UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 (Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2008
	or
¨	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: 000-51764

 LINCOLNWAY ENERGY, LLC

(Exact name of registrant as specified in its charter)

Iowa	20-1118105
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
59511 W. Lincoln Highway, Nevada, Iowa	50201
(Address of principal executive offices)	(Zip Code)

515-232-1010

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer þ	Smaller Reporting Company o

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 42,049 membership units outstanding at May 1, 2008.

LINCOLNWAY ENERGY, LLC

FORM 10-Q

For the Quarter Ended March 31, 2008

INDEX

			Page
Part I. Financial Information
	Item 1.	Unaudited Financial Statements
		a)  Balance Sheets	2
		b)  Statements of Operations	4
		c)  Statements of Cash Flows	6
		d)  Notes to Unaudited Financial Statements	8
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	15
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
	Item 4T.	Controls and Procedures	30
	Part II.	Other Information
	Item 1.	Legal Proceedings	31
	Item 1A.	Risk Factors	32
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
	Item 3.	Defaults Upon Senior Securities	32
	Item 4.	Submission of Matters to a Vote of Security Holders	32
	Item 5.	Other Information	34
	Item 6.	Exhibits	34
Signatures
Exhibits Filed With This Report
	Rule 13a-14(a) Certification of President and Chief Executive Officer		E-1
	Rule 13a-14(a) Certification of Chief Financial Officer		E-2
	Section 1350 Certification of President and Chief Executive Officer		E-3
	Section 1350 Certification of Chief Financial Officer		E-4

PART I - FINANCIAL INFORMATION

Item 1.Unaudited Financial Statements.

Lincolnway Energy, LLC

Balance Sheets

	March 31, 2008			September 30, 2007
	Unaudited
ASSETS (Note 4)
CURRENT ASSETS
Cash and cash equivalents	$	3,279,906		$	7,856,908
Certificate of deposit		-			428,050
Due from broker		5,655,920			845,169
Trade and other accounts receivable (Note 6)		2,626,342			2,475,593
Inventories (Note 3)		8,940,207			3,671,529
Prepaid expenses and other		172,340			162,215
Derivative financial instruments (Note 7)		-			514,464
Total current assets		20,674,715			15,953,928
PROPERTY AND EQUIPMENT
Land and land improvements		6,969,637			6,966,137
Buildings and improvements		1,601,111			1,587,836
Plant and process equipment		73,506,851			73,319,932
Construction in progress		154,733			92,513
Office furniture and equipment		348,922			332,986
		82,581,254			82,299,404
Accumulated depreciation		(14,712,498	)		(10,681,642	)
		67,868,756			71,617,762
OTHER ASSETS
Restricted cash (Note 4)		351,000			351,000
Financing costs, net of amortization of $101,901 and $80,448		370,061			391,514
Deposit		463,994			504,753
Investments		2,000			2,000
		1,187,055			1,249,267
	$	89,730,526		$	88,820,957

See Notes to Unaudited Financial Statements.

2

	March 31, 2008		September 30, 2007
	(Unaudited)
LIABILITIES AND MEMBERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	1,531,846	$	1,772,703
Accounts payable, related party (Note 5)		811,565		169,088
Current maturities of long-term debt (Note 4)		3,823,874		1,323,346
Accrued expenses		562,847		726,008
Advance payments		1,265,389		-
Derivative financial instruments (Note 7)		2,596,285		117,475
Total current liabilities		10,591,806		4,108,620
LONG-TERM DEBT, less current maturities (Note 4)		22,204,996		24,743,372
COMMITMENTS AND CONTINGENCY (Notes 5, 6 and 8)
MEMBERS’ EQUITY
Member contributions, net of issuance costs, 42,049
units issued and outstanding		38,990,105		38,990,105
Retained earnings		17,943,619		20,978,860
		56,933,724		59,968,965
	$	89,730,526	$	88,820,957

3

Lincolnway Energy, LLC

Statements of Operations

	Three Months Ended March 31, 2008			Three Months  Ended  March 31, 2007
	(Unaudited)
Revenues (Note 6)	$	34,351,843		$	28,873,501
Cost of goods sold		30,650,197			26,387,919
Gross profit		3,701,646			2,485,582
General and administrative expenses		649,972			842,508
Operating income		3,051,674			1,643,074
Other income (expense):
Interest income		27,012			130,990
Interest expense		(307,564	)		(464,662	)
		(280,552	)		(333,672	)
Net income	$	2,771,122		$	1,309,402
Weighted average units outstanding		42,049			42,859
Net income per unit - basic and diluted	$	65.90		$	30.55

See Notes to Unaudited Financial Statements.

4

Lincolnway Energy, LLC

Statements of Operations

	Six Months			Six Months
	Ended			Ended
	March 31, 2008			March 31, 2007
	(Unaudited)
Revenues (Note 6)	$	60,663,118		$	56,941,666
Cost of goods sold		56,351,893			38,393,152
Gross profit		4,311,225			18,548,514
General and administrative expenses		1,415,501			1,459,521
Operating income		2,895,724			17,088,993
Other income (expense):
Interest income		108,735			232,762
Interest expense		(783,575	)		(1,156,428	)
		(674,840	)		(923,666	)
Net income	$	2,220,884		$	16,165,327
Weighted average units outstanding		42,049			42,859
Net income per unit - basic and diluted	$	52.82		$	377.17

See Notes to Unaudited Financial Statements.

5

Lincolnway Energy, LLC

Statements of Cash Flows

	Six Months			Six Months
	Ended			Ended
	March 31, 2008			March 31, 2007
	(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	2,220,884		$	16,165,327
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization		4,062,403			3,999,641
Loss of disposal of property and equipment		25,495			-
Changes in working capital components:
(Increase) decrease in prepaid expenses and other		(10,125	)		60,709
(Increase) decrease in trade and other accounts receivable		(150,749	)		1,603,868
(Increase) in due from broker		(4,810,751	)		(3,871,569	)
Decrease in derivative financial instruments		2,993,274			5,767,924
(Increase) in inventories		(5,268,678	)		(2,581,687	)
Decrease in deposits		40,759			-
(Decrease) in accounts payable		(378,667	)		(196,637	)
Increase in accounts payable, related party		642,477			486,899
Increase in advance payments		1,265,389			-
(Decrease) in accrued expenses		(163,161	)		(157,762	)
Net cash provided by operating activities		468,550			21,276,713
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(181,418	)		(1,507,159	)
Proceeds from redemption of certificate of deposit		428,050			-
Purchase of certificate of deposit		-			(428,050	)
Proceeds from sale of equipment		1,789			-
Net cash provided by (used in) investing activities		248,421			(1,935,209	)
CASH FLOWS FROM FINANCING ACTIVITIES
Member distributions		(5,256,125	)		(6,428,850	)
Proceeds from long-term borrowings		-			153,707
Payments on long-term borrowings		(37,848	)		(6,278,750	)
Net cash (used in) financing activities		(5,293,973	)		(12,553,893	)
Net increase (decrease) in cash and cash equivalents		(4,577,002	)		6,787,611
CASH AND CASH EQUIVALENTS
Beginning		7,856,908			4,731,873
Ending	$	3,279,906		$	11,519,484
(Continued)

6

Lincolnway Energy, LLC

Statements of Cash Flows (Continued)

	Six Months		Six Months
	Ended		Ended
	March 31, 2008		March 31, 2007
	(Unaudited)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION, cash paid for interest	$	892,206	$	1,353,025
SUPPLEMENTAL DISCLOSURES OF NONCASH OPERATING,
INVESTING AND FINANCING ACTIVITIES
Construction in progress included in accounts payable	$	137,810	$	40,248
Reclassification of accrued interest to long-term debt		-		116,781

See Notes to Unaudited Financial Statements.

7

Lincolnway Energy, LLC

Notes to Unaudited Financial Statements

Note 1. Nature of Business and Significant Accounting Policies

Principal business activity: Lincolnway Energy, LLC (the Company), located in Nevada, Iowa, was formed in May 2004 to pool investors to build a 50 million gallon annual production dry mill corn-based ethanol plant. The Company began making sales on May 30, 2006 and became operational during the quarter ended June 30, 2006.

