Homeland Energy Solutions 424B3 Prospectus supplement

Filed Pursuant to Rule 424(B)(3)
Registration Statement No. 333-135967

PROSPECTUS SUPPLEMENT NO. 2
(To Prospectus dated November 30, 2006)

HOMELAND ENERGY SOLUTIONS, LLC

The Securities being offered by Homeland Energy Solutions, LLC are:
Limited Liability Company Membership Units


Minimum Offering Amount	$	55,000,000	Minimum Number of Units	55,000
Maximum Offering Amount	$	110,000,000	Maximum Number of Units	110,000

Offering Price: $1,000 per Unit
Minimum Purchase Requirement: Twenty-Five Units ($25,000)
Additional Purchases in Increments of Five (5) Units

The date of this Prospectus Supplement No. 2 is July 27, 2007

RECENT DEVELOPMENTS

We have attached to this Prospectus Supplement No. 2 (to the Prospectus dated November 30, 2006), and incorporated by reference into it, our Quarterly Report on Form 10-QSB filed with the Securities and Exchange Commission (the “Commission”) on May 15, 2007 and our Current Report on Form 8-K filed with the Securities and Exchange Commission (the “Commission”) on July 20, 2007 and Exhibit 99.1 filed therewith.

Exhibit 99.1 to the Current Report on Form 8-K filed with the Commission on July 20, 2007 is an investor newsletter, which contains forward-looking statements that involve future events, our future performance and our expected future operations and actions. In some cases you can identify forward-looking statements by the use of words such as “may,” “will,” “should,” “anticipate,” “believe,” “expect,” “plan,” “future,” “intend,” “could,” “estimate,” “predict,” “hope,” “potential,” “continue,” or the negative of these terms or other similar expressions. These forward-looking statements are only our predictions and involve numerous assumptions, risks and uncertainties, including, but not limited to those listed below and those business risks and factors described in our filings with the Commission.

	•		Our ability to secure our Title V air permit and other necessary licenses and permits;

	•		Changes in the environmental regulations that apply to our plant site and operations;

	•		Our ability to enter into a definitive debt financing agreement for the debt financing necessary to construct and operate our ethanol plant;

	•		Our ability to construct the ethanol plant and coal gasification energy center within our current budget;

	•		Our ability to enter into a definitive agreement for the engineering and construction of our coal gasification energy center;

	•		Our ability to enter into definitive agreements for our required supply of coal, natural gas and electricity;

	•		Changes in the availability and price of coal, natural gas and corn, and the market for distillers grains;

	•		Our ability to obtain federal and state grants and tax relief; and

Our actual results or actions could and likely will differ materially from those anticipated in the forward-looking statements for many reasons, including the reasons described in this communication. We are not under any duty to update the forward-looking statements contained in this newsletter. We cannot guarantee future results, levels of activity, performance or achievements. We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this communication. You should read this newsletter with the understanding that our actual future results may be materially different from what we currently expect. We qualify all of our forward-looking statements by these cautionary statements.

The Prospectus dated November 30, 2006, together with Prospectus Supplement No. 1 dated March 5, 2007 and this Prospectus Supplement No. 2, constitute the prospectus required to be delivered by Section 5(b) of the Securities Act of 1933, as amended, with respect to offers and sales of the membership units. All references in the Prospectus dated November 30, 2006 to “this prospectus” are hereby amended to read “this prospectus (as supplemented and amended).”

July 27, 2007

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB


þ		Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the fiscal quarter ended March 31, 2007


o		Transition report under Section 13 or 15(d) of the Exchange Act.

Commission file number 333-135967

HOMELAND ENERGY SOLUTIONS, LLC

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


Iowa (State or other jurisdiction of incorporation or organization)		20-3919356 (I.R.S. Employer Identification No.)

106 W. Main Street
Riceville, IA 50466
(Address of principal executive offices)

(641) 985-4025
(Issuer’s telephone number)

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

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

State the number of shares outstanding for each of the issuer’s classes of common equity as of the latest practicable date:

As of May 1, 2007 there were 2,850 units outstanding.

