and a monthly performance fee. WeThese ~~expect~~fees ~~continued~~are ~~volatility~~determined inon ~~the~~a ~~natural~~sliding ~~gas~~fee ~~market~~scale tied to production. ~~Global~~The ~~demand~~Agreement ~~for~~commenced ~~natural~~July ~~gas is~~1, ~~expected~~2010 to(Effective Date). The Agreement shall continue tofor ~~increase~~a term of twenty-four (24) months from the Effective Date. Thereafter, ~~which~~the ~~may~~Agreement ~~further~~shall ~~drive~~automatically uprenew ~~prices~~for additional successive terms of twelve (12) months, unless either party gives ninety (90) days notice of its desire not to renew. ~~Any~~The ~~ongoing~~Agreement ~~increases~~may ~~in the~~also ~~price~~be terminated for a failure to cure a material breach of ~~natural~~the ~~gas~~Agreement ~~will~~thirty ~~increase~~(30) days ~~our~~after ~~cost~~receipt of ~~goods~~notice ~~sold~~of the breach, or for a change of control.

33 Sales to WMG for the year ended September 30, 2011 were approximately $13,383,000. There were accounts receivable from WMG of approximately $100,000 and none recorded as of September 30, 2011 and 2010, respectively. The total fees expensed under this agreement for the year ended September 30, 2011 were $426,888 of which the entire amount is payable as of September 30, 2011 as the Company disputes some amounts billed.

~~Table~~Prior to the agreement with WMG, the Company had an agreement with Renewable Energy Group (REG), where REG made efforts to market and sell all of ~~Contents~~the biodiesel produced. Sales to REG for the years ended September 30, 2011 and 2010 were none and approximately $9,000,000, respectively. There were no related accounts receivable from REG as of September 30, 2011 or 2010.

~~Commodity prices~~Iowa ~~have~~Renewable ~~been extremely volatile over the recent years~~Energy, ~~increasing~~LLC byalso ~~historic proportions~~entered ininto ~~the~~procurement ~~summer~~and ofmanagement ~~2008.~~agreements ~~Soybean costs~~with ~~fell~~REG to ~~$11.20~~supply ~~per~~IRE ~~bushel~~with infeedstocks ~~November 2010,~~and ~~down~~chemical ~~from~~inputs anecessary ~~high~~for ofproduction ~~approximately~~and ~~$13.30 per bushel in July 2008, according~~ to ~~the~~manage ~~USDA’s December 2010 Oil Crop Outlook Report~~operations. ~~Soybean~~Fees ~~oil prices~~under ~~have~~this ~~followed~~agreement aare ~~similar~~based ~~trend,~~on ~~which according to~~ the ~~USDA’s~~number ~~December 2010 Oil Crop Outlook Report, average soybean oil prices reached a peak~~ of ~~approximately~~biodiesel ~~62.43~~gallons ~~cents~~produced ~~per~~and, ~~pound~~ in ~~June 2008~~addition, ~~but~~the ~~have~~agreement ~~come~~provided ~~down~~for topayment ~~a price~~ of ~~47.62~~a ~~cents~~yearly ~~per~~bonus ~~pound~~based inon ~~November 2010. The decrease in soybean oil prices is likely due to~~ the ~~rapid~~Company's ~~changes~~net ~~in the global economy~~income. ~~The~~There ~~USDA~~were ~~National Weekly~~no Agfees ~~Energy~~expensed ~~Round-Up~~under ~~Report~~the ~~indicates~~agreement ~~that~~for ~~as of December 10, 2010, soybean oil prices in Iowa are approximately 49.90 to 51.15 cents per pound, which is up from~~ the ~~price range of 35.59 to 38.15 cents per pound one~~ year ~~ago.~~ended ~~The~~September ~~USDA forecasted that 2010/11 soybean oil prices would range from 45 to 49 cents per pound. Accordingly~~30, based on recent trends, management expects that cost of goods sold on the basis of a per-gallon of soybean oil-based biodiesel sold may increase from levels experienced in fiscal year 2010. However, management still expects that prices may remain volatile through fiscal year 2011. ItThe istotal ~~uncertain~~fees toexpensed ~~what~~under ~~extent~~the ~~and~~agreement for ~~how long domestic and global economic conditions may exert downward pressure on~~ the ~~cost~~year ofended ~~soybean~~September ~~oil and other commodities. Because it takes more than seven pounds of soybean oil to make a gallon of biodiesel~~30, ~~price~~ ~~fluctuations~~2010 ~~can~~were ~~have a significant affect on our profit margin on each gallon of biodiesel produced and sold. Soybean crushing~~$131, ~~soybean acres planted, and weather conditions could increase volatility in the soybean oil market~~151. ~~Animal fats prices have also increased significantly, although they still remain lower than soybean oil prices.~~

~~Like~~On ~~soybean~~April ~~oil prices~~3, ~~animal~~2009 ~~fat~~the ~~costs~~Company ~~also~~received ~~peaked~~a inwritten ~~the~~notice ~~summer~~ of ~~2008.~~termination ~~Although~~from ~~animal fat~~REG ~~costs~~due ~~did~~to ~~not~~changes ~~reach prices as high as soybean oil prices~~ in the ~~summer~~biodiesel ofmarket ~~2008,~~since ~~animal~~the ~~fat costs~~original ~~nonetheless~~agreements ~~increased~~were ~~well above their historical average~~signed. ~~The~~Therefore ~~prices for animal fats tend to move in relation to~~ the ~~price~~agreements ofexpired ~~other~~on ~~feedstocks~~June ~~such as soybean oil. Accordingly~~30, ~~as soybean oil prices increase, animal fat costs will also likely increase and vice versa. According to the USDA’s December~~ 2010 ~~Oil Crop Outlook report~~, ~~lard~~however ~~and edible tallow prices for November 2010~~ were ~~estimated~~ atsubject ~~37.32~~to ~~cents~~arbitration ~~and~~as ~~41.75~~discussed ~~cents per pound, respectively, which are mixed changes from their prices of 52.82 cents and 38.61 cents per pound, respectively,~~ in ~~July 2008.~~Note ~~Management expects that prices may remain volatile throughout fiscal year 2011, as domestic and global economic conditions and commodities markets may affect input prices, including animal fats~~5.

~~Based~~See onNote ~~recent~~7 ~~trends~~for ofa ~~soybean~~description ~~oil and animal fat costs, we expect that cost~~ of ~~goods sold on~~ a ~~per-gallon~~new ~~basis~~contract ~~may~~executed ~~increase~~after ~~from levels experienced in fiscal~~ year ~~2010~~end. In addition, management still expects that prices may remain volatile through fiscal year 2011. We will attempt to utilize feedstocks that provide us with the greatest margins on the sale of our biodiesel. Nonetheless, even if feedstock costs drop, decreases in the price at which we may sell our biodiesel and glycerin in the future could still result in low profit margins, which could have an adverse affect on our net income.

WeNote experienced a $29,615 net loss during the year ended September 30, 2010 related to our derivative contracts, which is a decrease from the $560,099 net gain recognized during the fiscal year ended September 30, 20093. Members' We enter into option contracts to reduce the risk caused by market fluctuations of soybean oil and home heating oil. The contracts are used to fix the purchase price of our anticipated requirements of soybean oil in production activities and to manage exposure to changes in biodiesel prices. The fair value of the derivatives is continually subject to change due to the changing market conditions. As the value of soybean oil and home heating oil fluctuate, the value of our derivative instruments are impacted, which affects our financial performance. We anticipate continued volatility in our cost of goods sold due to the timing and changes in value of derivative instruments relative to the cost of the commodity being hedged. Equity

~~Operating~~The ~~Expenses~~ Company was formed on April 14, 2005 to have a perpetual life. The Company has one class of membership unit with each unit representing a pro rata ownership interest in the Company's capital, profits, losses and distributions. Income and losses are allocated to all members in proportion to units held.

~~Operating~~The ~~expenses~~Company ~~for~~was initially capitalized by 12 members of the ~~year~~original ~~ended~~board ~~September 30~~of directors, ~~2010~~contributing ~~totaled~~an aggregate of $~~887~~240,~~187,~~000 ~~which~~for is480 ~~lower~~units. ~~than operating~~The ~~expenses~~Company was further capitalized by 78 members contributing an aggregate of $12,~~421~~440,~~907~~000 ~~for~~in ~~the~~exchange ~~same~~for ~~period~~4,880 ~~in 2009~~units. ~~This~~These ~~decrease~~units iswere ~~largely~~issued ~~due~~pursuant to ~~reduced~~ ~~operations~~a ~~brought~~private ~~about~~placement bymemorandum, ~~reductions~~limited to Iowa residents in ~~staff~~which ~~and~~the ~~elimination~~Company offered a maximum of ~~nonessential expenditures~~6,000 tounits ~~preserve~~at ~~cash~~a ~~resources.~~cost ~~Operating~~of ~~expenses~~$500 asper unit for a ~~percentage~~maximum offering of ~~revenues~~$3,000,000, ~~increased from~~with ~~fiscal~~all ~~year~~funds ~~2009~~collected being considered at-risk capital. Each investor was required to ~~fiscal~~purchase ~~year~~a ~~2010~~minimum of 50 units for $25,000, atwith ~~4.88%~~the ~~and~~option ~~9.60%~~to ~~respectively.~~purchase ~~The~~additional ~~increase~~units in ~~operating~~ ~~expenses~~increments asof one unit for $500 thereafter up to a ~~percentage~~maximum purchase by a single investor of ~~revenues~~100 isunits ~~primarily~~for ~~due~~$50,000. Additionally, a total of 500 units were issued to the ~~reduced~~members ~~overall~~of ~~sales volume.~~an Weentity ~~expect~~related ~~that~~to ~~our~~the ~~operating~~Company ~~expenses~~through common ownership in exchange for ~~fiscal~~project ~~2011~~development ~~will~~services ~~remain~~provided ~~fairly~~pursuant ~~consistent~~to ~~if average~~a ~~plant~~consulting ~~production~~agreement. ~~levels~~The ~~remain~~private ~~consistent~~placement memorandum for the seed round offering was closed on November 30, 2005.