Basis of presentation and other information:

The consolidated balance sheet as of September 30, 2007 was derived from the Company’s audited balance as of that date. The accompanying financial statements as of and for the three and six months ended March 31, 2008 and 2007 are unaudited and reflect all adjustments(consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim periods. These unaudited financial statements and notes should be read in conjunction with the audited financial statements and notes thereto, for the year ended September 30, 2007 contained in the Company’s Annual Report on Form 10-K. The results of operations for the interim periods presented are not necessarily indicative of the results for the entire year.

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.

Income taxes: The Company is organized as 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 the members. Therefore, no provision or liability for federal or state income taxes has been included in these financial statements.

Earnings per unit: Basic and diluted earnings per unit have been computed on the basis of the weighted average number of units outstanding during each period presented.

8

Lincolnway Energy, LLC

Notes to Unaudited Financial Statements

Note 2. Members’ Equity

The Company was formed on May 19, 2004. It was initially capitalized by the issuance of 1,924 membership units totaling $962,000 to the founding members of the Company. The Company has one class of membership units. A majority of the Board of Directors owns a membership interest in the Company. The Company is authorized to issue up to 45,608 membership units without member approval.

Income and losses are allocated to all members based on their pro rata ownership interest. All unit transfers are effective the last day of the month. Units may be issued or transferred only to persons eligible to be members of the Company and only in compliance with the provisions of the operating agreement.

Note 3. Inventories

Inventories consist of the following as of:

	March 31,		September 30,
	2008		2007
Raw materials, including corn, coal, chemicals and supplies	$	1,511,950	$	1,277,700
Work in process		1,782,197		1,151,023
Ethanol and distillers grains		5,646,060		1,242,806
Total	$	8,940,207	$	3,671,529

9

Lincolnway Energy, LLC

Notes to Unaudited Financial Statements

Note 4. Long-Term Debt

Long-term debt consists of the following as of:

	March 31, 2008			September 30, 2007
Construction term loan. (A)	$	22,750,000		$	22,750,000
Construction/revolving term loan. (C)		-			-
Note payable to contractor, interest-only quarterly payments at 5%
due through maturity date of November 2014, secured by real
estate and subordinate to financial institution debt commitments. (B )		1,216,781			1,216,781
Note payable to contractor, unsecured, interest-only quarterly
payments at 4% due through maturity date of May 2021		1,250,000			1,250,000
Note payable to Iowa Department of Economic Development. (D)		257,500			272,500
Note payable to Iowa Department of Economic Development. (D)		100,000			100,000
Note payable to Iowa Department of Transportation. (E)		454,589			477,437
		26,028,870			26,066,718
Less current maturities		(3,823,874	)		(1,323,346	)
	$	22,204,996		$	24,743,372

(A) The Company has a construction and term loan with a financial institution. Borrowings under the term loan include a variable interest rate based on prime less .05%. The agreement requires 30 principal payments of $1,250,000 per quarter commencing in December 2006 through March 2014, with the final installment due May 2014. The agreement requires the maintenance of certain financial and nonfinancial covenants. Borrowings under this agreement are collateralized by substantially all of the Company’s assets. As of March 31, 2008 the Company has been allowed to make prepayments of $16,250,000 without any penalty.

(B) The Company has a $1,100,000 subordinate note payable dated November 17, 2004 to an unrelated third party. Quarterly interest payments began on March 31, 2007. The third party allowed the Company to include the accrued interest of $116,781 through December 2006 into the principal of the note. Principal is due in full at maturity on November 17, 2014.

(C) The Company has a $10,000,000 construction/revolving term credit facility with a financial institution which expires on March 1, 2015. Borrowings under the credit facility agreement include a variable interest rate based on prime less .05% for each advance under the agreement. Borrowings are subject to borrowing base restrictions as defined in the agreement. The credit facility and revolving credit agreement require the maintenance of certain financial and nonfinancial covenants. Borrowings under this agreement are collateralized by substantially all of the Company’s assets. There was no balance outstanding as of March 31, 2008.

10

Lincolnway Energy, LLC

Notes to Unaudited Financial Statements

On July 3, 2007 the $351,000 revolving credit agreement was cancelled. This agreement was for the benefit of a letter of credit that was required by an unrelated third party to lease rail cars. An amendment was made to the lease agreement on June 19, 2007, that allowed the Company to purchase a certificate of deposit for $351,000 in lieu of the letter of credit that is pledged as collateral on the railcar lease. The Company has classified this certificate of deposit as restricted cash in other assets.

(D) The Company also has a $300,000 loan agreement and a $100,000 forgivable loan agreement with the Iowa Department of Economic Development (IDED). The $300,000 loan is noninterest-bearing and due in monthly payments of $2,500 beginning December 2006 and a final payment of $152,500 due November 2012. Borrowings under this agreement are collateralized by substantially all of the Company’s assets and subordinate to the above $39,000,000 financial institution debt and construction and revolving loan/credit agreements included in (A) and (C). The $100,000 loan is forgivable upon the completion of the ethanol production facility and the production of at least 50 million gallons of ethanol before the project completion date of October 31, 2008.

(E) The Company entered into a $500,000 loan agreement with the Iowa Department of Transportation (IDOT) in February 2005. The proceeds were disbursed upon submission of paid invoices. Interest at 2.11% began accruing on January 1, 2007. Principal payments will be due semiannually through July 2016. The loan is secured by all rail track material constructed as part of the plan construction. The debt is subordinate to the above $39,000,000 financial institution debt and construction and revolving loan/credit agreements included in (A) and (C).

11

Note 5. Related-Party Transactions

The Company has an agreement with the Heart of Iowa Coop (HOIC), a member of the Company, to provide 100% of the requirement of corn for use in the operation of the ethanol plant. The Company purchased corn totaling $24,929,636 and $40,925,706 for the three months and six months ended March 31, 2008, respectively. There were corn purchases of $16,133,002 and $27,100,638 for the three months and six months ended March 31, 2007, respectively. As of March 31, 2008, the Company has several corn cash contracts with HOIC amounting to approximately 1,189,000 bushels, for a commitment of approximately $6,308,000 and several basis contracts representing approximately 3,635,000 bushels of corn. The contracts mature on various dates through October 2008. The Company also has made some miscellaneous purchases from HOIC (storage fees, fuel, and propane costs) amounting to $28,025 and $137,642 for the three months and six months ended March 31, 2008, respectively. There were miscellaneous purchases of $86,587 and $119,794 for the three months and six months ended March 31, 2007, respectively. As of March 31, 2008 the amount due to HOIC is $753,357.

The Company is also purchasing anhydrous ammonia and propane from Prairie Land Cooperative, a member of the Company. Total purchases for the three months and six months ended March 31, 2008 is $219,310 and $334,255, respectively. Purchases for the three months and six months ended March 31, 2007 is $103,769 and $215,017, respectively. As of March 31, 2008 the amount due to Prairie Land Cooperative is $58,208. As of March 31, 2008, there was a purchase commitment of $181,137.

Note 6. Commitments and Major Customer

The Company has an agreement with an unrelated entity and major customer for marketing, selling, and distributing all of the ethanol produced by the Company. Under such pooling arrangements, the Company will pay the entity $.01 (one cent) per gallon for each gallon of ethanol sold. This agreement shall be effective until terminated by 45 days’ written notice. The agreement had an initial 12-month term through June 2007. The parties are currently negotiating a new agreement and are still operating under the terms of the existing agreement. For the three months and six months ended March 31, 2008 the Company has expensed $123,875 and $249,790, respectively, under this agreement. Marketing expense for the three months and six months ended March 31, 2007 is $122,120 and $242,886, respectively. Revenues with this customer were $27,593,184 and $51,338,383 for the three months and six months ended March 31, 2008, respectively. For the three months and six months ended March 31, 2007 revenue with this customer is $25,288,491 and $49,649,768, respectively. Trade accounts receivable of $1,535,348 was due from the customer as of March 31, 2008.