Transitional Small Business Disclosure Format (Check one): o Yes þ No

INDEX


	Page No.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements		3

Item 2. Management’s Discussion and Analysis and Plan of Operations		11

Item 3. Controls and Procedures		26

PART II. OTHER INFORMATION

Item 1. Legal Proceeding		27

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		27

Item 3. Defaults Upon Senior Securities		28

Item 4. Submission of Matters to a Vote of Security Holders		28

Item 5. Other Information		28

Item 6. Exhibits		29

SIGNATURES		30

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

HOMELAND ENERGY SOLUTIONS, LLC
(A Development Stage Company)
BALANCE SHEET (UNAUDITED)

ASSETS


	3/31/2007

CURRENT ASSETS
Cash and cash equivalents	$	2,111,326
Certificate of deposit		614,488
Attorney escrow account		224
Accrued interest receivable		13,701
Prepaid offering costs		235,587
Prepaid expenses		14,105


Total current assets		2,989,431


PROPERTY AND EQUIPMENT, at cost
Land		1,483,126
Equipment		23,816
Construction in progress		190,359
Less accumulated depreciation		(1,242	)


		1,696,059


OTHER ASSETS
Loan fees, net of amortization $390		17,182
Land options		24,774

		41,956


Total Assets	$	4,727,446


LIABILITIES AND MEMBERS’ EQUITY

CURRENT LIABILITIES
Accounts payable	$	82,514
Notes payable		3,517,572
Accrued interest payable		6,449


Total current liabilities		3,606,535


COMMITMENTS AND CONTINGENCIES (NOTE 7)

MEMBERS’ EQUITY
Capital units, less syndication costs		1,305,893
Deficit accumulated during development stage		(184,982	)


Total members’ equity		1,120,911


Total liabilities and members’ equity	$	4,727,446

See Notes to the unaudited Financial Statements.

HOMELAND ENERGY SOLUTIONS, LLC
(A Development Stage Company)
STATEMENTS OF OPERATIONS (UNAUDITED)
For the Quarter Ended March 31, 2007, for the period
from December 7, 2005 (Date of Inception) to March 31, 2007 and for the
period from December 7, 2005 (Date of Inception) to March 31, 2006


				Period from			Period from
	Quarter Ended			inception to			inception to
	3/31/2007			3/31/2007			3/31/2006

OPERATING REVENUE	$	—		$	—		$	—

OPERATING EXPENSES
Professional expenses		51,162			128,559			16,234
Engineering & design		—			18,652			2,177
Feasibility studies		—			67,750			6,000
Filing fees/permits		1,158			12,928			—
Land options		—			1,650			—
Insurance		4,619			6,159			—
Office Expense		3,169			9,736			—
Depreciation		949			1,242			—
Amortization		390			390			—
Rent		1,200			1,800			—
Utilities		3,171			3,242			—
Misc expenses		820			2,261			350


Total Expenses		66,638			254,369			24,761


OTHER INCOME
Interest income		11,327			44,387			—
Grant income		14,125			25,000			—


Total Other Income		25,452			69,387			—


Net loss during development stage	$	(41,186	)	$	(184,982	)	$	(24,761	)


Basic and Diluted loss per capital unit	$	(14.45	)


Basic and Diluted weighted average captial units O/S		2,850

See Notes to the unaudited Financial Statements.

HOMELAND ENERGY SOLUTIONS, LLC
(A Development Stage Company)
STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Quarter Ended March 31, 2007, for the period
from December 7, 2005 (Date of Inception) to March 31, 2007 and for the
period from December 7, 2005 (Date of Inception) to March 31, 2006


					Period from			Period from
		Quarter Ended			inception to			inception to
		3/31/2007			3/31/2007			3/31/2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss during development stage		$	(41,186	)	$	(184,982	)	$	(24,761	)
Depreciation and Amortization			1,339			1,632			—
Write off land options			—			1,650			—
Adjustments to reconcile net loss to net cash used in operating activities
Changes in assets and liabilities
Increase in other current assets			(3,710	)		(28,030	)		(11,044	)
(Decrease) increase in accounts payable			(79,308	)		16,009			—
Increase in accrued interest payable			6,449			6,449			—


Net cash used in operating activities			(116,416	)		(187,272	)		(35,805	)


CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturity of certificate of deposit			—			600,000			—
Purchase of certificate of deposit			—			(1,214,488	)		—
Payments for construction in progress			(123,854	)		(123,854	)		—
Purchase of equipment			—			(23,816	)		—
Purchase of land			(1,483,126	)		(1,483,126	)		—
Purchase of land options			(11,163	)		(26,424	)		—


Net cash used in investing activities			(1,618,143	)		(2,271,708	)		—


CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowing			3,500,000			3,500,000			—
Payments for prepaid offering costs			(11,824	)		(235,587	)		—
Contributed capital			—			1,325,000			200,000
Payments for sydication costs on capital units issued			—			(19,107	)		(6,222	)


Net cash provided by financing activities			3,488,176			4,570,306			193,778


Net change in cash			1,753,617			2,111,326			157,973

CASH AND CASH EQUIVALENTS
Beginning of period			357,709			—			—


End of period		$	2,111,326		$	2,111,326		$	157,973


SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING & FINANCING ACTIVITIES
Accounts payable related to construction in progress		$	66,505		$	66,505		$	—
	��

Loan fees related to short-term borrowings		$	17,572		$	17,572		$	—

See Notes to the unaudited Financial Statements.

