Form S-1 Registration Statement

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

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

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information contained in this prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

This is the initial public offering of our Common Stock. No public market currently exists for our Common Stock. We are offering shares of our Common Stock and the selling stockholders identified in this prospectus are selling shares of our Common Stock offered by this prospectus. We will not receive any of the proceeds from the Common Stock sold by the selling stockholders. We expect the public offering price to be between $ and $ per share.

Following this offering, we will have two classes of authorized common stock, Common Stock and Class A Common Stock. The rights of the Common Stock and Class A Common Stock are identical, including rights with respect to voting and dividends. However, the Class A Common Stock will not be listed for trading on any stock exchange. Shares of Class A Common Stock will automatically convert into shares of Common Stock upon expiration of the underwriter lock-up agreements described herein.

We intend to apply to list our Common Stock on the Nasdaq Global Market, under the symbol “REGI.”

Investing in our Common Stock involves a high degree of risk. Before buying any shares, you should carefully read the discussion of material risks of investing in our Common Stock in “Risk factors” beginning on page 9 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters may also purchase up to an additional shares of our Common Stock from us at the public offering price, less underwriting discounts and commissions, to cover over-allotments, if any, within 30 days from the date of this prospectus. If the underwriters exercise this option in full, the total underwriting discounts and commissions will be $ . Our total proceeds, after underwriting discounts and commissions but before expenses, will be $ based on a public offering price of $ , the midpoint of the price range set forth above.

The underwriters are offering the Common Stock as set forth under “Underwriting.” Delivery of the shares will be made on or about , 2011.

You should rely only on the information contained in this prospectus and any free writing prospectus we may specifically authorize to be delivered or made available to you. We, the selling stockholders and the underwriters have not authorized anyone to provide you with additional or different information. The information contained in this prospectus or any free writing prospectus is accurate only as of its date, regardless of its time of delivery or of any sale of shares of our Common Stock. Our business, financial condition, results of operations and prospects may have changed since that date.

This prospectus is an offer to sell only the shares offered hereby but only under circumstances and in jurisdictions where it is lawful to do so.

Prior to February 26, 2010, the “Company,” “we” “us” “our” and similar references refer to the business, results of operations and cash flows of REG Biofuels, Inc., formerly Renewable Energy Group, Inc., which is considered the accounting predecessor to Renewable Energy Group, Inc., formerly, REG Newco, Inc. On or after February 26, 2010, such references refer to the business, results of operations and cash flows of Renewable Energy Group, Inc., and its consolidated subsidiaries.

“ASTM” refers to the American Society for Testing and Materials International, an organization that develops and delivers international voluntary consensus standards, including United States standards for fuel.

“ASTM D6751” refers to the ASTM specification for pure biodiesel, or B100, in the United States.

“ASTM D7467” refers to the ASTM specification for biodiesel blends in the United States from 6% to 20% biodiesel.

“ASTM D975” refers to the ASTM specification for diesel fuel in the United States, which includes up to 5% biodiesel.

“B2, B5, B6, B10, B11, B99.9 and B100” refer to blends of biodiesel with petroleum-based diesel. The number represents the biodiesel percentage of the blend. For instance, a blend of 5% biodiesel and 95% petroleum-based diesel would be represented as B5.

“blender’s tax credit” refers to the federal excise tax credit of $1.00 per gallon of biodiesel that is available to the person who blends biodiesel with petroleum-based diesel.

“BQ-9000” refers to a cooperative and voluntary program for the accreditation of biodiesel producers and marketers. The program combines the ASTM standard for biodiesel, ASTM D6751, and a quality systems program that includes storage, sampling, testing, blending, shipping, distribution and fuel management practices.

“nameplate production capacity” refers to the production capacity of a particular facility based on the expected annual throughput in gallons based upon producing at 100% of design capacity for approximately 330 days per year using a particular feedstock.

“Obligated Parties” refers to petroleum refiners and petroleum fuel importers in the 48 contiguous states and Hawaii that have annual renewable fuel volume obligations to use biofuels under RFS2.

“RFS” refers to the renewable fuel standard created under the Energy Policy Act of 2005, which established the first renewable fuel volume requirement in the United States.

“RFS2” refers to the expanded renewable fuel standard that became effective July 1, 2010 requiring for the first time that a specific portion of the diesel fuel consumed in the United States annually be renewable.

“RIN” refers to a renewable identification number, which is a unit of measurement generated in connection with the production or importation of renewable fuel that may be used to satisfy certain renewable fuel requirements of RFS2.

“RVO” refers to a renewable volume obligation, the annual renewable fuel volume requirement for an Obligated Party under RFS2.

“ULSD” refers to ultra low sulfur diesel, which is diesel fuel containing 15 parts per million or less of sulfur, which is the current United States standard for on-road diesel fuel.

Prospectus summary

This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider before investing in our Common Stock. You should read this entire prospectus carefully, including our consolidated financial statements and the related notes and the information set forth under the headings “Risk factors” and “Management’s discussion and analysis of financial condition and results of operations,” in each case included elsewhere in this prospectus.

OUR BUSINESS

We are the largest producer of biodiesel in the United States. We have played a leading role in developing the United States biodiesel industry since our inception in 1996. We market and distribute our biodiesel throughout the country to all segments of the petroleum-based distillate fuel supply chain. In 2010, we sold nearly 68 million gallons of biodiesel, representing approximately 22% of United States biodiesel production. Our strategy is to optimize and grow our core biodiesel business, to diversify into renewable chemicals and additional advanced biofuels, and to expand internationally.

We have led the consolidation of the United States biodiesel industry. We operate six biodiesel plants, with an aggregate nameplate production capacity of 212 million gallons per year, or mmgy, consisting of five wholly-owned facilities and one leased facility. We have acquired four of our six facilities since February 2010. Our scale allows us to quickly transfer best practices at one of our facilities to the others to maximize production volumes and cost efficiencies. We believe our fully integrated approach, which includes acquiring feedstock, managing biorefinery facility construction and upgrades, operating biorefineries and marketing renewable products, strongly positions us to capitalize on growing demand for biodiesel, renewable chemicals and other advanced biofuels.

We are a low-cost biodiesel producer. We primarily produce our biodiesel from a wide variety of lower cost feedstocks, including inedible animal fat, used cooking oil and inedible corn oil. We believe our ability to process these feedstocks provides us with a cost advantage over many biodiesel producers, particularly those that rely on higher cost virgin vegetable oils, such as soybean oil. In addition, we believe our size, reputation, large and diverse feedstock supplier base and processing capabilities give us a competitive advantage over other biodiesel producers.

Biodiesel addresses a large existing market. Biodiesel is a low carbon, advanced biofuel and drop-in replacement for petroleum-based distillate fuel, which, according to the United States Energy Information Administration, or EIA, was a 522 billion gallon per year global market in 2007, the latest year for which global data is available. Biodiesel is compatible with the existing diesel and distillate fuel infrastructure. The largest segment of the distillate fuel market is diesel fuel for on-road and off-road use, which market also includes fuel oils used for heating and power generation. In 2009, the United States market for distillate fuel was 52.7 billion gallons, according to the EIA. On July 1, 2010, the expanded renewable fuel standard, or RFS2, became effective, requiring for the first time that a portion of the diesel fuel consumed in the United States be renewable. RFS2 requires that Obligated Parties use 800 million gallons of biomass-based diesel in 2011, one billion gallons in 2012 and at least one billion gallons each year thereafter through 2022. Recently, the United States Environmental Protection Agency, or EPA, proposed a requirement that 1.28 billion gallon of biomass-based diesel be used in 2013. Biodiesel is currently the only commercially significant RFS2-compliant biomass-based diesel fuel produced in the United States. As a result, demand for biodiesel has increased significantly. In the first five months of 2011, 297 million gallons of biodiesel were produced in the United States, while 311 million gallons were produced in all of 2010.

OUR COMPETITIVE STRENGTHS

Largest United States Biodiesel Producer. We believe the scale of our operations allows us to enjoy several advantages over many of our competitors. First, we offer lower cost feedstock producers consistent access to the renewable fuel industry on a scale that we believe our competitors generally cannot match. Second, our size allows us to provide our customers with larger volumes of biodiesel than our smaller competitors. Third, our larger size also generally allows us to reduce our overhead costs per gallon compared to our smaller competitors. Fourth, we are able to transfer best practices among our six operating facilities to maximize production volumes and reduce operating costs, in a manner that our competitors who do not operate multiple facilities cannot.

Multi-Feedstock Expertise. We utilize our proprietary technology and knowhow to efficiently convert a wide variety of lower cost feedstocks into high quality biodiesel. We believe our ability to process lower cost feedstocks at scale enables us to be a low cost producer and provides a distinct advantage against many of our competitors. Several of our competitors’ facilities are only able to process higher cost virgin vegetable oil feedstocks. Our competitors that are able to process lower cost feedstocks generally operate at a smaller scale, making it more difficult for them to reliably procure and efficiently process lower cost feedstocks.

Effective Acquisitions. We have led the consolidation of the United States biodiesel industry, acquiring six biodiesel plants since our inception. We have developed an ability to target and acquire strategic assets and quickly add value to them through upgrades and integration onto our biorefinery platform. We believe our in-house expertise will allow us to continue to acquire and effectively integrate new production facilities as we grow and further consolidate the biodiesel industry.

Strategic relationships with other industry participants. We have established strategic relationships with other industry participants, particularly Bunge North America, Inc., or Bunge, ED&F Man Holdings Limited, or ED&F Man, and West Central Cooperative, or West Central, with whom we trade feedstock and biodiesel. These relationships enable us to more effectively address market opportunities and provide us with an advantage over our competitors that have not been able to establish such strategic relationships.

Sales and Marketing Leadership. We are a leading marketer of biodiesel in the United States, marketing both biodiesel we produce as well as biodiesel produced by others. The scale of our operations, combined with our logistics capabilities, allows us to satisfy local and national customer needs in a manner that we believe most other biodiesel producers and marketers cannot match. In addition, the customer support provided by our large sales and technical teams provides us with further competitive advantages.

Premium Product Quality. Our REG-9000^® biodiesel exceeds the ASTM D6751 biodiesel quality specification. In addition, all of our operating facilities are either certified as BQ-9000 Producers or follow BQ-9000 protocols and are in the process of obtaining certification. Some larger customers require specifications stricter than ASTM D6751. The ability of our REG-9000^® biodiesel to meet stricter specifications than the industry standards and our BQ-9000 accreditation enables us to sell to a broader customer base than our competitors who cannot meet these customer requirements.

Experienced Management Team with Significant Risk Management Expertise. Our management team has extensive experience in the biodiesel and related oleochemical and agricultural industries, with an average of 19 years of relevant experience. Our management team has enabled our company to evolve from a single biodiesel production facility in 1996 into a nationally recognized fully integrated biodiesel company. Our team also has extensive experience in managing risk related to commodity pricing, which is an essential component of effective biorefinery management.

OUR STRATEGY

Our strategy is to optimize and grow our core biodiesel business, to diversify our biorefinery assets to produce renewable chemicals, additional advanced biofuels and next generation feedstocks, and to expand internationally.

Optimize and expand our fully-integrated biodiesel offering. We intend to enhance the capabilities and increase the production capacity of our existing plants by investing in high-value processing upgrades to further improve yields and optimize the range of usable lower cost feedstocks at our production facilities. We also plan to continue to consolidate the biodiesel industry and expand our existing biorefinery platform by continuing to strategically acquire biodiesel plants.

Diversify into the production of renewable chemicals, additional advanced biofuels and related products. Our track record of successfully commercializing new biorefinery technologies positions us well to diversify into the production of renewable chemicals and additional advanced biofuels, such as renewable diesel and jet fuel. We also plan to vertically integrate by producing next generation feedstocks, such as algae oil.

Grow our business internationally. We intend to expand into select international markets, which may include Europe, South America and Asia, where we believe we can leverage our existing fully integrated biorefinery platform or leverage our existing strategic relationships with industry participants operating in such markets. In addition, we plan to acquire or invest in biodiesel, renewable chemicals or other advanced biofuel production and distribution assets targeting large end-user or large feedstock generating markets.

Expand our intellectual property base. We intend to build upon our existing intellectual property portfolio and develop and acquire additional intellectual property to support our business and to expand into renewable chemicals, additional advanced biofuels, next generation feedstocks and related renewable products.

RISKS ASSOCIATED WITH OUR BUSINESS

Our business is subject to numerous risks. Before you invest in our Common Stock, you should carefully consider all the information in this prospectus, including matters set forth under the heading “Risk factors” beginning on page 9 of this prospectus. These risks include, among others, that:

a loss or reduction of governmental requirements for the use of biofuels could have a material adverse affect on our revenues and operating margins;

our gross margins are dependent on the spread between feedstock costs and biodiesel prices;

the costs of raw materials that we use as feedstocks are volatile and our results of operations could fluctuate substantially as a result;

we have limited working capital and a recent history of unprofitable operations, and these working capital constraints may limit our growth and may cause us to curtail our operations or forgo sales;

we and certain subsidiaries have substantial indebtedness, which subjects us to potential defaults, and could adversely affect our ability to raise additional capital to fund our operations and limit our ability to react to changes in the economy or the biodiesel industry;

a loss or reductions of tax incentives for biodiesel production or consumption could have a material adverse affect on our revenues and operating margins;

despite our current debt levels, we and our subsidiaries may incur substantially more debt. This could exacerbate the risks associated with our substantial indebtedness;

our success depends on our ability to manage our growing and changing operations;

risk management transactions could significantly increase our operating costs and working capital requirements if we incorrectly estimate our feedstock demands and biodiesel sales as compared to market conditions; and

one customer accounted for a meaningful percentage of revenues and a loss of this customer could have an adverse impact on our total revenues.

CORPORATE INFORMATION

Our predecessor, REG Biofuels, Inc., formerly named Renewable Energy Group, Inc., was formed under the laws of the State of Delaware in August 2006 upon acquiring the assets and operations of the biodiesel division of West Central and two of West Central’s affiliated companies, InterWest, L.C. and REG, LLC. We were incorporated in Delaware in April 2009.

Our principal executive offices are located at 416 South Bell Avenue, Ames, Iowa 50010. Our telephone number at that location is (515) 239-8000. Our website address is www.regfuel.com. Information on our website is not part of this prospectus and should not be relied upon in determining whether to make an investment decision.

Renewable Energy Group, REG, the REG logo, and REG-9000^® referenced in this prospectus are our trademarks or service marks or registered trademarks or service marks. All other trademarks, trade names and service marks appearing in this prospectus are the property of their respective owners.

The offering

Common Stock offered by us

shares (or shares if the underwriters exercise their over-allotment option in full)

Common Stock offered by the selling stockholders

Common Stock to be outstanding after this offering

shares (or shares if the underwriters exercise their over-allotment option in full)

Class A Common Stock to be outstanding after this offering

Total Common Stock and Class A Common Stock to be outstanding after this offering

shares (or shares if the underwriters exercise their over-allotment option in full)

Over-allotment option

The underwriters have an option to purchase a maximum of additional shares of Common Stock from us to cover over-allotments. The underwriters could exercise this option at any time within 30 days from the date of the prospectus.

Use of proceeds

We intend to use the net proceeds received by us from this offering to exercise the option we hold to acquire our facility in Seneca, Illinois, which we currently lease, with the remaining proceeds to be used for working capital, capital expenditures related to improvements of production processes and logistics, investments in new biofuel businesses, production technologies or other assets, and in opportunities to extend our biorefinery platform to the production of renewable chemicals and feedstocks. If the underwriters exercise their over-allotment option, the first $15.0 million of net proceeds, or such lesser amount if the net proceeds are less than $15.0 million, will be used for certain payments to the former holders of the Series A preferred stock. We intend to use any net proceeds from the exercise of the over-allotment option in excess of $15.0 million as described in the first sentence above. See “Use of proceeds” on page 32. We will not receive any of the proceeds from the sale of Common Stock by the selling stockholders.

Risk factors

See “Risk factors” beginning on page 9 of this prospectus for a discussion of factors you should carefully consider before deciding to invest in our Common Stock.

Proposed the Nasdaq Global Market symbol

“REGI”

The total number of shares of our Common Stock and Class A Common Stock outstanding after this offering is based on no shares of our Common Stock and shares of our Class A Common Stock outstanding (after giving pro forma effect to the reclassification of our existing common stock into an equivalent number of shares of Class A Common Stock), as of March 31, 2011 and:

Includes shares of Class A Common Stock that will be issued as part of the conversion of our outstanding Series A preferred stock and exchange of existing warrants to purchase shares of our common stock;

Excludes up to shares of Common Stock issuable upon the conversion of the Series B preferred stock issuable pursuant to the recapitalization;

Excludes shares of Class A Common Stock issuable upon the exercise of warrants to purchase Class A Common Stock that will remain outstanding following this offering;

Excludes shares of Class A Common Stock issuable upon the exercise of outstanding restricted stock units, or RSUs;

Excludes shares of Class A Common Stock issuable upon the exercise of outstanding options, at a weighted average exercise price of $ per share; and

Excludes shares of Class A Common Stock reserved for future issuance under our 2009 Stock Incentive Plan.

Unless otherwise indicated, all information in this prospectus assumes:

The reclassification of our existing common stock into an equivalent number of shares of our Class A Common Stock and the authorization of our Common Stock;

That our third amended and restated certificate of incorporation, which we will file in connection with the completion of this offering, is in effect;

Except for the financial statements and notes thereto, the conversion, effective immediately prior to the completion of this offering, of all outstanding shares of our Series A preferred stock for an aggregate of shares of Class A Common Stock and 3,000,000 shares of Series B preferred stock, which number includes up to 400,000 shares of Series B preferred stock, issuable upon expiration of the underwriters’ over-allotment option, to be reduced proportionately if the net proceeds from that exercise are greater than $5.0 million and less than $15.0 million, as described under “Use of proceeds”; and

No exercise by the underwriters of their over-allotment option to purchase up to additional shares of Common Stock from us.

All references in this prospectus to common stock include our existing common stock, our Common Stock and our Class A Common Stock. As set forth in the section entitled “Description of capital stock,” all shares of Class A Common Stock outstanding following this offering will automatically convert into shares of Common Stock upon expiration of the underwriters lock-up described in the section entitled “Underwriting.”

Summary consolidated financial data

The summary consolidated statements of operations data for each of the three years in the period ended December 31, 2010 have been derived from our audited consolidated financial statements that are included elsewhere in this prospectus. The summary consolidated balance sheet data as of March 31, 2011 and the summary consolidated statements of operations data for each of the three months ended March 31, 2011 and 2010 have been derived from our unaudited condensed consolidated financial statements that are included elsewhere in this prospectus. You should read this information together with the consolidated financial statements and related notes, unaudited pro forma as adjusted financial information and other information under “Management’s discussion and analysis of financial condition and results of operations” included elsewhere in this prospectus. Operating results for the three months ended March 31, 2011 are not necessarily indicative of the results that may be expected for the year ended December 31, 2011.


	Year ended December 31,									Three months ended March 31,
Consolidated Statement of Operations Data:	2010(1)			2009			2008(2)			2011			2010
	(in thousands, except share and per share amounts)

Revenues:
Biodiesel sales	$	207,902		$	109,027		$	69,509		$	100,074		$	32,975
Biodiesel government incentives		7,240			19,465			6,564			4,340			3,652

Total biodiesel		215,142			128,492			76,073			104,414			36,627
Services		1,313			3,009			9,379			21			862

Total revenues		216,455			131,501			85,452			104,435			37,489

Costs of goods sold:
Biodiesel		194,016			127,373			78,736			96,189			34,824
Services		807			1,177			4,470			18			415

Total costs of goods sold		194,823			128,550			83,206			96,207			35,239

Gross profit		21,632			2,951			2,246			8,228			2,250
Total operating expenses		29,681			24,144			24,208			6,278			5,227

Income (loss) from operations		(8,049	)		(21,193	)		(21,962	)		1,950			(2,977	)

Total other income (expense), net		(16,102	)		(1,364	)		(2,318	)		1,851			(55	)

Income (loss) before income tax benefit (expense) and loss from equity investments		(24,151	)		(22,557	)		(24,280	)		3,801			(3,032	)
Income tax benefit (expense)		3,252			(45,212	)		9,414			—			6,328
Loss from equity investments		(689	)		(1,089	)		(1,013	)		(65	)		(215	)

Net income (loss)		(21,588	)		(68,858	)		(15,879	)		3,736			3,081
Less: Net loss attributable to noncontrolling interests		—			7,953			2,788			—			—

Net income (loss) attributable to the company		(21,588	)		(60,905	)		(13,091	)		3,736			3,081
Effects of recapitalization		8,521			—			—			—			8,521
Less: accretion of preferred stock to redemption value		(27,239	)		(44,181	)		(26,692	)		(5,896	)		(11,068	)
Less: undistributed dividends allocated to preferred stockholders		(10,027	)		(14,036	)		(11,145	)		(3,061	)		(1,147	)

Net loss attributable to the company’s common stockholders	$	(50,333	)	$	(119,122	)	$	(50,928	)	$	(5,221	)	$	(613	)

Net loss per share attributable to common stockholders:
Basic	$	(1.71	)	$	(6.14	)	$	(3.07	)	$	(0.16	)	$	(0.03	)

Diluted (3)	$	(1.71	)	$	(6.14	)	$	(3.07	)	$	(0.16	)	$	(0.03	)


	Year ended December 31,						Three months ended March 31,
Consolidated Statement of Operations Data:	2010(1)		2009		2008(2)		2011		2010
	(in thousands, except share and per share amounts)
Weighted-average shares used to compute net loss per share attributable to common stockholders:
Basic		29,427,120		19,407,227		16,593,555		33,148,940		22,996,011

Diluted(3)		29,427,120		19,407,227		16,593,555		33,148,940		22,996,011

Pro forma net loss per share attributable to common stockholders(4):
Basic	$						$

Diluted	$						$

Pro forma weighted-average shares used to compute net loss per share attributable to common stockholders(4):
Basic

Diluted

(1)

Reflects the deconsolidation of Blackhawk Biofuels, LLC, or Blackhawk, as of January 1, 2010, the acquisition of Blackhawk as of February 26, 2010, the acquisition of Central Iowa Energy, LLC, or CIE, as of March 8, 2010, the consolidation of Seneca Landlord, LLC, or Landlord, as of April 8, 2010, the acquisition of Tellurian Biodiesel, Inc., or Tellurian, and American BDF, LLC, or ABDF, as of July 16, 2010, and the acquisition of Clovis Biodiesel, LLC, as of September 21, 2010.

(2)

Reflects the consolidation of Blackhawk as of May 9, 2008 and the acquisition of U.S. Biodiesel Group, Inc., or USBG, as of June 26, 2008.

(3)

Certain potentially dilutive securities were excluded from the calculation of diluted net loss per share attributable to common stockholders during the periods presented as the effect was anti-dilutive.

(4)

The pro forma per share amounts give effect to (i) the filing of our second amended and restated certificate of incorporation, (ii) the automatic conversion of all outstanding shares of Series A preferred stock and the reclassification of our existing common stock into an aggregate of shares of Class A Common Stock and 3,000,000 shares of Series B preferred stock in the recapitalization transactions that will occur in connection with this offering, (iii) the issuance of 500,000 shares of Class A Common Stock to USRG Holdco IX, LLC immediately prior to the completion of this offering in connection with the termination of the Glycerin Option Agreement dated as of April 8, 2010, between us and USRG Holdco IX, LLC and (iv) the issuance of shares of Class A Common Stock in exchange for existing warrants to purchase shares of Class A Common Stock, as if such actions had occurred on the first day of the applicable period.


	As of March 31, 2011
Consolidated Balance Sheet Data:	Actual			Pro Forma(1)	Pro Forma as Adjusted(2)
				(in thousands)
Cash and cash equivalents	$	4,363
Working capital (deficit)(3)		(1,655	)
Total assets		385,786
Total liabilities		223,508
Total stockholders’ equity		33,946

(1)

The pro forma column in the consolidated balance sheet data table above reflects the conversion of all outstanding shares of our Series A preferred stock into shares of Class A Common Stock and 3,000,000 shares of Series B preferred stock in recapitalization transactions that will occur in connection with this offering.

(2)

The pro forma as adjusted column in the consolidated balance sheet data table above reflects (i) the conversion of all outstanding shares of our Series A preferred stock into shares of Class A Common Stock and 3,000,000 shares of Series B preferred stock in the recapitalization transactions that will occur in connection with this offering, (ii) the issuance of shares of Class A Common Stock to USRG Holdco IX, LLC immediately prior to the completion of this offering in connection with the termination of the Glycerin Option Agreement dated as of April 8, 2010, between us and USRG Holdco IX, LLC, (iii) the issuance of shares of Class A Common Stock in exchange for existing warrants to purchase shares of Class A Common Stock and (iv) the issuance and sale by us of shares of our Common Stock in this offering at an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

(3)

Includes $23.2 million term loan held by our wholly-owned subsidiary, REG Danville, LLC, or REG Danville, which matures on November 3, 2011. Working capital is defined as current assets less current liabilities.

Investing in our Common Stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below, together with all of the other information in this prospectus, including our consolidated financial statements and related notes included elsewhere in this prospectus, before making an investment decision. The risks described below are not the only risks we face. Additional risks and uncertainties of which we are unaware, or that we currently believe are not material, also may become important factors that may materially and adversely affect us and our prospects. If any of the following risks are realized, our business, financial condition, results of operations and prospects could be materially and adversely affected. In that event, the trading price of our Common Stock could decline and you could lose part or all of your investment.

Loss or reductions of governmental requirements for the use of biofuels could have a material adverse affect on our revenues and operating margins.

The biodiesel industry relies substantially on federal requirements and state policies for use of biofuels. Since biodiesel has been more expensive to produce than petroleum-based diesel fuel over the past few years, the biodiesel industry depends on governmental programs that support a market for biodiesel that might not otherwise exist.

The most important of these government programs in the United States is RFS2, which requires that a certain volume of biomass-based diesel fuel, which includes biodiesel, be consumed. RFS2 became effective on July 1, 2010 and applies through 2022. We believe that the increase in demand for our biodiesel in the first quarter of 2011 is directly attributable to the implementation of RFS2. In addition, we believe that biodiesel prices in the first quarter have benefited significantly from RFS2.

There can be no assurance that Congress or the EPA will not repeal, curtail or otherwise change the RFS2 program in a manner adverse to us. The petroleum industry has opposed the retroactive application of certain provisions of the rule and fundamental fairness in the implementation of policy involved in RFS2 and can be expected to continue to press for changes that eliminate or reduce its impact. Any repeal or reduction in the RFS2 requirements or reinterpretation of RFS2 resulting in our biodiesel failing to qualify as a required fuel would materially decrease the demand for and price of our product, which would materially and adversely harm our revenues and cash flows.

If Congress decides to repeal or curtail RFS2, or if the EPA is not able or willing to enforce RFS2 requirements, the demand for our product based on this program and any increases in demand that we expect due to RFS2 would be significantly reduced or eliminated and our revenues and operating margins would be materially harmed. In addition, although we believe that state requirements for the use of biofuels increase demand for our biodiesel within such states, they generally may not increase overall demand in excess of RFS2 requirements. Rather, existing demand for our biofuel from petroleum refiners and petroleum fuel importers in the 48 contiguous states or Hawaii, which are defined as “Obligated Parties” in the RFS2 regulations, in connection with federal requirements, may shift to states that have use requirements or tax incentive programs.

Our gross margins are dependent on the spread between biodiesel prices and feedstock costs.

Our gross margins depend on the spread between biodiesel prices and feedstock costs. Historically, the spread between biodiesel prices and feedstock costs has varied significantly. Although actual yields vary depending on the feedstock quality, the average monthly spread between the price per gallon of 100% pure biodiesel, or B100, as reported by The Jacobsen Publishing Company, or The Jacobsen, and the price for the amount of choice white grease, a common inedible animal fat used by us to make biodiesel was $1.83 in 2008, $1.25 in 2009, $1.06 in 2010, and $1.02 in the first quarter of 2011, assuming 8.0 pounds of choice white grease yields one gallon of biodiesel. The average monthly spread for the amount of crude soybean oil required to produce one gallon of biodiesel, based on the nearby futures contract as reported on the Chicago Board of Trade, or CBOT, was $0.61 per gallon in 2008, $0.39 in 2009, and $0.25 per gallon in 2010, and $0.32 in the first quarter of 2011, assuming 7.5 pounds of soybean oil yields one gallon of biodiesel. For 2010, approximately 91% of our total feedstock usage was inedible animal fat, used cooking oil or inedible corn oil and 9% was soybean oil, compared to approximately 78% for inedible animal fat, used cooking or inedible corn oil and 22% for soybean oil in 2009.