The Company had an agreement with an unrelated entity for marketing, selling and distributing all of the distiller’s grains with solubles which are by-products of the ethanol plant. For the three months and six months ended March 31, 2008, the Company has expensed marketing fees of $ 0 and $10,672, respectively, under this agreement. For the three months and six months ended March 31, 2007 is $60,029 and $117,966, respectively. Revenues with this customer were $ 0 and $154,758 for the three months and six months ended March 31, 2008, respectively. For the three months and six months ended March 31, 2007 revenue with this customer is $3,585,011 and $7,291,899, respectively. There was no trade accounts receivable due from the customer as of March 31, 2008.

The Company has entered into a new agreement with an unrelated entity for marketing, selling and distributing the distiller’s grains as of October 1, 2007. For the three months and six months ended March 31, 2008, the Company has expensed marketing fees of $122,554 and $189,083, respectively, under this agreement. There were no expenses reported for the three months and six months ended March 31, 2007. Revenues with this customer were $6,869,750 and $11,317,372 for the three months and six months ended March 31, 2008, respectively. There were no revenues reported for the three months and six months ended March 31, 2007. Trade accounts receivable of $950,135 was due from the customer as of March 31, 2008.

12

The Company has an agreement with an unrelated party to provide the coal supply for the ethanol plant. For the three months and six months ended March 31, 2008 the Company has purchased $1,562,564 and $2,730,002, respectively, of coal under this contract. For the three months and six months ended March 31, 2007 is $1,015,214 and $2,119,834, respectively.

The Company has entered into one variable and one fixed contract with a supplier of denaturant. The variable contract is for a minimum purchase of 144,000 gallons at the national gasoline daily average plus $.235/usg. The term of the contract is from April 1, 2008 through June 30, 2008. The fixed contract is for a minimum purchase of 126,000 gallons at a fixed price of $2.545 per gallon. The total future purchase commitment is $690,894. For the three months and six months ended March 31, 2008, the Company purchased $862,976 and $1,403,169 respectively, of denaturant. For the three months and six months ended March 31, 2007 is $866,688 and $1,774,009, respectively.

Revenue by product is as follows:

(In thousands)	Three Months Ended March 31, 2008		Three Months  Ended  March 31, 2007		Six Months  Ended  March 31, 2008		Six Months  Ended  March 31, 2007
Ethanol	$	27,593	$	25,288	$	51,338	$	49,650
Distiller's Grains	$	6,869	$	3,585	$	11,472	$	7,292
Other	$	83	$	-	$	125	$	-

Note 7. Risk Management

The Company’s activities expose it to a variety of market risks, including the effects of changes in commodity prices. These financial exposures are monitored and managed by the Company as an integral part of its overall risk management program. The Company’s risk management program focuses on the unpredictability of commodity markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results.

The Company maintains a risk management strategy that uses derivative instruments to minimize significant, unanticipated earnings fluctuations caused by market fluctuations. The Company’s specific goal is to protect the Company from large moves in the commodity costs.

To reduce price risk caused by market fluctuations, the Company generally follows a policy of using exchange-traded futures and options contracts to minimize its net position of merchandisable agricultural commodity inventories and forward purchases and sales contracts. In April 2007, the Company started entering into derivative contracts to hedge the exposure to price risk as it relates to ethanol sales. Exchange traded futures and options contracts are designated as non-hedge derivatives and are valued at market price with changes in market price recorded in operating income through cost of goods sold for corn derivatives and through revenue for ethanol derivatives.

13

The effects on operating income from derivative activities is as follows:

	Three Months			Three Months			Six Months			Six Months
	Ended			Ended			Ended			Ended
	March 31, 2008			March 31, 2007			March 31, 2008			March 31, 2007
Increase (decrease) in revenue due to derivatives related to ethanol sales:
Realized	$	(1,095,894	)	$	-		$	(1,620,517	)	$	-
Unrealized		901,375			-			(652,039	)		-
Total effect on revenue		(194,519	)		-			(2,272,556	)		-
(Increase) decrease in cost of goods sold due to derivates related to corn costs:
Realized		210,025			1,313,242			155,206			9,156,775
Unrealized		(248,762	)		(3,857,837	)		(680,106	)		(4,725,825	)
Total effect on cost of goods sold		(38,737	)		(2,544,595	)		(524,900	)		4,430,950
Total increase (decrease) to operating income due to derivative activities	$	(233,256	)	$	(2,544,595	)	$	(2,797,456	)	$	4,430,950

Unrealized gains and losses on forward contracts, in which delivery has not occurred, are deemed “normal purchases and normal sales” under FASB No 133, as amended, and therefore are not marked to market in the Company’s financial statements.

Note 8. Contingency

The Company needs to maintain various permits to be able to maintain and continue its operations. The permits include water and air permits from the Iowa Department of Natural Resources. The Company has obtained these permits, but on December 4, 2007, the Iowa Environmental Protection Commission referred alleged environmental law violations by the Company to the Iowa Attorney General's office for enforcement action. The referred allegations concern wastewater releases relating to construction activities and exceedences of iron and total suspended solid limits in the Company’s NPDES wastewater discharge permit, and concern air permitting, emission limit exceedences, stack testing, monitoring and reporting. Lincolnway Energy will attempt to reach a negotiated settlement of all allegations. The Company cannot predict the outcome, however it is likely that settlement will include a monetary penalty, although an amount cannot be predicted at this time. Such monetary penalty could have a material adverse effect on the Company’s operations and financial condition.

14

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Statement on Forward Looking Statements and Industry and Market Data

Various discussions and statements in this Item and other sections of this quarterly report are or contain forward looking statements that express Lincolnway Energy's current beliefs, projections and predictions about future events. All statements other than statements of historical fact are forward looking statements, and include statements with respect to financial results and condition; anticipated future trends in business, revenues or net income; projections concerning operations, capital needs and cash flow; investment, business, growth, expansion and acquisition opportunities and strategies; management's plans and intentions for the future; competitive position; and other forecasts, projections and statements of expectation. Words such as "expects," "anticipates," "estimates," "plans," "may," "will," "contemplates," "forecasts," "future," "strategy," "potential," "predicts," "projects," "prospects," "possible," "continue," "hopes," "intends," "believes," "seeks," "should," "could," "thinks," "objectives" and other similar expressions or variations of those words or those types of words help identify forward looking statements. Forward looking statements involve and are subject to various risks, uncertainties and assumptions. Forward looking statements are necessarily subjective and are made based on numerous and varied estimates, projections, views, beliefs, strategies and assumptions made or existing at the time of such statements and are not guarantees of future results or performance. Lincolnway Energy disclaims any obligation to update or revise any forward looking statements based on the occurrence of future events, the receipt of new information, or otherwise. Lincolnway Energy cannot guarantee Lincolnway Energy's future results, performance or business conditions, and strong reliance must not be placed on any forward looking statements.