HOMELAND ENERGY SOLUTIONS, LLC
(A Development Stage Company)

Notes to Financial Statements

Nature of Business

Homeland Energy Solutions, LLC (an Iowa Limited Liability Company) to be located in Chickasaw County, was organized to pool investors for a 100 million gallon ethanol plant with distribution to upper Midwest and Eastern states. In addition, the company intends to produce and sell distillers dried grains as byproducts of ethanol production. Construction is expected to begin in July 2007. As of March 31, 2007, the Company is in the development stage with its efforts being principally devoted to organizational activities, project feasibility activities, and obtaining debt and equity financing.

Summary of Significant Accounting Policies

The unaudited financial statements contained herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America.

In the opinion of management all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included in the accompanying financial statements. These financial statements should be read in conjunction with the financial statements and notes included in the Company’s financial statements for the period from inception to October 31, 2006.

The results of operations for the quarter ended March 31, 2007, are not necessarily indicative of the results expected for the full year.

Fiscal Reporting Period

The Company has a fiscal year ending on December 31. On January 31, 2007 the year end was changed from October 31 to December 31.

Accounting Estimates

Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates.

Cash

The Company maintains its accounts primarily at one financial institution. At various times, the Company’s cash balances may exceed amounts insured by the Federal Deposit Insurance Corporation. The cash received from subscription agreements is being held in escrow and is restricted until all requirements of the escrow agreement are met.

For purposes of balance sheet presentation and reporting the statement of cash flows, the company considers all cash deposits with an original maturity of three months or less to be cash equivalents.

Investments

The Company has a certificate of deposit with a balance of $614,488, interest rate of 4.79% and an original maturity of six months.

HOMELAND ENERGY SOLUTIONS, LLC
(A Development Stage Company)

Notes to Financial Statements

Property and Plant

The Company incurred site selection and plan development costs on the proposed site that will be capitalized. Significant additions and betterments are capitalized, while expenditures for maintenance and repairs are charged to operations when incurred. Property and equipment are stated at cost. The Company uses the straight-line method of computing depreciation. Estimated useful lives range from 5-7 years.

The Company reviews its property and equipment for impairment whenever events indicate that the carrying amount of the assets may not be recoverable. An impairment loss is recorded when the sum of the future cash flows is less than the carrying amount of the asset. The amount of the loss will be determined by comparing the fair market values of the asset to the carrying amount of the asset.

Intangible Asset

Intangible assets consist of loan fees. The fees are amortized over the life of the loan of one year utilizing the straight-line method.

Cost of Raising Anticipated Capital

The Company defers the costs incurred to raise equity financing until that financing occurs. At such time that the issuance of new equity units occurs, these costs are deducted from the proceeds received.

Organizational and Start-up Costs

The Company expensed all organizational and start-up costs totaling $254,369 for the period from December 7, 2005 (date of inception) through March 31, 2007.

Revenue Recognition

Revenue from the production of ethanol and related products will be recorded upon transfer of title to customers, net of allowances for estimated returns on related products.

Income Taxes

The Company is organized as a limited liability company under state law. Accordingly, the Company’s earnings pass through to the members and are taxed at the member level. No income tax provision has been included in these financial statements. Differences between the financial statement basis of assets and the tax basis of assets are related to capitalization and amortization of organization and start-up costs for tax purposes, whereas these costs are expensed for financial statement purposes. As of March 31, 2007 the tax basis exceeded the book basis by $262,601.

Recently Issued Accounting Standards

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS No. 159 provides entities with an option to report certain financial assets and liabilities at fair value — with changes in fair value reported in earnings — and requires additional disclosures related to an entity’s election to use fair value reporting. It also requires entities to display the fair value of those assets and liabilities for which the entity has elected to use fair value on the face of the balance sheet. SFAS No. 159 is effective for the fiscal years beginning after November 15, 2007. We are in the process of evaluating the effect that the adoption of SFAS No. 159 will have on our results of operations and financial condition.

HOMELAND ENERGY SOLUTIONS, LLC
(A Development Stage Company)

Notes to Financial Statements

Grant Income

Revenue for grants awarded to the Company will be recognized upon meeting the requirements set forth in the grant documents.

The Company has received a grant from the Iowa Corn Promotion Board for the purpose of a financial feasibility study and legal fees for an equity drive. The grant will pay up to 50% of the total cost of these fees not to exceed $25,000. The Iowa Corn Promotion Board has assumed a maximum of $25,000 toward payment to the Grantee (Homeland Energy Solutions, LLC). As of March 31, 2007 the company has received the entire $25,000 from the Iowa Corn Promotion Board.