34 In April 2006, the Company issued an Iowa registered offering of membership units. The intrastate offering was set for a minimum of 17,595 membership units up to a maximum of 25,095 units for sale at $1,000 per unit, for a minimum offering amount of $17,595,000 and a maximum offering amount of $25,095,000. The minimum purchase requirements were 25 units for a minimum investment of $25,000. The Company began the intrastate offering on April 17, 2006 which was completed on May 1, 2006. A total of 19,371 membership units were issued to 508 members amounting to $19,371,000 of gross proceeds.

~~Table~~In ofNovember ~~Contents~~2006 the directors exercised 1,100 units at $500 per unit. 100 units were unexercised and expired. In accordance with the Loan agreement, referenced in Note 4 below, the options funds were used for construction contract obligations prior to the initial draw on the loan in December 2006.

~~Other Income (Expenses)~~ 28

~~Our~~Table ~~other income and expenses for the fiscal year ended September 30, 2010 was interest expense~~ of $1,109,649 and interest and other income of $460,104, compared to an interest expense of $1,272,475 and interest and other income of $36,579 in 2009. In 2010, other income included, $100,000 related to the forgivable grant portion of the Iowa Department of Economic Development (IDED) loan /grant, $280,000 in Advanced BioFuels Producer Credit funds, a $70,000 education grant from Kirkwood Community College, and with the remainder representing interest income. The interest expense represents interest and amortization costs. The decrease in interest expense was primarily the result of a decrease in our outstanding borrowings and a decrease in our average interest rates. Contents

~~Changes~~Iowa inRenewable ~~Financial~~Energy, ~~Condition~~ LLC

~~The~~Notes ~~following table highlights the changes in our financial condition from September 30, 2009~~ to ~~September 30,~~Audited ~~2010:~~ Financial Statements

	September 30, 2010		September 30, 2009
Current Assets	$	1,233,887	$	5,746,294
Current Liabilities	$	27,769,336	$	31,016,570
Members’ Equity	$	7,909,325	$	12,281,381

Note 4. Long-Term Debt and Line of Credit

~~Current~~Long-term ~~Assets.~~debt ~~Current~~consists ~~assets~~of ~~totaled~~the ~~$1,233,887~~following atas ~~September 30,~~of ~~2010 down from $5,749,294 at~~ September 30, ~~2009.~~2011 ~~The decrease during this period is a result of a decline in accounts receivable~~ and a2010: ~~decline in inventory on hand. The decline in these two key indicators is the result of a lack of sales activity.~~

Current Liabilities. Total current liabilities totaled approximately $27,769,336 at September 30, 2010, down slightly from $31,016,570 at September 30, 2009. This decrease was due largely to the payment on our term loan and with the scale back of operations, the Company is incurring less expenses resulting in the reduction of accounts payable and accrued expenses.



	2011		2010
Note payable to MLIC Asset Holdings, LLC (A) (MLIC)	$	27,142,668	$	27,142,668
Note payable to the Iowa Department of Economic Development (B)	55,000		65,000
Note payable to the Iowa Department of Transportation (C)	223,696		250,061
	$	27,421,364	$	27,457,729

~~Members’~~(A)On ~~Equity.~~October ~~Members’~~26, ~~contributions~~2006, atthe ~~both~~Company ~~September 30~~entered into a $34,715,000 ~~2010~~construction-term ~~and~~loan ~~September 30~~agreement with MLIC Asset Holdings, ~~2009~~ ~~were~~LLC ~~equal~~which was used to ~~$23,165,422~~complete the biodiesel project. ~~Total~~The ~~members’~~loan ~~equity~~consisted asof two phases: a “construction phase” where the Company made periodic requests for fund advances to meet construction obligations and at the completion of ~~September 30~~construction, ~~2010~~the loan converted to a “senior debt instrument.” Previously, the note bore interest at prime plus .25% and was due in monthly principal and interest payments of $7373,~~909~~000. The Company violated the debt covenants,~~325~~ however, ~~down~~ ~~from~~MLIC ~~$12~~has waived these violations and has entered into a new agreement on January 11,~~281,381~~ as2012 ofwhich ~~September 30~~extends the maturity date to January 5, ~~2009~~2013. This ~~The~~new ~~decrease~~note inagreement ~~total~~bears ~~members’~~interest ~~equity~~at is6% ~~due~~plus to the ~~current~~one ~~year~~month ~~loss~~LIBOR rate (currently 6.27%) ~~The~~and ~~loss~~requires ismonthly ~~the~~principal ~~result~~and interest payments of $350,000 plus additional principal payments if monthly earnings before taxes, depreciation and amortization exceed $300,000. This new debt agreement includes revised covenants including, the ~~low~~requirement ~~level~~to maintain tangible net worth of ~~sales~~at ~~experienced~~least in$2 ~~fiscal~~million ~~year 2010~~through June 30, 2012 and ~~the~~at ~~lower~~least ~~sales~~$2.25 ~~price~~million ~~received~~from ~~for~~July 1, 2012 until the ~~Company~~maturity ~~product~~date ~~sold~~of the loans on January 5, 2013. The ~~low~~Company ~~level~~is ~~has~~also ~~resulted~~required ~~in an~~to ~~inability~~maintain toa ~~cover~~cash ~~the~~flow ~~fixed~~coverage ~~costs~~ratio (monthly EBITDA divided by monthly principal and interest ~~expense~~payments) ~~incurred~~of ~~annually~~1:1 bystarting usin February 2012.

~~Liquidity~~The ~~and~~loan ~~Capital~~is ~~Resources~~ secured by substantially all assets of the Company. The loan agreements also require the following:

~~Cash~~Debt ~~Flow~~service ~~from~~reserve: ~~Operating~~Commencing ~~Activities.~~one ~~Net~~month ~~cash~~following ~~flow~~the ~~provided~~conversion bydate, ~~operating activities for~~ the ~~year~~Company ~~ended~~shall ~~September 30,~~make ~~2010~~monthly ~~totaled~~deposits ~~$2,044,225 compared~~ to ~~$4,039,052~~a ~~for~~debt ~~the~~service ~~year~~reserve ~~ended September 30,~~until ~~2009.~~such ~~This~~time ~~was~~as ~~due to~~ the ~~increased~~balance ~~loss~~equals ~~incurred~~$1,319,265. inMonthly ~~fiscal~~deposits ~~year~~shall ~~2010~~consist ~~compared~~of ~~to prior~~not ~~fiscal~~less ~~year~~than ~~and~~one-third ~~the~~of ~~overall~~all ~~decline~~available inmonthly ~~working~~projected ~~capital components~~EBITDA. ~~The~~(See ~~decline~~Note is1 ~~the~~for ~~result of the decline in sales~~modification. )

~~Cash~~Capital ~~Flow~~improvements ~~from~~reserve: ~~Investing~~Commencing ~~Activities.~~one ~~Net~~month ~~cash~~after ~~flow provided by investing activities for~~ the ~~year~~conversion ~~ended September 30~~date, ~~2010~~the ~~totaled~~Company ~~$454,634,~~shall ~~of which $470,830 was for reductions in restricted cash balances due to it being used to~~ make ~~interest~~deposits ~~payments~~into ona ~~the~~custodial ~~term~~account ~~debt~~held ~~and $16,196~~by ~~used for capital expenditures for~~ the ~~purchase of computers and computer software~~Lender. The ~~term loan~~fund ~~agreement~~will ~~allows~~be ~~for~~used ~~the use of the debt service reserve~~ to ~~make~~fund ~~interest~~capital ~~payments~~improvements. AsDuring ~~part of~~ the ~~agreement~~term ~~with~~of ~~our lender, during~~ the ~~period in which we have forbearance~~loan, ~~principal payments are deferred and~~ the ~~interest~~capital ~~payments~~improvements ~~are~~reserve ~~being~~must ~~pulled~~be ~~from~~maintained ~~the~~at ~~restricted cash~~$125,000. (See ~~Capital~~Note ~~purchases were~~1 ~~necessary following the termination of the management agreement with REG. While aligned with REG under the management agreement, we used the REG computer operating system~~ for ~~operations and financial reporting~~modification. ~~At the termination of the management agreement, we were required to acquire our own operating software as well as replace a number of computers owned by REG.~~ )

~~Cash~~Sinking ~~Flow~~fund: ~~from~~Commencing ~~Financing~~one ~~Activities.~~month ~~Net~~after ~~cash~~the ~~used~~conversion indate, ~~financing~~one-third ~~activities~~of ~~for~~all ~~the year~~monthly ~~ended~~projected ~~September 30,~~EBITDA ~~2009~~shall ~~totaled~~be ~~$2,668,847,~~applied ~~which~~to ~~was~~reduce ~~primarily~~loan aprincipal. ~~payment~~At onthe point the ~~term~~outstanding ~~debt made~~principal ~~prior~~loan tobalance ~~the~~is ~~agreement~~reduced ~~discussed~~to in$20,182,750 ~~Note~~no 4additional tosinking ~~the~~fund ~~Financial~~deposits ~~Statements~~will be required.

35 (B)The Company has a $300,000 loan agreement with the Iowa Department of Economic Development (IDED). The $300,000 loan is noninterest-bearing and due in monthly payments of $5,000 beginning December 2006 for a term of 60 months with a balance as of September 30, 2011 and 2010 of $55,000 and $65,000, respectively. Borrowings under this agreement are collateralized by substantially all of the Company's assets and subordinate to the MLIC debt. On November 18, 2010 the Company requested from the IDED a deferral of payments for the period of January 1, 2011 through June 30, 2011. On December 16, 2010 the IDED board approved the IRE deferral request with the requirement of a 6.0% interest accrual on the loan for that period. Additionally, in March 2011 the IDED board approved an extension of this agreement through March 2012.

~~Table~~(C)The Company has a $132,000 loan agreement and a $168,000 forgivable grant agreement with the Iowa Department of ~~Contents~~Transportation. The $132,000 loan bears interest at 3.67% beginning June 2008 and is due in semi-annual payments of $14,569 beginning December 2008 for a term of 60 months. The balance at September 30, 2011 and September 30, 2010 was $55,696 and $82,061, respectively. Borrowings under this agreement are collateralized by substantially all of the Company's assets and is not subordinate to the MLIC debt. The $168,000 grant is forgivable upon completion of the loan agreement.