Actual future performance, outcomes and results may differ materially from those suggested by or expressed in forward looking statements as a result of numerous and varied factors, risks and uncertainties, some that are known and some that are not, and many of which are beyond the control of Lincolnway Energy and Lincolnway Energy's management. It is not possible to predict or identify all of those factors, risks and uncertainties, but they include inaccurate assumptions or predictions by management, the accuracy and completeness of the publicly available information upon which part of Lincolnway Energy's business strategy is based and all of the various factors, risks and uncertainties discussed in this Item and in Item 1A of Part II of this quarterly report and the following:

15

·Overcapacity within the ethanol industry;

·Actual ethanol, distillers grains and corn oil production varying from expectations;

·Availability and costs of products and raw materials, particularly corn and coal;

·Changes in the price and market for ethanol and distillers grains;

·Lincolnway Energy's ability to market, and Lincolnway Energy's reliance on third parties to market, Lincolnway Energy's ethanol and distillers grains;

·Railroad and highway access for receipt of corn and coal and outgoing distillers grains and ethanol;

·Changes in or elimination of governmental laws, tariffs, trade or other controls or enforcement practices, such as national, state or local energy policy; federal or state ethanol tax incentives; or environmental laws and regulations that apply to Lincolnway Energy's plant operations and their enforcement;

·Changes in the weather or general economic conditions impacting the availability and price of corn and coal;

·Total U.S. consumption of gasoline;

·Weather changes, strikes, transportation or production problems causing supply interruptions or shortages affecting the availability and price of coal;

·Fluctuations in oil and gasoline prices;

·Changes in plant production capacity or technical difficulties in operating Lincolnway Energy's plant;

·Changes in Lincolnway Energy's business strategy, capital improvements or development plans;

·Results of Lincolnway Energy's hedging strategies;

·Changes in interest rates or the availability of credit;

·Lincolnway Energy's ability to generate free cash flow to invest in Lincolnway Energy's business and service Lincolnway Energy's debt;

·Lincolnway Energy's liability resulting from any litigation or governmental proceedings;

·Plant reliability;

·Lincolnway Energy's ability to retain key employees and maintain labor relations;

·Changes and advances in ethanol production technology; and

·Competition from other ethanol suppliers and from alternative fuels and alternative fuel additives.

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Lincolnway Energy may have obtained industry, market and competitive position data used in this quarterly report or its general business plan from Lincolnway Energy's own research, internal surveys and from studies conducted by other persons, trade or industry associations or general publications and other publicly available information. A trade or industry association for the ethanol industry may present information in a manner that is more favorable to the ethanol industry than would be presented by an independent source. Independent industry publications and surveys also generally state that they have obtained information from sources believed to be reliable, but do not guarantee the accuracy and completeness of any information. Forecasts are in all events likely to be inaccurate, especially over long periods of time, and in particular in a relatively new and rapidly developing and expanding industry such as the ethanol industry.

Overview

Lincolnway Energy is an Iowa limited liability company that was organized on May 19, 2004 for the purpose of constructing and operating a corn based fuel grade ethanol plant in Nevada, Iowa. Lincolnway Energy began producing ethanol and distillers grains on May 22, 2006. Lincolnway Energy's ethanol plant passed performance testing and became fully operational on June 22, 2006. Lincolnway Energy anticipates producing approximately 50 to 55 million gallons of denatured ethanol for the fiscal year ended September 30, 2008.

Lincolnway Energy's revenues are derived from the sale and distribution of its ethanol and distillers grains throughout the United States and Mexico. Lincolnway Energy's ethanol is marketed by Renewable Products Marketing Group. Lincolnway Energy's distillers grain is marketed by Hawkeye Gold, LLC.

Lincolnway Energy expects to fund its operations during the next 12 months using cash flow from continuing operations. Lincolnway Energy also has revolving lines of credit which are available to Lincolnway Energy.

Executive Summary

Highlights for the six months ended March 31, 2008, are as follows:

·Total revenues increased 6.5% or $3.7 million, compared to the 2007 comparable period.

·Total cost of goods sold increased 46.8%, or $18.0 million, compared to the 2007 comparable period.

·Change in derivative activity of $7.2 million, compared to the 2007 comparable period.

·Interest expense decreased 32.2%, or .4 million, compared to the 2007 comparable period.

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·Net income was $2.2 million, compared to net income of $16.2 million for the 2007 period.

·Ethanol sold was 25 million gallons, an increase of 3% or .7 million gallons, compared to the 2007 comparable period.

Plan of Operations

Lincolnway Energy reached a production record for the second fiscal quarter 2008, producing 14.8 million gallons in 91 days of operation. Lincolnway Energy reached this record even though production had to be slowed for centrifuge repairs and stack emissions testing. Lincolnway Energy was able to obtain this record through process improvements and extensive employee training for new and existing team members.

Lincolnway Energy will continue to focus on changes that will bring increased production efficiency and reduction in processing cost. Recent price increases for most ingredients have highlighted the need to reexamine usage rates and optimize the economics of all ingredients used in production. Lincolnway Energy continues to examine new products and new technologies that can improve efficiency and reduce production costs.

A corn oil extraction system was completed and commissioned in April 2008. Lincolnway Energy is currently working to maximize corn oil production capacity. The system is performing as expected in performance projections.

Lincolnway Energy will be continuing to test new process improvements and ingredients that show promise of increasing efficiency. As the Lincolnway Energy staff has matured they have come to better understand the process of manufacturing ethanol, and with that better understanding has come many ideas that once implemented have helped to increase production capacity or increased production efficiency.

Air Permit Testing

During the month of March 2008 Lincolnway Energy underwent a series of emissions tests to provide further support for a future air quality permit application. The tests were conducted on the main combustor stack over a four day time period at varying test parameters. Lincolnway Energy has recently received the results of the testing. The test results are currently being analyzed to determine a future course of action which will be developed in full cooperation with the Iowa Department of Natural Resources.

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Water Permit Testing

Lincolnway Energy’s water test results during the six months ended March 31, 2008 on iron content show full compliance with Lincolnway Energy’s NPDES permit.

Results of Operations

The following table shows the results of operations and the percentages of revenues, cost of goods sold, operating expenses and other items to total revenues in Lincolnway Energy's statement of operations for the three months and six months ended March 31, 2008 and 2007 ( dollars in thousands):

	Three Months Ended March 31,										Six Months Ended March 31,
	(Unaudited)										(Unaudited)
Income Statement Data	2008					2007					2008					2007
Revenue	$	34,352		100.0	%	$	28,874		100.0	%	$	60,663		100.0	%	$	56,942		100.0	%
Cost of goods sold		30,650		89.2	%		26,388		91.4	%		56,352		92.9	%		38,393		67.4	%
Gross Profit		3,702		10.8	%		2,486		8.6	%		4,311		7.1	%		18,549		32.6	%
General and administrative expenses		650		1.9	%		843		2.9	%		1,416		2.3	%		1,460		2.6	%
Operating income		3,052		8.9	%		1,643		5.7	%		2,895		4.8	%		17,089		30.0	%
Other (expense)		(281	)	(.80)	%		(334	)	(1.2)	%		(674	)	(1.1)	%		(924	)	(1.6)	%
Net Income	$	2,771		8.1	%	$	1,309		4.5	%	$	2,221		3.7	%	$	16,165		28.4	%

The following table shows other key data for the periods presented:

	Three Months Ended March 31,				Six Months Ended March 31,
	(Unaudited)				(Unaudited)
Operating Data:	2008		2007		2008		2007
Ethanol sold (gallons in thousands)		12,387		12,212		24,979		24,288
Average gross price of ethanol sold
(dollars per gallon)	$	2.23	$	2.08	$	2.06	$	2.05
Dry distillers grain sold (tons)		36,661		32,887		64,781		70,498
Average dry distillers grain sales price per ton	$	178.42	$	105.53	$	166.33	$	100.82
Average corn cost per bushel	$	4.72	$	3.49	$	4.13	$	3.11

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Results of Operations for the Three Months Ended March 31, 2008 as Compared to the Three Months Ended March 31, 2007

Revenues. Revenues increased by $5.5 million, or 19.0%, to $34.4 million for the three months ended March 31, 2008 from $28.9 million for the three months ended March 31, 2007. The increase in revenue was the result of a 7.2% increase in average gross ethanol price and a 69.0% increase in average dried distillers grain gross price, compared to the three months ended March 31, 2007.

Sales from ethanol increased $2.3 million, or 9.1%, to $27.6 million for the three months ended March 31, 2008 from $25.3 million for the three months ended March 31, 2007. The average price of ethanol sold was $2.23 per gallon for the three months ended March 31, 2008 compared to $2.08 per gallon for the three months ended March 31, 2007. Ethanol sales increased .2 million gallons, or 1.4%, for the three months ended March 31, 2008 when compared to the three months ended March 31, 2007.