Development Stage Enterprise

The Company was formed on December 7, 2005 to have a perpetual life. The Company was capitalized by contributions from eight founders who each contributed $25,000 for 75 units of membership interests.

Income and losses are allocated to all members based upon their respective percentage of membership units held. See Note 5 for further discussion of members’ equity.

Debt

On March 23, 2007, the Company entered into a Promissory Note and Business Loan Agreement (the “Bridge Loan”) with Home Federal Savings Bank establishing a credit facility for interim financing in the amount of $3,517,572. The Bridge Loan is secured by a mortgage on the land, as well as a deposit account with a balance of $614,488. The guarantee provided by the deposit account subsequently expired and certain directors of the Company have personally guaranteed the Promissory Note. The loan will be repaid in one payment of the principal amount plus any accrued interest due March 23, 2008 at an interest rate of 8.25%. Principal payments may be made at any time before the due date without any penalty. As of March 31, 2007 interest cost of $6,449 has been capitalized.

Members’ Equity

The Company has raised a total of $1,325,000 in membership units. By a motion of the board on May 10, 2006 the total seed stock issued was capped at $1,325,000. This total consists of the initial $200,000 (600 units at $333.33 per unit) issued on January 11, 2006 to the founding members. It also consists of $1,125,000 (2,250 units at $500 per unit) which was raised from other seed stock investors on May 10, 2006.

The Company prepared and filed, on Form SB-2, a Registration Statement with the Securities and Exchange Commission (SEC). The offering was for up to 110,000 membership units and was available for sale at $1,000 per unit. As of November 30, 2006 the Registration Statement had been declared effective. The equity drive began December 9, 2006 and as of March 31, 2007, 80,965 units have been subscribed for and the money collected is being held in escrow. The subscription agreement called for a 10% down payment and a promissory note signed for the remainder.

The Company entered into an escrow agreement with Home Federal Savings Bank. The agreement and escrow terminate December 1, 2007 unless terminated prior to that date. The agreement can be terminated prior to that date based on all of the following events occurring: the minimum escrow deposit of $55,000,000 is reached, the escrow agent has received written confirmation from the Company that the Company has obtained a written debt financing commitment, the Company has affirmatively elected in writing to terminate the agreement and the Escrow Agent has provided to each state securities department in which the Company has registered its securities for sale, as communicated to the Escrow Agent by the Company, an affidavit stating that the foregoing requirements have been satisfied.

HOMELAND ENERGY SOLUTIONS, LLC
(A Development Stage Company)

Notes to Financial Statements

All membership units have equal voting rights.

Each member who holds five thousand or more units, all of which were purchased by such member from the Company during its initial public offering of equity securities filed with the Securities and Exchange Commission, shall be deemed an “Appointing Member” and shall be entitled to appoint one Director for each block of five thousand units; provided, however, that no “Appointing Member” shall be entitled to appoint more than two Directors regardless of the total number of units owned and purchased in the initial public offering.

Related Party Transactions

The Company has engaged their Vice President of Project Development as an independent contractor to provide project development and consulting services through construction and initial start-up of the project. The Company expects the aggregate fee for those services to approximate $40,000.

Commitments and Contingencies

The Company anticipates borrowing approximately $143,100,000 in senior debt financing with specific terms to be negotiated. The Company also anticipates funding the project with member equity of approximately $95,385,000.

The company has signed a letter of intent with Fagen, Inc. for construction of the project. The letter of intent stipulates the contractor will be engaged to construct a plant, with costs not to exceed $109,706,788 (the Contract Price). The company will be responsible for certain site improvement, infrastructure, utilities, permitting and maintenance and power equipment costs. The price estimate of $109,706,788 is firm until December 31, 2008.

Under the letter of intent, the contract price of $109,706,788 may be further increased if the construction cost index (“CCI”) published by Engineering News-Record Magazine reports a CCI greater than 7540.38 in the month in which a notice to proceed with plant construction is issued to Fagen. The amount of the contract price increase will be equal to the increase in the CCI based upon the September 2005 CCI of 7540.38.

The Letter of Intent terminates on December 31, 2007.

The Company has entered into an engineering services agreement for Phase I and Phase II with Fagen Engineering, LLC. Phase I consists of the design package for the grading and drainage of the plant site. Phase II consists of the design package for the site work and utilities for the plant.

As of March 31, 2007 four land options have been exercised and one option has been extended until April 1, 2008. An additional payment of $13,125 was required for the option extension. The Company does not intend on allowing the remaining options to expire.