~~Short-Term and Long-Term Debt Sources~~ 29

InTable October 2006, we closed on our $34,715,000 debt financing with Marshall Bankfirst Corporation. Marshall Bankfirst Corporation has since been seized by the FDIC and our loan agreement is now held by MLIC as successor lender. The financing provided for a $29,715,000 term loan, with an interest rate during construction (the first 14 months following loan closing) of ~~0.75% over the Prime Rate as of the effective date reported in the Money Rates column of The Wall Street Journal. Our construction loan converted to a term loan in February 2008.~~ Contents

~~The~~Iowa ~~term~~Renewable ~~loan~~Energy, imposes various covenants upon us which may restrict our operating flexibility. We are subject to several ratios in the term loan which may limit how we allocate our sources of funds. The term loan imposes a negative covenant on distributions which may restrict our ability to distribute earnings to our members. The term loan also requires us to obtain MLIC’s permission prior to making any significant changes in our material contracts with third-party service providers. LLC

WeNotes ~~executed~~to aAudited ~~mortgage~~Financial in favor of MLIC creating a first lien on substantially all of our assets, including our real estate, plant, all personal property located on our property and all revenues and income arising from the land, plant or personal property for the loan and credit agreements discussed above. Statements

OnMaturities ~~September 2, 2010, we executed a Third Amendment and Note Modification with MLIC (the Amendment Documents). The purpose~~ of ~~the~~long-term ~~Amendment~~debt ~~Documents~~ are toas modify our term loan. The Amendment Documents provide that MLIC shall forbear until February 1, 2011 from exercising its remedies under the term loan and that MLIC shall waive until February 1, 2011 the Company’s compliance with certain covenants and ratios of the Term Loan. follows:

The Amendment Documents also modify the payment and interest terms of the term loan. From October 1, 2010 and on the first day of each month thereafter through February 1, 2011, the Company shall pay MLIC all accrued interest then due.



Year ending September 30:
2012	$	2,883,595
2013	24,537,769
	$	27,421,364

~~Beginning~~On onSeptember ~~March 1~~2, ~~2011,~~2010 ~~regular~~the ~~monthly~~Company ~~principal~~entered ~~and~~into ~~interest~~a ~~payments based upon the remaining~~ short-term line of ~~the~~credit ~~original~~where ~~amortization~~MLIC ~~period~~Asset ofHoldings, ~~ten~~LLC, ~~years~~Federation ~~shall~~Bank, ~~resume~~and inWashington ~~accordance~~State ~~with~~Bank ~~the original~~will ~~terms~~provide ofup ~~the~~to ~~term~~a ~~loan~~$6.0 ~~Beginning~~million onrevolving ~~March 1,~~line ~~2011,~~of wecredit ~~shall~~to ~~also~~be ~~pay~~used for the ~~accrued~~purchase ~~interest on~~of ~~the~~raw ~~principal~~materials. ~~payments~~At ~~that~~September ~~have~~30, ~~been~~2011, ~~deferred~~$5,974,473 ~~until~~is ~~such~~outstanding ~~deferred~~on ~~payments~~this ~~have~~line ~~been~~of ~~paid in full~~credit. The Online ~~September 5,~~of ~~2011,~~credit ~~the~~matured ~~principal~~and ~~payments~~was ~~that~~paid ~~were otherwise due~~ on ~~August 1~~January 2, ~~2010 through~~2012. ~~December 1,~~The ~~2010~~interest ~~shall~~rate becharged ~~due~~on ~~and~~the ~~payable.~~line Inof ~~addition,~~credit onwill ~~September 5,~~be ~~2011,~~an ~~the~~annual ~~remaining unpaid~~rate ~~principal~~equal ~~balance~~12.0% ofplus the ~~term~~one ~~loan~~month Libor rate, ~~together~~adjusted ~~with~~monthly. There ~~all~~was ~~accrued~~no ~~but~~balance ~~unpaid~~on ~~interest,~~this ~~shall~~line ~~be due~~of ~~and~~credit ~~payable~~on inSeptember ~~full~~30, 2010.

~~The~~On ~~Amendment~~January ~~Documents~~11, ~~also~~2012, ~~modify~~ the ~~interest~~Company ~~rate~~entered ~~under~~into ~~the~~a new short-term ~~loan.~~line ~~Under~~of ~~the~~credit ~~Amendment Documents,~~with ~~interest~~Washington ~~shall~~State ~~begin~~Bank toand beFederation ~~calculated~~Bank asto 6%provide ~~over~~up ~~LIBOR.~~to ~~Beginning~~a ~~six~~$1.0 ~~months~~million ~~from~~revolving ~~the first~~line ~~day~~ of ~~the~~credit ~~full~~to ~~month~~be ~~after~~used ~~the~~for ~~date~~operations. The ofline ~~the execution~~ of ~~the~~credit ~~Amendment~~will ~~Documents,~~mature ~~and~~on ~~every six~~January ~~months thereafter~~5, ~~the~~2013 ~~LIBOR~~at ~~margin shall be adjusted in accordance with the below schedule,~~ which istime ~~based~~all ~~upon~~principal ~~the~~and ~~number~~interest ~~calculated~~must bybe ~~dividing our total debt (including both secured and unsecured obligations) by~~paid. ~~our~~Interest ~~earnings~~on ~~before~~this ~~interest,~~line ~~taxes,~~of ~~depreciation~~credit ~~and~~is ~~amortization (“Company’s~~at ~~Leverage Ratio”)~~6%.

Company’s Leverage Ratio	LIBOR Applicable Margin
Less than 2.75 to 1.00		4.00	%
Greater than or equal to 2.75 to 1.00 but less than 3.5 to 1.00		4.75	%
Greater than or equal to 3.5 to 1.00 but less than 4.25 to 1.00		5.25	%
Greater than or equal to 4.25 to 1.00 but less than 5.0 to 1.00		5.50	%

Note 5. Legal Proceedings

36 In February 2009, the Company gave notice to REG that it had breached the Management and Operational Services Agreement (MOSA) in a variety of manners and requested the annual review of the MOSA, as provided for in the MOSA. After not receiving requested information and being unable to resolve any disputes, in June 2009, the Company gave notice to REG that the Company intended to proceed with arbitration to resolve disputes arising under the MOSA. On or about October 30, 2009, the Company delivered its Statement of Claims to REG and the selected arbiter alleging the following: (1) breach of the MOSA for failure to utilize best efforts; (2) breach of the covenant of good faith and fair dealing; (3) breach of fiduciary duties; (4) fraudulent non-disclosure; and (5) negligent misrepresentation. On or about December 7, 2009, REG responded to these claims and also asserted counterclaims of approximately $210,000 for breach of written contract, breach of the covenant of good faith and fair dealing, breach of oral contract and promissory estoppel, all of which arise out of one customer issue. The arbitration was continued until October 31, 2011 through November 11, 2011. Prior to arbitration, the Company reached a settlement agreement with REG. The Company agreed to dismiss the arbitration and instead started negotiating a long-term toll manufacturing agreement with REG. The Company was not required to enter into an agreement with REG with respect to toll manufacturing in the event the Company secured a more favorable contract from another party. The Company recently gave REG notice that it was proceeding with a more favorable long-term biodiesel manufacturing agreement and therefore had satisfied its obligations under the settlement agreement.

~~Table~~Note of6. Lease ~~Contents~~Commitment and Other Contingencies

~~Also~~The onCompany ~~September 1,~~leases ~~2010,~~a wecopier ~~entered~~under ~~into~~ a ~~loan~~long-term ~~agreement~~operating ~~and~~lease ~~related~~that ~~documents~~will ~~for~~expire ~~a $6,000,000~~in ~~revolving~~January ~~line~~2016. ofThe ~~credit~~lease ~~with~~requires ~~MLIC~~payments asof ~~the~~$237 ~~lead~~per ~~lender~~month ~~(the~~plus ~~Line~~applicable ~~of Credit)~~taxes. The ~~funds from~~Company ~~the~~leases ~~Line~~25 ofrailcars ~~Credit~~under long-term operating leases that will beexpire ~~used~~through ~~for~~2017. The ~~the~~leases ~~production~~require payments of ~~biodiesel~~$14,060 atper ~~our~~month ~~plant~~once ~~and~~all upcars ~~to $400,000~~are ofplaced. ~~the~~Minimum ~~funds~~lease ~~may~~payments beunder ~~used~~these byoperating usleases for ~~risk~~future ~~management~~years toare ~~hedge~~as ~~biodiesel.~~ follows:

We made standard representation and warranties under the Line of Credit, including, but not limited to: agreeing not to amend its articles of organization, operating agreement or similar governing document; agreeing not to merge, consolidate, sell transfer or assign substantial parts of its business without prior approval of MLIC; and sell or assign any accounts receivable without prior approval of MLIC.



Year ending September 30:
2012	$	138,088
2013	171,564
2014	171,564
2015	159,069
2016	152,911
2017	35,220
	$	828,416

InThe ~~addition,~~European weUnion ~~are~~is ~~required~~currently toleveling ~~maintain~~tariffs ~~certain~~on ~~financial~~biofuels ~~ratios~~exported ~~and~~from ~~covenants,~~the ~~including, but~~United ~~not~~States ~~limited~~due to: ~~net~~subsidies ~~tangible~~paid ~~worth~~on ofbiofuels. ~~$7,000,000;~~These ~~and~~tariffs wewent ~~agreed not~~into toeffect ~~purchase or redeem our units~~March 13, ~~declare~~2009. orIn ~~pay any dividends~~July 2009, ~~except~~the ~~dividends~~European ~~payable~~Commission ~~solely~~decided ~~in units, make any distributions~~ to ~~members~~extend orthese ~~set~~tariffs ~~aside~~beyond ~~any~~their ~~funds for any such purpose, without the prior written approval of the MLIC.~~

Upon the occurrence of an event of default, the Line of Credit shall become due and payable immediately. Events of Default include, but are not limited to: nonpayment of any principal or interest; breach by us which goes uncured for fifteen (15) days after notice under the Line of Credit or any of the term loan Documents of the Company; misrepresentation by us in the Line of Credit documents; insolvency; determination by MLIC that its position is insecure for any reason, and such insecurity is not cured by us within ten (10) day of notification; and acceleration or default by us on other debts. 30

~~Any~~Table ~~funds disbursed to us under the Line~~ of Credit shall be repaid to the MLIC, along with interest, by May 31, 2011. Interest under the loan shall be variable, based on 12% above the current thirty (30) day LIBOR rate. As of September 30, 2010 the Company has not accessed the Line of Credit. Contents