Biodiesel has traditionally been marketed primarily as an additive or alternative to petroleum-based diesel fuel and as a result biodiesel prices have been influenced by the price of petroleum-based diesel fuel, adjusted for government tax incentives supporting renewable fuels, rather than biodiesel production costs. A lack of correlation between production costs and biodiesel prices means that we may be unable to pass increased production costs on to our customers in the form of higher prices. Any decrease in the spread between biodiesel prices and feedstock costs, whether as a result of an increase in feedstock prices or a reduction in biodiesel prices, including, but not limited to, a reduction in the value of Renewable Identification Numbers, or RINs, would adversely affect our gross margins, cash flow and results of operations.

The costs of raw materials that we use as feedstocks are volatile and our results of operations could fluctuate substantially as a result.

The cost of feedstocks is a significant uncertainty for our business. The success of our operations is dependent on the price of feedstocks and certain other raw materials that we use to produce biodiesel. A decrease in the availability or an increase in the price of feedstocks may have a material adverse effect on our financial condition and operating results. At elevated price levels, these feedstocks may be uneconomical to use, as we may be unable to pass feedstock cost increases on to our customers.

The price and availability of feedstocks and other raw materials may be influenced by general economic, market and regulatory factors. These factors include weather conditions, farming decisions, government policies and subsidies with respect to agriculture and international trade, and global supply and demand. The significance and relative impact of these factors on the price of feedstocks is difficult to predict, especially without knowing what types of feedstock materials will be optimal for use in the future, particularly at new facilities that we construct or acquire.

Since 2009, we have principally used inedible animal fats, used cooking oil and inedible corn oil as our feedstocks for the production of biodiesel. Our decision to shift to these feedstocks resulted from the reduction in profit caused by a significant increase in soybean oil prices, which rose from $0.1435 per pound in February 2001 to $0.7040 per pound in March 2008, based on the closing nearby futures prices on the CBOT, and soybean oil having generally remained at high levels since that time. While less volatile than soybean oil, prices for these alternative feedstocks can also vary significantly based on market conditions. Since January 1, 2008, the cost per pound of choice white grease, an inedible animal fat commonly used by us in the production of biodiesel, has traded in a range of $0.0950 to $0.5175.

Historically, the price of animal fat has been affected by the amount of slaughter kills in the United States, as well as demand from other markets. If biodiesel production continues to increase in response to RFS2, we expect that more biodiesel producers will seek to use these lower cost feedstocks, potentially increasing our costs of production. In addition, because the market for animal fat is less well developed than markets for vegetable oils such as soybean oil, we generally are unable to enter into forward contracts at fixed prices. Further, the markets for used cooking oil and inedible corn oil are in their nascent stages. The market for used cooking oil as a feedstock for biodiesel is still developing and supply is limited. While the commercial supply for inedible corn oil is growing as ethanol producers are installing corn oil extraction technology in their ethanol plants, it is not generally available in quantities sufficient to cover all our operations. At present, there are a limited number of ethanol plants with the equipment necessary to extract inedible corn oil that can be used in biodiesel production. If more ethanol plants do not acquire and utilize corn oil extraction equipment or if ethanol plants are idled, we may not be able to obtain additional amounts of inedible corn oil for use in our production of biodiesel and may be forced to utilize higher cost feedstocks to meet increased demand, which may not be economical.

We have limited working capital and a recent history of unprofitable operations; these working capital constraints may limit our growth and may cause us to curtail our operations or forgo sales.

We have a limited amount of working capital to support our operations. We became cash flow positive during fourth quarter of 2010 and were cash flow positive in the first quarter of 2011, but we will need to raise additional working capital to be able to take advantage of the anticipated increased demand for biodiesel resulting from RFS2. Rising commodity prices further increase our demand for working capital, as both our feedstock production costs and costs for biodiesel we acquire from third parties and resell have increased in price, requiring more working capital to manage the same volume of sales. If additional working capital is not available, we may find it necessary to curtail operations and forgo sales harming our revenues and profitability.

We and certain subsidiaries have substantial indebtedness which subjects us to potential defaults and could adversely affect our ability to raise additional capital to fund our operations and limit our ability to react to changes in the economy or the biodiesel industry.

Several of our subsidiaries have a significant amount of indebtedness, some of which we have guaranteed. At March 31, 2011, our total term debt was $90.4 million. This includes consolidated term debt owed by our Variable Interest Entities, or VIEs, including Landlord and 416 South Bell, LLC, or Bell, LLC. At March 31, 2011, the amount borrowed by our subsidiaries under our lines of credit was $10.6 million, all of which we guaranteed.

All of the agreements for our indebtedness contain financial covenants the breach of which would result in an event of default by us or our subsidiary obligor. At March 31, 2011, our subsidiary that owns our Danville facility was not in compliance with its financial covenants requiring the subsidiary to meet a minimum fixed charge coverage ratio and a maximum funded debt-to-EBITDA ratio and it was necessary for us to obtain a waiver from the lender to avoid a default. Our Danville subsidiary will continue to be subject to the restrictive financial covenants, and it may not be in compliance with such covenants in future periods, which would require us to obtain another waiver in order to avoid a default. Since the Illinois Finance Authority guarantees 61% of the Danville facility indebtedness, its approval was also required for the March 31, 2011 waiver, and any future waiver would also require its approval, which we may not be able to obtain on acceptable terms or at all. There is no assurance that we will obtain any required waiver or that ongoing negotiations with the lender will result in an amendment to the terms of the agreement that places out subsidiary firmly in compliance in future periods.

Our level of indebtedness relative to our size could restrict our operations and make it more difficult for us to satisfy our debt obligations or obtain additional borrowings for working capital to fund operations. In connection with the Seneca facility transaction, one of our subsidiaries leases the Seneca facility from Landlord, an entity owned by certain of our large stockholders. In addition, our subsidiaries are required annually to pay a certain portion of our excess cash flow at our Danville and Newton facilities to their respective lenders, which reduces the cash flow that we receive from these facilities.

Loss or reductions of tax incentives for biodiesel production or consumption would have a material adverse affect on our revenues and operating margins.

The biodiesel industry is also substantially aided by federal and state tax incentives. Prior to RFS2, the biodiesel industry relied principally on these tax incentives to bring the price of biodiesel more in line with the price of petroleum-based diesel fuel to the end user. The most significant tax incentive program is the federal blenders’ tax credit. The blenders’ tax credit provides a $1.00 refundable tax credit per gallon of pure biodiesel, or B100, to the first blender of biodiesel with petroleum-based diesel fuel. Congress allowed the blenders’ tax credit to expire as of December 31, 2009 and then re-enacted the credit in December 2010 retroactively for all of 2010 and prospectively for 2011. The blenders’ tax credit is set to expire again on December 31, 2011. Unlike RFS2, the blenders’ tax credit has a direct effect on federal government spending and could be changed or eliminated as a result of changes in the federal tax or budget policy. The absence of and uncertainty around the blenders’ tax credit during most of 2010 materially curtailed demand for biodiesel and our ability to cost effectively produce and sell biodiesel, resulting in our idling production at several of our facilities during that period. Although the blenders’ tax credit was reinstated for all of 2010, we were not able to recapture all of the tax credit we would have been able to receive because we had chosen not to blend a significant portion of our production in 2010 after the credit lapsed. It is uncertain what action, if any, Congress may take with respect to extending the blenders’ tax credit beyond 2011 or when such action might be effective. If Congress eliminates or reduces the blenders’ tax credit before its expiration on December 31, 2011, or does not extend the credit beyond 2011, demand for our biodiesel and the price we are able to charge for our product may be significantly reduced, harming revenues and profitability.

In addition, several states have enacted tax incentives for the use of biodiesel. Like the federal blenders’ tax credit, these tax incentive programs could be changed as a result of state budget considerations or otherwise. Reduction or elimination of such incentives could materially and adversely harm our revenues and profitability.

Despite our current debt levels, we and our subsidiaries may incur substantially more debt. This could exacerbate the risks associated with our substantial indebtedness.

We and our subsidiaries may incur substantial additional debt in the future, including secured debt. We and certain of our subsidiaries are not currently prohibited under the terms of our debt from incurring additional debt, pledging assets, recapitalizing our debt or taking a number of other actions that could diminish our ability to make payments thereunder. If new indebtedness is added to our current debt levels, the related risks that we and our subsidiaries now face could intensify.

Our success depends on our ability to manage our growing and changing operations.

Since our formation, our business has grown significantly in size and complexity. This growth has placed, and is expected to continue to place, significant demands on our management, systems, internal controls and financial and physical resources. In addition, we expect that we will need to further develop our financial and managerial controls and reporting systems to accommodate future growth. This will require us to incur expenses related to hiring additional qualified personnel, retaining professionals to assist in developing the appropriate control systems and expanding our information technology infrastructure. Our inability to manage growth effectively could have a material adverse effect on our results of operations, financial position and cash flows.

Risk management transactions could significantly increase our operating costs and working capital requirements if we incorrectly estimate our feedstock demands and biodiesel sales as compared to market conditions.

In an attempt to partially offset the effects of volatility of feedstock costs and biodiesel fuel prices, we may enter into contracts that establish market positions in feedstocks, such as inedible animal fats and soybean oil, and related commodities, such as heating oil and ultra-low sulfur diesel, or ULSD. The financial impact of such market positions will depend on market prices at the time that we are required to perform our obligations under these contracts. Risk management arrangements will also expose us to the risk of financial loss in situations where the counterparty defaults on its contract or, in the case of exchange-traded or over-the-counter futures or options contracts, where there is a change in the expected differential between the underlying price in the contract and the actual prices paid or received by us. Risk management activities can themselves result in losses when a position is purchased in a declining market or a position is sold in a rising market. Changes in the value of these futures instruments are recognized in current income and may result in margin calls. We may also vary the amount of risk management strategies we undertake, or we may choose not to engage in risk management transactions at all. Further, our ability to reduce the risk of falling biodiesel prices and rising feedstock costs will be limited as currently there are no established futures market for biodiesel or the vast majority of our feedstocks, nor are fixed-price long-term contracts generally available. As a result, our results of operations and financial position may be adversely affected by increases in the price of feedstocks or decreases in the price of biodiesel that are not managed effectively.

One customer accounted for a meaningful percentage of revenues and a loss of this customer could have an adverse impact on our total revenues.

One customer, Pilot Travel Centers LLC, or Pilot, accounted for 24% of our total revenues in 2009 and 29% of our total revenues in 2010. Our agreements with Pilot have typically had a one-year term and our current agreement with Pilot expires December 31, 2011. In the event we lose Pilot as a customer or Pilot significantly reduces the volume of biodiesel it buys from us, it could be difficult to replace the lost revenues in the short term and potentially over an extended period, and our profitability and cash flow could be materially harmed.

Our business is primarily dependent upon one product. As a consequence, we may not be able to adapt to changing market conditions or endure any decline in the biodiesel industry.

Our business is currently focused almost entirely on the production and sale of biodiesel, with glycerin and fatty acid sales and the operations of our Services segment representing only a small portion of revenues. Our reliance on biodiesel means that we may not be able to adapt to changing market conditions or to withstand any significant decline in the biodiesel industry.

Technological advances and changes in production methods in the biodiesel industry could render our plants obsolete and adversely affect our ability to compete.

It is expected that technological advances in biodiesel production methods will continue to occur and new technologies for biodiesel production may develop. Advances in the process of converting oils and fats into biodiesel could allow our competitors to produce biodiesel faster and more efficiently and at a substantially lower cost. If we are unable to adapt or incorporate technological advances into our operations, our production facilities could become less competitive or obsolete. Further, it may be necessary for us to make significant expenditures to acquire any new technology and retrofit our plants in order to incorporate new technologies and remain competitive. There is no assurance that third-party licenses for any new proprietary technologies would be available to us on commercially reasonable terms or that any new technologies could be incorporated into our plants. If we are unable to obtain, implement or finance new technologies, our production facilities could be less efficient than our competitors and our results of operations could be substantially harmed.

If we are unable to respond to changes in ASTM or customer standards, our ability to sell biodiesel may be harmed.

We currently produce biodiesel to conform to or exceed standards established by ASTM. ASTM standards for biodiesel and biodiesel blends may be modified in response to new observations from the industries involved with diesel fuel. New tests or more stringent standards may require us to make additional capital investments in, or modify, plant operations to meet these standards. In addition, some biodiesel customers have developed their own biodiesel standards which are stricter than the ASTM standards. If we are unable to meet new ASTM standards or our biodiesel customers’ standards cost effectively or at all, our production technology may become obsolete, and/or our ability to sell biodiesel may be harmed, negatively impacting our revenues and profitability.

Increases in our transportation costs or disruptions in our transportation services could have a material adverse effect on our business.

Our business depends on transportation services to deliver our products to our customers and to deliver raw materials to us. The costs of these transportation services are affected by the volatility in fuel prices, such as those caused by recent geopolitical and economic events. We have not been in the past, and may not be in the future, able to pass along part or all of any fuel price increases to customers. If we continue to be unable to increase our prices as a result of increased fuel costs charged to us by transportation providers, our gross margins may be materially adversely affected.

If any transportation providers fail to deliver raw materials to us in a timely manner, we may be unable to manufacture products on a timely basis. Shipments of products and raw materials may be delayed due to weather conditions, strikes or other events. Any failure of a third-party transportation provider to deliver raw materials or products in a timely manner could harm our reputation, negatively affect our customer relationships and have a material adverse effect on our business, financial condition and results of operations.

We are dependent upon our key management personnel and the loss of any of these persons could adversely affect our results of operations.

We are highly dependent upon key members of our management team for the execution of our business plan. We believe that our future success is highly dependent on the contributions of these key employees. There can be no assurance that any individual will continue in his or her capacity for any particular period of time. The loss of any of these key employees could delay or prevent the achievement of our business objectives and have a material adverse effect upon our results of operations and financial position.

We have partially constructed plants and planned plant upgrades that require capital that we may not be able to raise.

We have three partially constructed plants, one near New Orleans, Louisiana, one in Emporia, Kansas and one in Clovis, New Mexico, that we expect will require additional investments of approximately $130 to $140 million in the aggregate, excluding working capital requirements, before they would be able to commence production. We also have various upgrades planned for our operating facilities. In order to complete construction of these facilities or upgrade our facilities as planned, we will require additional capital. While we intend to finance certain upgrades to our existing facilities in part with a portion of the proceeds of this offering and from our cash flow from operations, we will need to raise significant capital in addition to the proceeds of this offering to complete construction of the three facilities. We continue to be in discussions with lenders in an effort to obtain financing for our facilities, however, it is uncertain when or if financing will be available. It is also likely that the terms of any project financing would include customary financial and other covenants restricting our project subsidiaries, including restrictions on the ability to make distributions, to guarantee indebtedness and to incur liens on the plants of such subsidiaries. If we are unable to obtain such capital on satisfactory terms, or if such capital is otherwise unavailable, or if we encounter cost overruns on these projects such that we have insufficient capital, we may have to postpone completion of these projects indefinitely, which may adversely affect our ability to implement our strategy and our future revenues and cash flow.

We may not successfully identify and complete acquisitions and other strategic relationships on favorable terms or achieve anticipated synergies relating to any such transactions, and integration of acquisitions may disrupt our business and management.

We regularly review domestic and international acquisitions of biodiesel production facilities and have acquired most of our facilities from third parties. However, we may be unable to identify suitable acquisition candidates in the future. Even if we identify appropriate acquisition candidates, we may be unable to complete such acquisitions on favorable terms, if at all. In addition, we may not realize the anticipated benefits of any or all of our past or future transactions and each transaction has numerous risks. These risks include:

In addition, one of our strategic goals is to expand our biodiesel production capabilities into international markets. In the event we expand our operations into international markets through acquisitions or otherwise, we may be exposed to additional risks, including unexpected changes in foreign laws and regulations, political and economic instability, challenges in managing foreign operations, increased costs to adapt our systems and practices to those used in foreign countries, export duties, currency restrictions, tariffs and other trade barriers, and the burdens of complying with a wide variety of foreign laws, each of which could have a material adverse effect on our business, financial condition, results of operations and liquidity.

Our business is subject to seasonal fluctuations, which are likely to cause our revenues and operating results to fluctuate.

Our operating results are influenced by seasonal fluctuations in the price of biodiesel. Our sales tend to decrease during the winter season due to perceptions that biodiesel will not perform adequately in colder weather. Colder seasonal temperatures can cause the higher cloud point biodiesel we make from inedible animal fats to become cloudy and eventually gel at a higher temperature than petroleum-based diesel or lower cloud point biodiesel made from soybean, canola or inedible corn oil. Such gelling can lead to plugged fuel filters and other fuel handling and performance problems for customers and suppliers. Reduced demand in the winter for our higher cloud point biodiesel may result in excess supply of such higher cloud point biodiesel and/or lower prices for such higher cloud point biodiesel. In addition, most of our production facilities are located in colder Midwestern states and our costs of shipping biodiesel to warmer climates generally increase in cold weather months. As a result of these seasonal fluctuations, comparisons of operating measures between consecutive quarters may not be as meaningful as comparisons between longer reporting periods.

Failure to comply with governmental regulations, including EPA requirements relating to RFS2, could result in the imposition of penalties, fines, or restrictions on our operations and remedial liabilities.

The biodiesel industry is subject to extensive federal, state and local laws and regulations related to the general population’s health and safety and compliance and permitting obligations, including those related to the use, storage, handling, discharge, emission and disposal of municipal solid waste and other waste, pollutants or hazardous substances, or discharges and air and other emissions as well as land use and development. Existing laws also impose obligations to clean up contaminated properties or to pay for the cost of such remediation, often upon parties that did not actually cause the contamination. Compliance with these laws, regulations and obligations could require substantial capital expenditures. Failure to comply could result in the imposition of penalties, fines or restrictions on operations and remedial liabilities. These costs and liabilities could adversely affect our operations.

Changes in environmental laws and regulations occur frequently, and any changes that result in more stringent or costly waste handling, storage, transport, disposal or cleanup requirements could require us to make significant expenditures to attain and maintain compliance and may otherwise have a material adverse effect on our business in general and on our results of operations, competitive position or financial condition. We are unable to predict the effect of additional environmental laws and regulations which may be adopted in the future, including whether any such laws or regulations would significantly increase our cost of doing business or affect our operations in any area.

Under certain environmental laws and regulations, we could be held strictly liable for the removal or remediation of previously released materials or property contamination regardless of whether we were responsible for the release or contamination, or if current or prior operations were conducted consistent with accepted standards of practice. Such liabilities can be significant and, if imposed, could have a material adverse effect on our financial condition or results of operations.

In addition to the regulations mentioned above, we are subject to various laws and regulations related to RFS2, most significantly regulations related to the generation and dissemination of RINs. These regulations are highly complex and evolving, requiring us to periodically update our compliance systems. Any violation of these regulations by us, inadvertently or otherwise, could result in significant fines and harm our customers’ confidence in the RINs we issue, either of which could have a material adverse effect on our business.

We are a holding company and there are limitations on our ability to receive dividends and distributions from our subsidiaries.

All of our principal assets, including our biodiesel production facilities, are owned by subsidiaries and these subsidiaries are subject to loan covenants that generally restrict them from paying dividends, making distributions or making loans to us or to any other subsidiary. These limitations will restrict our ability to repay indebtedness, finance capital projects or pay dividends to stockholders from our subsidiaries cash flows from operations.

Our business may suffer if we are unable to attract or retain talented personnel.

Our success depends on the abilities, expertise, judgment, discretion, integrity, and good faith of our management and employees to manage the business and respond to economic, market and other conditions. We have a relatively small management team and employee base, and the inability to attract suitably qualified replacements or additional staff could adversely affect our business. No assurance can be given that our management team or employee base will continue their employment, or that replacement personnel with comparable skills could be found. If we are unable to attract and retain key personnel and additional employees, our business may be adversely affected.

If we fail to maintain effective internal control over financial reporting, we might not be able to report our financial results accurately or prevent fraud; in that case, our stockholders could lose confidence in our financial reporting, which would harm our business and could negatively impact the value of our stock.

Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. The process of maintaining our internal controls may be expensive and time consuming and may require significant attention from management. Although we have concluded that our internal control over financial reporting provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, because of its inherent limitations, internal control over financial reporting may not prevent or detect fraud or misstatements. Failure to implement required new or improved controls,

or difficulties encountered in their implementation, could harm our results of operations or cause us to fail to meet our reporting obligations. If we or our independent registered public accounting firm discover a material weakness, the disclosure of that fact could harm the value of our stock and our business.

A natural disaster, leak, fire or explosion at any of our production plants would increase our costs and liabilities.

Because biodiesel and some of its inputs and outputs are combustible and flammable, a leak, fire or explosion may occur at a plant which could result in damage to the plant and nearby properties, injury to employees and others, and interruption of operations. In addition, our Houston facility, due to its coastal location, is vulnerable to hurricanes, which may cause plant damage, injury to employees and others and interruption of operations and all of our plants could incur damage from other natural disasters. A majority of our facilities are also located in the Midwest, which is subject to tornado activity. If any of the foregoing events occur, we may incur significant additional costs including, among other things, loss of profits due to unplanned temporary or permanent shutdowns of our facilities, clean-up costs, liability for damages or injuries, legal expenses, and reconstruction expenses, which would seriously harm our results of operations and financial condition.

We maintain insurance for some, but not all, of the potential risks and liabilities associated with our business. For some risks, we may not obtain insurance if we believe the cost of available insurance is excessive relative to the risks presented. As a result of market conditions, premiums and deductibles for certain insurance policies can increase substantially and, in some instances, certain insurance policies may become unavailable or available only for reduced amounts of coverage. As a result, we may not be able to renew our existing insurance policies or procure other desirable insurance on commercially reasonable terms, if at all. Although we intend to maintain insurance at levels we believe are appropriate for our business and consistent with industry practice, we will not be fully insured against all risks. In addition, pollution, environmental risks and the risk of natural disasters generally are not fully insurable. Losses and liabilities from uninsured and underinsured events and delay in the payment of insurance proceeds could have a material adverse effect on our financial condition and results of operations.

Confidentiality agreements with employees and others may not adequately prevent disclosures of confidential information, trade secrets and other proprietary information.

We rely in part on trade secret protection to protect our confidential and proprietary information and processes. However, trade secrets are difficult to protect. We have taken measures to protect our trade secrets and proprietary information, but these measures may not be effective. For example, we require new employees and consultants to execute confidentiality agreements upon the commencement of their employment or consulting arrangement with us. These agreements generally require that all confidential information developed by the individual or made known to the individual by us during the course of the individual’s relationship with us be kept confidential and not disclosed to third parties. These agreements also generally provide that knowhow and inventions conceived by the individual in the course of rendering services to us are our exclusive property. Nevertheless, these agreements may be breached, or may not be enforceable, and our proprietary information may be disclosed. Further, despite the existence of these agreements, third parties could reverse engineer our processes and others may independently develop substantially equivalent proprietary information and techniques. Accordingly, it may be difficult for us to protect our trade secrets. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

Moreover, we cannot assure you that our technology does not infringe upon any valid claims of patents that other parties own. In the future, if we were found to be infringing on a patent owned by a third party, we might have to seek a license from such third party to use the patented technology. We cannot assure you that, if required, we would be able to obtain such a license on terms acceptable to us, if at all. If a third party brought a legal action against us or our licensors, we could incur substantial costs in defending ourselves, and we cannot assure you that such an action would be resolved in our favor. If such a dispute were to be resolved against us, we could be subject to significant damages.

We depend on our ability to maintain relationships with industry participants, including our current stockholders and other strategic partners.

Our ability to maintain commercial arrangements with biodiesel customers, feedstock suppliers, and transportation and logistics services providers may depend on maintaining close working relationships with industry participants including some of our current stockholders, including Bunge, ED&F Man and West Central. As we continue to develop our business, we expect to use the business relationships of management and our stockholders in order to form strategic relationships such as contractual arrangements, joint ventures, financings or minority investments. There can be no assurance that we will be able to maintain or establish additional necessary strategic relationships, in which case the opportunity to grow our business may be negatively affected.

We operate in a highly competitive industry and competition in our industry would increase if new participants enter the biodiesel business.

We operate in a very competitive environment. The biodiesel industry is primarily comprised of smaller entities that engage exclusively in biodiesel production and large integrated agribusiness companies that produce biodiesel along with their soybean crush businesses. We face competition for capital, labor, feedstocks and other resources from these companies. In the United States, we compete with soybean processors and refiners, including Archer-Daniels-Midland Company, LLC, Cargill, Inc. and Louis Dreyfus Commodities. These and other competitors that are divisions of larger enterprises may have greater financial resources than we do. We also have many smaller competitors. If our competitors consolidate or otherwise grow and we are unable to similarly increase our scale, our business and prospects may be significantly and adversely affected.

In addition, petroleum companies and diesel retailers have not been engaged in biodiesel production to a large extent. These companies form the primary distribution networks for marketing biodiesel through blended petroleum-based diesel. If these companies seek to engage in direct or indirect biodiesel production, there will be less of a need to purchase biodiesel from independent biodiesel producers like us. Such a shift in the market would materially harm our operations, cash flows and financial position.

In the event we enter into new construction contracts, we may be exposed to a variety of risks that could affect our ability to realize profit.

While our construction services management business has had only limited external operations over the last two years, we intend to continue to pursue opportunities to provide these services. Substantially all of our revenues from our new facility construction services are derived from fixed unit price contracts. Fixed unit price contracts require us to perform the contract for a fixed unit price irrespective of our actual costs. As a result, we realize a profit on these contracts only if we and our subcontractors successfully estimate our costs and then successfully control actual costs and avoid cost overruns. Further, we have historically subcontracted substantially all of our construction work to Todd & Sargent, Inc. and TSW, LLC on a time and materials, rather than fixed, basis. As a result, we have less control over the largest component of our plant construction costs and the risk of cost overruns generally falls on us rather than our subcontractors. If we or our subcontractors do not execute a contract within

cost estimates, then cost overruns may cause us to incur losses or cause the contract not to be as profitable as we initially expected. This, in turn, could negatively affect our cash flow, earnings and financial position.

The costs incurred and gross profit realized on our plant construction contracts can vary, sometimes substantially, from the original projections due to a variety of factors, including, but not limited to:

For example, if we or our subcontractors perform extra or change order work that is not approved by the customer in advance we may have a dispute with the customer over whether the work performed is beyond the scope of the work included in the original project plans and specifications or, if the customer agrees that the work performed qualifies as extra work, the price that the customer is willing to pay for the extra work. These disputes may result in us not receiving payment for all or a significant portion of work that we or our subcontractors have performed. Even where the customer agrees to pay for the extra work, we may be required to fund the cost of that work for a lengthy period of time until the change order is approved and paid by the customer. To the extent actual recoveries with respect to change orders or amounts subject to contract disputes or claims are less than the estimates used in our financial statements, the amount of any shortfall will reduce our revenues and profits, and this could have a material adverse effect on our working capital and results of operations.

We intend to pursue strategic initiatives to diversify our business that will require significant funding and management attention and these initiatives may not be successful.

We are seeking opportunities to diversify our product lines, both as a commercialization partner for companies engaged in the development of new advanced biofuels and by using our biorefinery platform to produce renewable chemicals from bio-mass feedstocks. There is no assurance that new technologies capable of economically producing advanced biofuels will be developed, that the developers of these technologies will select us as their commercialization partner or that the terms of any such collaborative arrangement will be favorable to us. Further, the renewable chemicals market is underdeveloped. Any chemicals that we produce from renewable sources may not prove to be as effective as chemicals produced from petroleum or other sources and, regardless of their effectiveness, renewable chemicals may not be accepted in the chemical marketplace. These strategic initiatives will require significant funding and management attention, and if we are not successful in implementing them, our financial condition and results of operations may be harmed.

We may be obligated to redeem the Series B preferred stock issuable in connection with the recapitalization beginning in 2015.