The Company has entered into an agreement with Air Resource Specialists, Inc. to provide consulting services to obtain State of Iowa air quality and storm water permits prior to the commencement of construction activities. The work authorization on a time and materials basis for the air quality permit application is $29,894. The work authorization on a time and materials basis for the construction storm water permit application is $6,598. As of March 31, 2007, the Company has incurred $5,518 of expenses with Air Resource Specialists, Inc.

The Company has entered into an agreement with PlanScape Partners to provide consulting services in negotiating local incentives, assisting with property rezoning, and preparation of State and Federal program applications. The fees for these services are not to exceed $25,500. As of March 31, 2007, the Company has incurred $22,723 of expenses with PlanScape Partners.

HOMELAND ENERGY SOLUTIONS, LLC
(A Development Stage Company)

Notes to Financial Statements

The Company has entered into an agreement with Burns & McDonnell to provide project development assistance regarding the use of coal gasification as an alternative energy source for the plant once we have reached substantial operations. Project assistance will consist of design and FEL II level cost estimates for the balance of plant items outside the gasifier, refinement of coal transportation and supply options, and development of plant performance guarantees. In exchange for their services, the Company has agreed to pay Burns & McDonnell $461,750.

The Company has entered into an agreement with Terracon Consultants Inc. to complete subsurface exploration and geotechnical engineering services. The majority of the services consist of taking soil borings and testing the samples. Terracon’s estimated fees for these services are $66,700 to $72,000. As of March 31, 2007, the Company has incurred $43,001 of expenses with Terracon Consultants Inc.

The Company has entered into an agreement with Transystems to prepare plans, details and specifications for rail plans. Transystems fees for these services are $91,000. As of March 31, 2007, the Company has incurred $51,527 of expenses with Transystems.

Subsequent Events

An additional 7,930 units have been subscribed for in April & May of 2007 and the money collected is being held in escrow. As of May 9, 2007 all of the subscription funds were collected and held in escrow.

The Company purchased 190.5 acres for $2,045,969 and renewed an option for another year in April of 2007. The option extension required a payment of $5,000.

Item 2. Management’s Discussion and Analysis and Plan of Operations.

Forward Looking Statements

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

	•		Investors’ ability to pay the outstanding balances on promissory notes after the closing of the offering;

	•		Our ability to obtain the debt financing necessary to construct and operate our plant;

	•		Our ability to enter into binding agreements with Fagen, Inc. and ICM, Inc. to build our plant;

	•		Our ability to enter into a binding agreement with a Design-Build Firm to build our coal gasification energy center;

	•		Changes in our business strategy, capital improvements or development plans;

	•		Construction delays and technical difficulties in constructing the plant;

	•		Increases in the price of corn as the corn market becomes increasingly competitive;

	•		Our inelastic demand for corn, as it is the only available feedstock for our plant;

	•		Changes in the availability and price of coal and natural gas to power our plant;

	•		Changes in the environmental regulations that apply to our plant site and operations;

	•		Ability to secure all necessary licenses and permits;

	•		Changes in federal and/or state laws (including the elimination of any federal and/or state ethanol tax incentives);

	•		Changes and advances in ethanol production technology; and

	•		Competition in the ethanol industry and from other alternative fuel additives.

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

Overview

Homeland Energy Solutions, LLC is a development-stage Iowa limited liability company. It was formed on December 7, 2005 for the purpose of raising capital to develop, construct, own and operate a 100-million gallon corn-based ethanol plant which is expected to be located near New Hampton, Iowa. References to “we,” “us,” “our” and the “Company” refer to Homeland Energy Solutions, LLC.

Based upon engineering estimates from Fagen, Inc., our anticipated design-builder for our plant, we expect the ethanol plant to process approximately 37 million bushels of corn per year to produce approximately 100 gallons of fuel grade ethanol and approximately 333,000 tons of distillers grains. Based on engineering estimates from Fagen, Inc. we may use as much as 1,870,000 Million British Thermal Units (“MMBtu”) of energy per month to power our production process. We expect to complete construction of our plant in winter of 2008.

We expect the project will cost approximately $238,485,000 to complete. Our initial estimated project cost was $159,000,000 and was based on using natural gas as our energy source to power the plant. However, we disclosed in our prospectus dated November 30, 2006, that we might utilize a coal gasification system as an alternative power source to natural gas, and that we would incur significant additional engineering and design costs which would increase our estimated project cost from $159,000,000 to approximately $224,000,000. Our management has since determined that is in our best interests to install a coal gasification energy system to power the plant. However, our initial estimated total project cost to build a 100 MGY ethanol plant with a coal gasification energy system has increased from $224,000,000 to approximately $238,485,000. The main difference in cost between a natural gas powered plant and a coal gasification plant is the additional engineering and design costs to build the coal gasification energy center. We estimate that the cost to construct this energy center will be approximately $64,500,000.