WeIowa ~~shall~~Renewable make payments to MLIC beginning on the first day of the first month following the first advance under the Line of Credit and on the first day of each month thereafter. We shall make such monthly payments in an amount equal to all accruedEnergy, but unpaid interest on the Line of the Credit. On May 31, 2011, we shall make one payment in the amount of all unpaid principal and interest. In addition, we shall pay MLIC a monthly administrative fee of $3,000, with the first administrative fee to be paid contemporaneously with the execution of the Line of Credit and each administrative fee to be paid on the first day of each month thereafter. The administrative fees shall be paid regardless of whether there is a balance under the Line of Credit. We shall be allowed to borrow, prepay and re-borrow under the Line of Credit until May 31, 2011, however, all advances are subject to the sole discretion of MLIC and MLIC is not obligated to make any advance. LLC

~~Grants~~Notes ~~and~~to ~~Government~~Audited ~~Programs~~ Financial Statements

Weinitial ~~entered~~July 2009 ~~into~~expiration adate ~~loan~~until ~~with~~2014. ~~the~~The ~~Iowa~~Company ~~Department~~will likely face increased competition for sales of ~~Economic~~its ~~Development~~biodiesel and international demand for ~~$400,000.~~ ~~This~~its ~~loan~~product iswill ~~part~~likely ofdecrease ~~the~~as ~~Iowa~~a ~~Department~~result of ~~Economic~~these ~~Development’s~~tariffs. ~~Value~~If ~~Added~~any ~~Program~~ governmental supports are modified or permanently removed and ~~$100~~decreased demand for the Company's biodiesel results,~~000~~ its profitability will be reduced. Because biodiesel has historically been more expensive to produce than diesel fuel, the biodiesel industry has depended on governmental incentives that have effectively brought the price of biodiesel more in line with the ~~loan~~price isof ~~forgivable~~diesel ~~and~~fuel to the ~~$300,000~~end ~~principal~~user. ~~amount~~These ~~does~~incentives have supported a market for biodiesel that might not ~~bear~~exist ~~interest~~without the incentives. The ~~balance~~most atsignificant ~~September 30,~~of ~~2010~~these ~~was~~incentives for biodiesel is the blenders' tax credit which provides a $~~65,000~~1.00 ~~The $100,000~~tax ~~forgivable~~credit ~~portion~~per ~~was~~gallon ~~forgiven~~of inpure ~~October 2009.~~biodiesel, Weor ~~recently~~B100, ~~requested~~to ~~and~~the ~~were~~first ~~granted~~blender ~~a six~~of ~~month~~biodiesel ~~waiver~~with onpetroleum ~~payments~~based diesel fuel. ~~This~~The ~~waiver~~blenders' ~~will~~tax ~~begin~~credit inexpired ~~January~~on December 31, 2011 and asmanagement adoes ~~result~~not ofbelieve ~~this waiver,~~that ~~interest~~it will be ~~at 6~~renewed.0% However, ~~when~~many wein ~~again~~the ~~begin~~biodiesel ~~making~~industry ~~payments~~believe that due to the biodiesel use requirements in RFS2, demand for biodiesel will continue during 2012, despite the loss of the biodiesel blenders' credit.

InNote ~~addition, on May 14, 2007 we entered into a Railroad Revolving Loan and Grant Program Agreement with the Iowa Department of Transportation (IDOT) for an amount of up to $168,000 (or 13~~7.3% Going ~~of the cost for the railroad project~~Concern, ~~whichever~~Management isPlans ~~less)~~ and aSubsequent loan amount of up to $132,000 (or 10.5% of the cost for the railroad project, whichever is less). Interest on the loan amount is at 3.67% per year for five years. The balance at September 30, 2010 was $250,061 of which $82,061 is required to be repaid to the IDOT. Events

37 The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Through September 30, 2011, the Company has generated accumulated losses of $20,084,725, has experienced significant volatility in its input costs and undertaken significant borrowings to finance the construction of the biodiesel plant. The loan agreements with the Company's lender contained covenants which the Company was not in compliance with as of September 30, 2011. However, on January 11, 2012 the Company's lender waived these violations and entered into a new agreement which extends the maturity date of the debt through January 5, 2013. See Note 4 for details of new debt agreement terms. This new debt agreement includes revised covenants including, the requirement to maintain tangible net worth of at least $2 million through June 30, 2012 and at least $2.25 million from July 1, 2012 until the maturity date of the loans on January 5, 2013. The Company is also required to maintain a cash flow coverage ratio (monthly EBITDA divided by monthly principal and interest payments) of 1:1 starting in February 2012.

~~Table~~Also on January 13, 2012, the Company entered into an agreement with Gavilon, LLC (Gavilon) that the Company will purchase from Gavilon all of ~~Contents~~the feedstock that is required to produce biodiesel during calendar year 2012 and that the Company will sell all of the biodiesel produced to Gavilon. This is an exclusive relationship where the Company has agreed not to purchase feedstock from any other supplier and not to produce biodiesel for any other customers during calendar year 2012. In exchange for this exclusive relationship, Gavilon has agreed to purchase a minimum amount of biodiesel from the Company during calendar year 2012 which equals approximately 50% to 70% of the Company's total production capacity, depending on which feedstock is used. In the event Gavilon does not purchase the minimum amount of biodiesel during any month, Gavilon has agreed to make a minimum cash payment. This agreement renews annually unless either Party provides the other Party with written notice of nonrenewal no less than 90 days prior to the end of the initial or then-current renewal period. Management anticipates that this agreement with Gavilon will allow the Company to operate profitably during our fiscal year 2012 and to recommence making payments on our long-term loan with our primary lender and to remain in compliance with our loan covenants during our fiscal year 2012.

~~Critical Accounting Estimates~~ 31

~~Management~~Table ~~uses estimates and assumptions in preparing our financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts~~ of ~~assets and liabilities, the disclosure of contingent assets and liabilities and the reported revenues and expenses.~~ Contents

~~Revenue~~ITEM ~~Recognition~~ 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

~~Revenue from the production of biodiesel and its co-products is recorded when title transfers to customers~~None. ~~Biodiesel and its co-products are generally shipped FOB from the plant.~~

~~Derivative~~ITEM ~~Instruments~~9A. CONTROLS ~~and~~AND ~~Hedging Activities~~ PROCEDURES

~~Accounting~~Disclosure ~~Standards~~Controls ~~Codification (ASC) Topic No. 815, Derivatives~~ and Hedging Activities, or ASC 815, requires a company to evaluate its contracts to determine whether the contracts are derivatives. Certain derivative contracts may be exempt under ASC 815 as normal purchases or normal sales, which are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. At this time, our forward contracts related to the purchase of soy oil are considered normal purchases and, therefore, are exempted from the accounting and reporting requirements of ASC 815. Procedures

~~Commodity~~Our ~~Price~~management, ~~Risk~~including ~~Protection~~ our chief executive officer (the principal executive officer), Larry Rippey, along with our chief financial officer (the principal financial officer), Ron Lutovsky, have reviewed and evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2011. Based on a review and evaluation, these officers believe that our disclosure controls and procedures are effective in ensuring that material information related to us is recorded, processed, summarized and reported within the time periods required by the forms and rules of the Securities and Exchange Commission.

WeManagement's ~~seek~~Report to minimize the risks from fluctuations in the prices of raw material inputs, such as soybean oil, and finished products, such as biodiesel, through the use of derivative instruments. In practice, as markets move, we actively manage our risk and adjust hedging strategies as appropriate. Although we believe our hedge positions accomplish an economic hedge against our future purchases, they do not qualify for hedge accounting, which would match the gain or loss on ~~our~~ ~~hedge~~Internal ~~positions~~Control toover ~~the~~Financial specific commodity purchase being hedged. We are using fair value accounting for our hedge positions, which means as the current market price of our hedge positions changes, the gains and losses are immediately recognized in our cost of goods sold. The immediate recognition of hedging gains and losses under fair value accounting can cause net income to be volatile from quarter to quarter due to the timing of the change in value of the derivative instruments relative to the cost and use of the commodity being hedged. Reporting

~~During~~Our ~~the~~management, ~~year~~including ~~ended~~our ~~September 30,~~chief ~~2010,~~executive ~~the~~officer ~~losses~~and on our ~~derivative~~chief ~~instruments~~financial ~~relating to certain commodities~~officer, ~~including~~is ~~soybean~~responsible ~~oil~~for establishing and ~~heating~~maintaining ~~oil,~~adequate ~~was~~internal acontrol ~~realized~~over ~~loss~~financial ofreporting ~~$96,377~~for ~~and~~the ~~a change~~Company. Internal control over financial reporting is defined in ~~unrealized~~Rule ~~gain~~13a-15(f) ofor ~~$66,762~~15d-15(f) ~~for~~promulgated aunder ~~net~~the ~~loss~~Securities Exchange Act of ~~$29,615.~~1934 ~~The~~as ~~realized~~a ~~loss~~process ~~was~~designed ~~recorded~~by, ~~but the~~or ~~transaction~~under ~~was~~the ~~offset~~supervision byof, athe ~~sales~~Company's ~~price~~principal ~~tied~~executive toand ~~heating~~principal ~~oil.~~financial Weofficers, ~~realized~~or ~~gain~~persons ofperforming ~~$560~~similar functions,~~099 during~~ and effected by the ~~year~~Company's ~~ended~~board ~~September 30,~~of ~~2009~~directors, ~~which~~management ~~consisted~~and ofother anpersonnel, ~~unrealized~~to ~~loss~~provide ofreasonable ~~$131,903~~assurance ~~for~~regarding ~~a realized~~the ~~gain~~reliability of ~~$692,002.~~financial ~~The~~reporting ~~unrealized~~and ~~portion~~the preparation of ~~any~~financial ~~hedging~~statements ~~loss~~for isexternal ~~subject~~purposes toin ~~change~~accordance with ~~market~~ ~~fluctuations~~Generally ~~and~~Accepted ~~may~~Accounting bePrinciples ~~offset~~and byincludes ~~future~~those ~~higher-priced~~policies ~~biodiesel~~and ~~sales.~~ procedures that:

~~There~~• ~~are~~Pertain ~~several variables that could affect the extent~~ to ~~which our derivative instruments are impacted by price fluctuations in~~ the ~~cost~~maintenance of ~~soybean~~records ~~oil or biodiesel. However, it is likely~~ that ~~commodity~~in ~~cash~~reasonable ~~prices~~detail ~~will~~accurately ~~have~~and ~~the~~fairly ~~greatest~~reflect ~~impact on~~ the ~~derivative~~transactions ~~instruments with delivery dates nearest the current cash price. As we move forward, additional protection may be necessary. As the prices of these hedged commodities move in reaction to market trends~~ and ~~information,~~ ~~our~~dispositions ~~statement~~ of ~~operations will be affected depending on~~ the ~~impact~~assets ~~such market movements have on the value~~ of our derivative instruments. Depending on market movements, crop prospects and weather, these price protection positions may cause immediate adverse effects, but are expected to produce long-term positive growth for the Company. ;

38 • Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with Generally Accepted Accounting Principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

~~Table~~• Provide reasonable assurance regarding prevention or timely detection of ~~Contents~~unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.