On June 30, 2015, the holders of twenty-five percent of the then-outstanding shares of Series B preferred stock may require that all outstanding shares of Series B preferred stock be redeemed by us out of funds lawfully available at a price per share equal to $25 per share plus any accumulated and accrued dividends. Assuming no exercise of the underwriters over-allotment option, as of the date of this prospectus, the amount of this potential obligation would be $75 million. In order to satisfy any redemption request, we may need to use limited cash resources on hand, be required to borrow money, issue equity securities or sell assets to meet this obligation, which could impair our working capital, reduce the funds necessary to operate and grow our business, involve significant dilution to holders of our Common Stock or require the disposition of our key assets. If we are subject to a redemption request, it could have a material adverse effect on our financial condition, results of operations and cash flows, and cause the price of our Common Stock to decline.

The market price of biodiesel is influenced by the price of petroleum-based distillate fuels, such as ultra-low sulfur diesel, and decreases in the price of petroleum-based distillate fuels or renewable identification number, or RIN, values would very likely decrease the price we can charge for our biodiesel, which could harm our revenues and profitability.

Historically, biodiesel prices have been strongly correlated to petroleum-based diesel prices and in particular ULSD regardless of the cost of producing biodiesel itself. We market our biofuel as an alternative to petroleum-based fuels. Therefore, if the price of petroleum-based diesel falls, the price of biodiesel could decline, and we may be unable to produce products that are a commercially viable alternative to petroleum-based fuels. Petroleum prices are volatile due to global factors such as the impact of wars, political uprisings, and other events, Organization of Oil Exporting Countries, or OPEC, production quotas, worldwide economic conditions, changes in refining capacity and natural disasters. Additionally, demand for liquid transportation fuels, including biodiesel, is impacted by economic conditions. Just as a small reduction in the real or anticipated supply of crude oil can have a significant upward impact on the price of petroleum-based fuels, a perceived reduction of such threats can result in a significant reduction in petroleum-based fuel prices. A reduction in petroleum-based fuel prices may have a material adverse affect on our revenues and profits if such price decrease reduces the price we are able to charge for our biodiesel.

Under RFS2 and its increasing required volume obligations, the price of biodiesel has been more sensitive to changes in feedstock costs. Increased RIN values have, in part, offset this premium in price resulting from higher feedstock costs. A reduction in RIN values may have a material adverse affect on our revenues and profits if such price decrease reduces the price we are able to charge for our biodiesel.

The development of alternative fuels and energy sources may reduce the demand for biodiesel, resulting in a reduction in our revenues and profitability.

The development of alternative fuels, including a variety of energy alternatives to biodiesel has attracted significant attention and investment. The construction of several renewable diesel plants by competitors has been announced. Under RFS2, renewable diesel made from biomass meets the definition of biomass-based diesel and thus is eligible, along with biodiesel, to satisfy the RFS2 biomass-based diesel requirement described in “Industry overview—Government Programs Favoring Biodiesel Use.” Furthermore, under RFS2, renewable diesel may receive up to 1.7 RINs per gallon, whereas biodiesel

currently receives 1.5 RINs. As the value of RINs increase, this 0.2 RIN advantage may make renewable diesel more cost-effective, both as a petroleum-based diesel substitute and for meeting RFS2 requirements. If renewable diesel proves to be more cost-effective than biodiesel, our revenues and results of operations would be adversely impacted.

The biodiesel industry will also face increased competition resulting from the advancement of technology by automotive, industrial and power generation manufacturers which are developing more efficient engines, hybrid engines and alternative clean power systems. Improved engines and alternative clean power systems offer a technological solution to address increasing worldwide energy costs, the long-term availability of petroleum reserves and environmental concerns. If and when these clean power systems are able to offer significant efficiency and environmental benefits and become widely available, the biodiesel industry may not be able to compete effectively with these technologies and government requirements for the use of biodiesel may not continue.

The development of alternative fuels and renewable chemicals also puts pressure on feedstock supply and availability to the biodiesel industry. If these emerging technologies compete with biodiesel for feedstocks, are more profitable or have greater governmental support than biodiesel does, then the biodiesel industry may have difficulty in procuring the feedstocks necessary to be successful.

The European Commission has imposed anti-dumping and countervailing duties on biodiesel blends imported into Europe, which have effectively eliminated our ability to sell those biodiesel blends in Europe.

In March 2009, as a response to the blenders’ tax credit, the European Commission imposed anti-dumping and anti-subsidy tariffs on biodiesel produced in the United States. These tariffs have effectively eliminated European demand for biodiesel blends of 20% biodiesel blends, or B20, or higher imported from the United States. The European Commission has extended these tariffs through 2014. In May 2011, the European Commission imposed similar anti-dumping and countervailing duties on biodiesel blends below B20. These duties significantly increase the price at which we and other United States biodiesel producers will be able to sell such biodiesel blends in European markets, making it difficult or impossible to compete in the European biodiesel market. These anti-dumping and countervailing duties therefore decrease the demand for biodiesel produced in the United States and increase the supply of biodiesel available in the United States market. Such market dynamics may negatively impact our revenues and profitability.

If automobile manufacturers and other industry groups express reservations regarding the use of biodiesel, our ability to sell biodiesel will be negatively impacted.

Because it is a relatively new product, research on biodiesel use in automobiles is ongoing. Some industry groups have recommended that blends of no more than 5% biodiesel be used for automobile fuel due to concerns about fuel quality, engine performance problems and possible detrimental effects of biodiesel on rubber components and other engine parts. Although some manufacturers have encouraged use of biodiesel fuel in their vehicles, cautionary pronouncements by other manufacturers or industry groups may impact our ability to market our biodiesel.

There is currently excess production capacity and low utilization in the biodiesel industry and if non-operational and underutilized facilities commence or increase operations, our results of operations may be negatively affected.

Many biodiesel plants in the United States do not currently operate, and of those that do, many do not operate at full capacity. The EPA reported as of April 2010 that 2.2 billion gallons per year of biodiesel production capacity in the United States were registered under the RFS2 program. Further, plants under

construction and expansion in the United States as of December 2010, if completed, could add an additional several hundred million gallons of annual biodiesel production capacity. The annual production capacity of existing plants and plants under construction far exceeds both historic consumption of biodiesel in the United States and required consumption under RFS2. If this excess production capacity was utilized for biodiesel production, it would increase competition for our feedstocks, increase the volume of biodiesel on the market and may reduce biodiesel gross margins, harming our revenues and profitability.

Perception about “food vs. fuel” could impact public policy which could impair our ability to operate at a profit and substantially harm our revenues and operating margins.

Some people believe that biodiesel may increase the cost of food, as some feedstocks such as soybean oil used to make biodiesel can also be used for food products. This debate is often referred to as “food vs. fuel.” This is a concern to the biodiesel industry because biodiesel demand is heavily influenced by government policy and if public opinion were to erode, it is possible that these policies would lose political support. These views could also negatively impact public perception of biodiesel. Such claims have led some, including members of Congress, to urge the modification of current government policies which affect the production and sale of biofuels in the United States.

Concerns regarding the environmental impact of biodiesel production could affect public policy which could impair our ability to operate at a profit and substantially harm our revenues and operating margins.

Because biodiesel is a new product, the environmental impacts associated with biodiesel production and use have not yet been fully analyzed. Under the 2007 Energy Independence and Security Act, the EPA is required to produce a study every three years of the environmental impacts associated with current and future biofuel production and use, including effects on air and water quality, soil quality and conservation, water availability, energy recovery from secondary materials, ecosystem health and biodiversity, invasive species and international impacts. A draft of the first such triennial report was released in January 2011, with the final report expected to be released in 2012. Should the 2012 study, future EPA triennial studies, or other analyses find that biodiesel production and use has resulted in, or could in the future result in, adverse environmental impacts, such findings could also negatively impact public perception of biodiesel and acceptance of biodiesel as an alternative fuel, which also could result in the loss of political support.

To the extent that state or federal laws are modified or public perception turns against biodiesel, use requirements such as RFS2 and tax incentives such as the blenders’ tax credit may not continue, which could materially harm our ability to operate profitably.

Problems with product performance, in cold weather or otherwise, could cause consumers to lose confidence in the reliability of biodiesel which, in turn, would have an adverse impact on our ability to successfully market and sell biodiesel.

Concerns about the performance of biodiesel could result in a decrease in customers and revenues and an unexpected increase in expenses. Biodiesel typically has a higher cloud point than petroleum-based diesel. The cloud point is the temperature below which a fuel exhibits a noticeable cloudiness and is the conventional indicator of a fuel’s potential for cold weather problems. The lower the cloud point, the better the fuel should perform in cold weather. The cloud point of biodiesel is typically between 30 °F and 60 °F, while the cloud point of the most common form of petroleum-based diesel fuel is typically less than 20 °F. When diesel is mixed with biodiesel to make a two percent biodiesel blend, the cloud point of

the blended fuel can be 2 °F to 6 °F higher than petroleum-based diesel and the cloud point of a twenty percent biodiesel blend can be 15 °F to 35 °F higher than petroleum-based diesel, depending on the individual cloud points of the biodiesel and petroleum-based diesel. Cold temperatures can therefore cause biodiesel blended fuel to become cloudy and eventually to gel, and this phenomena can lead to plugged fuel filters and other fuel handling and performance problems for customers and suppliers. The consequences of these higher cloud points may cause demand for biodiesel in northern and eastern United States markets to diminish during the colder months, which are the primary markets in which we currently operate.

The tendency of biodiesel to gel in colder weather may also result in long-term storage problems. In cold climates, fuel may need to be stored in a heated building or heated storage tanks, which result in higher storage costs. This and other performance problems, including the possibility of particulate formation above the cloud point of a blend of biodiesel and petroleum-based diesel, may also result in increased expenses as we try to remedy these performance problems. Remedying these performance problems may result in decreased yields, lower process throughput or both, as well as substantial capital costs. Any reduction in the demand for our biodiesel product, or production capacity of, our facilities will reduce our revenues and have an adverse effect on our cash flows and results of operations.

Growth in the sale and distribution of biodiesel is dependent on the expansion of related infrastructure which may not occur on a timely basis, if at all, and our operations could be adversely affected by infrastructure limitations or disruptions.

Growth in the biodiesel industry depends on substantial development of infrastructure for the distribution of biodiesel. Substantial investment required for these infrastructure changes and expansions may not be made on a timely basis or at all. The scope and timing of any infrastructure expansion are generally beyond our control. Also, we compete with other biofuel companies for access to some of the key infrastructure components such as pipeline and terminal capacity. As a result, increased production of biodiesel or other biofuels will increase the demand and competition for necessary infrastructure. Any delay or failure in expanding distribution infrastructure could hurt the demand for or prices of biodiesel, impede delivery of our biodiesel, and impose additional costs, each of which would have a material adverse effect on our results of operations and financial condition. Our business will be dependent on the continuing availability of infrastructure for the distribution of increasing volumes of biodiesel and any infrastructure disruptions could materially harm our business.

We may face competition from imported biodiesel, which may reduce demand for biodiesel produced by us and cause our revenues to decline.

Biodiesel produced in Canada, South America, Eastern Asia, the Pacific Rim, or other regions may be imported into the United States market to compete with United States produced biodiesel. These regions may benefit from biodiesel production incentives or other financial incentives in their home countries that offset some of their biodiesel production costs and enable them to profitably sell biodiesel in the United States at lower prices than United States-based biodiesel producers. Under RFS2, imported biodiesel may be eligible and, therefore, may compete to meet the volumetric requirements. This could make it more challenging for us to market or sell biodiesel in the United States, which would have a material adverse effect on our revenues.

Nitrogen oxide emissions from biodiesel may harm its appeal as a renewable fuel and increase costs.

In some instances biodiesel may increase emissions of nitrogen oxide as compared to petroleum-based diesel fuel, which could harm air quality. Nitrogen oxide is a contributor to ozone and smog. These

emissions may decrease the appeal of biodiesel to environmental groups and agencies who have been historic supporters of the biodiesel industry, potentially harming our ability to market our biodiesel.

In addition, several states have acted to regulate potential nitrogen oxide emissions from biodiesel. Texas currently requires that biodiesel blends contain an additive to eliminate this perceived nitrogen oxide increase. California is in the process of formulating biodiesel regulations that may also require such an additive. In states where such an additive is required to sell biodiesel, the additional cost of the additive may make biodiesel less profitable or make biodiesel less cost competitive against petroleum-based diesel or renewable diesel, which would negatively impact our ability to sell our products in such states and therefore have an adverse effect on our revenues and profitability.

Several biofuels companies throughout the United States have filed for bankruptcy over the last several years due to industry and economic conditions.

Unfavorable worldwide economic conditions, lack of credit and volatile biofuel prices and feedstock costs have likely contributed to the necessity of bankruptcy filings by biofuel producers. Our business has been, and in the future may be, negatively impacted by the industry conditions that influenced the bankruptcy proceedings of other biofuel producers, or we may encounter new competition from buyers of distressed biodiesel properties who enter the industry at a lower cost than original plant investors.

There is no prior public market for our common stock and therefore an active trading market or any specific price for our common stock may not be established or maintained.

Currently, there is no public trading market for our common stock. We intend to apply to list our Common Stock on the Nasdaq Global Market under the symbol “REGI.” The initial public offering price per share was determined by agreement among us and the representatives of the underwriters and may not be indicative of the market price of our Common Stock after our initial public offering. An active trading market for our Common Stock may not develop and even if it does develop, may not continue upon the completion of this offering and the market price of our Common Stock may decline below the initial public offering price.

The market price for our Common Stock is likely to be highly volatile and subject to wide fluctuations in response to factors including the following:

In addition, stock markets generally and from time to time experience significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may have a material adverse effect on the market price of our Common Stock.

As noted below, a significant portion of our total outstanding shares of common stock is restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of our Common Stock to drop significantly, even if our business is doing well.

Purchasers in this offering will experience immediate and substantial dilution in the book value of their investment.

The initial public offering price of our Common Stock will be substantially higher than the net tangible book value per share of our Common Stock immediately after this offering. Therefore, if you purchase shares of our Common Stock in this offering, you will incur an immediate dilution of $ in net tangible book value per share from the price you paid, based on an assumed initial public offering price of $ per share, the midpoint of the initial public offering price range set forth on the cover page of this prospectus. In addition, new investors who purchase shares in this offering will contribute approximately % of the total amount of equity capital raised by us through the date of this offering, but will only own approximately % of the outstanding share capital and approximately % of the voting rights. The exercise of outstanding options and warrants will result in further dilution. For a further description of the dilution that you will experience immediately after this offering, see “Dilution.”

Some arrangements that we have with our principal stockholders may not be the result of arm’s-length negotiations.

We have entered into various agreements with West Central, Bunge and ED&F Man, three of our principal stockholders, and their affiliates, relating to corporate and commercial services that are material to the conduct of our business, and we may enter into additional agreements with these parties and their affiliates. Although we believe that these agreements, as a whole, are no less favorable to us than could be obtained through arm’s-length dealing, these agreements include specific terms and conditions that may be different from terms contained in similar agreements negotiated with unaffiliated third parties. In addition, because these parties are also our principal stockholders and because we have significant contractual or strategic relationships with these parties, it may be difficult or impossible for us to enforce claims that we may have against one or more of them. For a more complete discussion of our arrangements with our principal stockholders, see the discussion under the heading “Certain relationships and related party transactions.”

Insiders have substantial control over us and will be able to influence corporate matters.

As of June 30, 2011, our five largest stockholders beneficially owned, in the aggregate, % of our outstanding capital stock, including shares subject to outstanding warrants, and we expect that upon completion of this offering and the related recapitalization transactions described herein the same stockholders will continue to beneficially own % of our outstanding common stock. As a result, these stockholders, acting together, would be able to exercise control over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, such as a merger or other sale of our company or its assets. In addition, subject to certain exceptions, two of our largest stockholders, USRG Holdco V, LLC, or USRG, and NGP Energy Technology Partners, L.P., will hold rights to each designate a member of our board of directors for a period of three years from and after the closing of this offering. This concentration of ownership and contractual power over the appointment of directors could limit other stockholders’ ability to influence corporate matters and may have the effect of delaying or preventing a third party from acquiring control over us.

Future sales of shares by existing stockholders could cause our stock price to decline.

If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our Common Stock in the public market after the underwriter lock-up and other liquidity and legal restrictions on resale discussed in this prospectus lapse, the trading price of our Common Stock could decline. Based on shares outstanding as of March 31, 2011, after giving pro forma effect to the completion of this offering and the related recapitalization transactions, we will have outstanding a total of shares of common stock, assuming no exercise of the underwriters’ over-allotment option. Of these shares, only the shares of Common Stock sold in this offering by us will be listed and eligible for trading on NASDAQ after the offering. All of our existing stockholders will own Class A Common Stock or Series B preferred stock, which will not be eligible for trading on NASDAQ. The Class A Common Stock will be converted into our Common Stock upon the expiration of the underwriters’ lock-up period described below and the Series B preferred stock will be convertible into Common Stock after the expiration of the underwriters’ lock-up period at the election of the holders or at our election upon the occurrence of certain events. There is currently no public market for our Class A Common Stock, although it is possible that there will be off-market transactions in our Class A Common Stock following the closing of this offering. Of the shares of our Class A Common Stock that, on a pro forma basis for this offering and the related recapitalization transactions, would have been outstanding as of March 31, 2011, shares held by our directors and officers, and certain of our stockholders, are subject to lock-up agreements with the underwriters that restrict their ability to sell or transfer their shares. The lock-up agreements pertaining to this offering will expire 180 days from the date of this prospectus, or the initial lock-up period. Notwithstanding the initial lock-up period, if (i) during the period beginning on the date that is 15 calendar days plus three business days before the last day of the 180-day period, and ending on the last day of the initial lock-up period, we issue an earnings release or material news or a material event relating to us occurs; or (ii) prior to the expiration of the initial lock-up period, we announce that we will release earnings results during the 16-day period beginning on the last day of the initial lock-up period, then the restrictions imposed by these lock-up agreements will continue to apply until the expiration of the date that is 15 calendar days plus three business days after the date on which the issuance of the earnings release or the material news or material event occurs. Our underwriters, however, may, in their sole discretion, permit our officers, directors and other current stockholders who are subject to the contractual lock-up to sell shares prior to the expiration of the lock-up agreements. After the lock-up agreements expire and all shares of Class A Common Stock are converted to Common Stock, based on shares outstanding as of , 2011 giving pro forma effect to the completion of this offering and the related recapitalization transactions, up to an additional shares of Common Stock will be eligible for sale in the public market, of which are held by directors, executive officers and

other affiliates and will be subject to volume limitations under Rule 144 under the Securities Act of 1933, or the Securities Act, and various vesting agreements. Following this offering and the related recapitalization transactions, we will have warrants outstanding that will be exercisable into approximately shares of our Class A Common Stock. In addition, following this offering and the related recapitalization transactions, shares of Class A Common Stock will be issuable upon the exercise of outstanding options. Also, there will be shares of Class A Common Stock initially issuable upon conversion of the Series B preferred stock issued in the recapitalization, assuming the underwriters’ over-allotment option has not been exercised. All of these shares of Class A Common Stock will become eligible for sale in the public market after the lock-up agreements expire and all shares of Class A Common Stock are converted to Common Stock, to the extent permitted by the provisions of various vesting and other agreements, and Rules 144 and 701 under the Securities Act. If these additional shares are sold, or if it is perceived that they will be sold, in the public market, the trading price of our Common Stock could decline.

We may issue additional common stock as consideration for future investments or acquisitions.

We have issued in the past, and may issue in the future, our securities in connection with investments and acquisitions. The amount of our common stock or securities convertible into or exchangeable for our common stock issued in connection with an investment or acquisition could constitute a material portion of our then outstanding common stock.

We will incur increased costs as a result of operating as a publicly traded company and our management will be required to devote substantial time to compliance initiatives.

Although we have been operating as a reporting company, we have not been responsible for the full corporate governance and financial reporting practices and policies required of a public company pursuant to the Sarbanes-Oxley Act of 2002, as well as the rules implemented by NASDAQ. Following the completion of this offering, we will be a publicly traded company and we will incur significant legal, accounting, investor relations and other expenses that we do not currently incur. We will need to dedicate a substantial amount of time to these compliance initiatives. We will need to hire additional accounting, financial and other staff with appropriate experience and financial knowledge to ensure compliance. Furthermore, if we identify issues complying with these requirements, we would likely incur additional costs relating to such issues, and the existence of such issues could adversely affect us, our reputation, investor perceptions of us and the market price of our Common Stock.

We have never paid dividends on our capital stock and we do not anticipate paying any cash dividends in the foreseeable future.

We have paid no cash dividends on any of our classes of capital stock to date, have contractual restrictions against paying cash dividends and currently intend to retain our future earnings to fund the development and growth of our business. As a result, stockholders must look solely to appreciation of our Common Stock to realize a gain on their investment. This appreciation may not occur. Investors seeking cash dividends should not invest in our Common Stock.

Delaware law and our amended and restated certificate of incorporation and bylaws will contain anti-takeover provisions that could delay or discourage takeover attempts that stockholders may consider favorable.

Provisions in our amended and restated certificate of incorporation and bylaws that we intend to adopt before the closing of this offering may have the effect of delaying or preventing a change of control or changes in our management. These provisions include the following:

In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, or DGCL. These provisions may prohibit or restrict large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us. These provisions in our amended and restated certificate of incorporation and bylaws and under Delaware law could discourage potential takeover attempts and could reduce the price that investors might be willing to pay for shares of our common stock in the future and result in our market price being lower than it would without these provisions.

We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.

We intend to use the net proceeds from this offering to exercise the option we hold to acquire the Seneca facility for approximately $12.0 million, working capital, capital expenditures related to improvements of production processes and logistics, and investments. In addition, the first $15.0 million of the net proceeds from the exercise of the over-allotment option, if any, will be used for certain payments to the former holders of the Series A preferred stock. For a further description of our intended use of the net proceeds to us from this offering, see the “Use of proceeds” section of this prospectus.

Because of the number and variability of factors that will determine our use of the net proceeds from this offering, our ultimate use of these proceeds may vary substantially from their currently intended use. Our management will have considerable discretion over the use of the net proceeds to us from this offering. Stockholders may not agree with such uses and the net proceeds may be used in a manner that does not increase our operating results or market value.

Our failure to apply these funds effectively could have a material adverse effect on our business, delay the development of our products and cause the price of our common stock to decline.

If securities or industry analysts issue an adverse or misleading opinion regarding our stock or do not publish research or reports about our business, our stock price and trading volume could decline.

The trading market for our Common Stock will rely in part on the research and reports that equity research analysts publish about us and our business. It may be more difficult for companies such as ours to attract independent equity research analysts to cover our Common Stock. We do not control these analysts or the content and opinions included in their reports. The price of our Common Stock could decline if one or more equity research analysts downgrade our common stock or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business. If one or more equity research analysts ceases coverage of our company, we could lose visibility in the market, which in turn could cause our stock price to decline. Further, securities analysts may elect not to provide research coverage of our Common Stock after the completion of this offering, and such lack of research coverage may adversely affect the market price of our Common Stock.

This prospectus includes forward-looking statements. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “design,” “intend,” “expect” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk factors.” In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. In addition, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We disclaim any duty to update any of these forward-looking statements after the date of this prospectus to confirm these statements to actual results or revised expectations.

You may rely only on the information contained in this prospectus. Neither we nor any of the underwriters have authorized anyone to provide information different from that contained in this prospectus. Neither the delivery of this prospectus, nor sale of Common Stock, means that information contained in this prospectus is correct after the date of this prospectus. This prospectus is not an offer to sell or solicitation of an offer to buy shares of Common Stock in any circumstances under which the offer or solicitation is unlawful.

We expect that the net proceeds we will receive from the sale of the shares of Common Stock offered by us will be approximately $ million (or approximately $ million if the underwriters exercise their over-allotment option in full), based on an assumed initial public offering price of $ per share (the mid point of the range reflected on the cover page of this prospectus), after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. A $1.00 increase (decrease) in the assumed initial public offering price of $ per share would increase (decrease) the net proceeds to us from this offering by approximately $ million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same. A 100,000 share increase (decrease) in the number of shares of Common Stock offered by us in this offering would increase (decrease) the net proceeds to us by approximately $ million. If the underwriters’ over-allotment option to purchase additional shares from us is exercised in full, we estimate that we will receive additional net proceeds of $ million. We will not receive any of the proceeds from the sale of Common Stock by the selling stockholders, although we will bear the costs, other than the underwriting discounts and commissions, associated with the sale of these shares. The selling stockholders include entities affiliated with or controlled by certain of our directors.

We intend to use approximately $12.0 million of the net proceeds we receive from this offering to exercise the option we hold to acquire the Seneca facility, which we currently lease. The Seneca facility is beneficially owned by three of our stockholders: Bunge, USRG Holdco V, LLC, or USRG, and West Central. The option purchase price was determined through negotiation between the current beneficial owners and us in a transaction whereby we acquired the facility from a third party in 2010 and immediately sold the facility to its current owners in a sale/leaseback transaction. We also have certain other arrangements and agreements in place with these parties. See “Certain relationships and related party transactions” beginning on page 112 of this prospectus.

The remainder of the net proceeds is expected to be used for working capital, capital expenditures related to improvements of production processes and logistics, and investments, including potential acquisitions, joint ventures and other collaborative arrangements, in new biofuel businesses, production technologies or other assets and in opportunities to extend our biorefinery platform to the production of renewable chemicals and feedstocks. We have no agreements with respect to any material investments at this time.

If the underwriters’ over-allotment option is exercised, we are obligated to use the first $15.0 million of net proceeds, or such lesser amount if the net proceeds are less than $15.0 million, to make a one-time special payment to the former holders of our Series A preferred stock. To the extent that the underwriters’ over-allotment option is not exercised, or the net proceeds from the exercise of the over-allotment option are less than $15.0 million, upon expiration of the 30-day option period, we are obligated to issue up to 400,000 additional shares of Series B preferred stock to the former holders of Series A preferred stock, such that the maximum number of shares of Series B preferred stock that we may issue is 3,000,000. The number of shares of Series B preferred stock to be issued to such former holders of Series A preferred stock will be reduced proportionately for any exercise of the over-allotment option resulting in net proceeds in excess of $5.0 million and less than $15.0 million. If the net proceeds from the exercise of the over-allotment option exceed $15.0 million, we intend to use such excess net proceeds as described in the preceding paragraph.

As of the date of this prospectus, however, except as set forth above, we cannot predict with certainty all of the particular uses for the proceeds of this offering or the amounts that we will actually spend on the uses set forth above. Our management will have significant flexibility in applying the net proceeds of this offering. Pending use of the net proceeds as described above, we intend to invest the net proceeds of this offering in short-term, interest-bearing, investment-grade securities.

Upon the completion of the offering, holders of the Series B preferred stock are entitled to receive, on each share, out of assets legally available, cumulative dividends semi-annually at an annual rate of 4.50% of the stated value, which is $25 per share. For so long as at least 300,000 shares of Series B preferred stock remain outstanding, without the approval of the holders of at least 75% of the then-outstanding shares of Series B preferred stock, we may not declare, pay or set apart funds for the payment of any dividend or other distribution with respect to any junior stock or parity stock, including the Common Stock, and we will not, subject to certain exceptions, redeem, purchase or otherwise acquire for consideration junior stock or parity stock, including the Common Stock.

We have never declared or paid any cash dividends on the Common Stock. We expect to retain all of our earnings to finance the expansion and development of our business and we do not currently intend to pay any cash dividends on the Common Stock in the foreseeable future. Any future determinations to declare dividends will be at the discretion of our Board of Directors, subject to the restrictions imposed by our Series B preferred stock, and will depend on our financial condition, results of operations, capital requirements, general business requirements, contractual restrictions and other factors our Board of Directors deem relevant. Certain of our subsidiaries have entered into credit agreements that limit their ability to pay dividends. See “Management’s discussion and analysis of financial condition and results of operations—Liquidity and Capital Resources” beginning on page 65 for a discussion of these limitations. Future agreements that we may enter into, including with respect to any future debt we may incur, may also further limit or restrict our ability to pay dividends.

The following table describes our cash and cash equivalents, short-term debt and capitalization as of March 31, 2011:

A $1.00 increase (decrease) in the assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) total stockholders’ equity and total capitalization by $ million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses. A one million share increase (decrease) in the number of shares of Common Stock sold by us in this offering would increase (decrease) total stockholders’ equity and total capitalization by approximately $ million, assuming an initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses.