Sales from co-products increased by $3.4 million, or 94.0%, to $7.0 million for the three months ended March 31, 2008 from $3.6 million for the three months ended March 31, 2007. The average price of dried distillers grain sold was $178.42 per ton for the three months ended March 31, 2008, compared to $105.53 for the prior comparable period. Dried distillers grain sales increased by 3,774 tons, or 11.5%, for the three months ended March 31, 2008 when compared to the three months ended March 31, 2007. Wet distillers grain sales increased by 3,120 tons, or 81.6%, for the three months ended March 31, 2008 when compared to the three months ended March 31, 2007. For the three months ended March 31, 2008 there were reported sales for excess syrup and corn oil of $83,428. There were no sales for these co-products for the three months ended March 31, 2007.

Revenues included a combined unrealized and realized loss of $.2 million related to ethanol derivative instruments for the three months ended March 31, 2008. Lincolnway Energy did not hold any ethanol derivative instruments for the three months ended March 31, 2007. As ethanol prices fluctuate, the value of Lincolnway Energy's ethanol-related derivative instruments are impacted, which effects Lincolnway Energy's financial performance. Lincolnway Energy expects the volatility in these derivative instruments to continue to have an impact on revenues due to the timing of changes in value of derivative instruments relative to sales. These instruments are the primary tools of Lincolnway Energy’s risk management program for ethanol revenues.

Cost of goods sold. Cost of goods sold increased by $4.3 million, or 16.2%, to $30.7 million for the three months ended March 31, 2008 from $26.4 million for the three months ended March 31, 2007. The increase was primarily due to higher corn cost in the 2008 period compared to the 2007 period. Cost of goods sold major components are: corn, process chemicals, denaturant, coal, electricity, production labor, repairs and maintenance, and depreciation.

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Corn costs increased $7.0 million to $25.0 million for the three months ended March 31, 2008 from $18.0 million for the three months ended March 31, 2007. Corn costs represented 81% of Lincolnway Energy's cost of goods sold for the three months ended March 31, 2008 compared to 69% for the three months ended March 31, 2007.

The increase in corn costs is primarily driven by an increase in cash corn prices compared to the prior period. Lincolnway Energy had a $.04 million marked to market loss during the first quarter of 2008, compared to a $2.5 million loss in the same period in 2007. Since Lincolnway Energy's derivative contracts are marked to market each quarter, the benefits of this risk management tool can cause corn costs to be volatile from quarter to quarter due to the timing of the change in value of the positions relative to the cost and use of the corn commodity being hedged. Corn prices have increased significantly from $3.525 per bushel in January 2007 for March 2007 delivery to $ 5.19 per bushel in January 2008 for March 2008 delivery.

Ethanol freight costs increased $.3 million to $1.9 million for the three months ended March 31, 2008 from $1.6 million for the three months ended March 31, 2007. The increase is due to a 12% increase in the average freight rate per gallon due to an increase in rail rates and also the additional volume of ethanol shipped for the period.

General and administrative expenses. General and administrative expenses decreased $.2 million to $.6 million for the three months ended March 31, 2008 from $.8 million for the three months ended March 31, 2007. The decrease is primarily due to lower cost for professional fees for the 2008 period compared to 2007.

Other income and (expense). Interest expense decreased $.2 million to $.3 million for the three months ended March 31, 2008 from $.5 million for the three months ended March 31, 2007. Lincolnway Energy's variable interest rate on its construction and term loan with Co-Bank has decreased to 5.2% as of March 31, 2008 from 8.2% as of March 31, 2007. Lincolnway Energy has also reduced long term debt by $5.1 million since March 31, 2007.

Results of Operations for the Six Months Ended March 31, 2008 as Compared to the Six Months Ended March 31, 2007

Revenues. Revenues increased by $3.7 million, or 6.5%, to $60.7 million for the six months ended March 31, 2008 from $56.9 million for the six months ended March 31, 2007. The increase in revenue was the result of an increase in ethanol volume sold and an increase in average dried distillers grain gross price, compared to the six months ended March 31, 2007.

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Sales from ethanol increased $1.7 million, or 3.4%, to $51.3 million for the six months ended March 31, 2008 from $49.6 million for the six months ended March 31, 2007. The average price of ethanol sold was $2.06 per gallon for the six months ended March 31, 2008 compared to $2.05 per gallon for the six months ended March 31, 2007. Ethanol sales increased .7 million gallons, or 2.8%, for the six months ended March 31, 2008 when compared to the six months ended March 31, 2007.

Sales from co-products increased by $4.3 million, or 59.0%, to $11.6 million for the six months ended March 31, 2008 from $7.3 million for the six months ended March 31, 2007. The average price of dried distillers grain sold was $166.33 per ton for the six months ended March 31, 2008, compared to $100.82 for the prior comparable period. Wet distillers grain sales increased by 11,801 tons, or 218%, for the six months ended March 31, 2008 when compared to the six months ended March 31, 2007. For the six months ended March 31, 2008 there were reported sales for excess syrup and corn oil of $125,160. There were no sales for these co-products for the six months ended March 31, 2007.

Revenues included a combined unrealized and realized loss of $2.3 million related to ethanol derivative instruments for the six months ended March 31, 2008. Lincolnway Energy did not hold any ethanol derivative instruments for the six months ended March 31, 2007. As ethanol prices fluctuate, the value of Lincolnway Energy's ethanol-related derivative instruments are impacted, which effects Lincolnway Energy's financial performance. Lincolnway Energy expects the volatility in these derivative instruments to continue to have an impact on revenues due to the timing of changes in value of derivative instruments relative to sales. These instruments are the primary tools of Lincolnway Energy’s risk management program for ethanol revenues.

Cost of goods sold. Cost of goods sold increased by $18 million, or 47%, to $56.4 million for the six months ended March 31 2008 from $38.4 million for the six months ended March 31, 2007. The increase was primarily due to higher corn cost in the 2008 period compared to the 2007 period. Cost of goods sold major components are: corn, process chemicals, denaturant, coal, electricity, production labor, repairs and maintenance, and depreciation.

Corn costs increased $19.5 million to $41.6 million for the six months ended March 31, 2008 from $22.1 million for the six months ended March 31, 2007. Corn costs represented 74% of Lincolnway Energy's cost of goods sold for the six months ended March 31, 2008 compared to 58% for the six months ended March 31, 2007.

The increase in corn costs is primarily driven by an increase in cash corn prices compared to the prior period. The corn costs for the six months ended March 31, 2008 also included a marked to market loss of $.5 million for derivatives relating to future deliveries of corn, compared to a $4.4 million marked to market gain in the same period in 2007.

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Ethanol freight costs increased $.6 million to $3.8 million for the six months ended March 31, 2008 from $3.2 million for the six months ended March 31, 2007. The increase is due to a 16% increase in the average freight rate per gallon due to an increase in rail rates and also the additional volume of ethanol shipped for the period.

General and administrative expenses. There was a minimal change in general and administration costs for the six months ended March 31, 2008 when compared to the six months ended March 31, 2007.

Other income and (expense). Interest expense decreased $.4 million to $.8 million for the six months ended March 31, 2008 from $1.2 million for the six months ended March 31, 2007. Lincolnway Energy's variable interest rate on its construction and term loan with Co-Bank has decreased to 5.2% as of March 31, 2008 from 8.2% as of March 31, 2007. Lincolnway Energy has also reduced long term debt by $5.1 million since March 31, 2007.

Risks, Trends and Factors that May Affect Future Operating Results

Corn

Corn prices continued to rise in the first quarter of 2008. This uptrend began in late summer of 2007 near $3.25 per bushel on the Chicago Board of Trade (CBOT) and continues as front month CBOT prices trade 0.15 cents per bushel above or below the $6.00 mark. Current prices are well above historical highs and will likely remain strong through the growing season as yields are determined largely by the weather during the spring and summer months. Strong export and domestic demand for corn, as well as other agricultural crops, along with increasing energy costs, continues to fuel the uptrend.

Lincolnway Energy attempts to offset or hedge some of the risk involved with the changing corn price through the trading of futures and options on the CBOT, as well as the purchase of physical delivery contracts from suppliers. To ensure adequate supply and protection against rapid price increases, Lincolnway Energy has attempted to keep a net corn ownership position of approximately 60-75 days worth of usage, on a continuous basis, using the tools described above. A substantial risk to Lincolnway Energy with respect to corn is a widespread crop failure that would make it economically difficult to secure an adequate supply of feedstock.