~~Impairment~~Our management assessed the effectiveness of ~~long~~our internal control over financial reporting as of September 30, 2011. In making this assessment, the Company's management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-~~lived~~Integrated ~~assets~~ Framework. Based on this assessment, our management concluded that, as of September 30, 2011, our internal controls over financial reporting were effective.

WeThis ~~review~~annual ~~long-lived~~report ~~assets,~~does ~~including~~not ~~property,~~include ~~plant~~an ~~and~~attestation ~~equipment,~~report ~~for~~of impairment in accordance with ASC Topic 360-10, “Property, Plant, and Equipment”. Asset impairment charges are recorded for long-lived assets when events and circumstances indicate that such assets may be impaired and the ~~undiscounted~~Company's ~~net~~registered ~~cash~~public ~~flows~~accounting ~~estimated~~firm toregarding beinternal ~~generated~~control byover ~~those~~financial ~~assets are less than their carrying amounts~~reporting. Management's Ifreport ~~estimated~~was ~~future undiscounted cash flows are~~ not ~~sufficient~~subject to ~~recover~~ ~~the~~attestation ~~carrying value of the assets, an impairment charge is recorded for the amount~~ by ~~which~~ the ~~carrying~~Company's ~~amount~~registered ofpublic ~~the~~accounting ~~assets~~firm ~~exceeds~~pursuant its fair value. Fair value is determined by management estimates using discounted cash flow calculations. The estimate of cash flows arising from the future use of the asset that are used in the impairment analysis requires judgment regarding what we would expect to ~~recover from~~ the ~~future~~Dodd-Frank ~~use~~Wall ofStreet ~~the~~Reform ~~asset.~~and ~~Changes~~Consumer inProtection ~~judgment~~Act, ~~that~~which ~~could significantly~~exempts ~~alter~~non-accelerated ~~the~~filers ~~calculation of the fair value or the recoverable amount of the asset may result~~ from, ~~but are not limited to, significant changes in~~ the ~~regulatory environment, the business climate,~~ management’s ~~plans,~~report ~~legal factors, commodity prices, and the use of the asset or the physical condition of the asset~~requirement.

~~Off-Balance~~Changes ~~Sheet~~in ~~Arrangements~~ Internal Control Over Financial Reporting

WeOur domanagement, ~~not~~consisting of our chief executive officer and our chief financial officer, have reviewed and evaluated any ~~off-balance~~changes ~~sheet~~in ~~arrangements~~our internal control over financial reporting that occurred as of September 30, 2011 and there has been no change that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

ITEM 7A9B. OTHER ~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.~~INFORMATION

~~We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item~~None.

39 PART III

~~Table~~ITEM of10. DIRECTORS, ~~Contents~~EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

~~ITEM~~The 8.information ~~FINANCIAL~~required ~~STATEMENTS.~~by this Item is incorporated by reference to the definitive proxy statement for our 2012 annual Meeting of Members to be filed with the Securities and Exchange Commission within 120 days after the end of our 2011 fiscal

~~Report of Independent Registered Public Accounting Firm~~ 32

ToTable ~~the Board~~ of ~~Directors and Members Iowa Renewable Energy, LLC~~ Contents

Weyear. This ~~have~~proxy ~~audited~~statement ~~the~~is ~~accompanying~~referred ~~balance~~to ~~sheets~~in ofthis ~~Renewable~~report ~~Energy, LLC~~ as ~~of September 30, 2010 and 2009, and~~ the ~~related~~2012 ~~statements~~Proxy ~~of operations, members’ equity, and cash flows for the years then ended~~Statement. ~~These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.~~

WeITEM ~~conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States)~~11. EXECUTIVE Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. COMPENSATION

InThe ~~our~~information ~~opinion,~~required ~~the~~by ~~financial~~this ~~statements~~Item ~~referred~~is toincorporated ~~above~~by ~~present~~reference ~~fairly,~~to ~~in all material respects,~~ the ~~financial~~2012 ~~position~~Proxy ~~of Iowa Renewable Energy, LLC as of September 30, 2010 and 2009, and the results of its operations and its cash flows for the years then ended in conformity with U~~Statement.~~S. generally accepted accounting principles.~~

~~The~~ITEM ~~accompanying financial statements have been prepared assuming that the Company will continue as a going concern~~12. SECURITY AsOWNERSHIP ~~discussed~~OF inCERTAIN ~~Note~~BENEFICIAL 6OWNERS toAND ~~the~~MANAGEMENT ~~financial~~AND ~~statements,~~RELATED ~~the~~MEMBER Company has suffered losses from operations and has experienced significant increases in the input costs of its products. This has created liquidity issues and caused the Company to be in violation of its bank debt covenants. There is no assurance that such violations will be waived and substantially all debt is due in September 2011 which, together raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 6. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. MATTERS

~~/s/~~The ~~McGladrey~~information &required ~~Pullen,~~by ~~LLP~~ this Item is incorporated by reference to the 2012 Proxy Statement.

~~Davenport,~~ITEM ~~Iowa December 29,~~13. CERTAIN ~~2010~~ RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

~~F-1~~ The information required by this Item is incorporated by reference to the 2012 Proxy Statement.

~~Table~~ITEM of14. PRINCIPAL ~~Contents~~ACCOUNTANT FEES AND SERVICES

~~Iowa~~The ~~Renewable~~information ~~Energy,~~required ~~LLC~~ by this Item is incorporated by reference to the 2012 Proxy Statement.

~~Balance~~PART ~~Sheets September 30, 2010 and 2009~~ IV

	2010			2009
Assets
Current Assets:
Cash and cash equivalents	$	479,309		$	649,297
Due from broker		310,390			477,059
Accounts receivable		—			1,090,753
Federal incentive receivable		—			146,182
Inventory		372,547			3,265,653
Prepaids and other assets		71,641			117,350
		1,233,887			5,746,294
Property and Equipment:
Land		420,000			420,000
Plant and processing equipment		40,742,442			40,742,442
Office building, furniture and fixtures		588,965			572,769
Equipment and vehicles		240,241			240,241
		41,991,648			41,975,452
Accumulated depreciation		(8,615,336	)		(5,963,978	)
		33,376,312			36,011,474
Other Assets:
Cash, restricted by loan agreement		730,288			1,201,118
Financing costs, net		338,174			339,065
		1,068,462			1,540,183
	$	35,678,661		$	43,297,951
Liabilities and Members’ Equity
Current Liabilities:
Current maturities of long-term debt	$	27,457,729		$	30,005,576
Accounts payable and accrued expenses		311,607			944,232
Derivative financial instruments		—			66,762
Total current liabilities		27,769,336			31,016,570
Long-Term Debt		—			—
Commitments
Members’ Equity:
Member contributions, net of issuance costs, units outstanding 2010 and 2009 26,331		23,165,422			23,165,422
Accumulated (deficit)		(15,256,097	)		(10,884,041	)
		7,909,325			12,281,381
	$	35,678,661		$	43,297,951

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

~~See~~Exhibits ~~Notes~~Filed toas ~~Financial~~Part ~~Statements~~of this Report and Exhibits Incorporated by Reference.

~~F-2~~ The following exhibits and financial statements are filed as part of, or are incorporated by reference into, this report:

~~Table~~(1) ofFinancial ~~Contents~~Statements

~~Iowa~~The ~~Renewable~~financial ~~Energy,~~statements ~~LLC~~ appear beginning at page 22 of this report.

~~Statements~~(2) ofFinancial ~~Operations Years~~Statement ~~Ended September 30, 2010 and 2009~~ Schedules

	2010			2009
Revenues:
Sales	$	9,047,234		$	25,906,537
Federal incentives		187,632			3,226,067
		9,234,866			29,132,604
Cost of sales		12,070,190			29,795,410
Gross (loss)		(2,835,324	)		(662,806	)
Operating expenses:
General and administrative		849,187			1,383,907
Depreciation		38,000			38,000
		887,187			1,421,907
(Loss) before other income (expense)		(3,722,511	)		(2,084,713	)
Other income (expense):
Interest and other income		460,104			36,579
Interest expense		(1,109,649	)		(1,272,475	)
Net (loss)	$	(4,372,056	)	$	(3,320,609	)
Weighted average units outstanding		26,331			26,331
Net (loss) per unit — basic and diluted	$	(166.04	)	$	(126.11	)

All supplemental schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.