The pro forma information set forth in the above table is based on no shares of our Common Stock and shares of our Class A Common Stock outstanding (after giving pro forma effect to the reclassification of our existing common stock into an equivalent number of shares of Class A Common Stock) as of March 31, 2011; and

Our net tangible book value as of March 31, 2011 was approximately $ million, or $ per share of common stock. Net tangible book value per share represents the amount of our total tangible assets less total liabilities, divided by the number of shares of common stock outstanding as of March 31, 2011. Dilution in net tangible book value per share to new investors represents the difference between the amount per share paid by purchasers of shares of Common Stock in this offering and the net tangible book value per share of common stock immediately after completion of this offering.

After giving effect to the sale of the shares of Common Stock by us in this offering at an assumed public offering price of $ per share, the midpoint of the range on the cover page of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us, our net tangible book value as of March 31, 2011 would have been approximately $ million, or $ per share of common stock. This represents an immediate increase in net tangible book value of $ per share of common stock to existing stockholders and an immediate dilution in net tangible book value of $ per share to new investors purchasing shares of Common Stock in this offering.

A $1.00 increase (decrease) in the assumed public offering price per share would increase (decrease) our net tangible book value as of March 31, 2011 by approximately $ million, or $ per share, resulting in additional dilution of $ per share to the new investors purchasing shares of Common Stock in this offering.

Separately, a one million share increase (decrease) in the number of shares of Common Stock sold would increase (decrease) our net tangible book value as of March 31, 2011 by approximately $ million, or $ per share, resulting in a decrease (increase) in dilution of $ per share to the new investors purchasing shares of Common Stock in this offering.

As of March 31, 2011, assuming the exercise and payment of all outstanding options and warrants, excluding warrants that are terminated in connection with the recapitalization, and after giving effect to this offering, net tangible book value would have been approximately $ million, representing dilution of $ per share to new investors.

As of March 31, 2011, assuming a $1.00 increase in the assumed public offering price per share, our net tangible book value would have increased by $ million, representing additional dilution of $ per share to new investors. As of March 31, 2011, assuming a 10% increase in the number of shares of Common Stock sold and an assumed public offering price of $ per share, our net tangible book value would have increased by approximately $ million, representing a decrease in dilution of $ per share to new investors.

If the underwriters’ over-allotment option is exercised in full, the number of shares of common stock held by existing stockholders will be reduced to % of the total number of shares of common stock to be outstanding after this offering; and the number of shares of Common Stock held by the new investors will be increased to shares or % of the total number of shares of common stock outstanding after this offering.

A 10% increase in the number of shares sold of Common Stock would decrease the number of shares of common stock held by existing stockholders as a percentage of the total number of shares of common stock outstanding after this offering by %; the number of shares of Common Stock held by new investors would increase by shares, or % of the total number of shares of common stock outstanding after this offering.

Sales by the selling stockholders in this offering will reduce the number of shares held by existing stockholders to or approximately % of the total shares of our common stock outstanding after this offering, or shares and approximately % of the total shares of our common stock outstanding after this offering if the over-allotment option is exercised in full. The number of shares to be purchased by new investors will be increased to or approximately % of the total shares of our common stock outstanding after this offering, or shares and approximately of the total shares of common stock outstanding after this offering, if the over-allotment option is exercised in full.

The following table sets forth selected historical consolidated financial data that should be read in conjunction with “Management’s discussion and analysis of financial condition and results of operations” and our consolidated financial statements and notes thereto. The selected historical consolidated financial data in this section is not intended to replace our historical consolidated financial statements and the related notes thereto. Our historical results are not necessarily indicative of future results, and our operating results for the three months ended March 31, 2011 are not necessarily indicative of the results that may be expected for the year ended December 31, 2011.

The selected consolidated balance sheet data as of December 31, 2010 and 2009, and the selected consolidated statements of operations data for each year ended December 31, 2010, 2009 and 2008, have been derived from our audited consolidated financial statements which are included in this prospectus. The selected consolidated balance sheet data as of December 31, 2008, 2007 and 2006, and the selected consolidated statements of operations data for the years ended December 31, 2007 and 2006 have been derived from our audited consolidated financial statements not included in this prospectus.

The consolidated statements of operations data for the three month periods ended March 31, 2011 and 2010 and the balance sheet data as of March 31, 2011 have been derived from our unaudited condensed consolidated financial statements that are included elsewhere in this prospectus and have been prepared on the same basis as our audited consolidated financial statements and include all adjustments (consisting of normal recurring adjustments) that we considered necessary for a fair presentation of the results for or as of the periods presented. The balance sheet data as of March 31, 2010 has been derived from our unaudited condensed consolidated financial statements, which are not included in this prospectus.

Management’s discussion and analysis of financial condition and results of operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section entitled “Risk factors” included elsewhere in this prospectus.

We are the largest producer of biodiesel in the United States. We have been a leader of the biodiesel industry since 1996. We have transitioned from a single plant production facility, then being primarily an operator of a third party-owned network of facilities, and now we own five operating biodiesel production facilities and lease a sixth biodiesel facility. We own biodiesel production facilities with nameplate capacities consisting of: a 12 mmgy facility in Ralston, Iowa, a 35 mmgy facility near Houston, Texas, or the Houston facility, a 45 mmgy facility in Danville, Illinois and a 30 mmgy facility in Newton, Iowa. As part of our acquisition strategy, in April 2010, we signed a seven year lease for a 60 mmgy facility in Seneca, Illinois, and on July 11, 2011 we completed our acquisition of SoyMor Biodiesel, LLC’s, or SoyMor, 30 mmgy biodiesel production facility in Albert Lea, Minnesota, bringing our total nameplate production capacity to 212 mmgy. During 2010 we sold 68 million gallons of biodiesel, including five million gallons we purchased from third parties and resold, and including eight million gallons we manufactured for others. The 68 million gallons we sold in 2010 represented approximately 22% of the total biodiesel produced in the United States in 2010.

As noted above, on July 11, 2011, we acquired SoyMor’s production facility, now named REG Albert Lea, LLC. We built and operated this facility under a management and operation services agreement, or MOSA, until SoyMor idled the facility in February 2008. We intend to recommence operations of the facility using soybean oil feedstock immediately and to upgrade the facility to process a wide variety of lower cost feedstocks as project financing becomes available and market conditions warrant.

The recent implementation of RFS2 has led to a significant year-over-year increase in demand and substantial increase in sales price per gallon. Over the last three years, prior to the implementation of RFS2, challenging biodiesel industry conditions have had a significant effect on our results of operations. The United States biodiesel industry experienced a downturn beginning in 2008 as a result of a variety of factors, including the imposition of extensive anti-dumping tariffs and countervailing duties on exports of United States biodiesel to the European Union, or EU, the worldwide economic crisis, falling petroleum-based diesel fuel prices, an uncertain regulatory environment and high soybean oil prices. As a result of these factors, the average price for B100 Upper Midwest Biodiesel as reported by The Jacobsen fell from $4.47 per gallon in 2008 to $3.07 per gallon in 2009.

In response to these industry dynamics, we reduced expenses in our biodiesel business by shifting production to lower cost feedstocks such as inedible animal fat, used cooking oil and inedible corn oil. In addition, we periodically idled our plants when there was insufficient demand. Over this three-year period, the services segment of our business became significantly less active as construction of new biodiesel production facilities largely stopped and the third party-owned facilities managed by us also saw decreased volume from poor industry conditions. However, in anticipation of increased demand for biodiesel as a result of RFS2 we elected to use our available resources and our position as an industry

Management’s discussion and analysis of financial condition and results of operations

leader to acquire two plants with lower cost feedstock processing capabilities which we then managed. We also leased and obtained an option to buy a third lower cost feedstock facility and focused on developing sufficient and reliable supplies of lower cost feedstocks.

During the second half of 2010, we and the biodiesel industry began to benefit from RFS2, which became effective July 1, 2010 and requires Obligated Parties to use specified amounts of biomass-based diesel, as discussed further below. In addition, the $1.00 per gallon federal blenders’ tax credit, which had expired as of December 31, 2009, was reinstated in December 2010 retroactively for all of 2010 and prospectively for 2011. As a result of these regulatory changes, as well as improving general economic conditions and relatively high petroleum prices, the price of and demand for biodiesel have increased significantly. In the first quarter of 2010, prior to the effectiveness of RFS2 and the reinstatement of the blenders’ tax credit, our average price for B100 was $3.02 per gallon. In the first quarter of 2011, our average price per gallon of B100 was $4.36, or 45% higher than the average price during the first quarter of 2010, and we sold approximately 21 million gallons of biodiesel, compared to approximately 68 million gallons sold in all of 2010.

We have completed eight acquisitions since the beginning of 2010, which include the acquisition of five biodiesel plants, and we intend to continue to seek opportunities to acquire biodiesel production facilities located in the United States and in international markets. We own three partially completed biodiesel production facilities. In 2007, we began construction of two 60 mmgy nameplate production capacity facilities, one near New Orleans, Louisiana and the other in Emporia, Kansas. In February 2008, we halted construction of these facilities as a result of conditions in the biodiesel industry and our inability to obtain financing necessary to complete construction of the facilities. Construction of the New Orleans facility is approximately 50% complete and construction of the Emporia facility is approximately 20% complete. Further, during the third quarter of 2010, we acquired a 15 mmgy nameplate biodiesel production capacity facility in Clovis, New Mexico which is approximately 70% complete. We plan to complete construction of these facilities as financing becomes available, subject to market conditions. We expect that the aggregate cost to complete construction and commence operations of these three facilities is in the range of approximately $130 to $140 million, excluding working capital.

We derive revenues from two reportable business segments: Biodiesel and Services.

Management’s discussion and analysis of financial condition and results of operations

We derive a small portion of our revenues from the sale of glycerin, free fatty acids and other co-products of the biodiesel production process. In 2009 and 2010, our revenues from the sale of co-products were less than five percent of our total Biodiesel segment revenues.

When we produce a gallon of biodiesel, we generate 1.5 RINs per gallon. RINs are used to track compliance with RFS2. RFS2 allows us to attach between zero and 2.5 RINs to any gallon of biodiesel. When we sell a gallon of biodiesel we generally attach 1.5 RINs. As a result, a portion of our selling price for a gallon of biodiesel is generally attributable to RINs. For a more detailed discussion of RIN values, please see “Government Programs Favoring Biodiesel Production and Use—Renewable Fuel Standard” on page 80.

Historically, we provided facility operations management services to owners of biodiesel production facilities. Pursuant to a MOSA with a facility owner, we provided a broad range of management and operations services, typically for a monthly fee based on gallons of biodiesel produced or marketed and a contingent payment based on the facility’s net income. We do not recognize revenues from the sale of biodiesel produced at managed facilities, which is sold for the account of the third party owner. In 2009, we provided notice of termination of our five remaining third party MOSAs because we determined the terms were not favorable to us. During 2010, we ceased providing services to three of these facilities, acquired one and continue to provide limited services to the other facility. We do not anticipate the termination of our MOSAs will have a significant impact on our financial statements.

In addition, historically we have provided construction management services to the biodiesel industry, including assistance with pre-construction planning, such as site selection and permitting, facility and process design and engineering, engagement of subcontractors to perform construction activity and supply biodiesel processing equipment and project management services. Because we do not have internal construction capabilities and do not manufacture biodiesel processing equipment, we rely on our prime subcontractors, Todd & Sargent, Inc. and its joint venture with the Weitz Company, TSW, LLC, to fulfill the bulk of our obligations to our customers. Payments to these prime subcontractors historically represented most of the costs of goods sold for our Services segment.

Demand for our construction management and facility management and operational services depends on capital spending by potential customers and existing customers, which is directly affected by trends in the biodiesel industry. Due to the current economic climate, overcapacity in the biodiesel industry and reduced demand for biodiesel, we have not received any orders or provided services to outside parties for

Management’s discussion and analysis of financial condition and results of operations

new facility construction services since 2009. We have, however, utilized our construction management expertise internally to upgrade two of our facilities during the last three years. We anticipate revenues derived from construction management services will be minimal in future periods.

Our results of operations are primarily affected by industry-wide factors affecting the profitability of biodiesel production. The principal factors affecting our segments are the market prices for biodiesel and the feedstocks used to produce biodiesel, as well as governmental programs designed to create incentives for the production and use of biodiesel.

Biodiesel has been more expensive to produce than petroleum-based diesel fuel and as a result the industry depends on federal and, to a lesser extent, state usage requirements and tax incentives.

On July 1, 2010, RFS2 was implemented, stipulating volume requirements for the amount of biomass-based diesel that must be utilized in the United States each year. Under RFS2, Obligated Parties—including petroleum refiners and fuel importers—must show compliance with these standards. Currently, biodiesel meets two categories of an Obligated Party’s annual renewable fuel volume requirement, or RVO—biomass-based diesel and advanced biofuel. Today, biodiesel is the only significant commercially available domestically produced advanced biofuel that meets the RFS2 standard. Consistent with the RFS2 program, the EPA announced it would require the domestic use of 800 million gallons of biodiesel in 2011 and one billion gallons in 2012. The EPA recently proposed a requirement for domestic use of biodiesel by Obligated Parties of 1.28 billion gallons in 2013. Our sales volumes have increased during 2011 as a result of RFS2-generated demand.

The federal blenders’ tax credit provides a $1.00 refundable tax credit per gallon of 100% pure biodiesel, or B100, to the first blender of biodiesel with petroleum-based diesel fuel. The blenders’ tax credit expired on December 31, 2009, but was reinstated on December 17, 2010, retroactively for 2010 and prospectively for 2011. As a result of the uncertainty about the reinstatement of the blenders’ tax credit for most of 2010, we elected to sell mostly unblended biodiesel. Accordingly, we were not entitled to claim the blenders’ tax credit for these gallons on a retroactive basis. The absence of the blenders’ tax credit during most of 2010 also affected our ability to cost effectively sell biodiesel and as a consequence, we idled several of our plants for various periods of time. Most of our facilities operated at less than 50% utilization due to decreased demand for biodiesel.

Our operating results generally reflect the relationship between the price of biodiesel and the price of feedstocks used to produce biodiesel.

Biodiesel is a low carbon, renewable alternative to petroleum-based diesel fuel and is primarily sold to the end user after it has been blended with petroleum-based diesel fuel. Biodiesel prices have historically been correlated to petroleum-based diesel fuel prices. Accordingly, biodiesel prices have generally been impacted by the same factors that affect petroleum prices, such as worldwide economic conditions, wars and other political events, OPEC production quotas, changes in refining capacity and natural disasters. Recently enacted government requirements and incentive programs, such as RFS2 and the blenders’ tax credit, have reduced this correlation, although it remains a significant factor in the market price of our product.

Management’s discussion and analysis of financial condition and results of operations

During late 2010 and 2011, we have seen regulatory and legislative factors influencing the price of biodiesel, in addition to petroleum prices. RIN pricing, a value component that was introduced via RFS2, has had a significant impact on our biodiesel pricing. During the first quarter of 2011, RIN value represented almost a third of the price of each gallon of biodiesel that we sold.

During 2010, feedstock expense accounted for 76% of our costs of goods sold, while methanol and chemical catalysts expense accounted for 5% and 3% of our costs of goods sold, respectively. Methanol, a reactant in the production process, represents our second largest cost, the price of which is correlated to the cost of natural gas.

Feedstocks for biodiesel production, such as inedible animal fat, used cooking oil, inedible corn oil and soybean oil are commodities and market prices for them will be affected by a wide range of factors unrelated to the supply and demand for biodiesel and petroleum-based diesel fuels. The following table outlines some of the factors influencing supply in a given area:

During 2010, 91% of our feedstocks were comprised of inedible animal fats, used cooking oil and inedible corn oil while in 2007 we used 100% refined vegetable oil. We have increased the use of these feedstocks because they are lower cost than refined vegetable oils.

Historically, most biodiesel in the United States has been made from soybean oil. Soybean oil prices have fluctuated greatly, but have generally remained at historically high levels since early 2007 due to higher overall commodity prices. Over the period January 2006 to May 2010, soybean oil prices (based on daily closing nearby futures prices on the CBOT for crude soybean oil) have ranged from $0.21 per pound, or $1.58 per gallon, in January 2006 to $0.70 per pound, or $5.28 per gallon, in March 2008, assuming 7.5 pounds of soybean oil yields one gallon of biodiesel. The average closing price for soybean oil during 2010 was $0.42 per pound, or $3.16 per gallon, in 2010, compared to $0.25 per pound, or $1.88 per gallon, in 2006, $0.36 per pound, or $2.72 per gallon, in 2007 and $0.51 per pound, or $3.85 per gallon, in 2008, assuming 7.5 pounds of soybean oil yields one gallon of biodiesel.

Over the period from January 2008 to May 2011, the price of choice white grease, an inedible animal fat (based on daily closing nearby futures prices for The Jacobsen reported Missouri River delivery of choice

Management’s discussion and analysis of financial condition and results of operations

white grease), have ranged from $0.0950 per pound, or $0.76 per gallon, in December 2008 to $0.5175 per pound, or $4.14 per gallon, in March 2011, assuming 8.0 pounds of choice white grease yields one gallon of biodiesel. The average closing price for choice white grease during 2010 was $0.29 per pound, or $2.34 per gallon, compared to $0.33 per pound, or $2.64 per gallon, in 2008, assuming 8.0 pounds of choice white grease yields one gallon of biodiesel.

The graph below illustrates the spread between the cost of producing one gallon of biodiesel made from soybean oil to the cost of producing one gallon of biodiesel made from a lower cost feedstock. The results were derived using assumed conversion factors for the yield of each feedstock and subtracting the cost of producing one gallon of biodiesel made from each respective lower cost feedstock from the cost of producing one gallon of biodiesel made from soybean oil.

Management’s discussion and analysis of financial condition and results of operations

Our results of operations generally will benefit when the spread between biodiesel prices and feedstock prices widens and will be harmed when this spread narrows. The following graph shows feedstock cost data of choice white grease and soybean oil on a per gallon basis compared to the sale price data for biodiesel, and the spread between the two, from January 2008 to May 2011.

Management’s discussion and analysis of financial condition and results of operations

Selling, general and administrative expense consists of expenses generally involving corporate overhead functions and operations at our Ames, Iowa headquarters.

Other income (expense), net is primarily comprised of the changes in fair value of the embedded derivative related to the Series A preferred stock conversion feature, changes in fair value of interest rate swap, interest expense, interest income, the impairment of investments we made in biodiesel plants owned by third parties and the changes in valuation of the Seneca Holdco, LLC liability associated with the put and call options on the equity interest in Landlord.

We use the equity method of accounting to account for the operating results of entities over which we have significant influence. Significant influence may be reflected by factors such as our significant

Management’s discussion and analysis of financial condition and results of operations

operational influence due to our management of biodiesel operations at a third party owned facility and participation by one of our employees on the facility’s board of directors. We currently account for our interest in SoyMor under the equity method and in the past used this method to account for our interests in other entities where we had a significant management roll under a MOSA and had board participation. One of our wholly-owned subsidiaries acquired substantially all of the assets of SoyMor in July 2011; therefore, in future periods we will no longer account for our interest under the equity method, instead we will consolidate our interest in SoyMor like all of our other wholly-owned subsidiaries in our consolidated financial statements. Additionally, we use the equity method of accounting to account for the operating results of Bell, LLC which owns our headquarters building. Under the equity method, we recognize our proportionate share of the net income (loss) of each entity in the line item “Loss from equity investments.”

We use the cost method of accounting to account for our minority investment in three previously managed plants, East Fork Biodiesel, LLC, or EFB, Western Iowa Energy, LLC, or WIE, since May, 2010, and Western Dubuque Biodiesel, LLC, or WDB, since August 2010. Because we do not have the ability to influence the operating and financial decisions of EFB, WIE, or WDB, and do not maintain a position on the board of directors, the investment is accounted for using the cost method. Under the cost method, the initial investment is recorded at cost and assessed for impairment. There was $0.4 million impairment recorded during 2010, relating to the wind up and liquidation of EFB, which fully impaired the remaining investment. We have not recorded any impairment of our investments in WIE or WDB.

In June 2009, the Financial Accounting Standards Board, or FASB, amended its guidance on accounting for variable interest entities, or VIEs. As of January 1, 2010, we evaluated each investment and determined we do not hold a controlling interest in any of our investments in third party owned plants that would empower us to direct the activities that most significantly impact economic performance. As a result, we are not the primary beneficiary and do not consolidate these VIE’s. See “Note 7—Variable Interest Entities” to our audited consolidated financial statements for more information.

For additional information with regards to prior accounting treatment for now acquired investments including Blackhawk and CIE, please see “Note 5—Blackhawk”, “Note 6—Acquisitions and Equity Transactions” and “Note 7—Variable Interest Entities” to our audited consolidated financial statements.

On April 8, 2010, we determined that Landlord was a VIE and it was consolidated into our financial statements as we are the primary beneficiary. See “Note 6—Acquisitions and Equity Transactions” for a description of the transaction. We have a put/call option with Seneca Holdco, LLC to purchase Landlord and currently lease the plant for production of biodiesel, both of which represent a variable interest in Landlord that is significant to the VIE. Although we do not have an ownership interest in Seneca Holdco, LLC, it was determined that we are the primary beneficiary due to the related party nature of the entities involved, our ability to direct the activities that most significantly impact Landlord’s economic performance and the design of Landlord that ultimately gives us the majority of the benefit from the use of Landlord’s assets.

During 2007, we invested, through a wholly-owned subsidiary, in Bell, LLC, a VIE joint venture, whereby we own 50% of the outstanding units. Bell, LLC owns and leases to us its corporate office building located in Ames, Iowa, which we use as our corporate headquarters. We currently have the right to exercise a call option with the other joint venture member, Dayton Park, LLC, to purchase Bell, LLC; therefore, we have determined we are the primary beneficiary of Bell, LLC and have consolidated Bell, LLC into our financial statements in accordance with ASC Topic 810, Consolidation (ASC Topic 810). See “Note 7—Variable Interest Entities” to our audited consolidated financial statements for a description of the consolidation.

Management’s discussion and analysis of financial condition and results of operations

The profitability of the biodiesel production business largely depends on the spread between prices for feedstocks and for biodiesel fuel. We actively monitor changes in prices of these commodities and attempt to manage a portion of the risks of these price fluctuations. However, the extent to which we engage in risk management activities varies substantially from time to time, and from feedstock to feedstock, depending on market conditions and other factors. Adverse price movements for these commodities directly affect our operating results. As a result of our recent acquisitions, our exposure to these risks has increased. In making risk management decisions, we receive input from others with risk management expertise and utilize research conducted by outside firms to provide additional market information.

We manage feedstock supply risks related to biodiesel production in a number of ways, including, where available, through long-term supply contracts. For example, most of the feedstock requirements for our Ralston facility were supplied under a three-year agreement with West Central that expired on July 8, 2010. However, we continue to purchase under, and expect to renegotiate terms similar to, the expired agreement. The purchase price for soybean oil under this agreement is indexed to prevailing Chicago Board of Trade, or CBOT, soybean oil market prices with a negotiated market basis. We utilize futures contracts and options to hedge, or lock in, the cost of portions of our future soybean oil requirements generally for varying periods up to one year.

Inedible animal fat is the primary feedstock that we used to produce biodiesel in 2010. We have increased our use of inedible animal fat as a result of the tolling arrangements with plants with animal fat processing capabilities and our acquisition of the Danville and Newton facilities. We utilize several varieties of inedible animal fat, such as beef tallow, choice white grease derived from pork and poultry fat. We manage inedible animal fat supply risks related to biodiesel production through supply contracts with inedible animal fat suppliers/producers. There is no established futures market for inedible animal fat. The purchase price for inedible animal fat is generally set on a negotiated flat price basis or spread to a prevailing market price reported by the United States Department of Agriculture price sheet. Our limited efforts to hedge against changing inedible animal fat prices have involved entering into futures contracts or options on other commodity products, such as soybean oil or heating oil. However, these products do not always experience the same price movements as animal fats, making risk management for these feedstocks challenging.

Our ability to mitigate our risk of falling biodiesel prices is limited. We have entered into forward contracts to supply biodiesel. However, pricing under these forward sales contracts generally has been indexed to prevailing market prices, as fixed price contracts for long periods on acceptable terms have generally not been available. There is no established market for biodiesel futures in the United States. Our efforts to hedge against falling biodiesel prices, which have been relatively limited to date, generally involve entering into futures contracts and options on other commodity products, such as diesel fuel and heating oil. However, these products do not always experience the same price movements as biodiesel.

Changes in the value of these futures or options instruments are recognized in current income or loss.

Our discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally

Management’s discussion and analysis of financial condition and results of operations

accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, equities, revenues and expenses and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for judgments we make about the carrying values of assets and liabilities that are not readily apparent from other sources. Because these estimates can vary depending on the situation, actual results may differ from the estimates.

We believe the following critical accounting policies affect our more significant judgments used in the preparation of our consolidated financial statements:

Biodiesel sales revenues are recognized when there is persuasive evidence of an arrangement, delivery has occurred, the price has been fixed or is determinable, and collectability can be reasonably assured.

Fees received under toll manufacturing agreements with third parties are generally established as an agreed upon amount per gallon of biodiesel produced. The fees are recognized where there is persuasive evidence of an arrangement, delivery has occurred, the price has been fixed or is determinable, and collectability can be reasonably assured.

Revenues associated with the governmental incentive programs are recognized when the amount to be received is determinable, collectability is reasonably assured and the sale of product giving rise to the incentive has been recognized.

Historically, we have provided consulting and construction services under turnkey contracts. These jobs require design and engineering effort for a specific customer purchasing a unique facility. We record revenues on these fixed-price contracts on the percentage of completion basis using the ratio of costs incurred to estimated total costs at completion as the measurement basis for progress toward completion and revenue recognition. The total contract price includes the original contract plus any executed change orders only when the amounts have been received or awarded.

Contract costs include all direct labor and benefits, materials unique to or installed in the project and subcontract costs. Contract accounting requires significant judgment relative to assessing risks, estimating contract costs and making related assumptions for schedule and technical issues. We routinely review estimates related to contracts and reflect revisions to profitability in earnings on a current basis. If a current estimate of total contract cost indicates an ultimate loss on a contract, we would recognize the projected loss in full when it is first determined. We recognize additional contract revenue related to claims when the claim is probable and legally enforceable.

Management’s discussion and analysis of financial condition and results of operations

Changes relating to executed change orders, job performance, construction efficiency, weather conditions, and other factors affecting estimated profitability may result in revisions to costs and revenues and are recognized in the period in which the revisions are determined.

Billings in excess of costs and estimated earnings on uncompleted contracts represents amounts billed to customers prior to providing related construction services.

Fees for managing ongoing operations of third party plants, marketing biodiesel produced by third party plants and from other services are recognized as services are provided. We also have performance-based incentive agreements that are included as management service revenues. These performance incentives are recognized as revenues when the amount to be received is determinable and collectability is reasonably assured.

We act as a sales agent for certain third parties and recognize revenues on a net basis in accordance with ASC Topic 605-45, “Revenue Recognition”.

Impairment of Long-Lived Assets and Certain Identifiable Intangibles. We review long-lived assets, including property, plant and equipment and definite-lived intangible assets, for impairment in accordance with ASC Topic 360-10, “Property, Plant, and Equipment.” Asset impairment charges are recorded for long-lived assets and intangible assets subject to amortization when events and circumstances indicate that such assets may be impaired and the undiscounted net cash flows estimated to be generated by those assets are less than their carrying amounts. If estimated future undiscounted cash flows are not sufficient to recover the carrying value of the assets, an impairment charge is recorded for the amount by which the carrying amount of the assets exceeds 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 use of the asset. Changes in judgment that could significantly alter the 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, legal factors, commodity prices, and the use of the asset or the physical condition of the asset. There were $7.5 million and $0.8 million of asset impairments recorded during 2010 and 2009, respectively.

Goodwill asset valuation. While goodwill is not amortized, it is subject to periodic reviews for impairment. As required by ASC Topic 350, “Intangibles—Goodwill and Other”, we review the carrying value of goodwill for impairment annually on July 31 or when we believe impairment indicators exist. The analysis is based on a comparison of the carrying value of the reporting unit to its fair value, determined utilizing a discounted cash flow methodology. Additionally, we review the carrying value of goodwill whenever events or changes in business circumstances indicate that the carrying value of the assets may not be recoverable. Changes in estimates of future cash flows caused by items such as unforeseen events or sustained unfavorable changes in market conditions could negatively affect the fair value of the reporting unit’s goodwill asset and result in an impairment charge. There has been no goodwill impairment recorded in the last three fiscal years.