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Ethanol

Ethanol prices on the CBOT have been moving higher throughout most of 2008. A strong overall world economy, bolstered by rapid industrialization and growth in China and India, has kept demand for energy on the rise. Those factors have helped ethanol prices rise over 0.45 cents since the start of calendar year 2008. A decrease in the profitability of ethanol production in the third quarter of 2007 helped to temporarily slow the overall expansion of the industry and keep excess production from flooding the market. The net effect of this decreased production growth is being seen in the current price increase. Lincolnway Energy has utilized various hedge instruments in the risk management of ethanol prices. Lincolnway Energy is currently maintaining the ability to capitalize on spot market sales, which Lincolnway Energy currently believes offer the greatest value when compared to sales further out on the calendar.

Crush Margin

The gross crush margin represents the biggest factor affecting the future results of Lincolnway Energy. This margin figure represents the gross profit or loss of buying a bushel of corn and converting it into a gallon of marketable denatured ethanol. All of the fundamental factors that influence the corn or ethanol markets are ultimately expressed in the crush margin. Gross margins have found a good amount of stability in 2008, with a relatively flat standard deviation. The values of corn and ethanol have been strongly correlated in 2008, which is the main contributing factor in the stability of the gross crush margin. Major factors that could change the gross margins, thereby affecting future profitability results of Lincolnway Energy, include weather affecting corn production, changes in governmental policy, and international economic changes.

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ETHANOL AND CORN PRICE COMPARISON – CRUSH MARGIN HISTORY

Source: Chicago Board of Trade

Liquidity and Capital Resources

The following table summarizes Lincolnway Energy's sources and uses of cash and cash equivalents from Lincolnway Energy's unaudited statement of cash flows for the periods presented (in thousands):

Cash Flow Data: ( Unaudited)	Six Months Ended March 31,
	(in thousands)
Cash Flow Data:	2008			2007
Net cash provided by operating activities	$	469		$	21,277
Net cash provided by (used in) investing activities		248			(1,935	)
Net cash (used in ) financing activities		(5,294	)		(12,554	)
Net increase (decrease) in cash and cash equivalents	$	(4,577	)	$	6,788

	As of March 31		As of March 31
Additional Data:	2008		2007		Financial Covenants
Cash and cash equivalents	$	3,280	$	11,519
Working capital	$	10,083	$	16,802	$	5,000
Long term debt	$	22,205	$	27,281
Net worth	$	56,934	$	65,399	$	42,000

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For the six months ended March 31, 2008, net cash provided by operating activities decreased by $20.8 million, when compared to cash provided by operating activities for the six months ended March 31, 2007. The decrease is due to a decrease in net income for the six months ended March 31, 2008 of $14.0 million, a $1.0 million increase in derivative broker accounts, a $2.8 million decrease in derivative financial instruments and a $2.7 million increase in inventories, all when compared to the six months ended March 31, 2007. The decrease in net income for the six months ended March 31, 2008 is primarily due to the increase in corn costs which has a result has lowered the profit margins. The change in derivative broker accounts and financial instruments is due to the volatility of the commodities market and increased margin requirements.

Finished goods inventory is higher for the six months ended March 31, 2008 compared to the six months ended March 31, 2007 due to an ethanol unit train that had not yet been released to the common carrier as of March 31, 2008 and therefore could not be reported as revenue and released in inventory. For the six months ended March 31, 2008, Lincolnway Energy had an increase of $1.3 million of deferred revenue when compared to the six months ended March 31, 2007. This is a result of advance payments from Lincolnway Energy's ethanol marketer on ethanol sales that have not yet been recognized due to the unit train not yet being released to the common carrier.

Cash flows used in investing activities reflect the impact of property and equipment acquired for the ethanol plant and proceeds from investments. Net cash used by investing activities decreased by $2.2 million for the six months ended March 31, 2008 when compared to cash used in investing activities for the six months ended March 31, 2007. The decrease is due to proceeds received from redemption of a certificate of deposit, offset by a reduction of property and equipment purchases for the plant.

Cash flows from financing activities include transactions and events whereby cash is obtained from, or paid to, depositors, creditors or investors. Net cash used in financing activities decreased by $7.3 million for the six months ended March 31, 2008 when compared to cash used in investing activities for the six months ended March 31, 2007. The decrease is due to a decrease in member distribution payments and payments on long-term borrowings for the six months ended March 31, 2008.

As of March 31, 2008, Lincolnway Energy had total debt of $26.0 million, of which $3.8 million is due within one year and is classified as current maturities of long-term debt on the balance sheet. Lincolnway Energy has a $10.0 million revolving term credit agreement available from Co-Bank that had no outstanding balance as of March 31, 2008.

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Lincolnway Energy's financial position and liquidity are, and will be, influenced by a variety of factors, including:

·our ability to generate cash flows from operations;

·the level of our outstanding indebtedness and the interest we are obligated to pay; and

·our capital expenditure requirements, which consists primarily of plant improvements to improve efficiencies.

Lincolnway Energy expects to have available cash to meet its currently anticipated liquidity needs.

Critical Accounting Estimates and Accounting Policies

Lincolnway Energy's financial statements are prepared in conformity with accounting principles generally accepted in the United States of America and follow general practices within the industries in which Lincolnway Energy operates. This preparation requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, actual results could differ from the estimates, assumptions, and judgments reflected in the financial statements. Certain policies inherently have a greater reliance on the use of estimates, assumptions, and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. Management believes the following policies are both important to the portrayal of Lincolnway Energy's financial condition and results of operations and require subjective or complex judgments; therefore, management considers the following to be critical accounting policies.

Revenue Recognition

Revenue from the sale of Lincolnway Energy’s ethanol and distiller’s grain is recognized at the time title and all risk of ownership transfers to the customer, which generally occurs upon shipment to the customer or when the customer picks up the product. For railcar shipments, title passes when the product is released to the common carrier and a bill of lading is produced. For truck shipments, title passes once the truck is filled and leaves the premises of Lincolnway Energy. Shipping, handling costs and marketing fees incurred by Lincolnway Energy for the sale of ethanol and distiller’s grain are included in cost of goods sold.

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Lincolnway Energy’s ethanol production is sold to Renewable Products Marketing Group (RPMG). Lincolnway Energy’s ethanol is pooled with the ethanol of other ethanol producers whose ethanol is marketed by RPMG. Lincolnway Energy pays RPMG a pooling fee of $.01 per gallon of ethanol, and RPMG pays Lincolnway Energy a netback price per gallon that is based upon the difference between the pooled average delivered ethanol selling price and the pooled average distribution expense. The averages are calculated based upon each pool participant’s selling price and expense averaged in direct proportion to the volume of ethanol supplied by each pool participant.

Lincolnway Energy’s distiller’s grain production is sold to Hawkeye Gold, LLC. Lincolnway Energy pays Hawkeye Gold, LLC a marketing fee for dried distiller’s grains equal to the greater of 2% of the FOB plant price for the dried distiller’s grain or a per-ton fee of $1.30 for the dried distiller’s grain. The marketing fee for wet distiller’s grains is the greater of 3% of the FOB plant price for the wet distiller’s grains or a per-ton fee of $1.00 for the wet distiller’s grains.

Derivative Instruments

Lincolnway Energy enters into derivative contracts to hedge its exposure to price risk related to forecasted corn needs and forward corn purchase contracts. Lincolnway Energy does not typically enter into derivative instruments other than for hedging purposes. All the derivative contracts are recognized on the March 31, 2008 balance sheet at their fair market value. Although Lincolnway Energy believes its derivative positions are economic hedges, none has been designated as a hedge for accounting purposes. Accordingly, any realized or unrealized gain or loss related to these derivative instruments is recorded in the statement of operations as a component of cost of goods sold for corn derivatives and through revenue for ethanol derivatives.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

In addition to the various risks inherent in Lincolnway Energy's operation, Lincolnway Energy is exposed to various market risks. The primary market risks arise as a result of possible changes in certain commodity prices.