~~See~~(3) ~~Notes to Financial Statements.~~ Exhibits

~~F-3~~ 33

Table of Contents

Iowa Renewable Energy, LLC



Exhibit No.	Exhibit	Filed Herewith	Incorporated by Reference
3.1	Articles of Organization of Iowa Renewable Energy, LLC filed with the Iowa Secretary of State on April 14, 2005.		Filed as Exhibit 3.1 to the registrant's registration statement on Form 10-12G (000-52428).
3.2	Second Amended and Restated Operating Agreement of the registrant dated March 27, 2010.		Filed as Exhibit 3.2 to the registrant's Form 10-Q filed with the Commission on August 16, 2010.
4.1	Membership Unit Certificate Specimen.		Filed as Exhibit 4.1 to the registrant's registration statement on Form 10-12G (000-52428).
10.1	Construction-Term Loan Agreement between BankFirst and Iowa Renewable Energy, LLC dated October 26, 2006.		Filed as Exhibit 10.5 to the registrant's registration statement on Form 10-12G (000-52428).
10.2	Management Services Agreement between WMG Services LLC and Iowa Renewable Energy, LLC dated January 27, 2010.+		Exhibit 10.1 to the registrant's Form 10-Q filed with the Commission on February 16, 2010.
10.3	Third Amendment to Construction Term-Loan Agreement between MLIC Asset Holdings LLC and Iowa Renewable Energy, LLC dated September 1, 2010.		Exhibit 10.2 to the registrant's Form 10-K/A filed with the Commission on January 1, 2011.
10.4	Commercial Note between MLIC Asset Holdings, LLC and Iowa Renewable Energy, LLC dated September 1, 2010.		Exhibit 10.3 to the registrant's Form 10-K/A filed with the Commission on January 1, 2011.
10.5	First Addendum to Loan Agreement between MLIC Asset Holdings LLC, Federation Bank and Washington State Bank and Iowa Renewable Energy, LLC dated February 1, 2011.		Exhibit 10.1 to the registrant's Form 10-Q filed with the Commission on February 14, 2011.
10.6	Second Addendum to Third Amendment to Construction-Term Loan Agreement between MLIC Asset Holdings LLC, successor-in-interest to Outsource Services Management, LLC, successor-in-interest to the Federal Deposit Insurance Corporation as receiver of BankFirst and Iowa Renewable Energy, LLC dated February 1, 2011.		Exhibit 10.2 to the registrant's Form 10-Q filed with the Commission on February 14, 2011.
31.1	Certificate Pursuant to 17 CFR 240.13a-14(a)	X
31.2	Certificate Pursuant to 17 CFR 240.13a-14(a)	X
32.1	Certificate Pursuant to 18 U.S.C. Section 1350	X
32.2	Certificate Pursuant to 18 U.S.C. Section 1350	X
101	The following financial information from Iowa Renewable Energy, LLC's Annual Report on Form 10-K for the fiscal year ended September 30, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) Balance Sheets as of September 30, 2011 and 2010, (ii) Statements of Operations for the fiscal years ended September 30, 2011 and 2010, (iii) Statements of Changes in Members' Equity, (iv) Statements of Cash Flows for the fiscal years ended September 30, 2011 and 2010, and (iv) the Notes to Financial Statements.*

~~Statements of Changes in Members’ Equity~~ (~~Deficit~~+) ~~Years~~ ~~Ended~~Confidential ~~September 30,~~Treatment ~~2010 and 2009~~ Requested.

			Member		Accumulated			Total Members’
	Member Units		Contributions		Deficit			Equity
Balance, September 30, 2008		26,331	$	23,165,422	$	(7,563,432	)	$	15,601,990
Net (loss)		—		—		(3,320,609	)		(3,320,609	)
Balance, September 30, 2009		26,331		23,165,422		(10,884,041	)		12,281,381
Net (loss)		—		—		(4,372,056	)		(4,372,056	)
Balance, September 30, 2010		26,331	$	23,165,422	$	(15,256,097	)	$	7,909,325

(X) Filed herewith.

~~See~~(*) ~~Notes~~Furnished ~~to Financial Statements.~~ herewith

~~F-4~~ 34

Table of Contents

~~Iowa Renewable Energy, LLC~~ SIGNATURES

~~Statements~~Pursuant to the requirements of ~~Cash~~Section ~~Flows Years~~13 ~~Ended~~or ~~September 30~~15(d) of the Securities Exchange Act of 1934, ~~2010~~the ~~and~~registrant ~~2009~~ has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		2010			2009
			IOWA RENEWABLE ENERGY, LLC
Cash Flows from Operating Activities:
Date:	January 13, 2012		/s/ Larry Rippey
Net (loss)		$	(4,372,056	)	$	(3,185,489	)
			Larry Rippey
Adjustments to reconcile net (loss) to net cash provided by operating activities:
			Chairman and President
Depreciation			2,651,358			2,650,008
			(Principal Executive Officer)
Amortization			121,891			101,725
Date:	January 13, 2012		/s/ Ronald Lutovsky, Jr.
Unrealized (gain) loss on derivative financial instruments			(66,762	)		131,903
			Ronald Lutovsky, Jr.
Change in working capital components:
			Chief Financial Officer
(Increase) decrease in due from broker			166,669			(394,877	)
			(Principal Financial and Accounting Officer)
Decrease in accounts receivable			1,236,935			3,845,137
Decrease in inventory			2,893,106			2,315,253
(Increase) decrease in prepaids and other assets			45,709			(73,719	)
(Decrease) in accounts payable and accrued expenses			(632,625	)		(1,350,889	)
Net cash provided by operating activities			2,044,225			4,039,052
Cash Flows from Investing Activities:
Purchase of property and equipment			(16,196	)		(83,161	)
(Increase) decrease in cash restricted			470,830			(156,301	)
Net cash provided by (used in) investing activities			454,634			(239,462	)
Cash Flows from Financing Activities:
Debt issuance costs			(121,000	)		—
Payment on long-term borrowings			(2,547,847	)		(3,339,767	)
Net cash (used in) financing activities			(2,668,847	)		(3,339,767	)
Net increase (decrease) in cash and cash equivalents			(169,988	)		459,823
Cash and cash equivalents:
Beginning			649,297			189,474
Ending		$	479,309		$	649,297
Supplemental Disclosure of Cash Flow Information, cash payments for interest		$	923,670		$	1,119,767

~~See~~Pursuant ~~Notes~~ to ~~Financial~~the ~~Statements~~requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

F-5




Date:	January 13, 2012	/s/ Larry Rippey
		Larry Rippey, Chairman, Director and President

Date:	January 13, 2012	/s/ Mark Cobb
		Mark Cobb, Vice Chairman and Director

Date:	January 13, 2012	/s/ Dick Gallagher
		Dick Gallagher, Secretary and Director

Date:	January 13, 2012	/s/ Mike Bohannan
		Mike Bohannan, Director

Date:	January 13, 2012	/s/ Steven Powell
		Steven Powell, Director

Date:	January 13, 2012	/s/ Edwin J. Hershberger
		Edwin J. Hershberger, Director

Date:	January 13, 2012	/s/ John Heisdorffer
		John Heisdorffer, Director

~~Table of Contents~~35

Iowa Renewable Energy, LLC Notes to Financial Statements

Note 1. Nature of Business and Significant Accounting Policies

Nature of business:

Iowa Renewable Energy, LLC (the Company), located in Washington, Iowa, was formed in April 2005 to pool investors to build a biodiesel manufacturing plant with an annual capacity of 30 million gallons. The Company was in the development stage until July 2007, when it commenced operations. See Note 6 for discussion of management’s plans for current operations.

Significant accounting policies:

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

Concentrations of credit risk: The Company’s cash balances are maintained in bank deposit accounts which at times may exceed federally insured limits. The Company has not experienced any losses in such accounts.

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

Restricted cash: Includes deposits to custodial accounts held by our lender. Debt service reserve: Commencing one month following the conversion date, the Company shall make monthly deposits to a debt service reserve until such time as the balance equals $1,319,265. Monthly deposits shall consist of not less than one-third of all available monthly projected EBITDA. Capital improvements reserve: Commencing one month after the conversion date, the Company shall make deposits into an account held by the Lender. The fund will be used to fund capital improvements. During the term of the loan, the capital improvements reserve must be maintained at $125,000. As part of the Line of credit agreement, discussed in Note 4 below, the Lenders will defer principal payments and pull interest payments from the debt service reserve. The lenders began taking interest payments from the debt service reserve in June of 2010. The balance in the debt service reserve at September 30, 2010 is $728,555 while the Capital Improvements reserve stands at $1,733.

Accounts receivable: Accounts receivable are presented at face value, net of the allowance for doubtful accounts. The allowance for doubtful accounts is established through provisions charged against income and is maintained at a level believed adequate by management to absorb estimated bad debts based on historical experience and current economic conditions. The Company had no sales in the final quarter of the year. All outstanding accounts receivable were collected prior to the end of the period.

The Company’s policy is to charge simple interest on trade receivables past due balances; accrual of interest is discontinued when management believes collection is doubtful. Receivables are considered past due based upon payment terms set forth at the date of the related sale. The Company had no receivables accruing interest at September 30, 2010 or 2009.

Inventory: Inventory is valued at the lower of cost or market using the first-in, first out (FIFO) method. Inventory consists of the following as of September 30, 2010 and 2009:

	2010		2009
Raw material	$	111,951	$	1,418,828
Finished goods		260,596		1,846,825
	$	372,547	$	3,265,653

F-6

Iowa Renewable Energy, LLC Notes to Financial Statements

Organizational costs and startup costs: The Company expenses all organizational and startup costs as incurred.

Property and equipment: Property and equipment is stated at cost. Depreciation of such amounts commenced when the plant began operations. Depreciation is computed using the straight-line method over the following estimated useful lives:

		Years
Plant and process equipment		10 - 20
Office building		10 - 20
Office equipment		3 - 7
Other equipment		3 - 7

Maintenance and repairs are expensed as incurred; major improvements and betterments are capitalized.

The Company reviews its property and equipment for impairment whenever events indicate that the carrying amount of the asset may not be recoverable. An impairment loss is recorded when the sum of the future undiscounted cash flows are less than the carrying amount of the asset. The amount of the loss is determined by comparing the fair market values of the asset to the carrying amount of the asset. No loss has been recorded during the years ended September 30, 2010 or 2009.

Financing costs: Deferred financing costs associated with the construction and revolving loans and the $34,715,000 construction loan (Note 4) include expenditures directly related to securing debt financing. These costs are being amortized using the effective interest method over the 6-year term of the related debt agreement. Deferred financings costs associated with the Company’s line of credit are being amortized using the effective interest method over the 6 month term of the related agreement. Accumulated amortization as of September 30, 2010 and 2009 was $418,586 and $296,695, respectively.

Derivative instruments: The Company has entered into derivative contracts to hedge its exposure to price risk related to forecasted soybean oil purchases and forecasted biodiesel sales. These derivative contracts are to be accounted for under Accounting Standards Codification (ASC) Topic No. 815, Derivatives and Hedging. ASC 815 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as (a) a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment, (b) a hedge of the exposure to variable cash flows of a forecasted transaction, or (c) a hedge of the foreign currency exposure of a net investment in a foreign operation, an unrecognized firm commitment, an available-for-sale security, or a foreign-currency-denominated forecasted transaction.