We plan to finance the development and construction of the ethanol plant with a combination of equity and debt to supplement the proceeds from our previous private placements. Through our previous private placements, we raised aggregate proceeds of $1,325,000 to fund our development, organizational and offering expenses. We then filed a registration Statement for an initial public offering of our units with the Securities and Exchange Commission on Form SB-2 (SEC Registration No. 333-135967), as amended, which became effective on November 30, 2006. We subsequently filed Supplement Number 1 to the final prospectus on March 8, 2007 (hereinafter collectively referred to as “the Prospectus”) with certain updates to our budget and engineering plan. We also registered the units for sale in the following states: Florida, Illinois, Iowa, Kansas, Missouri, South Dakota and Wisconsin. Under our Prospectus, we plan to raise a minimum of $55,000,000 and a maximum of $110,000,000 in the offering and secure the balance needed to construct the plant through debt financing and any federal, state or local grants we may receive.

As of the date of this report, we have received subscriptions in for approximately 88,895 units, for an aggregate amount of $88,895,000. However, we have not yet closed the offering or released funds from escrow. We will require a significant amount of debt financing to complete our project. We are considering a debt financing proposal from a potential senior lender; however, no agreement has been executed yet. If we do not secure the necessary debt financing, we will not be able to construct our proposed ethanol plant and may have to abandon our business.

We are still in the development phase, and until the proposed ethanol plant is operational, we will generate no revenue. We anticipate that accumulated losses will continue to increase until the ethanol plant is operational. We currently estimate that completion of the construction of the plant will take 14-16 months after construction by Fagen, Inc. commences. Our anticipated completion date is scheduled for winter 2008.

Plan of Operations for the Next 12 Months

We expect to spend at least the next 12 months (as measured from the date of this report) focused on completion of project capitalization, site acquisition and development, and plant construction. We expect the funds raised in our previous private placements to supply us with enough cash to cover our costs, including staffing, office costs, audit, legal, compliance and staff training, until we close the offering and procure debt financing. Assuming the successful completion of our registered offering and execution of debt financing agreements, we expect to have sufficient cash on hand to cover all costs associated with construction of the project, including, but not limited to, site acquisition and development, utilities, construction and equipment acquisition. We also plan to negotiate and execute final contracts concerning our supply of coal, natural gas and other power sources and marketing agreements for our ethanol and distillers grains.

Project Capitalization

Our primary focus in the upcoming fiscal quarter will be on project capitalization and the start of significant construction at our plant site. We have sold the minimum number of units, however we must secure a written debt financing commitment from a senior lender before we may release the offering proceeds from our escrow account. We are considering a debt financing proposal from a potential senior lender; however, no agreement has been executed yet. We expect to expect to continue to raise additional funds through our registered offering.

Seed Capital Offering

Registered Offering

As of the date of this report, we have received subscriptions for approximately 88,895 units, for an aggregate amount of $88,895,000. However, we have not yet closed the offering or released funds from escrow. Our subscription procedures required subscribers to send 10% of the amount due at the time they signed the subscription agreement. At that time, investors were also required to provide a promissory note for the remainder. We are currently collecting funds pursuant to the promissory notes. We may not ultimately be able to collect all funds owed to us by investors under the subscription agreements. We will not release funds from escrow until we have cash deposits in our escrow account in excess of the minimum offering amount of $55,000,000, and have obtained a written debt financing commitment for the debt financing we need. We have begun preliminary discussions with potential lenders, but have no commitments or agreements in place.

A debt financing commitment only obligates the lender to lend us the debt financing that we need if we satisfy all the conditions of the commitment. These conditions may include, among others, the total cost of the project being within a specified amount, the receipt of engineering and construction contracts acceptable to the lender, evidence of the issuance of all permits, acceptable insurance coverage and title commitment, the contribution of a specified amount of equity and attorney opinions. We may not satisfy the loan commitment conditions before closing this offering, or at all. If this occurs we may:

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commence construction of the plant using all or a part of the equity funds raised while we seek another debt financing source if the board of directors in their discretion determines that we could likely find another debt financing source;

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hold the equity funds raised indefinitely in an interest-bearing account while we seek another debt financing source; or

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return the equity funds, if any, to investors with accrued interest, after deducting the currently indeterminate expenses of operating our business or partially constructing the plant before we return the funds.