Income taxes. We recognize deferred taxes by the asset and liability method. Under this method, deferred income taxes are recognized for differences between the financial statement and tax bases of assets and liabilities at enacted statutory tax rates in effect for the years in which differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. In addition, valuation allowances are established if necessary to reduce deferred tax assets to amounts expected to be realized.

Management’s discussion and analysis of financial condition and results of operations

On December 31, 2009, we determined that it is unlikely that our deferred tax assets will be fully realized in the future based on available evidence; therefore, a full valuation allowance was established against the assets. On a quarterly basis, any deferred tax assets are reviewed to determine the probability of realizing the assets. At December 31, 2010, we had net deferred income tax assets of approximately $39.2 million with a valuation allowance of $37.7 million, which resulted in a net deferred tax asset of $1.5 million and is offset by an accrued liability for uncertain tax benefits. We believe there is a reasonable basis in the tax law for all of the positions we take on the various federal and state tax returns we file. However, in recognition of the fact that various taxing authorities may not agree with our position on certain issues, we expect to establish and maintain tax reserves. As of December 31, 2010, we had a net deferred tax asset of $1.5 million relating to uncertain tax benefits.

Prior to the merger of our wholly-owned subsidiary with and into Blackhawk, or the Blackhawk Merger, Blackhawk was treated as a partnership for federal and state income tax purposes and generally did not incur income taxes. Instead, its earnings and losses were included in the income tax returns of its members. Therefore, no provision or liability for federal or state income taxes was included in our consolidated financial statements aside from our pro-rata share included on our Schedule K-1 determined based on our ownership interest for the year ending December 31, 2009 and the period ending February 26, 2010 prior to acquisition.

Consolidations. As of June 30, 2010, we determined the acquisition price of Blackhawk and CIE. For the Blackhawk Merger and the acquisition of substantially all of the assets and liabilities of CIE pursuant to the CIE asset purchase agreement, the allocation of the recorded amounts of consideration transferred and the recognized amounts of the assets acquired and liabilities assumed are based on the final appraisals and evaluation and estimations of fair value as of the acquisition date. We determined the goodwill recorded was $44.2 million and $24.6 million for REG Danville and REG Newton, LLC, or REG Newton, respectively.

On April 8, 2010, we determined that Landlord was a VIE and consolidated it into our financial statements as we are the primary beneficiary (ASC Topic 810, “Consolidations”). We have a put/call option with Seneca Holdco, LLC to purchase Landlord and we currently lease the plant for production of biodiesel, both of which represent a variable interest in Landlord that are significant to the VIE. Although we do not have an ownership interest in Seneca Holdco, LLC, we determined that we are the primary beneficiary because the equity owners are our stockholders; our ability to direct the activities that most significantly impact Landlord’s economic performance; and the design of the leasing arrangement that ultimately gives us the majority of the benefit from the use of Landlord’s assets. We have elected the fair value option available under ASC Topic 825, “Financial Instruments” on the $4.0 million investment made by Seneca Holdco, LLC and the associated put and call options. Changes in the fair value after the date of the transaction are recorded in earnings. Those assets are owned by and those liabilities are obligations of Landlord, which we have consolidated as the primary beneficiary.

During 2007, we invested, through a wholly-owned subsidiary, in Bell, LLC, a VIE joint venture, whereby we own 50% of the outstanding units. Commencing January 1, 2011, we have the right to execute a call option with the joint venture member, Dayton Park, LLC, to purchase Bell, LLC; therefore, we determined we were the primary beneficiary of Bell, LLC and consolidated Bell, LLC into our financial statements in accordance with ASC Topic 810. See “Note 7—Variable Interest Entities” to our audited consolidated financial statements for a description of the consolidation.

Valuation of Preferred Stock Embedded Derivatives. The terms of our Series A preferred stock provide for voluntary and, under certain circumstances, automatic conversion of the Series A preferred stock to common stock based on a prescribed formula. In addition, shares of Series A preferred stock are subject

Management’s discussion and analysis of financial condition and results of operations

to redemption at the election of the holder beginning February 26, 2014. The redemption price is equal to the greater of (i) an amount equal to $13.75 per share of Series A preferred stock plus any and all accrued dividends, not exceeding $16.50 per share, and (ii) the fair market value of the Series A preferred stock. Under ASC Topic 815-40, we are required to bifurcate and account for as a separate liability certain derivatives embedded in our contractual obligations. An “embedded derivative” is a provision within a contract, or other instrument, that affects some or all of the cash flows or the value of that contract, similar to a derivative instrument. Essentially, the embedded terms contain all of the attributes of a free-standing derivative, such as an underlying market value, a notional amount or payment provision, and can be settled “net,” but the contract, in its entirety, does not meet the ASC 815-40 definition of a derivative. For a description of the redemption and liquidation rights associated with Series A preferred stock, see “Note 4—Redeemable Preferred Stock” to our audited consolidated financial statements.

We have determined that the conversion feature of Series A preferred stock is an embedded derivative because the redemption feature allows the holder to redeem Series A preferred stock for cash at a price which can vary based on the fair market value of the Series A preferred stock, which effectively provides the holders of the Series A preferred stock with a mechanism to “net settle” the conversion option. Consequently, the embedded conversion option must be bifurcated and accounted for separately because the economic characteristics of this conversion option are not considered to be clearly and closely related to the economic characteristics of the Series A preferred stock, which is considered more akin to a debt instrument than equity.

Upon issuance of Series A preferred stock, we recorded a liability representing the estimated fair value of the right of preferred holders to receive the fair market value of the common stock issuable upon conversion of the Series A preferred stock on the redemption date. This liability is adjusted each quarter based on changes in the estimated fair value of such right, and a corresponding income or expense is recorded as Other Income in our statements of operations.

We use the option pricing method to value the embedded derivative. We use the Black-Scholes options pricing model to estimate the fair value of the conversion option embedded in the Series A preferred stock. The Black-Scholes options pricing model requires the development and use of highly subjective assumptions. These assumptions include the expected volatility of the anticipated impact of this offering and the application of the proceeds therefrom, value of our equity, the expected conversion date, an appropriate risk-free interest rate, and the estimated fair value of our equity. The expected volatility of our equity is estimated based on the volatility of the value of the equity of publicly traded companies in a similar industry and general stage of development as us. The expected term of the conversion option is based on the period remaining until the contractually stipulated redemption date of February 26, 2014. The risk-free interest rate is based on the yield on United States Treasury STRIPs with a remaining term equal to the expected term of the conversion option. The development of the estimated fair value of our equity is discussed below in the “Valuation of the Company’s Equity.”

The significant assumptions utilized in our valuation of the embedded derivative are as follows:

The estimated fair values of the conversion feature embedded in the Series A preferred stock is recorded as a derivative liability. The derivative liability is adjusted to reflect fair value at each period end, with

Management’s discussion and analysis of financial condition and results of operations

any increase or decrease in the fair value being recorded in results of operations as change in fair value of Series A preferred stock embedded derivative. The impact of the change in the value of the embedded derivative is not included in the determination of taxable income. For a discussion of the conversion of our Series A preferred stock, see the section entitled “Certain relationships and related party transactions—Recapitalization” in this prospectus.

Valuation of Seneca Holdco, LLC Liability. In connection with the agreements under which we lease the Seneca facility (See “Note 6—Acquisitions and Equity Transactions” to our consolidated financial statements), we have the option to purchase, or Call Option, and Seneca Holdco, LLC has the option to require us to purchase, or Put Option, the membership interest of Landlord whose assets consist primarily of a biodiesel plant located in Seneca, Illinois. Both the Put Option and the Call Option have a term of seven years and are exercisable by either party at a price based on a pre-defined formula. We have valued the amounts financed by Seneca Holdco, LLC, the Put Option, and the Call Option using an option pricing model. The fair values of the Put Option and the Call Option were estimated using an option pricing model, and represent the probability weighted present value of the gain that is realized upon exercise of each option. The option pricing model requires the development and use of highly subjective assumptions. These assumptions include (i) the value of our equity, (ii) expectations regarding future changes in the value of our equity, (iii) expectations about the probability of either option being exercised, including the our ability to list our securities on an exchange or complete a public offering, and (iv) an appropriate risk-free rate. We considered current public equity markets, relevant regulatory issues, biodiesel industry conditions and our position within the industry when estimating the probability that we will raise additional capital. Differences in the estimated probability and timing of this event may significantly impact the fair value assigned to the Seneca Holdco, LLC liability as we determined it is not likely that the Put Option will become exercisable in the absence of this event.

The significant assumptions utilized in our valuation of the Seneca Holdco, LLC liability are as follows:

Preferred Stock Accretion. Beginning October 1, 2007, the date that we determined that there was a more than remote likelihood that our then outstanding preferred stock would become redeemable, we commenced accretion of the carrying value of the preferred stock over the period until the earliest redemption date, which was August 1, 2011, to the preferred stock’s redemption value, plus accrued but unpaid dividends using the effective interest method. This determination was based upon the current state of the public equity markets which restricted our ability to execute a qualified public offering, our historical operating results, and the volatility in the biodiesel and renewable fuels industries which have resulted in lower projected profitability. Prior to October 1, 2007, we had determined that it was not probable that the preferred stock would become redeemable; therefore, the carrying value was not adjusted in accordance with ASC Topic 480-10-S99, “Classification and Measurement of Redeemable Securities.”

On February 26, 2010, after issuance of the Series A preferred stock, we determined that there was a more than remote likelihood that the Series A preferred stock would become redeemable and we commenced accretion of the carrying value of the Series A preferred stock over the period until the earliest redemption date (February 26, 2014) to the Series A preferred stock’s redemption value, plus

Management’s discussion and analysis of financial condition and results of operations

dividends, using the effective interest method. This determination was based upon the state of the public equity markets at the time which restricted our ability to execute a qualified public offering, our historical operating results, and the volatility in the biodiesel and renewable fuels industries.

Accretion of $27.2 million and $44.2 million for 2010 and 2009, respectively, has been recognized as a reduction to income available to common stockholders in accordance with paragraph 15 of ASC Topic 480-10-S99.

Valuation of the Company’s Equity. We considered three generally accepted valuation approaches to estimate the fair value of our aggregate equity: the income approach, the market approach, and the cost approach. Ultimately, the estimated fair value of our aggregate equity is developed using the Income Approach—Discounted Cash Flow, or DCF, method. The value derived using this approach is supported by a variation of the Market Approach, specifically comparisons of the implied multiples derived using the DCF method to the multiples of various metrics calculated for guideline public companies.

Material underlying assumptions in the DCF analysis include the gallons produced and managed, gross margin per gallon, expected long-term growth rates, and an appropriate discount rate. Gallons produced and managed as well as the gross margin per gallon were determined based on historical and forward-looking market data.

The discount rate used in the DCF analysis is based on macroeconomic, industry, and company-specific factors and reflects the perceived degree of risk associated with realizing the projected cash flows. The selected discount rate represents the weighted average rate of return that a market participant investor would require on an investment in our debt and equity. The percent of total capital assumed to be comprised of debt and equity when developing the weighted average cost of capital was based on a review of the capital structures of our publicly traded industry peers. The cost of debt was estimated utilizing the adjusted average 20-Year B-rated corporate bond rate during the previous 12 months representing a reasonable market participant rate based on our publicly traded industry peers. Our cost of equity was estimated utilizing the capital asset pricing model, which develops an estimated market rate of return based on the appropriate risk-free rate adjusted for the risk of the industry relative to the market as a whole, an equity risk premium, and a company specific risk premium. The risk premiums included in the discount rate were based on historical and forward looking market data.

Valuations derived from this model are subject to ongoing internal and external verification and review. Selection of inputs involves management’s judgment and may impact net income. This analysis is done on a regular basis and takes into account factors that have changed from the time of the last common stock issuance. Other factors affecting our assessment of price include recent purchases or sales of common stock, if available.

Management’s discussion and analysis of financial condition and results of operations

Set forth below is a summary of certain unaudited financial information (in thousands) for the periods indicated:

Revenues. Our total revenues for the three months ended March 31, 2011 increased $66.9 million, or 178%, to $104.4 million from $37.5 million for the three months ended March 31, 2010. This increase was due to an increase in biodiesel revenues, offset by a small decrease in service revenues, as follows:

Biodiesel. Biodiesel revenues including government incentives increased $67.8 million, or 185%, to $104.4 million during the three months ended March 31, 2011 from $36.6 million for the three months ended March 31, 2010. This increase in biodiesel revenues was due to an increase in both gallons sold and selling price. Reflecting higher energy prices in the first quarter of 2011, our average B100 sales price per gallon increased $1.36, or 45%, to $4.36 during the first quarter of 2011, compared to $3.02 during the first quarter of 2010. Gallons sold increased 165% from 7.7 million gallons during first quarter 2010 to 20.5 million gallons during the first quarter 2011. This increase reflects significantly stronger market demand primarily as a result of RFS2.

Services. Services revenues decreased more than $0.8 million, or 98%, to $0.1 for the three months ended March 31, 2011, from $0.9 million for the three months ended March 31, 2010. This decrease was due to our decision to cancel our remaining MOSAs during 2010.

Management’s discussion and analysis of financial condition and results of operations

Costs of goods sold. Our costs of goods sold increased $61.0 million, or 173%, to $96.2 million for the three months ended March 31, 2011, from $35.2 million for the three months ended March 31, 2010. This increase was due to costs associated with the increase in gallons sold in the 2011 period, as follows:

Biodiesel. Biodiesel-related cost of goods sold increased $61.4 million, or 176%, to $96.2 million for the three months ended March 31, 2011, compared to $34.8 million for the three months ended March 31, 2010. The biodiesel-related increase in cost of goods sold is primarily the result of additional gallons sold in the first quarter of 2011 as well as higher feedstock costs. Average feedstock costs for the three months ended March 31, 2011 and 2010 were $0.43 and $0.30 per pound, respectively. We had losses of $3.7 million from hedging activity in the first quarter of 2011, compared to losses of $0.2 million from hedging arrangements in the first quarter of 2010. Hedge gains and losses are generally offset by other corresponding changes in gross margin through changes in either biodiesel sales price and/or feedstock price.

Services. Costs of services decreased $0.4 million, or 100%, to $0 for the three months ended March 31, 2011, from $0.4 million for the three months ended March 31, 2010. We had limited construction activity in the first quarter of 2011 and 2010 and minimal associated costs. Costs incurred to perform services under the MOSAs decreased in the first quarter of 2011 due to the cancellation of the MOSAs during 2010.

Selling, general and administrative expenses. Our selling, general and administrative, or SG&A, expenses were $6.3 million for the three months ended March 31, 2011, compared to $5.1 million for the three months ended March 31, 2010, representing an increase of $1.2 million. The increase was primarily related to the additional non-cash stock compensation expense of $1.0 million in the first quarter of 2011. Non-cash stock compensation expense for the same related period in 2010 was less than $0.1 million. There were several offsetting expense increases and decreases when comparing expenses between the three months ended March 31, 2011 and 2010. Professional fees decreased $0.3 million in the period for 2011. Depreciation expense, the provision for bad debt expense and insurance expense each increased approximately $0.1 million, or an aggregate of $0.3 million, in the first quarter 2011 when compared to the same period for 2010.

Other income (expense), net. Other income was $1.9 million for the first quarter of 2011 and other expense was $0.1 million during the first quarter of 2010. Other income is primarily comprised of the changes in fair value of the Series A preferred stock conversion feature embedded derivative, changes in fair value of Seneca Holdco, LLC liability, interest expense, interest income and the other non-operating items. The change in fair value of the Series A preferred stock conversion feature embedded derivative resulted in $2.6 million of income for the first quarter of 2011 and had no income or expense impact for the first quarter of 2010. The change in fair value of the Seneca Holdco, LLC liability for the first quarter 2011 was $0.7 million of income and had no income or expense impact for the same period in 2010. Interest expense increased $1.4 million to $1.7 million for the first three months of 2011, from $0.3 million for the first quarter of 2010. This increase was primarily attributable to the debt assumed as part of the Blackhawk Merger and CIE Asset Acquisition and the consolidation of Landlord during 2010.

Income tax benefit. There was no income tax benefit for the first quarter of 2011, compared to a $6.3 million tax benefit for the first quarter of 2010. Deferred tax liabilities were recorded as a result of the Blackhawk Merger and CIE Asset Acquisition. As the deferred tax liabilities were recorded, the resulting decrease in net deferred tax assets required a lower valuation allowance. The release of the associated valuation allowance resulted in an income tax benefit.

Loss from equity investments. Loss from equity investments was $0.1 million and $0.2 million for the first quarter of 2011 and 2010, respectively, due to lower levels of overall production at equity method investees that were generating gross losses.

Management’s discussion and analysis of financial condition and results of operations

Effects of Biofuels Merger Recapitalization. Due to the Biofuels Merger in 2010, the Company recorded the effects from recapitalization of $8.5 million.

Preferred stock accretion. Preferred stock accretion was $5.9 million for the three months ended March 31, 2011, compared to $11.1 million for the three months ended March 31, 2010. During the first quarter of 2010, we accreted two months of the previously issued Seneca Holdco, LLC preferred stock (redemption date of August 1, 2011) and one month of newly issued Series A preferred stock (redemption date February 26, 2014). Monthly accretion expense decreased after the Biofuels Merger in 2010 as a result of the new redemption amount and redemption date.

Set forth below is a summary of certain financial information (in thousands) for the periods indicated:

During 2009, Blackhawk was consolidated in our financial results. During first quarter 2010, Blackhawk was excluded from our financial results until the date of the Blackhawk Merger, February 26, 2010. After February 26, 2010, Blackhawk was included in our financial results. See “Note 5—Blackhawk” and “Note 7—Variable Interest Entities” in our audited consolidated financial statements for additional information relating to the Blackhawk consolidation.

Management’s discussion and analysis of financial condition and results of operations

Revenues. Our total revenues increased $85.0 million, or 65%, to $216.5 million in 2010, from $131.5 million in 2009. This increase was due to an increase in biodiesel revenues, offset by a small decrease in services revenues, as follows:

Biodiesel. Biodiesel revenues including government incentives increased $86.6 million, or 67%, to $215.1 million during the year ended December 31, 2010, from $128.5 million for the year ended December 31, 2009. This increase in biodiesel revenues was due to an increase in both average selling price and gallons sold. As a result of higher energy prices during 2010, the average sales price per gallon increased $0.57, or 22%, to $3.16, compared to $2.59 during 2009. Total gallons sold increased 34% to 59.5 million gallons during 2010 from 44.5 million gallons during 2009. The increase in gallons sold was primarily the result of additional demand. We produced and sold 54.1 million gallons at our owned or leased facilities during 2010; compared to 41.5 million gallons at our owned or tolling facilities during 2009, which represents an increase of 12.6 million gallons, or 30.4%. We also purchased 5.4 million gallons of third party product in 2010 and 3.0 million gallons in 2009. During 2010 under a tolling arrangement, our Houston facility shipped 8.2 million gallons compared to 14.0 million gallons during 2009. As a result of these shipments, we earned toll fee revenues $3.8 million during 2010, and $5.6 million during 2009. We had biodiesel government incentives revenue of $3.6 million during fourth quarter 2010 due to the reenactment of the blenders’ tax credit on December 17, 2010. We expect to continue to increase production based on anticipated additional demand for our product as a result of the implementation of RFS2.

Services. Services revenues decreased $1.7 million, or 57%, to $1.3 million for the year ended December 31, 2010, from $3.0 million for the year ended December 31, 2009. Our revenues generated from management services decreased during 2010 due to decreased production at the third party plants driven by the expiration of the blenders’ tax credit and due to the termination of the MOSA arrangements.

Cost of goods sold. Our cost of goods sold increased $66.2 million, or 51%, to $194.8 million for the year ended December 31, 2010, from $128.6 million for the year ended December 31, 2009. This increase was primarily due to costs associated with the increase in gallons sold in the 2010 period as follows:

Biodiesel. Biodiesel cost of goods sold increased $66.6 million, or 52%, to $194.0 million for the year ended December 31, 2010, compared to $127.4 million for the year ended December 31, 2009. The increase in cost of goods sold is primarily the result of additional gallons sold in the 2010 period as outlined above and an increase in feedstock prices. Average animal fat costs for 2010 and 2009 were $0.30 and $0.24 per pound, respectively. Average soybean oil costs for 2010 and 2009 were $0.38 and $0.33 per pound, respectively. We had losses of $1.2 million from hedging activity during 2010, compared to a loss of $1.1 million from hedging activities in 2009. Hedge gains and losses are generally offset by other corresponding changes in gross margin through changes in either biodiesel sales price and/or feedstock price.

Services. Cost of services decreased $0.4 million, or 33%, to $0.8 million for the year ended December 31, 2010, from $1.2 million for the year ended December 31, 2009. We had limited construction activity during 2010 and minimal associated costs. Costs incurred to perform services under the MOSAs decreased due to reduced employee costs stemming from the termination of our MOSAs during 2010.

Selling, general and administrative expenses. Our SG&A expenses were $22.2 million for the year ended December 31, 2010, compared to $25.6 million for the year ended December 31, 2009. The decrease was primarily due to our 2009 expenses including the consolidation of Blackhawk SG&A

Management’s discussion and analysis of financial condition and results of operations

expenses, which although still included in expenses during 2010, have been greatly reduced due to the completion of the Blackhawk Merger and start up of the facility. SG&A was further reduced by other cost cutting measures undertaken by management during 2010, which reduced wages by $1.4 million and reduced information technology expenses by $0.6 million during 2010.

Gain on sale of assets—related party. In July 2009, we sold our Stockton, California terminal facility to Westway Feed Products, Inc., or Westway, for $3.0 million in cash. We recognized a gain on the sale of this asset of $2.3 million. We had no similar sales in 2010.

Impairment of Long Lived and Intangible Assets. During 2010, the raw material supply agreements for the New Orleans and Emporia facilities were cancelled. The original agreements were recorded as an intangible asset in the amount of $7.0 million. As a result of the cancellations the full amount was charged off during the three months ended December 31, 2010. We also impaired deferred financing costs related to the New Orleans project because we determined that it was unlikely that the previously contemplated Gulf Opportunity Zone bond financing, available as part of Congress’ tax incentive program to help the Gulf Coast recover from Hurricane Katrina, would be completed prior to the deadline. The amount of the impairment for 2010 was $0.3 million.

Other income (expense), net. Other expense was $16.1 million for the year ended December 31, 2010 and $1.4 million during the year ended December 31, 2009. Other income and expense is primarily comprised of the changes in fair value of the Series A preferred stock conversion feature embedded derivative, changes in fair value of the Seneca Holdco, LLC liability, interest expense, interest income, and the other non-operating items. The change in fair value of the Series A preferred stock conversion feature embedded derivative resulted in $8.2 million expense for year ended December 31, 2010, compared $2.3 million expense for the year ended December 31, 2009. The change in the fair value of the Seneca Holdco, LLC liability for the year ending December 31, 2010, was an expense of $4.2 million. Interest expense increased $2.5 million to $4.9 million for the year ended December 31, 2010, from $2.4 million for the year ended December 31, 2009. This increase was primarily attributable to the Seneca Transaction during the second quarter of 2010, the $49.4 million of debt assumed in connection with the Blackhawk Merger and the CIE Asset Acquisition during the first quarter of 2010. Other income and expense during 2009 included $1.4 million of miscellaneous income from the release of an escrow related to our Stockton terminal facility that occurred in the first half of 2009 and grant income of $1.0 million. In addition, during 2010 we fully wrote off our investment in East Fork Biodiesel, LLC for an additional expense of $0.4 million.

Income tax benefit (expense). We recorded income tax expense for the year ended December 31, 2009 due to the full valuation allowance against the income tax expense. Income tax benefit was $3.3 million for the year ending December 31, 2010, compared to income tax expense of $45.2 million for the year ended December 31, 2009. Deferred tax liabilities were recorded as a result of the Blackhawk Merger and CIE Asset Purchase. As the deferred tax liabilities were recorded, the resulting decrease in net deferred tax assets required a lower valuation allowance. The release of the associated valuation allowance resulted in an income tax benefit. The income tax expense for the year ended December 31, 2009 was the result of our recording a full valuation allowance for our deferred tax assets.

Loss from equity investments. Loss from equity investments was $0.7 million for the year ended December 31, 2010 and $1.1 million for the year ended December 31, 2009.

Non-controlling interest. Net benefit from the removal of non-controlling interests was $8.0 million for the year ended December 31, 2009, resulting from the consolidation of Blackhawk in 2009. In 2010, there was no income or loss from non-controlling interest due to our acquisition of Blackhawk.

Management’s discussion and analysis of financial condition and results of operations

Effects of Biofuels Merger Recapitalization. Net effects of recapitalization were $8.5 million for the year ended December 31, 2010. This is a one-time item due to the Biofuels Merger share issuances.

Preferred stock accretion. Preferred stock accretion was $27.2 million for the year ended December 31, 2010, compared to $44.2 million for the year ended December 31, 2009. The accretion amount increases as the redemption date becomes closer due to the use of the effective interest rate method. Accretion during 2009 was higher based on the previous redemption date of August 1, 2011. During 2010, we accreted two months of the previously issued REG Biofuels, Inc. preferred stock (redemption date of August 1, 2011) and ten months of newly issued Series A preferred stock (redemption date February 26, 2014). Monthly accretion expense decreased after issuance of our new Series A preferred stock as a result of the new redemption amount and redemption date.

Set forth below is a summary of certain financial information (in thousands) for the periods indicated:

Management’s discussion and analysis of financial condition and results of operations

Revenues. Our total revenues increased $46.0 million, or 54%, to $131.5 million for the year ended December 31, 2009 from $85.5 million for the year ended December 31, 2008. This increase was due to an increase in revenues from the Biodiesel segment and a decrease in revenues from the Services segment, as follows:

Biodiesel. Biodiesel revenues including government incentives increased $52.4 million, or 69%, to $128.5 million for the year ended December 31, 2009 from $76.1 million for the year ended December 31, 2008. This increase in biodiesel revenue was primarily due to an increase in gallons sold. Gallons sold increased 253% from 12.6 million gallons during 2008 to 44.5 million gallons during 2009, excluding gallons tolled at our Houston facility. The increase in gallons sold is primarily the result of finished biodiesel produced by CIE and Blackhawk for us under tolling arrangements of 23.7 million gallons during 2009. Our acquisition of the Houston facility in June 2008 resulted in 6.0 million gallons of production for our account during 2009, compared to zero gallons during 2008. The overall increase in gallons sold was partially offset by a reduction in our average B100 sales price from $4.46 in 2008 to $2.59 in 2009, reflecting lower market pricing. Under the Houston facility’s tolling arrangement we produced 14.0 million gallons, during 2009, at our Houston facility compared to 8.8 million gallons during the same period of 2008. As a result of this production, revenues include an average toll fee of $0.40 per gallon.

Services. Services revenues decreased $6.4 million, or 68%, to $3.0 million for the year ended December 31, 2009 from $9.4 million for the year ended December 31, 2008 almost entirely as a result of lower construction management services revenues due to decreased construction activity. The consolidation of Blackhawk as of May 9, 2008 resulted in the elimination for financial reporting purposes of all construction revenue related to the Blackhawk construction project, which, prior to the elimination represented substantially all of our construction revenues in 2009. In first nine months of 2008, REG recognized $2.5 million of revenue from construction services including completion activities related to one other facility. Revenues generated from management services we provided to third party owned facilities were $1.6 million for the year ended December 31, 2009, compared to $3.7 million for the year ended December 31, 2008. This decrease was due to decreased production at the third party plants driven by the narrowing of the spread between feedstock and biodiesel prices.