Lincolnway Energy is exposed to market risk with respect to the price of ethanol, which is Lincolnway Energy's principal product, and the price and availability of corn and coal, which are the principal commodities used by Lincolnway Energy to produce ethanol. The other primary product of Lincolnway Energy is distillers grains, and Lincolnway Energy is also subject to market risk with respect to the price for distillers grains. The prices for ethanol, distillers grains, corn and coal are volatile, and Lincolnway Energy will experience market conditions where the prices Lincolnway Energy receives for its ethanol and distillers grains are declining, but the price Lincolnway Energy pays for its corn, coal and other inputs is increasing. Lincolnway Energy's results will therefore vary substantially over time, and include the possibility of losses, which could be substantial.

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In general, rising ethanol and distillers grains prices result in higher profit margins, and therefore represent favorable market conditions. Lincolnway Energy is, however, subject to various material risks related to its production of ethanol and distillers grains and the price for ethanol and distillers grains. For example, ethanol and distillers grains prices are influenced by various factors beyond the control of Lincolnway Energy's management, including the supply and demand for gasoline, the availability of substitutes and the effects of laws and regulations.

In general, rising corn prices result in lower profit margins and, accordingly, represent unfavorable market conditions. Lincolnway Energy will generally not be able to pass along increased corn costs to its ethanol customers. Lincolnway Energy is subject to various material risks related to the availability and price of corn, many of which are beyond the control of Lincolnway Energy. For example, the availability and price of corn is subject to wide fluctuations due to various unpredictable factors, including weather conditions, crop yields, farmer planting decisions, governmental policies with respect to agriculture and local, regional, national and international trade, demand and supply.

Lincolnway Energy's average gross corn costs during the three and six months ended March 31, 2008 was, respectively, approximately $4.72 and $4.13 per bushel, compared to, respectively, $3.49 and $3.11 per bushel for the three and six months ended March 31, 2007.

During the quarter ended March 31, 2008, corn prices (based on the Chicago Board of Trade daily futures data) ranged from a low of $4.71 per bushel to a high of $6.16 per bushel for May 2008 delivery.

During the quarter ended March 31, 2008, ethanol prices (based on the Chicago Board of Trade daily futures data) ranged from a low of $1.975 per gallon to a high of $2.57 per gallon for May 2008 delivery.

Lincolnway Energy has some price protection in place for April, May and June of 2008 thru short swaps and long calls that net zero gallons. Due to the increasing ethanol prices of late, Lincolnway Energy is primarily in the spot market for ethanol prices.

Lincolnway Energy may from time to time take various cash, futures, options or other positions with respect to its corn needs in an attempt to minimize or reduce Lincolnway Energy's price risks related to corn. Those activities are, however, also subject to various material risks, including that price movements in the cash and futures corn markets are highly volatile and are influenced by many factors and occurrences which are beyond the control of Lincolnway Energy.

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Although Lincolnway Energy intends its futures and option positions to accomplish an economic hedge against Lincolnway Energy's future purchases of corn, Lincolnway Energy has chosen not to use hedge accounting for those positions, which would match the gain or loss on the positions to the specific commodity purchase being hedged. Lincolnway Energy is instead using fair value accounting for the positions, which generally means that as the current market price of the positions changes, the realized and unrealized gains and losses are immediately recognized in Lincolnway Energy's costs of goods sold in the statement of operations. The immediate recognition of gains and losses on those positions can cause net income to be volatile from quarter to quarter due to the timing of the change in value of the positions relative to the cost and use of the commodity being hedged. For example, Lincolnway Energy's net loss on corn derivative financial instruments that was included in its cost of goods sold for the six months ended March 31, 2008 was $524,900, as opposed to the net gain of $4,430,950 for the six months ended March 31, 2007.

The extent to which Lincolnway Energy may enter into arrangements with respect to its ethanol or corn during the year may vary substantially from time to time based on a number of factors, including supply and demand factors affecting the needs of customers to purchase ethanol or suppliers to sell Lincolnway Energy raw materials on a fixed basis, Lincolnway Energy's views as to future market trends, seasonable factors and the cost of future contracts.

Lincolnway Energy's cost per ton for coal under its current coal supply agreement is subject to various fixed and periodic adjustments based on factors which are outside of the control of Lincolnway Energy's management. The factors include changes in certain inflation type indices, increases in transportation costs and the quality of coal. Lincolnway Energy's coal costs will therefore vary, and the variations could be material. Coal costs represented approximately 5% of Lincolnway Energy's cost of goods sold for both the three and six months ended March 31, 2008.

Item 4T. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Lincolnway Energy's  management,  under the supervision and with  the  participation  of  Lincolnway Energy's president and chief executive officer and Lincolnway Energy's chief financial  officer,  have evaluated the  effectiveness of Lincolnway Energy's disclosure  controls  and  procedures  (as defined in Rule  13a-15(e) under the Securities  Exchange  Act of 1934) as of the end of the  period covered by this quarterly report.  Based on that evaluation,  Lincolnway Energy's president and chief executive officer and Lincolnway Energy's chief financial  officer have  concluded  that, as of the end of the period covered by this quarterly report, Lincolnway Energy's disclosure controls and procedures have been effective to provide  reasonable  assurance that the information required to be disclosed in the reports Lincolnway Energy  files or submits  under the Securities Exchange  Act of 1934 is (i)  recorded,  processed, summarized and reported within the time  periods  specified  in the  Securities  and  Exchange Commission's   rules  and  forms,  and  (ii)  accumulated  and  communicated  to management,  including Lincolnway Energy's principal executive and principal financial officers or persons performing such functions,  as appropriate,  to allow timely decisions regarding  disclosure.  Lincolnway Energy believes that a control system, no matter how well designed and operated,  cannot provide absolute  assurance that the  objectives of the control system are met, and no evaluation of controls can provide  absolute  assurance that all control issues and instances of fraud,  if any, within a company have been detected.

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Changes in Internal Control Over Financial Reporting

No change in Lincolnway Energy's internal control over financial reporting occurred during the period covered by this quarterly report that has materially affected, or is reasonably likely to materially affect, Lincolnway Energy's internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

Except as noted in the following paragraph, as of the date of this quarterly report, Lincolnway Energy was not aware of any material pending legal proceeding to which Lincolnway Energy was a party or of which any of Lincolnway Energy's property was the subject, other than ordinary routine litigation, if any, that was incidental to Lincolnway Energy's business. Except as noted in the following paragraph, as of the date of this quarterly report, Lincolnway Energy was not aware that any governmental authority was contemplating any proceeding against Lincolnway Energy or any of Lincolnway Energy's property.

As discussed in Lincolnway Energy's Form 10-K for the fiscal year ended September 30, 2007, the Iowa Environmental Protection Commission referred alleged environmental law violations by Lincolnway Energy to the Iowa Attorney General's office for enforcement action on December 4, 2007. The referred allegations concern wastewater releases relating to construction activities and exceedences of iron and total suspended solid limits in Lincolnway Energy's NPDES wastewater discharge permit and concern air permitting, emissions limit exceedences, stack testing, monitoring and reporting. There have been no material developments regarding that matter since Lincolnway Energy's filing of its Form 10-K for the fiscal year ended September 30, 2007 with the Securities and Exchange Commission on December 21, 2007.

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Item 1A. Risk Factors.

There has been no material change from the risk factors as previously disclosed in Lincolnway Energy's Form 10-K for the fiscal year ended September 30, 2007 and filed with the Securities and Exchange Commission on December 21, 2007. One matter that has changed is that the Energy Independence and Security Act of 2007 was signed into law by President Bush on December 19, 2007, with the Act taking effect on January 1, 2008. The Act does provide support for the ethanol industry, but Lincolnway Energy does not believe that it will have any material effect on Lincolnway Energy's business or financial results or condition in the near term, with the adverse counterveiling factors currently including the high cost of corn.