While the foregoing alternatives may be available, we do not expect to begin substantial plant construction activity before satisfying the loan commitment conditions or closing the loan transaction because, pursuant to our Letter of Intent with Fagen, Inc., we cannot give our Notice to Proceed construction until we have obtained Financial Closing (closing of our loan(s)) of our necessary debt financing. It is also likely that any lending institution will prohibit substantial plant construction activity until satisfaction of loan commitment conditions or loan closing. Thus, it is more probable that we will have to obtain Financial Closing of our necessary debt financing before we may begin substantial plant construction. However, in the unlikely event that the loan commitment and Fagen, Inc. permit us to spend equity proceeds prior to closing the loan and obtaining loan proceeds, we may decide to spend equity proceeds on project development expenses, such as securing critical operating contracts or owner’s construction costs such as site development expenses.

Bridge Loan

On March 23, 2007, we entered into a Promissory Note and Business Loan Agreement (the “Bridge Loan”) with Home Federal Savings Bank establishing a credit facility for interim financing in the amount of $3,517,572. We used the loan funds to purchase the majority of the land for our plant site. We paid an approximate purchase price of $1,150,000 to purchase 152 acres, and we subsequently purchased approximately 180 acres on April 25, 2007 for a purchase price of approximately $2,041,000. At that time, we also paid $5,000 for an option to purchase an additional small parcel of land adjacent to our plant site. The Bridge Loan is secured by a mortgage and assignment of rents for the land, as well as our deposit account with a balance of $614,000. The guarantee provided by the deposit account subsequently expired and certain directors of the Company have personally guaranteed the Promissory Note. In addition, on April 23, 2007, we entered into a Change of Terms Agreement with Home Federal Savings Bank on April 23, 2007, which revised the terms of our repayment obligations regarding the payment of interest. Previously, we were obligated to begin making monthly interest payments on April 23, 2007, at an interest rate of 8.25%, with a final payment of the principal amount plus any accrued interest due on March 23, 2008. Under the Change in Terms Agreement, we agreed to pay the loan in one principal payment of $3,517,572 plus interest at a rate of 8.25% on March 23, 2008. We expect to pay the balance when we close on our senior debt financing and release equity proceeds from escrow; however, there is no assurance or guarantee that we will be able to successfully close our project financing.

Tax Abatement under the High Quality Jobs Program

We are seeking 20-year 100% tax abatement under the High Quality Jobs program from the State of Iowa. Under this program we would not be exempt from any state income tax, but it would exempt us from paying any state property tax for the period provided that we meet the eligibility requirements under the program. There are several eligibility requirements, and an applicant must meet four requirements to qualify for the program. We intend to apply based on meeting the following four criteria:

	(1)		offer a pension or profit-sharing plan for all employees;

	(2)		produce value-added goods or be in one of 11 targeted industries;

	(3)		provide medical and dental insurance and pay 80% of the premiums; and

	(4)		have active productivity and worker safety improvement programs.

In order to qualify for this tax abatement, we must pay our employees 160% of average county wage. If we meet those requirements, we may be eligible for the following benefits:

	(1)		a local property tax exemption of up to 100% of the value added to the property for a period not to exceed 20 years;

	(2)		a refund of state sales, service or use taxes paid to contractors or subcontractors during construction; and

	(3)		an investment tax credit equal to a percentage of the qualifying investment, amortized over 5 years.

The requirements mentioned above have not yet been met and there is potential that we will not meet one or more of those requirements. If we fail to meet these criteria, we will be ineligible for the tax abatement under the High Quality Jobs program. Finally, we are seeking up to $100,000 from the USDA Value Added Producer Grant program for Planning Activities. There is no guarantee that we will receive any funds under this program. A failure to obtain any of these grants or abatements will require us to obtain additional equity or debt financing to complete the project.

Site Development and Construction Activities

We have begun initial soil and water testing at the plant site located in Chickasaw County, such as soil boring, a soil elevations survey and grade packages. In addition, we have researched the water quality and amount of water available to us with tests from New Hampton, Iowa and Lawler, Iowa and test wells drilled on site. Initial testing indicates that the water quality is good, which may reduce our water pre-treatment costs in the future. We anticipate that we will begin dirt grading at our site in July 2007, with significant plant construction beginning in August 2007. We currently estimate that completion of the construction of the plant will take 14-16 months after construction by Fagen, Inc. commences. Our anticipated completion date is scheduled for winter 2008.

We have also begun investigating and planning for an interconnection between our ethanol plant and an interstate high-pressure natural gas pipeline owned by Alliance Pipeline, L.P. Although we intend to construct a coal gasification energy center to power our plant, we still intend to connect to a natural gas pipeline to give us the flexibility to operate on natural gas. This will also aid us to reduce down-time in our operations.