Cost of goods sold. Our cost of goods sold increased $45.4 million, or 55%, to $128.6 million for the year ended December 31, 2009 from $83.2 million for the year ended December 31, 2008. This increase is due to an increase in cost of goods sold in the Biodiesel segment, partially offset by lower cost of services, as follows:

Biodiesel. Biodiesel costs of goods sold increased $48.7 million, or 62%, to $127.4 million for the year ended December 31, 2009 from $78.7 million for the year ended December 31, 2008. The increase in cost of goods sold is primarily the result of additional gallons sold in the 2009 periods as outlined above. Cost of goods during 2009 includes $59.4 million of cost of goods for 23.7 million gallons produced through tolling arrangements with others. Increases in gallons were offset mostly by average feedstock price reductions. Average feedstock cost for the year ended December 31, 2008 was $0.48 per pound, reflecting high soybean oil prices as we did not process a significant amount of animal fat in 2008. Average feedstock cost for the year ended December 31, 2009 was $0.33 per pound for soybean oil, which represents an approximate 31% cost reduction for soybean oil compared to 2008. The remaining feedstock cost reduction was due to use of inedible animal fat under the tolling arrangements during 2009, which is generally a lower cost feedstock. Average inedible animal fat cost during 2009 was $0.24 per pound. Risk management gains and losses, which offset costs of goods sold, were approximately $1.1 million of losses for 2009, compared to

Management’s discussion and analysis of financial condition and results of operations

$0.4 million of gains for 2008. Hedge gains and losses are generally offset by other corresponding changes in gross margin through changes in either biodiesel sales price and/or feedstock price.

Services. Cost of services decreased $3.3 million, or 73%, to $1.2 million for the year ended December 31, 2009 from $4.5 million for the year ended December 31, 2008. The decrease in cost of services revenue was attributable to decreased construction activity in 2009. Costs incurred to perform services under the MOSAs were consistent for both periods as we provided services to the same number of third party facilities in each period.

Selling, general and administrative expenses. Our SG&A expense increased $1.6 million, or 7%, to $25.6 million for the year ended December 31, 2009 from $24.0 million for the year ended December 31, 2008. The increase was attributable to a $4.3 million increase in professional expenses for the year ending December 31, 2009 compared to year ending December 31, 2008. This increase is almost entirely related to the consolidation transactions during 2009. Costs also increased due to the inclusion of $2.8 million in expenses relating to Blackhawk in 2009 compared to $1.3 million during 2008. Also, during the first quarter of 2009, we collected a doubtful receivable account which was accounted for as a $1.5 million decrease to SG&A expenses.

Gain on sale of assets—related party. In July 2009, we sold the Stockton terminal facility to Westway for $3.0 million in cash. We recognized a gain on the sale of this asset of $2.3 million. We had no similar sale in 2008.

Impairment of Long Lived and Intangible Assets. Impairment of long lived assets increased $0.6 million, to $0.8 million for the year ended December 31, 2009 from $0.2 million for the year ended December 31, 2008. The $0.8 million impairment in 2009 related to a write off of construction inventory. The $0.2 million impairment in 2008 related to a partial write off of abandoned capital assets.

Other income (expense), net. Other income and expense was $1.4 million of expense for the year ended December 31, 2009 and $2.3 million of expense for the year ended December 31, 2008. Other expense is primarily comprised of the changes in fair value of the preferred stock conversion feature embedded derivative, interest expense, interest income, and the other non-operating items. The change in fair value of the preferred stock conversion feature embedded derivative resulted in expense of $2.3 million for the year ending December 31, 2009, compared to income of $2.1 million for the year ending December 31, 2008. The expense was recorded as a result of a net increase in the fair market value of our common stock. The change in fair value of interest rate swap recognized a gain of $0.4 million for the year ended December 31, 2009 and a loss of $1.4 million for the year ended December 31, 2008 as a result of the consolidation of Blackhawk into our financial statements. Interest expense increased $0.5 million, to $2.4 million for the year ended December 31, 2009 from $1.9 million for the year ended December 31, 2008. This increase was primarily attributable to new debt of $1.8 million for 2009 and interest paid to TSW, LLC during 2009 and the consolidation of Blackhawk into our financial statements, which accounted for $0.2 million in interest expense for 2008. We incurred impairment of investments of $0.2 million for the year ended December 31, 2009 versus $1.4 million for the year ended December 31, 2008 related to a write down of our investment in East Fork Biodiesel, LLC. Other income during 2009 included $1.4 million of miscellaneous income relating to release of an escrow related to REG’s Stockton terminal facility that occurred in the first quarter and $1.0 million of grant income.

Income tax (expense) benefit. Income tax expense was $45.2 million for the year ended December 31, 2009 compared to an income tax benefit of $9.4 million for the year ended December 31, 2008. The expense was a result of our conclusion as of December 31, 2009 that we were required to establish a valuation allowance for the entire amount of the net deferred tax assets since evidence was not available to prove that it was more likely than not that we would be able to realize these assets.

Management’s discussion and analysis of financial condition and results of operations

Loss from equity investments. Loss from equity investments was $1.1 million for the year ended December 31, 2009 compared to a loss of $1.0 million for the year ended December 31, 2008. The loss from equity investments was primarily attributable to losses sustained by partially owned facilities.

Non-controlling interest. Non-controlling interest was $8.0 million for the year ended December 31, 2009 compared to a loss of $2.8 million for the year ended December 31, 2008. The increase in non-controlling interest was primarily attributable to the losses sustained by Blackhawk which were consolidated.

Preferred stock accretion. Preferred stock accretion was $44.2 million for the year ended December 31, 2009, compared to $26.7 million for the year ended December 31, 2008. Accretion of preferred stock to redemption value increased during 2009 due to the full year impact of issuances of preferred stock during 2008, as well as the impact of using the effective interest rate method. As the redemption date becomes closer, the accretion amount increases.

Sources of liquidity. Since inception, a significant portion of our operations have been financed through the sale of our capital stock. From August 1, 2006 through March 31, 2011, we received cash proceeds of $136.8 million from private sales of preferred stock and common stock. Based on available funds, current plans and business conditions, we believe that our available cash, amounts available under our credit agreement and amounts expected to be generated from future operations will be sufficient to meet our cash requirements for at least the next twelve months. At March 31, 2011 and December 31, 2010, we had cash and cash equivalents of $4.4 and $4.3 million, respectively. At March 31, 2011 we had total assets of $385.8 million, compared to total assets of $369.6 million at December 31, 2010. At March 31, 2011, we had debt of $101.0 million, compared to debt of $96.1 million at December 31, 2010.

On February 26, 2010, in connection with the Blackhawk Merger, one of our subsidiaries, REG Danville assumed a $24.6 million term loan and a $5.0 million revolving credit line with Fifth Third Bank. As of March 31, 2011, there was $23.2 million of principal outstanding under the term loan. On November 30, 2010, the revolving credit line expired. The Illinois Finance Authority guarantees 61% of the term loan and the loan is secured by our Danville facility. The term loan bears interest at a fluctuating rate per annum equal to the London Interbank Offered Rate, or LIBOR, plus the applicable margin of 4%. Until June 30, 2010, REG Danville was required to make only monthly payments of accrued interest. Beginning on July 1, 2010, REG Danville was required to make monthly principal payments equal to $135,083 plus accrued interest. In addition to these monthly payments, as a result of

Management’s discussion and analysis of financial condition and results of operations

the amendment to the loan agreement dated February 26, 2010, REG Danville is required to make annual principal payments equal to 50% of REG Danville’s excess cash flow, as defined in the loan agreement, or Excess Cash Flow, or the 50% Excess Payment as defined in the loan agreement, or 50% Excess Payment, with respect to each fiscal year until $2.5 million has been paid from the Excess Cash Flow. Thereafter, REG Danville is required to make annual payments equal to 25% of its Excess Cash Flow. Excess Cash Flow is equal to EBITDA less certain cash payments made during the period including principal payments, lease payments, interest payments, tax payments, approved distributions and capital expenditures. REG Danville did not have Excess Cash Flow during 2010 and no amounts have been accrued or paid. REG Danville is subject to various loan covenants that restrict its ability to take certain actions, including prohibiting it from paying any dividend to us until the 50% Excess Payment is made and certain financial ratios are met. On November 30, 2010, the revolving credit line expired. As of March 31, 2011, REG Danville was not in compliance with certain term loan covenants. On May 11, 2011, REG Danville received a waiver from Fifth Third relating to these loan covenants and REG Danville’s Excess Cash Flow requirements. Currently, REG Danville is in compliance with the loan covenants and we expect to be in compliance with the covenants through the expiration of the term loan. We are currently in negotiations to renew the term loan, which matures on November 3, 2011.

On March 8, 2010, in connection with the CIE acquisition, one of our subsidiaries, REG Newton, refinanced a $23.6 million term loan, or the AgStar Loan, and obtained a $2.4 million line of credit, or the AgStar Line, with AgStar Financial Service, PCA, or AgStar. As of March 31, 2011, there was $23.5 million of principal outstanding under the AgStar Loan and $0.6 million of principal outstanding under the AgStar Line. These amounts are secured by our Newton facility. We have guaranteed the obligations under the AgStar Line and have a limited guarantee related to the obligations under the AgStar Loan; which provides that we will not be liable for more than the unpaid interest, if any, on the AgStar Loan that has accrued during an 18-month period beginning on March 8, 2010. The AgStar Loan bears interest at 3% plus the greater of (i) LIBOR or (ii) two percent. Beginning on October 1, 2011, monthly principal payments of approximately $120,000 and accrued interest are due based on a 12-year amortization period. Under the AgStar Loan, REG Newton is required to maintain a debt service reserve account, or the Debt Reserve, equal to 12-monthly payments of principal and interest on the AgStar Loan. Beginning on January 1, 2011 and at each fiscal year end thereafter, until such time as the balance in the Debt Reserve contains the required 12-months of payments, REG Newton must deposit an amount equal to REG Newton’s Excess Cash Flow, which is defined in the AgStar Loan agreement as EBITDA, less the sum of required debt payments, interest expense, any increase in working capital from the prior year until working capital exceeds $6.0 million, up to $0.5 million in maintenance capital expenditure, allowed distributions and payments to fund the Debt Reserve. In the event any amounts are past due, AgStar may withdraw such amounts from the Debt Reserve. REG Newton was not required to make a Debt Reserve deposit for 2010. REG Newton is subject to various standard loan covenants that restrict its ability to take certain actions, including prohibiting REG Newton from making any cash distributions to us in excess of 35% of REG Newton’s net income for the prior year. On November 15, 2010, REG Newton amended the loan agreement to revise certain financial covenants. In exchange for these revisions, REG Newton agreed to begin reduced principal payments of approximately $60,000 per month within two months after the enactment of the reinstated blenders’ tax credit. REG Newton began such reduced principal payments on March 1, 2011. The AgStar Loan matures on March 8, 2013 and the AgStar Line expires on March 5, 2012, which was extended for one year on March 7, 2011. The AgStar Line is secured by REG Newton’s account receivable and inventory.

During July 2009, we and certain subsidiaries entered into agreements with Bunge to provide services related to the procurement of raw materials and the purchase and resale of biodiesel produced. The agreement provides for Bunge to purchase up to $10.0 million in feedstock for, and biodiesel from, us. Feedstock is paid for daily as it is processed. Biodiesel is purchased and paid for by Bunge the following day. In June 2009, we entered into an extended payment terms agreement with West Central to provide

Management’s discussion and analysis of financial condition and results of operations

up to $3.0 million in outstanding payables for up to 45 days. Both of these agreements provided additional working capital resources to us. As of March 31, 2011, we had $7.6 million outstanding in available working capital under these agreements.

We and certain of our subsidiaries entered into a Revolving Credit Agreement, or the WestLB Revolver, dated as of April 8, 2010, with WestLB, AG, or WestLB. We guarantee the WestLB Revolver. The initial available credit amount under the WestLB Revolver is $10 million with additional lender increases up to a maximum commitment of $18 million. Advances under the WestLB Revolver are limited to the amount of certain of our qualifying assets that secure amounts borrowed. The WestLB Revolver requires that we maintain compliance with certain financial covenants. The term of the WestLB Revolver is two years. The interest rate varies depending on the loan type designation and is either 2.0% over the higher of 50 basis points above the Federal Funds Effective Rate or the WestLB prime rate for Base Rate loans or 3.0% over adjusted LIBOR for Eurodollar loans. The WestLB Revolver is secured by assets and ownership interests of our subsidiaries. As of March 31, 2011, we had $10.0 million outstanding under the WestLB Revolver.

In connection with our agreement to lease the Seneca facility, Landlord, the company that owns the Seneca facility, received from Seneca Holdco, LLC, which is owned by three of our investors, an investment of $4.0 million in Landlord at closing to pay for repairs to the Seneca facility. Landlord leases the Seneca facility to our subsidiary, REG Seneca, LLC, or REG Seneca, with rent being set at an amount to cover debt service and other expenses. REG Seneca pays Landlord who pays the fee to Seneca Holdco, LLC, a $600,000 per year fee, payable quarterly, which is guaranteed by us. See “Note 5—Variable Interest Entities” to our condensed consolidated financial statements for additional information.

On April 8, 2010, Landlord entered into a note payable agreement with West LB. The note requires that interest be accrued at different rates based on whether it is a Base Rate Loan or Eurodollar loan. Interest is at either 2.0% over the higher of 50 basis points above the Federal Funds Effective Rate or the WestLB prime rate for Base Rate loans or 3.0% over adjusted LIBOR for Eurodollar loans. The loan was a Eurodollar loan as of March 31, 2011. The effective rate at March 31, 2011 was 3.25%. Interest is paid monthly. Principal payments have been deferred until February 2012. At that time, Landlord will be required to make monthly principal payments of $201,389 with the remaining unpaid principal due at maturity on April 8, 2017. The note payable is secured by the Seneca facility. The balance of the note as of March 31, 2011 was $36.3 million.

We have 50% ownership in Bell, LLC, a VIE joint venture that owns and leases to us its corporate office building located in Ames, Iowa. Commencing January 1, 2011, we have the right to execute a call option with the joint venture member, Dayton Park, LLC, to purchase Bell, LLC; therefore, we determined we are the primary beneficiary of Bell, LLC and consolidated Bell, LLC into our financial statements. We are the primary beneficiary due to our ownership interest and having an exercisable call option that allows us to direct the activities that most significantly impact Bell, LLC’s economic performance and gives us the majority of the benefit from the use of Bell, LLC’s assets. Through consolidation of Bell, LLC on January 1, 2011, we recorded an outstanding promissory note balance of $4.8 million. Bell, LLC makes monthly principal payments of approximately $15,000 plus interest. The note bears interest at a rate of 5.7% per annum and the note matures February 15, 2013. The note is secured by a mortgage interest in the office building and has an outstanding balance of $4.7 million at March 31, 2011.

Management’s discussion and analysis of financial condition and results of operations

Cash flow. The following table presents information regarding our cash flows and cash and cash equivalents for the years ended December 31, 2010, 2009 and 2008 and the three months ended March 31, 2011 and 2010:

Operating activities. Net cash provided in operating activities was $0.3 million and net cash used in operating activities was $3.2 million for the three months ended March 31, 2011 and 2010, respectively. For the three months ended March 31, 2011, net income was $3.7 million, which includes depreciation and amortization expense of $2.0 million, stock compensation expense of $1.0 million, a decrease in the non-cash change in the preferred stock embedded derivative liability of $2.6 million and a decrease in the non-cash change in the Seneca Holdco, LLC liability of $0.9 million. We also used $3.1 million to fund net working capital requirements, which resulted in a net cash source from operations of $0.3 million. The net use of cash from operating activities for the three months ended March 31, 2010 of $3.2 million reflects $3.1 million in net income from operations, primarily offset by a change in the deferred tax benefit of $6.3 million, depreciation and amortization expense of $0.9 million, and net working capital decrease of $1.3 million.

Net cash used in operating activities was $14.6 million and $8.2 million for the year ended December 31, 2010 and 2009, respectively. For 2010, net loss was $21.6 million which includes non-cash charges for impairment of intangible assets of $7.3 million, depreciation and amortization expense of $5.9 million, non-cash change in the preferred stock embedded derivative liability of $8.2 million and non-cash change in the Seneca Holdco, LLC liability of $3.7 million. These charges were offset by non-cash benefits including a $3.3 million increase for changes in the deferred tax benefit. We also used $17.8 million to fund net working capital requirements, which resulted in a net cash use from operations of $14.6 million. The net use of cash from operating activities during 2009, of $8.2 million resulted primarily from a $68.9 million net loss from operations, a $2.3 million gain on the sale of property, and changes in allowance for doubtful accounts of $1.4 million. Those were primarily offset by a charge to deferred taxes of $45.2 million. In addition, they were partially offset by net working capital decrease of $5.9 million, non-cash depreciation and amortization of $5.8 million and stock-based compensation expenses totaling $2.5 million. Cash used in operating activities in 2008 was $3.6 million, as a net loss of $15.9 million and $8.3 million in non-cash deferred tax benefits were partially offset by positive working capital changes of $13.6 million.

Investing activities. Net cash used for investing activities for the three months ended March 31, 2011 was $0.3 million, consisting mostly of cash used to pay for Seneca facility construction of $0.7 million and cash provided from the release of restricted cash in the amount of $0.4 million. Net cash provided from investing activities for the three months ended March 31, 2010 was $0.1 million, consisting almost entirely of a certificate of deposit provided from the acquisition of CIE that relates to the Iowa Department of Economic Development loan and is restricted.

Management’s discussion and analysis of financial condition and results of operations

Net cash used for investing activities for the year ended December 31, 2010 was $4.6 million, consisting mostly of cash used to pay for Seneca construction of $4.0 million. Net cash provided from investing activities for the year ended December 31, 2009 was $0.4 million, as $7.4 million in facility construction costs for Danville were partially offset by receipt of $4.7 million from a construction escrow fund related to construction of the Danville facility. We also received $3.0 million for the sale of our Stockton terminal facility to Westway. Net cash used in investing activities for the year ended December 31, 2008 was $26.2 million. In 2008, we invested $67.2 million in construction of facilities, which includes $15.9 million from a construction escrow fund related to the Danville facility and $16.9 million related to the acquisition of USBG.

Financing activities. Net cash provided from financing activities for the three months ended March 31, 2011 was $0.1 million, which represents $1.0 million in borrowings on our WestLB Revolver. This was partially offset by $0.9 million in principal payments in connection with the note payable. Net cash used in financing activities for the three months ended March 31, 2010 was $0.2 million, which represents principal payments to TSW, LLC in connection with the note payable and cash paid for debt issuance.

Net cash provided from financing activities for the year ended December 31, 2010 was $17.6 million, which represents $8.0 million cash investment from ARES Corporation, $4.0 million cash proceeds received from the Seneca investors and $9.4 million in borrowings on our line of credit. This was partially offset by principal payments in connection with the note payable and cash paid for debt issuance. Net cash used in financing activities for the year ended December 31, 2009 was $1.6 million, which consisted of the payoff of the WestLB borrowings of $1.8 million, pay down of notes payable of $0.8 million and changes in the balance of the REG Danville line of credit for a net result of $0.9 million. Net cash provided by financing activities was $26.2 million in 2008. In 2008, cash provided by financing activities related primarily to the issuance of the Blackhawk notes payable. In February 2008, we through two of our subsidiaries obtained the first line of credit from WestLB. Borrowings ranged from $1.3 million to $4.2 million during the one year loan period.

Capital expenditures. We plan to make significant capital expenditures when project financing becomes available to complete construction of three facilities, our New Orleans facility, our Emporia facility and our Clovis facility, with expected aggregate nameplate production capacity of 135 mmgy. We estimate completion of the New Orleans, Emporia and the Clovis facilities will require an estimated $130 to $140 million, excluding working capital. We also plan to undertake various facility upgrades when funding becomes available to further expand processing capabilities at our existing facilities, most significantly our Houston facility and our newly acquired Albert Lea facility.

We continue to be in discussions with lenders in an effort to enter into equity and debt financing arrangements to meet our projected financial needs for facilities under construction and capital improvement projects for our operating facilities. Since these discussions are ongoing, we are uncertain when or if financing will be available. The financing may consist of common or preferred stock, debt, project financing or a combination of these financing techniques. Additional debt would likely increase our leverage and interest costs and would likely be secured by certain of our assets. Additional equity or equity-linked financings would likely have a dilutive effect on our existing and future stockholders. It is likely that the terms of any project financing would include customary financial and other covenants on our project subsidiaries, including restrictions on the ability to make distributions, to guarantee indebtedness, and to incur liens on the plants of such subsidiaries.

Management’s discussion and analysis of financial condition and results of operations

The following table describes our commitments to settle contractual obligations in cash as of December 31, 2010:

In June 2009, the FASB issued Accounting Standards Update, or ASU, No. 2009-17, Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities, which amends ASC Topic 810, “Consolidations”. This Statement requires a qualitative analysis to determine the primary beneficiary of a VIE. The analysis identifies the primary beneficiary as the enterprise that has both the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits that could be significant to the VIE. The Statement also requires additional disclosures about an enterprise’s involvement in a VIE. The effective date was the beginning of fiscal year 2010. We adopted this statement effective January 1, 2010, which resulted in the deconsolidation of Blackhawk and additional disclosure requirements. See “Note 7—Variable Interest Entities” to our audited consolidated financial statements for additional information.

In January 2010, the FASB issued ASU No. 2010-06, “Fair Value Measurements and Disclosures,” which amends ASC Topic 820, adding new requirements for disclosures for Level 1 and 2 assets, separate disclosures of purchases, sales issuances, and settlements related to Level 3 measurements and clarification of existing fair value disclosures. ASU 2010-06 became effective for interim and annual periods beginning after December 15, 2009, except for the requirement to provide Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which is effective for fiscal years beginning after December 15, 2010. The adoption of this guidance did not have a material effect on our financial statements and we do not anticipate the remaining disclosures will have a material effect on our financial statements.

Management’s discussion and analysis of financial condition and results of operations

The primary objectives of our investment activity are to preserve principal, provide liquidity and maximize income without significantly increasing risk. Some of the securities we invest in are subject to market risk. This means that a change in prevailing interest rates may cause the principal amount of the investment to fluctuate. To minimize this risk, we maintain a portfolio of cash equivalents in short-term investments in money market funds.

Over the period from January 2007 through March 2011, average diesel prices based on Platts reported pricing for Group 3 (Midwest) have ranged from a high of approximately $3.81 per gallon reported in June 2008 to a low of approximately $1.22 per gallon in February 2009, with prices averaging $2.29 per gallon during this period. Over the period from January 2006 through March 2011, soybean oil prices (based on closing sales prices on the CBOT nearby futures, for crude soybean oil) have ranged from a high of $0.6395 per pound in June 2008 to a low of $0.2108 per pound in January 2006, with closing sales prices averaging $0.3904 per pound during this period. Over the period from January 2008 through March 2011, inedible animal fat prices (based on prices from The Jacobsen Missouri River, for choice white grease) have ranged from a high of $0.5175 per pound in March 2011 to a low of $0.0950 per pound in December 2008, with sales prices averaging $0.2954 per pound during this period.

Higher feedstock prices or lower biodiesel prices result in lower profit margins and, therefore, represent unfavorable market conditions. Traditionally, we have not been able to pass along increased feedstock prices to our biodiesel customers. The availability and price of feedstocks are subject to wide fluctuations due to unpredictable factors such as weather conditions during the growing season, kill ratios, carry-over from the previous crop year and current crop year yield, governmental policies with respect to agriculture, and supply and demand.

We have prepared a sensitivity analysis to estimate our exposure to market risk with respect to our sales contracts, lower cost feedstock requirements, soybean oil requirements and the related exchange-traded contracts for 2010. Market risk is estimated as the potential loss in fair value, resulting from a hypothetical 10% adverse change in the fair value of our soybean oil and requirements and biodiesel sales. The results of this analysis, which may differ from actual results, are as follows:

We are subject to interest rate risk in connection with our $2.0 million loan from the proceeds of Variable Rate Demand Industrial Development Revenue Bonds, or IFA Bonds, issued by the Iowa Finance Authority to finance our Ralston facility. The IFA Bonds bear interest at a variable rate determined by the remarketing agent from time to time as the rate necessary to produce a bid for the purchase of all of the Bonds at a price equal to the principal amount thereof plus any accrued interest at the time of determination, but not in excess of 10% per annum. The interest rate on the bonds was 0.54% for the last week of December 2010. A hypothetical increase in interest rate of 10% would not have a material effect on our annual interest expense.

Management’s discussion and analysis of financial condition and results of operations

We are subject to interest rate risk relating to REG Danville’s $24.6 million term debt financing with Fifth Third Bank. The term loan bears interest at a fluctuating rate based on a range of rates above 30-day LIBOR and will mature on November 3, 2011. Interest will accrue on the outstanding balance of the term loan at 30-day LIBOR plus 400 basis points. Interest accrued on the outstanding balance of the loan at December 31, 2010 at 4.26%.

Blackhawk entered into an interest rate swap agreement in connection with the aforementioned term loan in May 2008. The agreement was assumed by REG Danville in the Blackhawk merger. The swap agreement effectively fixes the interest rate at 3.67% on a notional amount of approximately $20.7 million of REG Danville’s term loan through November 2011. The fair value of the interest rate swap agreement was $0.6 million and $1.0 million at December 31, 2010 and 2009, respectively, and is recorded in the other noncurrent liabilities. The interest rate swap agreement is not designated as a cash flow or fair value hedge. Gains and losses based on the fair value change in the interest rate swap agreement are recognized in the statement of operations as a change in the fair value of interest rate swap agreement. A hypothetical increase in interest rate of 10% would not have a material effect on our annual interest.

REG Newton is subject to interest rate risk relating to its $23.6 million term debt financing and its $2.4 million revolving line of credit both from AgStar. Interest will accrue on the outstanding balance of the term loan at 30-day LIBOR or 2.00%, whichever is higher, plus 300 basis points (effective rate at December 31, 2010 of 5.00%). The revolving line of credit accrues interest at 30-day LIBOR or 2.00%, whichever is higher, plus 300 basis points (effective rate at December 31, 2010 of 5.00%). A hypothetical increase in interest rate of 10% would not have a material effect on our annual interest expense.

REG Seneca is subject to interest rate risk relating to its lease payments for the Seneca facility. The lease provides that REG Seneca will pay rent in the amount of the interest payments due to WestLB from Landlord. The note requires that interest be accrued at different rates based on whether it is a Base Rate Loan or Eurodollar loan. Each Base Rate Loan accrues interest at a rate per annum equal to 2% plus the higher of (i) the Federal Funds Effective Rate plus 0.5% and (ii) the rate of interest in effect for such day as publicly announced from time to time by WestLB as its “prime rate”. Each Eurodollar Loan accrues interest at a rate per annum equal to 3.0% plus the greater of (a) one and one half percent (1.5%) per annum, and (b) the rate per annum obtained by dividing (x) LIBOR for such Interest Period and Eurodollar Loan, by (y) a percentage equal to (i) 100% minus (ii) the Eurodollar Reserve Percentage for such Interest Period. The loan was a Eurodollar Loan through December 31, 2010 (effective rate at December 31, 2010 of 3.26%). Interest is paid monthly. A hypothetical increase in interest rate of 10% would not have a material effect on our annual interest expense.

REG Marketing and Logistics Group, LLC and REG Services Group, LLC, together the WestLB Loan Parties, are subject to interest rate risk relating to their $10.0 million revolving line of credit from WestLB. The note requires that interest be accrued at different rates based on whether it is a Base Rate Loan or Eurodollar loan. Each Base Rate Loan shall accrue interest at a rate per annum equal to 2% plus the higher of (i) the Federal Funds Effective Rate plus 0.5% and (ii) the rate of interest in effect for such day as publicly announced from time to time by WestLB as its “prime rate”. Each Eurodollar Loan shall accrue interest at a rate per annum equal to 3.0% plus the greater of (a) one and one half percent (1.5%) per annum, and (b) the rate per annum obtained by dividing (x) LIBOR for such Interest Period and Eurodollar Loan, by (y) a percentage equal to (i) 100% minus (ii) the Eurodollar Reserve Percentage for such Interest Period. The loan was a Eurodollar Loan through December 31, 2010 (effective rate at December 31, 2010 of 3.26%). Interest is paid monthly. A hypothetical increase in interest rate of 10% would not have a material effect on our annual interest expense.

Management’s discussion and analysis of financial condition and results of operations

To date, inflation has not significantly affected our operating results, though costs for petroleum-based diesel fuel, feedstocks, construction, labor, taxes, repairs, maintenance and insurance are all subject to inflationary pressures. Inflationary pressure in the future could affect our ability to sell the biodiesel we produce, maintain our production facilities adequately, build new biodiesel production facilities and expand our existing facilities as well as the demand for our facility construction management and operations management services.