The various risk factors related to increased corn and input costs have been particularly relevant during the quarter covered by this quarterly report.

An investment in any membership units of Lincolnway Energy involves a high degree of risk and is a speculative and volatile investment. An investor could lose all or part of his or her investment in any membership units.

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

Lincolnway Energy did not sell any membership units during the period of January 1, 2008 through March 31, 2008.

None of Lincolnway Energy's membership units were purchased by or on behalf of Lincolnway Energy or any affiliated purchaser (as defined in Rule 10b-18(a)(3) of the Exchange Act) of Lincolnway Energy during the period of January 1, 2008 through March 31, 2008.

Item 3. Defaults Upon Senior Securities.

There has been no material default in the payment of principal, interest, a sinking or purchase fund installment, or any other material default not cured within thirty days, with respect to any indebtedness of Lincolnway Energy exceeding 5% of the total assets of Lincolnway Energy.

No material arrearage in the payment of distributions or any other material delinquency has occurred with respect to any class of preferred membership units of Lincolnway Energy which is registered or which ranks prior to any class of registered membership units of Lincolnway Energy.

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

The annual meeting of the members of Lincolnway Energy was held on February 18, 2008. The only matters voted upon by the members at the annual meeting were the election of three directors for Lincolnway Energy and the ratification of the appointment of Lincolnway Energy's independent auditor for the fiscal year ending September 30, 2008.

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Lincolnway Energy has nine directors, who are divided into three classes based upon the length of their term. Each director is elected to a three-year term and until his or her successor is elected, and the terms of the directors are staggered so that the term of three of the directors expire each year.

The three directors whose term expired at the annual meeting were Brian Conrad, Timothy Fevold and Jeff Taylor.

At least twenty-five percent of the outstanding membership units needed to be represented at the annual meeting in order for there to be a quorum, and the vote of a plurality of the membership units which were voted on the election of the directors was the act of the members on that matter. A plurality vote means that the three nominees who received the highest number of votes were elected to fill the three director positions.

There were four nominees for the three director positions, and those nominees were Brian Conrad, Timothy Fevold, Jeff Taylor and Bob Finch. Brian Conrad, Timothy Fevold and Jeff Taylor were elected as directors at the annual meeting, to serve until the annual meeting of the members which will be held in 2011 and until their successors are elected.

The number of votes cast for, against or withheld, and the number of abstentions and broker non-votes with respect to the four nominees for election as a director at the annual meeting was as follows:

Name	For		Against Or Withheld		Abstentions		Broker Non-Votes
Brian Conrad		20,309		—		—		—
Timothy Fevold		18,761		—		—		—
Jeff Taylor		22,408		—		—		—
Bob Finch		11,034		—		—		—

The directors whose term of office continued after the annual meeting of the members were William Couser, Terrill Wycoff, Rick Vaughan, James Hill, Kurt Olson and Richard Johnson.

The only other proposal voted upon by the members at the annual meeting was the ratification of the appointment of McGladrey & Pullen, LLP as Lincolnway Energy's independent auditor for the fiscal year ending September 30, 2008. The proposal was approved by the necessary vote of the members, and the number of votes cast for, against or withheld, and the number of abstentions and broker non-votes, regarding the proposal was as follows:

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	Against				Broker
For	or Withheld		Abstentions		Non-Votes
22,262		469		1841		—

Item 5. Other Information.

There was no information required to be disclosed in a report on Form 8-K during the period covered by this quarterly report which was not reported on a Form 8-K.

There were no material changes during the period of January 1, 2008 through March 31, 2008 to the procedures by which the members of Lincolnway Energy may recommend nominees to Lincolnway Energy's board of directors.

The following individuals were elected by the directors to the offices set forth opposite their name at a meeting of the directors held on April 16, 2008.

Name	Office
Jeff Taylor	Chairman
Brian Conrad	Vice Chairman
Kurt Olson	Secretary
Terry Wycoff	Treasurer

The individuals will hold those offices until the first meeting of the directors which follows the annual meeting of the members which is held in 2009 and until their successors are elected.

Rick Brehm continues as the President and Chief Executive Officer of Lincolnway Energy, and Kim Supercynski continues as the Chief Financial Officer.

Item 6.Exhibits.

The following exhibits are filed as part of this quarterly report. Exhibits previously filed are incorporated by reference, as noted.

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			Incorporated by Reference
Exhibit Number	Exhibit Description	Filed Herewith;  Page Number	Form	Period Ending	Exhibit	Filing Date
3.1	Articles of Restatement		10-Q	6/30/07	3.1	8/13/07
3.2	Amended and Restated Operating Agreement and Unit Assignment Policy		10-Q	6/30/07	3.2	8/13/07
*10.1	Design/Build Contract Between Lincolnway Energy, LLC and Fagen, Inc.		10		10.1	1/27/06
10.2	Master Loan Agreement Between Lincolnway Energy, LLC and Farm Credit Services of America		10		10.2	1/27/06
10.3	Construction and Term Loan Supplement Between Lincolnway Energy, LLC and Farm Credit Services of America		10		10.3	1/27/06
10.4	Construction and Revolving Term Loan Supplement Between Lincolnway Energy, LLC and Farm Credit Services of America		10		10.4	1/27/06
10.5	Loan Agreement Between Lincolnway Energy, LLC and Iowa Department of Transportation		10		10.5	1/27/06
10.6	Ethanol Fuel Marketing Agreement Between Lincolnway Energy, LLC and Renewable Products Marketing Group		10		10.6	1/27/06
10.7	Distiller's Grain Marketing Agreement Between Lincolnway Energy, LLC and Hawkeye Gold, LLC		10-K	9/30/07	10.7	12/21/07
10.8	Coal/Energy Consulting Agreement Between Lincolnway Energy, LLC And U.S. Energy		10		10.8	1/27/06

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*10.9	Coal Supply Agreement Between Lincolnway Energy, LLC and Williams Bulk Transfer, Inc. See Exhibit 10.9.1 for an amendment to this agreement.		10		10.9	1/27/06
*10.9.1	Amendment Number One to Coal Supply Agreement Between Lincolnway Energy, LLC and Williams Bulk Transfer, Inc.		10-K	9/30/07	10.9.1	12/21/07
10.10	Loan Agreement Between Lincolnway Energy, LLC and Iowa Department of Economic Development		10		10.10	1/27/06
10.11	Amended and Restated Grain Handling Agreement Between Lincolnway Energy, LLC and Heart of Iowa Cooperative		10		10.11	1/27/06
10.13	Industry Track Contract Between Lincolnway Energy, LLC and Union Pacific Railroad		10-Q	6/30/06	10.13	8/14/06
10.14	Denaturant Purchase Agreement Between Lincolnway Energy, LLC and Quadra Energy Trading Inc.		10-K	9/30/06	10.14	12/21/06
31.1	Rule 13a-14(a) Certification of President and Chief Executive Officer	E-1
31.2	Rule 13a-14(a) Certification of Chief Financial Officer	E-2
32.1	Section 1350 Certification of President and Chief Executive Officer	E-3
32.2	Section 1350 Certification of Chief Financial Officer	E-4

*Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the Securities and Exchange Commission.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LINCOLNWAY ENERGY, LLC
May 14, 2008	By:	/s/ Richard Brehm
		Name: Richard Brehm
		Title:  President and Chief Executive Officer
May 14, 2008	By:	/s/ Kim Supercynski
		Name: Kim Supercynski
		Title:  Chief Financial Officer

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EXHIBIT INDEX

Exhibits Filed With Form 10-Q

of Lincolnway Energy, LLC

For the Quarter Ended March 31, 2008

Description of Exhibit.				Page
	31.	Rule 13a-14(a)/15d-14(a) Certifications
		31.1	Rule 13a-14(a) Certification of President and Chief Executive Officer	E-1
		31.2	Rule 13a-14(a) Certification of Chief Financial Officer	E-2
	32.	Section 1350 Certifications
		32.1	Section 1350 Certification of President and Chief Executive Officer	E-3
		32.2	Section 1350 Certification of Chief Financial Officer	E-4

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