Although the Company believes its derivative positions are economic hedges, none have been designated as a hedge for accounting purposes and derivative positions are recorded on the balance sheet at their fair market value, with changes in fair value recognized in current period earnings. The following amounts have been included in cost of goods sold for the years ended September 30, 2010 and 2009:

	2010			2009
Realized (gain) loss	$	96,377		$	(692,002	)
Change in unrealized (gain) loss		(66,762	)		131,903
Net (gain) loss	$	29,615		$	(560,099	)

Revenue recognition: Revenue from the production of biodiesel and related products is recorded upon transfer of the risks and rewards of ownership and delivery to customers. Interest income is recognized as earned.

F-7

Iowa Renewable Energy, LLC Notes to Financial Statements

Federal incentive payments and receivables: Revenue from federal incentive programs is recorded when the Company has sold blended biodiesel and satisfied the reporting requirements under the applicable program. When it is uncertain that the Company will receive full allocation and payment due under the federal incentive program, it derives an estimate of the incentive revenue for the relevant period based on various factors including the most recently used payment factor applied to the program. The estimate is subject to change as management becomes aware of increases or decreases in the amount of funding available under the incentive programs or other factors that affect funding or allocation of funds under such programs. The blenders credit expired on December 31, 2009 and only in December 2010 was it extended for 2011 and made retroactive for 2010 No sales after the first quarter included Federal Blenders Incentive.

Cost of sales: The primary components of cost of sales from the production of biodiesel products are raw materials (soybean oil, animal fats, hydrochloric acid, methanol, sodium methylate, and chemicals), energy (natural gas and electricity), and labor. Cost of sales detail for the years ended September 30, 2010 and 2009 is as follows:

Cost Of Revenue/Sales	2010 Dollars		2010 Percentage			2009 Dollars			2009 Percentage
Input costs (soy oil, chemicals, etc.)	$	7,961,421		65.96	%	$	24,580,763			82.50	%
Plant wages and salaries		448,908		3.72			771,670			2.59
Utilities and waste disposal		446,595		3.70			1,055,769			3.54
Fees- procurement		34,250		0.28			142,591			0.48
(Gain) loss on derivative financial instruments		29,615		0.25			(560,099	)		(1.88	)
Depreciation		2,613,358		21.65			2,612,008			8.77
Maint., supplies and other expenses		536,043		4.44			1,192,708			4.00
Total cost of revenue/sales		12,070,190		100.00			29,795,410			100.00

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

Income taxes: The Company is organized as a limited liability company which is accounted for like a partnership for federal and state income tax purposes and generally does not incur income taxes. Instead, the Company’s earnings and losses are included in the income tax returns of its members. Therefore, no provision or liability for federal or state income taxes has been included in these financial statements.

(Loss) per unit: Loss per unit has been computed on the basis of the weighted average number of units outstanding during each period presented.

Fair value of financial instruments: The estimated fair value of financial instruments was determined by reference to various market data and other valuation techniques as appropriate. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate their fair values because of the short maturity of these financial instruments. The carrying value of the debt also approximates fair value as the interest rate reprices when market interest rates change. The fair values of the derivate instruments are based on quoted prices in active exchange-traded or over-the-counter markets.

The Company follows the guidance set forth in ASC Topic 820 for assets and liabilities recognized at fair value on a recurring basis. ASC 820 establishes a framework for measuring fair value and requires enhanced disclosures about assets and liabilities carried at fair value.

F-8

Iowa Renewable Energy, LLC Notes to Financial Statements

As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows:

Level 1 — Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as commodity derivative contracts listed on the Chicago Board of Trade.

Level 2 — Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities included in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs.

Level 3 — Significant inputs to pricing have little or no observability as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as the complex and subjective models and forecasts used to determine the fair value of financial transmission rights.

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of September 30, 2009. There were no assets or liabilities recognized at fair value on September 30, 2010. As required by ASC 820, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

Total Carrying

Significant other

Significant

Value at

Quoted prices in

observable

unobservable

September 30,

active markets

inputs

2009

(Level 1)

(Level 2)

(Level 3)

Liabilities

Derivative financial instruments liabilities

66,762

—

The Company enters into various commodity derivative instruments, including forward contracts, futures, options and swaps. The fair value of the Company’s commodity derivatives is determined using unadjusted quoted prices for identical instruments on the applicable exchange in which the Company transacts. When quoted prices for identical instruments are not available, the Company uses forward price curves derived from market price quotations. Market price quotations are obtained from independent energy brokers, exchanges, direct communication with market participants and actual transactions executed by the Company. Market price quotations for certain inputs are generally readily obtainable for the applicable term of the Company’s outstanding commodity derivative instruments and, therefore, the Company’s forward price curves for those locations and periods reflect observable market quotes.

Note. 2 Major Customer and Related Party

Iowa Renewable Energy, LLC entered into a marketing agreement with Renewable Energy Group (REG), where REG makes efforts to market and sell all of the biodiesel produced. Sales to REG for the years ended September 30, 2010 and 2009 were approximately $9.0 million and $25.9 million, respectively. Related accounts receivable from REG as of September 30, 2010 and 2009 were none and approximately $1.1 million, respectively.

Iowa Renewable Energy, LLC also entered into procurement and management agreements with REG to supply IRE with feedstocks and chemical inputs necessary for production and to manage operations.

Fees under this agreement are based on the number of biodiesel gallons produced and in addition the agreement provides for payment of a yearly bonus based on the Company’s net income. Total fees expensed under the agreement for the years ended September 30, 2010 and 2009 were $131,151 and $541,932, respectively.

On April 3, 2009 the Company received a written notice of termination from REG due to changes in the biodiesel market since the original agreements were signed. Therefore the current agreements expired on June 30, 2010.

F-9

Iowa Renewable Energy, LLC Notes to Financial Statements

On January 29, 2010, the Company and WMG Services LLC (WMG) entered into a Management Services Agreement (Agreement). The Agreement provides that WMG will provide certain facility administration services; accounting services; and marketing, sales, feedstock sourcing and logistic services for the Company in exchange for a monthly asset utilization fee and a monthly performance fee. These fees are determined on a sliding fee scale tied to production. The Agreement commenced July 1, 2010 (Effective Date). The Agreement shall continue for a term of twenty-four (24) months from the Effective Date. Thereafter, the Agreement shall automatically renew for additional successive terms of twelve (12) months, unless either party gives ninety (90) days notice of its desire not to renew. The Agreement may also be terminated for a failure to cure a material breach of the Agreement thirty (30) days after receipt of notice of the breach, or for a change of control. Through September 30, 2010 the Company did not incur any expenses under this agreement.

Note 3. Members’ Equity

The Company was formed on April 14, 2005 to have a perpetual life. The Company has one class of membership unit with each unit representing a pro rata ownership interest in the Company’s capital, profits, losses and distributions. Income and losses are allocated to all members in proportion to units held.

The Company was initially capitalized by 12 members of the original board of directors, contributing an aggregate of $240,000 for 480 units. The Company was further capitalized by 78 members contributing an aggregate of $2,440,000 in exchange for 4,880 units. These units were issued pursuant to a private placement memorandum, limited to Iowa residents in which the Company offered a maximum of 6,000 units at a cost of $500 per unit for a maximum offering of $3,000,000, with all funds collected being considered at-risk capital. Each investor was required to purchase a minimum of 50 units for $25,000, with the option to purchase additional units in increments of one unit for $500 thereafter up to a maximum purchase by a single investor of 100 units for $50,000. Additionally, a total of 500 units were issued to the members of an entity related to the Company through common ownership in exchange for project development services provided pursuant to a consulting agreement. The private placement memorandum for the seed round offering was closed on November 30, 2005.

In April 2006, the Company issued an Iowa registered offering of membership units. The intrastate offering was set for a minimum of 17,595 membership units up to a maximum of 25,095 units for sale at $1,000 per unit, for a minimum offering amount of $17,595,000 and a maximum offering amount of $25,095,000. The minimum purchase requirements were 25 units for a minimum investment of $25,000. The Company began the intrastate offering on April 17, 2006 which was completed on May 1, 2006. A total of 19,371 membership units were issued to 508 members amounting to $19,371,000 of gross proceeds.

In November 2006 the directors exercised 1,100 units at $500 per unit. 100 units were unexercised and expired. In accordance with the Loan agreement, referenced in Note 4 below, the options funds were used for construction contract obligations prior to the initial draw on the loan in December 2006.

Note 4. Long-Term Debt

Long-term debt consists of the following as of September 30, 2010 and 2009:

	2010		2009
Note payable to Marshall Bank Group for construction loan (A)	$	27,142,668	$	29,505,098
Note payable to the Iowa Department of Economic Development (B)		65,000		225,000
Note payable to the Iowa Department of Transportation (C)		250,061		275,478
	$	27,457,729	$	30,005,576

(A) On October 26, 2006, the Company entered into a $34,715,000 construction-term loan agreement which was used to complete the biodiesel project. The loan consisted of two phases: a “construction phase” where the Company made periodic requests for fund advances to meet construction obligations and at the completion of construction, the loan converted to a “senior debt instrument.” Previously, the note bore interest at prime plus .25% and was due in monthly principal and interest payments of $373,000. The loan is secured by substantially all assets of the Company. The Company violated the debt covenants and on April 2, 2009 received a written notice of default from the lender. In conjunction with the line of credit discussed below, the Lender has agreed until February 1, 2011 to allow the Company to defer principal payments on the term debt, interest payments related to the term loan will be charged against the debt service reserve fund, and the Company has been granted a forbearance on the covenant requirements of the term loan, specifically, section 5.02 (m)-(q). In place of the covenants, the Company has additional reporting requirements which accelerate their monthly reporting and provide additional cash flow information to the lender. While this does represent additional external reporting the information provided is data that is currently captured and reported internally. The forbearance also accelerates the maturity date for the entire loan to September 5, 2011 and increases the interest rate to 6.0% plus the one month LIBOR rate in effect two New York Banking Days prior to the beginning of each calendar month (6.26% as of September 30, 2010). New York Banking Days is defined as any day other than Saturday or Sunday that a commercial bank is open for business in New York, New York. The LIBOR margin will be adjusted every six months based on a schedule set in the agreement based on the Company’s leverage ratio at that time.