Biodiesel is an advanced biofuel made from renewable oils or fats, ranging from soybean oil to inedible waste oils and inedible animal fats. Biodiesel is a drop-in replacement for petroleum-based diesel fuel. Biodiesel is an environmentally friendly diesel fuel with physical and chemical properties similar to petroleum-based diesel fuel. Biodiesel can be blended with petroleum-based diesel or other petroleum-based distillate fuels like heating oil in any ratio and can also be used in its pure form. Biodiesel is simple to use, biodegradable and nontoxic.

Biodiesel is the largest commercially available advanced biofuel produced in the United States. Annual biodiesel production in the United States has increased from approximately 14 million gallons in 2003 to approximately 311 million gallons in 2010, according to data compiled by the EIA and is expected to increase significantly to meet the RFS2 biomass-based diesel requirement, which calls for 800 million gallons in 2011, increasing to a proposed 1.28 billion gallons in 2013.

Biodiesel has become a widely accepted global biofuel. In the United States, ASTM created ASTM D6751 as the official quality specification for pure biodiesel, or B100. Biodiesel has been registered with the EPA as a fuel and a fuel additive since 1998. The EU biodiesel industry began approximately 10 years prior to the United States biodiesel industry and has been a model for many of the programs adopted in the United States. EN 14214 is the quality standard used in the EU and serves as the international biodiesel standard.

Biodiesel extends existing diesel fuel supplies and promotes United States energy independence

Biodiesel production in the United States enhances energy security through use of readily available domestic feedstocks. The growth in the supply of conventional petroleum-based diesel fuel is being outpaced by growing demand for diesel fuel. Global demand for petroleum, and diesel fuel in particular, is increasing, largely driven by increased demand from developing nations such as China and India. Distillate fuel is a general classification for one of the petroleum fractions produced in conventional petroleum distillation operations. It includes diesel fuels used in on-road and off-road diesel engines and fuel oils used primarily for space heating and electric power generation. World petroleum prices have risen and continue to fluctuate in response to supply insecurity, political unrest and the threat of attacks on oil infrastructure in major oil producing regions, particularly those located in the Middle East. By adding biodiesel to petroleum-based diesel fuel, refiners and distributors are able to increase the volume of diesel fuel available to meet consumer demand. The 311 million gallons of biodiesel produced in the United States in 2010 represents the equivalent of 7.4 million barrels of petroleum. Increased production and use of biodiesel in the United States displaces foreign oil imports and improves our energy independence.

Biodiesel is a drop-in fuel, compatible with existing diesel engines and the existing diesel fuel distribution infrastructure

Unlike ethanol, biodiesel is a drop-in replacement fuel. Biodiesel blends can generally be used in conventional diesel engines with no modifications to the engine. Industry associations, such as the American Trucking Association, the largest national association for the trucking industry, have adopted policies supporting the voluntary use of high quality biodiesel in low percentage blends. According to

NBB, more than 20 engine manufacturers, including Cummins, Inc., Ford Motor Company, General Motors Corporation, Deere & Company, Mack Trucks, Inc., Mercedes-Benz USA, LLC, Volkswagen of America, Inc. and Volvo Truck Corporation, have approved biodiesel blends for use in their engines ranging from 5% biodiesel blends, or B5, to 20% biodiesel blends, or B20. Additionally, blends of B20 or higher are now accepted by several engine manufacturers. For blends higher than B20, minor engine modifications are sometimes necessary. Biodiesel and biodiesel blends can generally be transported using the same trucks, railcars and barges used to transport petroleum-based diesel and can be dispensed through the same terminals and retail pumps as petroleum-based diesel. Ethanol can currently only be used in blends up to 10% in a conventional gasoline engine, while diesel engines can use any blend of biodiesel, up to 100% pure biodiesel, or B100.

ASTM amended the definition of standard diesel fuel, ASTM D975, in October 2008 to include up to 5% biodiesel. ASTM also established a new specification, ASTM D7467, for blends of biodiesel between B6 and B20.

Biodiesel can be produced from a wide variety of feedstocks and promotes American agriculture

Biodiesel can be produced from a wide variety of feedstocks. Higher cost feedstock options include virgin vegetable oils, such as soybean, canola and palm oil. Lower cost feedstock options include inedible animal fats such as beef tallow, poultry fat, choice white grease derived from pork, and inedible corn oil, a co-product of corn ethanol production, and used cooking oils and greases from the restaurant and food processing industries. In 2007, 90% of the biodiesel produced in the United States was produced from soybean oil. Over the last three years, due to the high cost of soybean oil, several biodiesel companies, including us, began using lower cost feedstocks. By 2010, the volume of biodiesel produced in the United States from soybean oil decreased to approximately 50%. The soybean oil and inedible animal fats that comprise the biodiesel industry’s feedstocks are co-products and by-products of meat and soybean meal production. As a result, biodiesel has become an important component of protein production and the larger agribusiness sector in general.

Biodiesel is environmentally friendly, safe to use and reduces emissions of greenhouse gases

Biodiesel is non-toxic and biodegradable. Under the Clean Air Act, the EPA established a health effects testing program to assess the health impacts of various materials and products. The biodiesel tests conducted pursuant to the EPA’s health effects testing program demonstrated that, compared to petroleum-based diesel fuel, the use of a fuel comprised of a blend of petroleum-based diesel and biodiesel, or biodiesel blend, reduces substantially all regulated emissions and that the higher the percentage of biodiesel in the blend, the greater the reduction. These reduced emissions included unburned hydrocarbons, a contributing factor in the localized formation of smog and ozone; carbon monoxide, a poisonous gas; and particulate matter, a human health hazard. Biodiesel also has enormous greenhouse gas reduction benefits. According to studies by the EPA and the California Air Resources Board, biodiesel reduces lifecycle greenhouse gas emissions by approximately 57% for biodiesel produced with soybean oil to 93% for biodiesel produced with inedible corn oil compared to petroleum-based diesel. Furthermore, biodiesel offers significant safety benefits over petroleum-based diesel because it is much less combustible, with a flash point greater than 260°F, compared to 125°F for petroleum-based diesel. Accordingly, pure biodiesel and blends of biodiesel with petroleum-based diesel are safer to store, handle and use than conventional petroleum-based diesel fuel.

Based on many of the benefits of biodiesel described above, the United States federal and state governments have sought to encourage biodiesel production and use in the United States through numerous programs that either provide economic incentives for biodiesel or require the use of biodiesel. For a more complete discussion of the various programs, see the discussion below under the heading “Government Programs Favoring Biodiesel Production and Use.”

A significant benefit of biodiesel is its lubricity. Diesel fuel engines depend, in part, on the diesel fuel to lubricate internal moving parts, which reduces equipment wear and premature breakdown. EPA regulations now require reduced sulfur of 15 parts per million for on-road diesel fuel, known as ULSD. We anticipate that the EPA will implement a similar requirement for off-road, railroad and marine diesel over the next few years to reduce harmful emissions and improve air quality. ULSD does not contain sufficient lubricity and thus requires a lubricity additive. Blending biodiesel with ULSD, even at very low blend rates such as B2, adds the required lubricity, eliminating the need for lubricity additives. Higher blends of biodiesel add even more lubricity and may reduce maintenance and extend engine life as a result.

Biodiesel can be made from a wide variety of feedstocks, including lower cost and lower carbon feedstocks such as inedible animal fats, used cooking oil and inedible corn oil, or higher cost virgin vegetable oil feedstocks such as soybean oil, palm oil and canola oil.

According to United States Census Bureau data, 9.4 billion pounds, or approximately 1.2 billion gallons, of lower cost biodiesel feedstocks are generated in the United States annually. This estimate does not include inedible corn oil, which is a relatively new lower cost feedstock. EPA estimates that approximately 680 million gallons of inedible corn oil will be produced annually by 2022.

Globally, about 309 billion pounds of vegetable oils were produced during the 2009/2010 crop year. The largest sources of vegetable oil feedstock for biodiesel are soybean oil, palm oil and rapeseed oil, which accounted for approximately 76.4% of global vegetable oil production during the aforementioned year. Soybean oil accounted for approximately 27% of this total with the major production areas being the United States, Argentina and Brazil. Palm oil is the largest edible oil in the world and accounted for approximately 33% of global vegetable oil production in the 2009/2010 crop year with the major production areas being Malaysia and Indonesia. Rapeseed, also known as canola oil, accounted for approximately 16% of global vegetable oil production in the 2009/2010 crop year with the major production areas being Europe and Canada.

Methods for the production of methyl esters like biodiesel have been well known for over 100 years. A wide variety of different techniques and technologies have been developed for the production of biodiesel, all of which result in the conversion of triglycerides, or feedstock, into biodiesel and co-products, in a chemical reaction using alcohol. As discussed above, biodiesel can be made from a variety of feedstocks. The production method chosen for a biodiesel production facility, or biodiesel plant, will depend on the feedstocks used. Higher cost virgin vegetable oil feedstocks contain few

impurities and are comparatively easy to process. Lower cost and unrefined virgin vegetable oil feedstocks generally contain impurities that must be pretreated as part of the production process.

The schematic below shows a generalized biodiesel production process, starting with either a refined virgin vegetable oil or a lower cost or unrefined virgin vegetable oil feedstock. The pretreatment may involve removing water or other impurities, stripping free fatty acids, or FFAs, which then become a byproduct, or acid esterification to convert FFAs to methyl esters or glycerolysis, which attaches glycerin to FFAs so the FFAs do not produce soap in the transesterification reaction. Typically, the refined virgin vegetable oil or treated lower cost or unrefined virgin vegetable oil feedstock is mixed with an alcohol, usually methanol, and a catalyst, usually sodium methylate or potassium hydroxide, to create a transesterification reaction. This chemical reaction causes the glycerin attached to the feedstock to detach and be replaced with the alcohol creating methyl esters, or biodiesel, and crude glycerin. The biodiesel and crude glycerin are then separated from each other and purified.

As a general rule, 100 pounds of feedstock combined with 10 pounds of methanol will yield approximately 100 pounds of biodiesel and 10 pounds of crude glycerin. The actual yield will be influenced by the level of impurities in the feedstock and processing capabilities of the producer and typically ranges from approximately 7.5 pounds for refined soybean oil to approximately 9.0 pounds for lower cost feedstocks with a high level of impurities to produce one gallon of biodiesel.

Crude glycerin is the principal co-product of biodiesel production. Depending on the production method chosen, other co-products such as free fatty acids and distillation bottoms may also be generated. Crude glycerin is used in the animal feed market and industrial use markets as feedstock for highly refined glycerin. Highly refined or purified glycerin is used in pharmaceuticals, soaps, cosmetics and food and beverages.

Unlike ethanol, biodiesel is a drop-in fuel that can enter at any point along the petroleum-based fuel supply chain. Biodiesel can be shipped by rail car, barge or truck directly to a petroleum refinery,

terminal, distributor, retailer or end user where it will typically be blended with petroleum-based diesel and continue down the supply chain. If sent to a refinery or terminal, the biodiesel can be blended with petroleum-based diesel up to a B5 biodiesel blend and shipped in certain pipelines. This flexibility of biodiesel provides great optionality for the biodiesel producer, fuel distribution supply chain and end user.

In response to early product quality inconsistencies, the United States biodiesel industry created the BQ-9000 program. The BQ-9000 program is run by the National Biodiesel Accreditation Committee, a cooperative and voluntary program for the accreditation of producers and marketers. The program is a quality systems program that includes storage, sampling, testing, blending, shipping, distribution and fuel management practices. Since the creation and adoption of the BQ-9000 program, the quality of biodiesel in the marketplace has improved greatly.

Biodiesel and biodiesel blends are currently used in nearly all of the end markets where petroleum-based distillate fuels are used. Today, most biodiesel in the United States is consumed as a biodiesel and petroleum-based diesel blend in the on-road diesel fuel market, with blends of B2 up to B11 being the most common. Biodiesel is also used in the off-road diesel fuel market, residential/commercial heating oil and power generation markets. Biodiesel is also used in higher blends, generally from B20 to pure biodiesel. Military, government and mining represent large customers that use these higher blends of biodiesel. The following distillate fuel segments are best-positioned for use of biodiesel blends:

The United States biodiesel industry traces its roots to the mid-1990s when the soybean industry began the technical and regulatory work to make biodiesel a commercially viable, legally-approved fuel in the United States. The biodiesel industry in the United States was a small niche industry prior to the passage of the American Jobs Creation Act of 2004, which created the $1.00 per gallon tax credit for biodiesel effective January 1, 2005. This credit is referred to as the blenders’ tax credit because the $1.00 refundable tax credit is earned by the person who blends biodiesel with petroleum-based diesel to create a biodiesel blend. Following the passage of the blenders’ tax credit, the United States biodiesel industry experienced explosive growth. By September 2007, over one hundred biodiesel plants had been built and biodiesel production increased 48 fold from 14 million gallons in 2003 to 678 million gallons in 2008. In 2009 and 2010, the United States biodiesel industry experienced difficulties due to a combination of negative market forces, including EU anti-dumping duties, the collapse of United States financial markets, the drop in the price of petroleum and the lapse of the $1.00 per gallon blenders’ tax credit in January 2010. These forces caused virtually all new biodiesel plant development to stop and production in the United States to decrease to 311 million gallons in 2010, 54% lower than total production in 2008. The graph below shows biodiesel production and expected production over the period from 2003 to 2013.

By the end of 2010, the United States biodiesel industry had stabilized and was poised for growth. RFS2 became effective July 1, 2010 after 18 months of delay and in December 2010, a lawsuit challenging RFS2’s retroactive requirements was dismissed. The blenders’ tax credit was reinstated on December 17, 2010 and applied retroactively for 2010 and prospectively for 2011. Biodiesel production in the United States has increased significantly in 2011. According to the EPA, biomass-based diesel production volumes in the United States in the first five months of 2011 were approximately 37, 43, 70, 74 and 82 million gallons respectively, for a total of over 300 million gallons. Of this total, biodiesel accounted for approximately 297 million gallons or 97% of total United States biomass-based diesel production.

In response to the downturn of 2009 and 2010, the biodiesel industry began a process of capacity rationalization. Over one hundred biodiesel plants were built in the United States between the beginning of

2004 and the end of 2008. The initial self-reported annual nameplate production capacity of these plants was reported to be 2.69 billion gallons per year by the NBB in June of 2009. The vast majority of this nameplate production capacity was built to use higher cost virgin vegetable oil, usually soybean oil, as its only feedstock. We believe many of the biodiesel plants were constructed in haste and were either poorly built, built with deficient technology, built in an area with poor logistics, or a combination of each. These factors, plus the contraction of the biodiesel industry in 2009 and 2010, caused many of these biodiesel plants to fail. The stabilization that occurred in the biodiesel industry in 2010 was partially a result of a rationalization of production capacity in the biodiesel industry. We believe that as RFS2 increases demand for biodiesel in 2011 and beyond, the increased demand will be met first by increased capacity utilization of larger biodiesel producers that continued to produce through the 2009 to 2010 downturn. Many of the biodiesel plants that shut down production during 2009 and 2010 may experience difficulty in restarting production due to insufficient working capital, poor logistics that make them less competitive and a limited ability to run lower cost feedstocks without significant capital improvements.

Biodiesel producers have historically experienced seasonal fluctuations in demand for biodiesel. Biodiesel demand has tended to be lower during the winter in Northern and Midwestern states due to concerns about biodiesel’s ability to operate optimally in cold weather, as compared to the most commonly used petroleum-based diesel fuel. This seasonal fluctuation was strongest for biodiesel made from inedible animal fats and used cooking oil. Biodiesel made from those feedstocks has a higher cloud point, the point at which a fuel begins to gel, than biodiesel produced from soybean, canola, or inedible corn oil, which may cause cold weather performance issues. This historical seasonality appears to be decreasing. Biodiesel blends are used in cold Midwestern states like Minnesota, Iowa and Illinois throughout the year. We expect RFS2 may further reduce seasonality as Obligated Parties learn and begin to install infrastructure to properly handle biodiesel during all seasons in order to meet their requirements.

The biodiesel industry benefits from numerous federal and state government programs, the most important of which is RFS2.

On July 1, 2010, RFS2’s biomass-based diesel requirement became effective, requiring for the first time that a certain percentage of the diesel fuel consumed in the United States be made from renewable sources. The biomass-based diesel requirement can be satisfied by two primary fuels, biodiesel and renewable diesel. Renewable diesel is not currently available in the United States in significant commercial quantities and thus, biodiesel is expected to satisfy the vast majority of the RFS2 biomass-based diesel requirement for the foreseeable future. RFS2 requires 800 million gallons of biomass-based diesel in 2011, one billion gallons in 2012 and at least one billion gallons each year thereafter, with such higher amounts subject to EPA discretion. In June 2011, the EPA proposed a 1.28 billion gallon biomass-based diesel requirement for 2013. We expect that the EPA will increase the requirement each year thereafter based on its evaluation of the availability of biodiesel and renewable diesel. As such, we expect RFS2 to create a consistent and stable demand for biodiesel.

The biomass-based diesel requirement is one of four separate renewable fuel requirements under RFS2. The RFS2 requirements are based on two primary categories and two subcategories. The two primary

categories are conventional renewable fuel, which is intended to be satisfied by corn ethanol, and advanced biofuel, which is defined as a biofuel that reduces lifecycle greenhouse gas emissions by at least 50% compared to the petroleum-based fuel the biofuel is replacing. The advanced biofuel category has two subcategories, cellulosic biofuel, which is intended to be satisfied by newly developed cellulosic biofuels, such as ethanol made from woody biomass, and biomass-based diesel, which is intended to be satisfied by biodiesel and renewable diesel. RFS2’s total advanced biofuel requirement is larger than the combined cellulosic fuel and biomass-based diesel requirements, thus requiring the use of additional volumes of advanced biofuels.

The RFS2 requirement for additional volumes of advanced biofuels can be satisfied by any advanced biofuel, including biodiesel, renewable diesel, or sugarcane-based ethanol. The additional advanced biofuel requirement is approximately 150 million gallons in 2011 and 500 million gallons in 2012. We expect it will increase each year thereafter through 2022, subject to the EPA’s evaluation of the availability of advanced biofuels. RFS2’s initial compliance schedule required an additional advanced biofuel volume of approximately one billion by 2018. As biodiesel is currently the only advanced biofuel produced in the United States in significant commercial quantities, we expect the RFS2 advanced biofuel requirement to increase demand for biodiesel.

The advanced biofuel RVO is expressed in terms of ethanol equivalent volumes, or EEV, which is based on the fuel’s renewable energy content compared to ethanol. Biodiesel has an EEV of 1.5 compared to 1.0 for sugarcane-based ethanol. Accordingly, it requires less biodiesel than sugarcane-based ethanol to meet the required volumes as each gallon of biodiesel counts as 1.5 gallons for purposes of fulfilling the advanced biofuel RVO, providing an incentive for Obligated Parties to purchase biodiesel to meet their advanced biofuel RVO.

The RFS2 volume requirements apply to petroleum refiners and petroleum fuel importers in the 48 contiguous states or Hawaii, who are defined as “Obligated Parties” in the RFS2 regulations, and requires these Obligated Parties to incorporate into their petroleum-based fuel a certain percentage of renewable fuel or purchase credits in the form of RINs from those who do. An Obligated Party’s RVO is based on the volume of petroleum-based fuel they produce or import. The largest United States petroleum companies, such as ExxonMobil, Valero, ConocoPhillips, British Petroleum, Chevron and Shell, represent the majority of the total RVOs, with the remainder made up of smaller refiners and importers.

Each Obligated Party’s requirement is tracked, and ultimately satisfied, through the EPA’s renewable identification number, or RIN, system. Each gallon of biodiesel when produced or imported into the United States from an EPA RFS2 registered facility may generate 1.5 biomass-based diesel RINs for the compliance year in which the fuel was produced or imported. These RINs are then used to satisfy the biomass-based diesel or additional advanced biofuel requirements of RFS2. In order to provide an efficient market and facilitate compliance with RFS2, the RFS2 regulations provide that a RIN can be separated from a gallon of biomass-based diesel and sold as a separate commodity once the biomass-based diesel has been blended with petroleum-based diesel and certain other requirements have been met. Each Obligated Party must obtain or generate a sufficient number of RINs within each RFS2 renewable fuel category to satisfy its RVO. An Obligated Party can obtain those RINs by buying renewable fuels with RINs attached, or by buying RINs that have been separated from their renewable fuel and traded, or alternatively, they can generate RINs by producing or importing renewable fuels. Accordingly, diesel providers like truck stops that are not Obligated Parties can purchase biodiesel with RINs for blending into the diesel they sell and then resell the RINs to an Obligated Party or a broker.

In July 2010 when RFS2 became effective, biomass-based diesel RINs began trading at approximately $0.55 per RIN. By the end of the year, the 2010 biomass-based diesel RIN value had increased to $0.74. As of June 16, 2011, biomass-based diesel RINs were $1.38 per RIN, contributing $2.07 per gallon to the price of biodiesel.

The chart below shows how biomass-based diesel RINs have traded over time. The value of RINs has become increasingly significant to the price of biodiesel, contributing approximately $0.7904, or 25% of the average OPIS Chicago spot price of a gallon of biodiesel in July 2010 and $2.07, or 38% of the average OPIS Chicago spot price of a gallon of biodiesel in June 2011.

Biomass-Based Diesel RIN Values Have Been Significant Since RFS2 Began in July 2010

The blenders’ tax credit provides a $1.00 per gallon excise tax credit to the first person who blends the biodiesel with at least 0.1% petroleum-based diesel fuel. The blenders’ tax credit can then be credited against such blender’s federal excise tax liability or the blender can obtain a cash refund from the United States Treasury for the value of the credit. The blenders’ tax credit became effective January 1, 2005 and then lapsed January 1, 2010 before being reinstated retroactively December 17, 2010. The blenders’ tax credit is currently authorized through the end of 2011.

Several states have enacted legislation providing incentives for the use of biodiesel, requiring the use of biodiesel, or both. For example, Illinois offers an exemption from the generally applicable 6.25% sales tax for biodiesel blends that incentivizes blending at 11% biodiesel, or B11, however such taxes will not apply after December 31, 2013 unless such exemption is extended. Illinois’ program has made that state the largest biodiesel market in the country. Currently, Iowa offers a $0.03 per gallon income tax credit to petroleum marketers of B2 blends. In May 2011, Iowa signed into law a bill that encourages Iowa’s petroleum marketers to blend biodiesel into on-road and off-road diesel in a multi-year incentive program beginning in 2012. In 2012, retailers earn $0.02 per gallon for B2 blends or $0.045 per gallon for B5 blends. For 2013 through 2017, retailers earn $0.045 per gallon of B5. The new law also creates 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 produced in an Iowa facility up to the first 25 million gallons per production plant. South Carolina has a retailer cash incentive of $0.25 per gallon of B100 or $0.025 per gallon of B10. In Texas, biodiesel blends are exempt from state excise tax, which results in a $0.20 per gallon incentive for B100.

Currently, more than 40 states have implemented various programs that encourage the use of biodiesel through blending requirements as well as various tax incentives. Minnesota requires a B5 blend, which is scheduled to increase to B10 in 2012. Oregon has implemented a B5 biodiesel blend requirement. New Mexico, Pennsylvania, Massachusetts and Washington have all adopted legislation requiring biodiesel blends. Several northeast states, including Connecticut and Massachusetts, and the City of New York have adopted legislation requiring biodiesel blends for heating oil.

In addition, several states have adopted or are considering adopting a low carbon fuel standard, or LCFS, requiring a reduction in the amount of lifecycle carbon intensity in their transportation fuels. Biodiesel has lower carbon emissions than petroleum-based diesel and is thus expected to benefit from increased demand in states like California that have adopted a LCFS. California’s LCFS calls for a reduction in greenhouse gas emissions from transportation fuels of 10% by 2020.

Although we believe that state requirements for the use of biofuels increase demand for our biodiesel within such states, they generally may not increase overall demand in excess of RFS2 requirements. Rather, existing demand for our biofuel from Obligated Parties in connection with federal requirements may shift to states that have use requirements or tax incentive programs.

Biodiesel demand in Canada is expected to grow significantly in 2011 and 2012 due to Canada’s renewable fuel policies. Those policies require a 2% renewable blend into Canadian petroleum-based diesel and heating oil beginning July 1, 2011 and a 5% renewable blend into Canadian gasoline beginning December 15, 2010. Given an estimated diesel market of 6.8 billion gallons of diesel fuel in 2009 and a 2% blend rate, we estimate total Canadian market demand for biodiesel of approximately 135 mmgy. Additionally, several Canadian provinces maintain provincial blend requirements, including a 2% biodiesel blend requirement into diesel fuel in Manitoba as of November 2009, a 4% renewable fuel content in British Columbia that increases to a 5% renewable fuel content requirement in January 2012, and a 2% renewable fuel content requirement in Alberta as of April 2011. According to the Canadian Renewable Fuels Association, there is 54 mmgy of operating production capacity in Canada. Therefore, we expect United States biodiesel exports to Canada to increase significantly to satisfy higher demand levels pursuant to the recently enacted national blend requirements.

The EU represents the largest diesel market in the world, having consumed approximately 84.4 billion gallons of diesel fuel and 3.2 billion gallons of biodiesel in 2009, the latest year for which figures are available, according to the EIA. Demand in the EU is largely driven by public policy, the most significant of which is the Renewable Energy Directive 2009/28, which set a 5.75% target for renewable energy use in transport fuels by 2010 and a 10% target for renewable energy use in transport fuels by 2020, both targets to be met by EU member countries. The blend percentages are calculated on the basis of energy content of the fuel and apply to petrol and diesel fuel for transport purposes placed on the markets of member countries. Member countries are encouraged to take on national “indicative” targets in conformity with the overall target. As a result of these policies, the EU is both the largest global producer of biodiesel and the largest importer of biodiesel.

The EU biodiesel industry began approximately ten years prior to the United States biodiesel industry and has been a model for many of the programs adopted in the United States. In 2007 and 2008, approximately 50% of United States biodiesel production was exported to EU markets. In March 2009, EU trade authorities imposed extensive anti-dumping and countervailing duties on imports of United States biodiesel, which were extended for five years in July 2009. Since then, United States exports to the EU have been significantly curtailed and we do not expect the EU to be a significant source of demand for United States biodiesel producers until such anti-dumping and countervailing duties are rescinded or expire.

We operate a network of six biodiesel plants, with an aggregate nameplate production capacity of 212 mmgy consisting of five wholly-owned facilities and one leased facility. We have acquired four of our six facilities since February 2010. Our scale allows us to quickly transfer best practices from one of our facilities to the others to maximize production volumes and reduce operating costs. We believe our fully integrated approach, which includes acquiring feedstock, managing biorefinery facility construction and upgrades, operating biorefineries and marketing renewable products, strongly positions us to capitalize on growing demand for biodiesel, renewable chemicals and other advanced biofuels. Our experience has enabled us to develop extensive expertise in biorefinery operations, from facility construction management and feedstock procurement to biodiesel production, marketing, logistics and risk management.

We are a low-cost biodiesel producer. We primarily produce our biodiesel from a wide variety of lower cost feedstocks, including inedible animal fat, used cooking oil and inedible corn oil. We also produce a smaller portion of our biodiesel from higher cost virgin vegetable oils. We believe our ability to process a wide variety of feedstocks provides us with a cost advantage over many biodiesel producers, particularly those that rely on higher cost virgin vegetable oils, such as soybean oil. In addition, we believe our size, reputation, large and diverse feedstock supplier base and processing capabilities give us a competitive advantage over other biodiesel producers.

During 2008, we took advantage of the downturn in the biodiesel industry and began consolidating the industry. In 2010, we became the largest biodiesel producer in the United States by selectively acquiring three strategically located biodiesel plants in Danville, Illinois and Newton, Iowa and our leased Seneca, Illinois plant. This initial phase of our acquisition strategy focused on plants with strong access to lower cost feedstocks, lower cost feedstock production capabilities and access to key biodiesel markets. As part of our consolidation effort, we also acquired three additional biodiesel companies in 2010 that provided increased access to lower cost feedstocks, west coast biodiesel markets, our partially constructed Clovis, New Mexico facility and an $8 million strategic investment from ARES Corporation, the prior owner of the Clovis facility. On July 11, 2011, we completed the acquisition of the former SoyMor biodiesel facility in Albert Lea, Minnesota.