F-10

Iowa Renewable Energy, LLC Notes to Financial Statements

		Debt service reserve: Commencing one month following the conversion date, the Company shall make monthly deposits to a debt service reserve until such time as the balance equals $1,319,265. Monthly deposits shall consist of not less than one-third of all available monthly projected EBITDA. (See Note 1 for modification.)
		Capital improvements reserve: Commencing one month after the conversion date, the Company shall make deposits into a custodial account held by the Lender. The fund will be used to fund capital improvements. During the term of the loan, the capital improvements reserve must be maintained at $125,000.
		Sinking fund: Commencing one month after the conversion date, one-third of all monthly projected EBITDA shall be applied to reduce loan principal. At the point the outstanding principal loan balance is reduced to $20,182,750 no additional sinking fund deposits will be required.
(B)		The Company has a $300,000 loan agreement and a $100,000 forgivable loan agreement with the Iowa Department of Economic Development. The $300,000 loan is noninterest-bearing and due in monthly payments of $5,000 beginning December 2006 for a term of 60 months with a balance as of September 30, 2010 and 2009 of $65,000 and $185,000, respectively. Borrowings under this agreement are collateralized by substantially all of the Company’s assets and will be subordinate to the $34,715,000 of financial institution debt. The $100,000 loan is forgivable upon the completion of 36 months of the 60 month term. The $100,000 loan was forgiven during the quarter ended December 31, 2009 as the Company met the employment and production criteria defined in the agreement. The forgiveness was included in other income on the statement of operations.
(C)		The Company has a $132,000 loan agreement and a $168,000 forgivable grant agreement with the Iowa Department of Transportation. The $132,000 loan bears interest at 3.67% beginning June 2008 and is due in semi-annual payments of $14,569 beginning December 2008 for a term of 60 months. The balance at September 30, 2010 was $82,061. Borrowings under this agreement are collateralized by substantially all of the Company’s assets and is not subordinate to the $34,715,000 of financial instrument debt. The $168,000 grant is forgivable upon completion of the loan agreement.

Cash payments for long-term debt are as follows:

Year ending September 30:
2011	$	27,229,033
2012		32,342
2013		196,354
	$	27,457,729

On September 2, 2010 the Company entered into a short-term line of credit where MLIC Asset Holdings, LLC, Federation Bank, and Washington State Bank will provide up to a $6.0 million revolving line of credit to be used for the purchase of raw materials. The line of credit term is for a six month period with formal maturity at May 31, 2011. At the maturity date any unpaid principal and accrued interest of the line of credit must be paid. The interest rate to be charged on the line of credit will be an annual rate equal to 12.0% plus the one month Libor rate in effect two New York Banking Days prior to the beginning of each calendar month. New York Banking Days is defined as any day other than Saturday or Sunday that a commercial bank is open for business in New York, New York.

F-11

Iowa Renewable Energy, LLC Notes to Financial Statements

Note 5. Lease Commitment and Other Contingencies

The Company leases a copier under a long-term operating lease that will expire in February 2011. The lease requires payments of $275 per month plus applicable taxes, therefore minimum lease payments under this operating lease for future years is $1,377 during the year ending September 30, 2011.

The European Union is currently leveling tariffs on biofuels exported from the United States due to subsidies paid on biofuels. These tariffs went into effect March 13, 2009. In July 2009, the European Commission decided to extend these tariffs beyond their initial July 2009 expiration date until 2014. The Company will likely face increased competition for sales of its biodiesel and international demand for its product will likely decrease as a result of these tariffs. If any governmental supports are modified or permanently removed and decreased demand for the Company’s biodiesel results, its profitability will be reduced. Because biodiesel has historically been more expensive to produce than diesel fuel, the biodiesel industry has depended on governmental incentives that have effectively brought the price of biodiesel more in line with the price of diesel fuel to the end user. These incentives have supported a market for biodiesel that might not exist without the incentives. The most significant of these incentives for biodiesel is the blenders’ tax credit which provides a $1.00 tax credit per gallon of pure biodiesel, or B100, to the first blender of biodiesel with petroleum based diesel fuel. The blenders’ tax credit expired on December 31, 2009 and only in December 2010 was it extended for 2011 and made retroactive for 2010.

Note 6. Going Concern Matters and Management Plans

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Through September 30, 2010, the Company has generated accumulated losses of $15,256,097, has experienced significant volatility in its input costs and undertaken significant borrowings to finance the construction of the biodiesel plant. The loan agreements with the Company’s lender currently contain covenants that require a minimum ratio of current assets to current liabilities (working capital ratio), minimum debt coverage, fixed charge coverage ratios and a minimum level of equity. The Company is not in compliance with certain of these covenants at September 30, 2010 and it is projected that the Company will fail to comply with one or more of the loan covenants throughout fiscal 2011. Failure to comply with these loan covenants constitutes an event of default under the Company’s loan agreements which, at the election of the lender, could result in the acceleration of the unpaid principal loan balance and accrued interest under the loan agreements or the loss of the assets securing the loan in the event the lender elected to foreclose its lien or security interest in such assets. Furthermore, the loan agreements have been amended such that all principal and interest is due and payable no later than September 5, 2011 and there is no assurance that the Company will be able to secure financing at that time. These issues raise doubt about whether the Company will continue as a going concern.

Beginning January 1, 2010, following the expiration of the Federal Blender’s Credit, the Company went into a “warm shut down” status. In this status, the Company maintained a minimal crew and has used the period to perform maintenance on the plant while selling remaining inventory on the “spot market.” The warm shut down has allowed the Company to reduce expenses and preserve cash; however the low sales level has not covered the reduced cost. The Company is hopeful that the reinstatement of the biodiesel tax credit and the demand created by RFS2 will create sufficient product demand for the Company to resume biodiesel production. Meanwhile, the Company has been in communication with its lender as to the steps it needs to take to resolve this situation. The Company’s ability to continue as a going concern is dependent on the Company’s ability to comply with the loan covenants, the lender’s willingness to waive any noncompliance with such covenants and the Company’s ability to refinance the debt at its maturity date of September 5, 2011. As discussed in Note 4 above, the Company has secured an operating line of credit for $6.0 million. The line of credit is restricted to the purchase of raw materials to be used in the production of biodiesel with a small set aside that can be used for hedging activities. In addition to the line of credit, the Company has secured from its lender forbearance through February 1, 2011 from exercising their remedies under the term loan document with regard to the existing defaults.

F-12

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

McGladrey & Pullen, LLP is our independent registered public accounting firm at the present time. The Company has had no disagreements with its auditors.

ITEM 9A. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

Our management, including our chief executive officer (the principal executive officer), Michel Bohannan, along with our chief financial officer (the principal financial officer), J. William Pim, have reviewed and evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2010. Based on a review and evaluation, these officers believe that our disclosure controls and procedures are effective in ensuring that material information related to us is recorded, processed, summarized and reported within the time periods required by the forms and rules of the Securities and Exchange Commission.

Management’s Report on Internal Control over Financial Reporting

Our management, including our chief executive officer and our chief financial officer, is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Generally Accepted Accounting Principles and includes those policies and procedures that:

• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with Generally Accepted Accounting Principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Our management assessed the effectiveness of our internal control over financial reporting as of September 30, 2010. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on this assessment, our management concluded that, as of September 30, 2010, our integrated controls over financial reporting were effective.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the Frank-Dodd Wall Street Reform and Consumer Protection Act, which exempts non-accelerated filers form the management report requirement.

Changes in Internal Control Over Financial Reporting

Our management, consisting of our chief executive officer and our chief financial officer, have reviewed and evaluated any changes in our internal control over financial reporting that occurred as of September 30, 2010 and there has been no change that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.

The information required by this Item is incorporated by reference to the definitive proxy statement for our 2011 annual Meeting of Members to be filed with the Securities and Exchange Commission within 120 days after the end of our 2010 fiscal year. This proxy statement is referred to in this report as the 2011 Proxy Statement.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by this Item is incorporated by reference to the 2011 Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER MATTERS.

The information required by this Item is incorporated by reference to the 2011 Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

The information required by this Item is incorporated by reference to the 2011 Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The information required by this Item is incorporated by reference to the 2011 Proxy Statement.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

The following exhibits are filed as part of, or are incorporated by reference into, this report:

Exhibit			Method of
No.		Description	Filing
	3.2	Second Amended and Restated Operating Agreement dated March 27, 2010.		1
	10.1	Management Services Agreement between WMG Services LLC and Iowa Renewable Energy, LLC dated January 27, 2010.+		2
	31.1	Certificate pursuant to 17 CFR 240 13a-14(a)		*
	31.2	Certificate pursuant to 17 CFR 240 13a-14(a)		*
	32.1	Certificate pursuant to 18 U.S.C. Section 1350		*
	32.2	Certificate pursuant to 18 U.S.C. Section 1350		*

(*)		Filed herewith.
(+)		Confidential Treatment Requested.
(1)		Incorporated by reference to Exhibit of the same number filed with our quarterly report on Form 10-Q filed with the Securities and Exchange Commission on August 16, 2010.
(2)		Incorporated by reference to Exhibit of the same number filed with our quarterly report on Form 10-Q filed with the Securities and Exchange Commission on February 16, 2010.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	IOWA RENEWABLE ENERGY, LLC
Date: December 29, 2010	/s/ Mike Bohannan
	Mike Bohannan
	Chairman and President
Date: December 29, 2010	/s/ J. William Pim
	J. William Pim
	Chief Financial Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date: December 29, 2010		/s/ Mike Bohannan Mike Bohannan
		Chairman and President
Date: December 29, 2010		/s/ Mark Cobb
		Mark Cobb
		Vice Chairman and Director
Date: December 29, 2010		/s/ Dick Gallagher
		Dick Gallagher
		Secretary and Director
Date: December 29, 2010		/s/ Larry Rippey
		Larry Rippey, Director
Date: December 29, 2010		/s/ Steven Powell
		Steven Powell, Director
Date: December 29, 2010		/s/ Edwin J. Hershberger
		Edwin J. Hershberger, Director
Date: December 29, 2010		/s/ John Heisdorffer
		John Heisdorffer, Director

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