Biodiesel benefits from many government programs. The most important of these programs is RFS2, which we expect will create significant, stable and growing demand for our biodiesel. Biodiesel is the only commercially significant advanced biofuel currently produced in the United States. On July 1, 2010, RFS2 became effective, requiring for the first time that a portion of the diesel fuel consumed in the United States be renewable. In response, nearly 300 million gallons of biodiesel were produced in the United States in the first five months of 2011, compared with 311 million gallons in all of 2010.

We participate in each aspect of biodiesel production, from acquiring feedstock, managing construction and operating biodiesel production facilities to marketing, selling and distributing biodiesel and its co-products. We believe this integrated approach allows us to lower costs, improve biodiesel quality and distribute large quantities of biodiesel more efficiently than our competitors.

We believe our biorefinery platform and experience running a fully integrated biorefining company is highly attractive to technology companies working on developing renewable chemicals and advanced biofuels. We are able to offer co-location, design-build, operations and management capabilities to accelerate the commercialization of these companies’ products.

Biodiesel addresses a large existing market. Biodiesel is a low carbon, advanced biofuel, and drop-in replacement for petroleum-based distillate fuel, which in 2007 was a 522 billion gallon per year global market. Biodiesel is compatible with the existing fuel infrastructure. The largest segment of the distillate fuel market is diesel fuel for on-road and off-road use and also includes fuel oils used for heating and power generation. In 2009, the United States market for distillate fuel was 52.7 billion gallons according to the EIA. In 2010, 311 million gallons of biodiesel was produced in the United States achieving less than one percent penetration of the United States distillate fuel market.

In addition to addressing the large distillate fuel market, our biodiesel addresses the renewable fuels market. As discussed in the section entitled, “Industry overview—Government Programs Favoring Biodiesel Production and Use—Renewable Fuel Standard” on page 80, biodiesel satisfies the RFS2 biomass-based diesel and advanced biofuel requirements and is the only fuel produced in the United States in commercially significant volumes that can satisfy those requirements.

RFS2 requires the use of 800 million gallons of biomass-based diesel in 2011, one billion gallons in 2012 and at least one billion gallons each year thereafter through 2022. In June 2011, the EPA proposed a 1.28 billion gallon biomass-based diesel requirement for 2013. We expect the EPA will increase the requirement each year thereafter based on its evaluation of the availability of biodiesel and renewable diesel. As such, we expect RFS2 to create a consistent, stable and growing demand for our biodiesel.

RFS2’s requirement for additional volumes of advanced biofuels can be satisfied by any advanced biofuel, including biodiesel, renewable diesel, or sugarcane-based ethanol. This additional advanced biofuel requirement is approximately 150 million gallons in 2011 and 500 million gallons in 2012. We expect it will increase each year thereafter through 2022, subject to the EPA’s evaluation of the availability of advanced biofuels. RFS2’s initial advanced biofuel schedule required an additional volume of approximately one billion gallons of advanced biofuel by 2018.

The advanced biofuel RVO is expressed in terms of ethanol equivalent volumes, or EEV, which is based on the fuel’s renewable energy content compared to ethanol. Biodiesel has an EEV of 1.5 compared to 1.0 for sugarcane-based ethanol. Accordingly, it requires less biodiesel to meet the required volumes than it would if such volumes were satisfied by the use of sugarcane-based ethanol, providing an incentive for Obligated Parties to purchase biodiesel to meet their advanced biofuel RVO and creating additional demand for our biodiesel.

In addition, as discussed in the section entitled “Industry overview—Government Programs Favoring Biodiesel Production and Use—State Programs” on page 80, biodiesel must be used in several states to meet state biodiesel requirements and may be used in other states to meet LCFS or other state renewable fuel requirements.

Our products are able to address the large chemicals market. Today, our methyl esters, glycerin and fatty acids, among other products we produce, are sold into the chemicals market. For example, in the specialty chemical market, methyl esters are used as a solvent and glycerin is used in a variety of industrial and chemical products. We anticipate that our chemical sales, which were less than 5% of our total sales in 2010, will increase as we execute on our growth plan and increase the number of products we produce for the chemical markets.

We expect the renewable chemicals that we intend to make will be produced from feedstocks that are subject to lower cost volatility than the materials used to produce the petroleum-based chemicals they replace, thus allowing us to offer potential customers a replacement product with lower price volitility. Using our products also offers our customers the additional benefit of being able to market their products as environmentally friendly.

Our strategy is to optimize and grow our existing core biodiesel business in the United States and internationally while diversifying to produce renewable chemicals and additional advanced biofuels. We plan to maintain and improve upon our position as the largest producer of biodiesel in the United States, by continuously improving our biodiesel production facilities and continuing our acquisition efforts. We believe our integrated biorefinery platform strongly positions us as a development and commercialization partner for companies developing new feedstocks, renewable chemicals, other advanced biofuels and biodiesel production techniques. Key elements of our strategy include the following:

Diversify into the production of renewable chemicals, additional advanced biofuels and related products.

We believe we are the largest buyer of lower cost feedstocks for fuel production in the United States. Our multi-feedstock platform allows us to arbitrage across feedstocks more successfully than our competitors. Lower cost feedstocks allow us to produce biodiesel at a cost of approximately $0.37 to $0.67 less per gallon than our competitors who use higher cost virgin vegetable oils.

For 2010, approximately 91% of our total feedstock usage was lower cost inedible animal fat, used cooking oil or inedible corn oil feedstock and 9% was higher cost soybean oil. Our ability to use a wide range of feedstocks gives us the flexibility to quickly respond to changes in feedstock pricing to maintain our feedstock cost advantage. We have the ability to rapidly change our processing techniques to accommodate different feedstocks and feedstock mixes. Our plants generally run on a mix of feedstocks. As different feedstocks are delivered to the plant, they are combined or segregated into our feedstock storage tanks. Feedstock tanks are then tested and the plant is tuned to optimize the processing of that specific feedstock mix.

We procure our feedstocks from numerous vendors in small to medium quantities. There is no established futures market for lower cost feedstocks. We generally purchase inedible animal fats on a freight delivered basis and purchase in one to four week forward positions. Used cooking oil and inedible corn oil can be purchased in nearby forward positions of three to twelve months, and are sometimes indexed to the New York Mercantile Exchange, or NYMEX, heating oil index. We maintain both long term contractual arrangements and long term trading relationships with key feedstock suppliers, which provides us with an advantage. Some of these relationships are with our investors including West Central, Bunge and ED&F Man. These arrangements and relationships give us an advantage over our competition in procuring reliable volumes of lower cost feedstock at competitive prices. Higher cost virgin vegetable oil feedstocks like soybean oil can be purchased on a spot or forward contract basis from a number of suppliers.

We work with developers of next generation feedstocks, such as algae, camelina and jatropha oil, to assist them in bringing these new feedstocks to market. We have converted each of these feedstocks, as well as other second generation feedstocks, into high quality biodiesel in our laboratory. We believe we are well positioned to incorporate these new feedstocks into our production process as they become commercially available.

We obtain methanol, chemical catalysts such as sodium methylate and hydrochloric acid, under fixed-price contracts and formula-indexed contracts based upon competitive bidding. These procurement contracts typically last from three months to one year. The price of methanol is indexed to the monthly reported published price of methanol plus or minus a negotiated basis.

We are the largest biodiesel producer in the United States. We currently own five and lease one operating biodiesel production facilities with an aggregate nameplate production capacity of 212 mmgy. In addition to these six plants, we began construction of two 60 mmgy nameplate production capacity facilities in 2007, one near New Orleans, Louisiana and the other in Emporia, Kansas. In February 2008, we halted construction of these facilities as a result of conditions in the biodiesel industry and the lack of financing. In September 2010, we acquired a partially constructed 15 mmgy biodiesel production facility in Clovis, New Mexico. We plan to complete these three facilities as financing becomes available, subject to market conditions.

Our plants are able to use lower cost feedstock, which gives us a cost advantage over our competitors who can only run higher cost virgin vegetable oils. We intend to upgrade the Albert Lea facility to process a wide variety of lower cost feedstocks when project financing becomes available and market conditions warrant. In addition, our plants have the ability to quickly change the feedstock they are using. This allows us to respond to changes in feedstock pricing to maintain our feedstock cost advantage. We have the ability to rapidly change our processing techniques to accommodate different feedstocks and feedstock mixes.

We have established a national distribution system to supply biodiesel throughout the United States. Each of our facilities is equipped with an on-site rail loading system, a truck loading system, or both, and a logistics and supply chain management staff. We also manage some customers’ biodiesel storage tanks and replenishment process. We lease more than 150 railcars for transportation and lease biodiesel storage tanks in 12 terminals. Typically, the terminals where we lease our biodiesel storage tanks are petroleum fuel terminals so that fuel distributors and other biodiesel customers can create a biodiesel blend at the terminal before further distribution. Terminal leases typically have one to three-year terms and are generally renewable subject to certain terms and conditions. In the future, we plan to increase the

number of terminal leases we hold in strategic locations, including on the coasts of the United States and other deep water access points, to create a distribution system that enhances our ability to market biodiesel throughout the United States, Canada and abroad. We have sold biodiesel in 43 states and Canada. The map below represents our distribution network throughout the 48 contiguous states. The darkly shaded states represent the states in which we have sold our biodiesel.

The prices for feedstocks and biodiesel can be volatile and are not always closely correlated. Lower cost feedstocks are particularly difficult to risk manage given that such feedstocks are not traded in any public futures market. To manage feedstock and biodiesel price risks, we utilize forward contracting, hedging and other risk management strategies, including the use of futures, options and over-the-counter products.

We believe we are better at managing risk than our competitors that use lower cost feedstocks due to our scale, experience, feedstock supply relationships and the number of feedstocks we use, which allow us to more effectively risk manage lower cost feedstocks.

In establishing our risk management strategies, we draw from our own in-house risk management expertise and we consult with industry experts, such as Bunge and ED&F Man, two of the largest international commodity trading firms and investors in us. Bunge provides risk management services to us pursuant to a master services agreement. We utilize research conducted by outside firms to provide additional market information and risk management strategies. We believe combining these sources of knowledge, experience and expertise gives us a more sophisticated and global view of the fluctuating commodity markets for raw materials and energies, which we then can incorporate into our risk management strategies.

While we are the largest producer of biodiesel in the United States, we still face competition in the biodiesel market from other biodiesel producers, marketers and distributors. We also face competition in the biomass-based diesel RIN compliance market from producers of renewable diesel, in the advanced biofuel RIN compliance market from producers of other advanced biofuels and in the distillate fuel market from producers and suppliers of petroleum-based diesel fuel. In the United States and Canadian biodiesel markets, we compete with large, multi-product companies that have greater resources than we do. Archer Daniels Midland Company, Cargill, Incorporated, Louis Dreyfus Commodities Group and Ag Processing Inc. are major international agribusiness corporations and biodiesel producers with the financial, sourcing and marketing resources to be formidable competitors in the biodiesel industry. These agribusiness competitors tend to make biodiesel from higher cost virgin vegetable oils such as soybean or canola oil, which they produce as part of their integrated agribusinesses.

We also face competition from independent biodiesel producers. Unlike us, most of these competitors own only one biodiesel plant and thus, do not enjoy the benefits of scale that we do. Many of our competitors own biodiesel plants that can process only higher cost virgin vegetable oils. Furthermore, in our marketing and distribution, we face competition from biodiesel traders such as Mansfield, Astra, Gavilon, Tenaska and ED&F Man. These trading companies have far greater financial resources than we do and are able to take significant biodiesel positions in the marketplace. These competitors are often customers of ours as well.

In the RFS2 biomass-based diesel and the Canadian renewable fuel requirement markets, we are in competition with producers of renewable diesel. Renewable diesel, like biodiesel, is a petroleum-based diesel substitute made from renewable feedstocks. Renewable diesel can also satisfy the RFS2 biomass-based diesel requirement if the renewable diesel meets the greenhouse gas reduction requirements and may satisfy Canadian renewable fuel requirements. As of January 2011, there was less than one hundred million gallons of renewable diesel production capacity in the United States, and no operating facilities in Canada, but more facilities are planned. Some of the future producers of renewable diesel, like the renewable diesel joint venture between Valero Energy Corp. and Darling International, may have greater financial resources than we do. In the RFS2 advanced biofuel market, we also compete with other producers and importers of advanced biofuels such as Brazilian sugarcane ethanol producers.

The biodiesel industry is also in competition with the petroleum-based diesel fuel industry. The size of the biodiesel industry is small compared to the size of the petroleum-based diesel fuel industry and large petroleum companies have greater resources than we do. Without government incentives and requirements, biodiesel may be more expensive than petroleum-based diesel, making it difficult to compete with petroleum-based diesel on price.

We have been growing our business since 1996 by partnering with key industry participants and evolving our business model to take advantage of opportunities presented by the emergence of the United States biodiesel industry. In 1996, West Central, our former parent company, completed construction of a 1.3 mmgy biodiesel plant. Using the experience gained from operating this first plant, West Central began work in 2001 on our Ralston facility, a 12 mmgy biodiesel plant, which was the largest biodiesel plant in the United States at the time of its completion in 2002.

We partnered with Crown Iron Works and Todd & Sargent, Inc. to leverage the experience we gained building our 12 mmgy Ralston facility into a biodiesel plant design and build business that built more

commercial scale biodiesel plants in the United States than anyone else. We used the expertise we gained from operating our Ralston facility to build a biodiesel plant services business that managed and operated seven biodiesel plants for third parties. Our collaborative services business enabled us to become a leading marketer of biodiesel in the United States since 2005 and gave us substantial early operating experience.

In 2006, we spun-off from West Central and raised approximately $100 million from financial and strategic investors. In 2007, we began construction on two 60 mmgy facilities for our own account, our partially completed New Orleans and Emporia facilities. In February of 2008, in response to collapsing debt markets, we halted construction on these facilities. In June of 2008, we acquired our Houston facility from the USBG, increasing our wholly-owned nameplate production capacity to 47 mmgy.

In 2008 and 2009, in response to higher soybean oil prices we transformed our operations to allow us to produce biodiesel primarily from lower cost feedstocks. During these difficult times in the biodiesel industry, we became the largest producer of biodiesel in the United States as a result of acquisitions that began to consolidate the biodiesel industry, including the acquisition of three facilities we previously managed. Through our consolidation efforts, we have completed a total of nine acquisitions, including five biodiesel plants, with eight of the nine acquisitions closing since early 2010. Our current six operating biodiesel plants have a nameplate production capacity of 212 mmgy.

We believe the experience we have gained over the last 15 years combined with our track record of building business relationships and aligning our business with market trends will enable us to continue to lead the United States biodiesel industry, diversify into renewable chemicals, additional advanced biofuels and next generation feedstocks through strategic relationships with innovative companies, and expand internationally.

As of June 30, 2011, we employed 204 full-time employees, including 151 in operations, procurement, logistics and technical, 15 in sales and marketing and 38 in administration. None of our employees are represented by a labor organization or under any collective bargaining agreements. We consider our relationship with our employees to be good.

Our biofuel facilities, like other fuel and chemical production facilities, are subject to various federal, state and local environmental laws and regulations, including those relating to the discharge of materials into the air, water and ground; the generation, storage, handling, use, transportation and disposal of hazardous materials; ecological and natural resources; and the health and safety of our employees, contractors and the public. These laws and regulations require us to obtain and comply with numerous environmental permits to construct and operate each network facility. They can require expensive pollution control equipment or operational changes to limit actual or potential impacts to human health and the environment. A violation of these laws, regulations or permit conditions could result in substantial fines, natural resource damage, criminal sanctions, permit revocations and/or facility shutdowns. However, we do not currently have any such proceedings either pending or threatened against our facilities. Furthermore, we do not anticipate a material adverse effect on our business or financial condition as a result of our efforts to comply with these requirements as presently in effect.

We also do not expect to incur material capital expenditures for environmental controls in this or the succeeding fiscal year. However, new laws, new interpretations of existing laws, increased governmental enforcement of environmental laws or other developments could require us to make additional

significant expenditures. Continued government and public emphasis on environmental issues can be expected to result


Large accelerated filer	¨		Accelerated filer	¨

Non-accelerated filer	x	(Do not check if a smaller reporting company)	Smaller reporting company	¨



Title of each class of securities to be registered	Proposed maximum aggregate offering price (1)(2)	Amount of registration fee
Common Stock, $.0001 par value per share	$100,000,000	$11,610


	Per Share	Total
Public offering price	$	$
Underwriting discounts and commissions	$	$
Proceeds, before expenses, to Renewable Energy Group, Inc.	$	$
Proceeds, before expenses, to the selling stockholders	$	$


Management			99
Executive compensation			107
Certain relationships and related party transactions			112
Principal stockholders and selling stockholders			118
Description of capital stock			121
Shares eligible for future sale			130
Certain material United States federal income and estate tax considerations to non-United States holders			133
Underwriting			137
Legal matters			145
Experts			145
Where you can find additional information			145
Index to financial statements			F-1


	As of March 31, 2011
	Actual			Pro forma		Pro forma as adjusted
	(In thousands, except share and per share data)
Cash and cash equivalents	$	4,363		$		$

Revolving credit facility	$	10,550		$	10,550	$	10,550
Other long term debt		90,443			90,443		90,443

Total debt		100,993			100,993		100,993

Series A Preferred Stock, $0.0001 par value, 14,000,000 shares authorized, 13,455,522 shares issued and outstanding, actual; 14,000,000 shares authorized, no shares issued and outstanding, pro forma and pro forma as adjusted		128,332			—		—
Series B Preferred Stock, $0.0001 par value, no shares authorized, no shares issued and outstanding, actual; 3,000,000 shares authorized, 3,000,000 shares issued and outstanding, pro forma and pro forma, as adjusted		—
Stockholders’ equity:
Existing common stock, $0.0001 par value; 140,000,000 shares authorized, 33,129,553 shares issued and outstanding, actual; no shares authorized, issued or outstanding pro forma and pro forma as adjusted.		3			—		—
Common Stock, $0.0001 par value; no shares authorized, no shares issued and outstanding, actual; 300,000,000 shares authorized, no shares issued and outstanding, pro forma; 300,000,000 shares authorized, shares issued and outstanding, pro forma as adjusted		—
Class A Common Stock, $0.0001 par value; no shares authorized, no shares issued and outstanding, actual; 140,000,000 shares authorized, shares issued or outstanding, pro forma; 140,000,000 shares authorized, shares issued and outstanding, pro forma as adjusted		—
Additional paid-in capital		77,728
Warrants - additional paid-in-capital		4,820
Accumulated deficit		(48,605	)

Total stockholders’ equity		33,946

Total capitalization	$	263,271		$		$


Assumed public offering price per share of Common Stock	$	$
Net tangible book value per common share as of March 31, 2011
Increase in net tangible book value per share attributable to existing stockholders

Net tangible book value per share as adjusted after this offering

Dilution per share to new investors		$


	Shares Purchased				Total Consideration
	Number	Percent			Amount	Percent			Average Price Per Share
Existing stockholders				%	$			%	$
New investors

Total			100.0	%		$	100.0	%


	Year ended December 31,															Three months ended March 31,
Consolidated statement of operations data:	2010(1)			2009			2008(2)			2007			2006			2011			2010
	(In thousands, except share and per share amounts)
Revenues:
Biodiesel sales	$	207,902		$	109,027		$	69,509		$	130,562		$	93,649		$	100,074		$	32,975
Biodiesel government incentives		7,240			19,465			6,564			9,970			8,915			4,340			3,652

Total biodiesel		215,142			128,492			76,073			140,532			102,564			104,414			36,627
Services		1,313			3,009			9,379			94,018			75,465			21			862

Total revenues		216,455			131,501			85,452			234,550			178,029			104,435			37,489

Costs of goods sold:
Biodiesel		194,016			127,373			78,736			141,748			92,423			96,189			34,824
Services		807			1,177			4,470			71,258			70,751			18			415

Total costs of goods sold		194,823			128,550			83,206			213,006			163,174			96,207			35,239

Gross profit		21,632			2,951			2,246			21,544			14,855			8,228			2,250
Total operating expenses		29,681			24,144			24,208			29,453			11,688			6,278			5,227

Income (loss) from operations		(8,049	)		(21,193	)		(21,962	)		(7,909	)		3,167			1,950			(2,977	)
Total other income (expense), net		(16,102	)		(1,364	)		(2,318	)		36,623			(377	)		1,851			(55	)

Income (loss) before income tax benefit (expense) and income (loss) from equity investments		(24,151	)		(22,557	)		(24,280	)		28,714			2,790			3,801			(3,032	)
Income tax benefit (expense)		3,252			(45,212	)		9,414			3,198			745			—			6,328
Income (loss) from equity investments		(689	)		(1,089	)		(1,013	)		113			493			(65	)		(215	)

Net income (loss)		(21,588	)		(68,858	)		(15,879	)		32,025			4,028			3,736			3,081
Less: Net (income) loss attributable to noncontrolling interests		—			7,953			2,788			(141	)		—			—			—

Net income (loss) attributable to the company		(21,588	)		(60,905	)		(13,091	)		31,884			4,028			3,736			3,081
Effects of recapitalization		8,521			—			—			—			—			—			8,521


	Year ended December 31,															Three months ended March 31,
Consolidated statement of operations data:	2010(1)			2009			2008(2)			2007			2006			2011			2010
	(in thousands, except share and per share amounts)
Less: accretion of preferred stock to redemption value		(27,239	)		(44,181	)		(26,692	)		(4,434	)		—		$	(5,896	)	$	(11,068	)
Less: undistributed dividends allocated to preferred stockholders		(10,027	)		(14,036	)		(11,145	)		(7,112	)		(1,095	)		(3,061	)		(1,147	)

Net income (loss) attributable to the company’s common stockholders	$	(50,333	)	$	(119,122	)	$	(50,928	)		20,338			2,933			$(5,221	)	$	(613	)

Net income (loss) per share attributable to common stockholders:
Basic	$	(1.71	)	$	(6.14	)	$	(3.07	)	$	1.01		$	0.26		$	(0.16	)	$	(0.03	)

Diluted(3)	$	(1.71	)	$	(6.14	)	$	(3.07	)	$	(0.16	)	$	0.26		$	(0.16	)	$	(0.03	)

Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:
Basic		29,427,120			19,407,227			16,593,555			12,996,493			9,958,359			33,148,940			22,996,011

Diluted(3)		29,427,120			19,407,227			16,593,555			20,236,723			9,958,359			33,148,940			22,996,011

Pro forma net loss per share attributable to common stockholders(4):
Basic	$															$

Diluted	$															$

Pro forma weighted-average shares used to compute net loss per share attributable to common stockholders(4):
Basic

Diluted


	Year ended December 31,															Three months ended March 31,
Consolidated Balance Sheet Data:	2010(1)			2009			2008(2)			2007			2006			2010			2011
	(In thousands)
Cash and cash equivalents		4,259			5,855			15,311			18,965			53,698			2,605			4,363
Working capital (deficit)		(3,581	)(5)		10,786			25,984			36,157			69,930			2,913			(1,665	)(5)
Total assets		369,643			200,558			251,984			169,706			143,606			307,333			385,786
Total liabilities		212,091			78,567			65,359			32,283			68,767			142,754			223,508
Total long-term obligations
Total stockholders’ equity (deficit)		35,116			(27,131	)		82,018			93,716			53,905			58,317			33,946


Feedstock		Factors Influencing Supply
Inedible Animal Fat		Export demand
		Number of slaughter kills in the United States
		Demand for inedible animal fat from other markets

Used Cooking Oil		Export demand
		Population
		Number of restaurants in the vicinity of collection facilities and terminals which is dependent on population density
		Eating habits, which can be impacted by the economy

Inedible Corn Oil		Implementation of inedible corn oil separation systems into existing and new ethanol facilities
		Extraction system yield

Soybean Oil		Export demand
		Weather conditions
		Farmer planting decisions
		Government policies and subsidies
		Crop disease


	December 31, 2010			February 26, 2010			December 31, 2009			December 31, 2008			June 30, 2008
Expected volatility		40.00	%		40.00	%		50.00	%		55.00	%		55.00	%
Risk-free rate		4.10	%		4.40	%		4.11	%		4.39	%		4.58	%


	December 31, 2010			April 9, 2010
Expected volatility		50.00	%		50.00	%
Risk-free rate		4.10	%		4.60	%
Probability of IPO		70.00	%		60.00	%


	Twelve Months Ended December 31,
	2010			2009
Revenues
Biodiesel	$	207,902		$	109,027
Biodiesel government incentives		7,240			19,465

Total biodiesel		215,142			128,492
Services		1,313			3,009

Total		216,455			131,501

Cost of goods sold
Biodiesel		194,016			127,373
Services		807			1,177

Total		194,823			128,550

Gross profit		21,632			2,951
Selling, general and administrative expenses		22,187			25,565
Gain on sale of assets—related party		—			(2,254	)
Impairment of assets		7,494			833

Loss from operations		(8,049	)		(21,193	)
Other income (expense)		(16,102	)		(1,364	)
Income tax benefit (expense)		3,252			(45,212	)
Loss from equity investments		(689	)		(1,089	)

Net loss		(21,588	)		(68,858	)
Net loss attributable to non-controlling interests		—			7,953

Net loss attributable to REG		(21,588	)		(60,905	)
Effects of recapitalization		8,521			—
Accretion of preferred stock to redemption value		(27,239	)		(44,181	)

Net loss attributable to the company’s common stockholders	$	(40,306	)	$	(105,086	)


	Twelve Months Ended December 31,
	2009			2008
Revenues
Biodiesel	$	109,027		$	69,509
Biodiesel government incentives		19,465			6,564

Total biodiesel		128,492			76,073
Services		3,009			9,379

Total		131,501			85,452

Cost of goods sold
Biodiesel		127,373			78,736
Services		1,177			4,470

Total		128,550			83,206

Gross profit		2,951			2,246
Selling, general and administrative expenses		25,565			24,048
Gain on sale of assets—related party		(2,254	)		—
Impairment of assets		833			160

Loss from operations		(21,193	)		(21,962	)
Other income (expense)		(1,364	)		(2,318	)
Income tax benefit (expense)		(45,212	)		9,414
Loss from equity investments		(1,089	)		(1,013	)

Net loss		(68,858	)		(15,879	)
Net loss attributable to non-controlling interests		7,953			2,788

Net loss attributable to REG		(60,905	)		(13,091	)
Less—accretion of preferred stock to redemption value		(44,181	)		(26,692	)

Net loss attributable to the Company’s common stockholders	$	(105,086	)		(39,783	)


	March 31, 2011		December 31, 2010
Revolving Lines of Credit	$	10.6	$	9.5
REG Danville term loan		23.2		23.6
REG Newton term loan		23.5		23.6
Other		2.7		3.1

Total Notes Payable	$	60.0	$	59.8

Landlord term loan		36.3		36.3
Bell, LLC promissory note		4.7		—

Total Notes Payable—variable interest entities	$	41.0	$	36.3


PRELIMINARY PROSPECTUS		Subject to Completion		July 18, 2011


UBS Investment Bank		Piper Jaffray


Stifel Nicolaus Weisel		Canaccord Genuity


	Payments Due by Period
	Total		Less Than 1 Year		Years 1-3		Years 4-5		More Than 5 Years
	(in thousands)
Long Term Debt(1)	$	99,774	$	30,097	$	36,660	$	7,974	$	25,043
Operating Lease Obligation(2)		89,214		7,268		23,799		15,005		43,142
Purchase Obligation(3)		18,087		10,039		8,048		—		—
Other Long-Term Liabilities(4)		2,201		160		301		80		160

	$	209,276	$	47,564	$	68,808	$	23,059	$	68,345


	2010 Volume (in millions)		Units		Hypothetical Adverse Change in Price			Change in Annual Gross Profit (in millions)		Percentage Change in Gross Profit
Biodiesel		67.9		gallons		10	%	$	19.2		87.2	%
Lower Cost Feedstocks		398.3		pounds		10	%	$	11.8		53.5	%
Soybean Oil		40.5		pounds		10	%	$	1.6		7.1	%


		· Trucks, buses and automobiles				· Farming and ranching

		· Construction facilities and equipment and other off-road use				· Facilities and equipment used for producing, processing or assembling goods

		· Railroads for any use, including related facilities				· Utilities using fuel for electric power generation

		· Commercial and private boats, including ocean-going vessels				· Living quarters for private households and institutional living quarters; service-providing facilities and equipment for non-manufacturing businesses

		· Other energy-consuming sectors not included elsewhere, including the military				· Federal, state and local governments; and private and public organizations