We plan to have facilities to receive grain by truck and rail and to load ethanol and distillers grains onto trucks and rail cars. We expect that the Iowa, Chicago & Eastern (“IC&E”) Railroad will provide rail service to the proposed site. However, we will still need to establish rail access directly to the plant from the main rail line that can provide 75 to 90-unit car trains. We have engaged TranSystems Corporation to provide us with a Conceptual Rail Service Plan Drawing. We also anticipate that we will retain TranSystems Corporation for a Continuous Services Agreement for our rail infrastructure design and construction. We anticipate that the cost of this rail infrastructure will be approximately $6,500,000.

Letter of Intent with Fagen, Inc.

We have executed a non-binding letter of intent with Fagen, Inc., which has agreed to enter into good faith negotiations with us to prepare definitive agreements for design and construction services. We expect to pay Fagen, Inc. approximately $109,706,788 in exchange for the design and construction of our plant. We expect to be responsible for certain site improvements, infrastructure, utilities, permitting and maintenance and power equipment costs. The base price estimate of $109,706,788 is firm until December 31, 2008. The services of Fagen, Inc. are currently in high demand because of its extensive experience as a design-builder for ethanol production facilities. Our management believes that the contract price of the ethanol plant is reasonable in light of Fagen, Inc.’s expertise in the design and construction of ethanol production facilities and the level of current demand for its services.

Under our letter of intent with Fagen, Inc., the contract price of $109,706,788 may be further increased if the construction cost index (“CCI”) published by Engineering News-Record Magazine reports a CCI greater than 7540.38 in the month in which we issue to Fagen, Inc., a notice to proceed with plant construction. The amount of the contract price increase will be equal to the increase in the CCI based upon the September 2005 CCI of 7540.38. The CCI is reported on a monthly basis and since September 2005 has shown a steady increase. Thus, we have allowed for a $8,500,000 contingency in our total estimated costs of the project.

This contingency may not be sufficient to offset any upward adjustment in our construction cost. We anticipate that under the design-build agreement, our expenses will increase for any change orders we may approve. In addition, the price assumes the use of non-union labor. If Fagen, Inc. is required to employ union labor, excluding union labor for the grain system and energy center, the contract price will be increased to include any increased costs associated with the use of union labor.

We expect to execute a definitive design-build agreement with Fagen, Inc., which will set forth in detail the design and construction services provided by Fagen, Inc. in exchange for a lump sum price equal to the $109,706,788 set forth in our letter of intent. The letter of intent will terminate on December 31, 2007 unless a specific site or sites and design of our ethanol facility have been determined and mutually agreed upon, and at least 10% of the necessary equity has been raised. The letter may be extended upon mutual agreement but can be terminated at either party’s option if a design-build agreement is not executed prior to December 31, 2008. The letter of intent automatically terminates upon execution and delivery of the design-build agreement.

Phase I and II Engineering Services Agreement with Fagen, Inc.

We have entered into a Phase I and II Engineering Services Agreement with Fagen Engineering, LLC for the performance of certain engineering and design services. We have agreed to pay Fagen Engineering, LLC a lump sum fee of $92,500 in exchange for the following services:

	•		Property Layout Drawings;

	•		Grading, Drainage and Erosion Control Plan Drawings;

	•		Culvert Cross Sections and Details;

	•		Roadway Alignment;

	•		Final Interior Plant Grading;

	•		Utility Layouts for Fire Loop, Potable Water, Well Water, Sanitary Sewer, Utility Water Blowdown, and Natural Gas;

	•		Geometric Layout;

	•		Site Utility Piping Tables Drawing;

	•		Tank Farm layout and Details Drawings;

	•		Sections and Details Drawing (if required); and

	•		Miscellaneous Details Drawing (if required).

The lump sum fee of $92,500 under this agreement will reduce the lump sum fee we owe to Fagen, Inc. under our anticipated design-build agreement.

Design Process Engineer: ICM, Inc.

ICM, Inc. is a full-service engineering, manufacturing and merchandising firm based in Colwich, Kansas. We expect ICM, Inc. to be the principal subcontractor for the plant. ICM, Inc. is expected to provide the process engineering operations for Fagen, Inc. ICM, Inc. has been involved in the research, design and construction of ethanol plants for many years. The principals of ICM, Inc. each have over 20 years of experience in the ethanol industry and have been involved in the design, fabrication and operations of many ethanol plants. ICM employs more than 250 engineers, professional and industry experts, craftsmen, welders and painters and full-time field employees that oversee the process. ICM, Inc. has been involved in 60 ethanol plant projects. At least 20 of the projects involved a partnership between ICM, Inc. and Fagen, Inc.

Coal Gasification Energy Center

Our management has determined that it is in our best interests to install a coal gasification energy system to power the plant. The construction of a coal gasification energy system will allow us to power the plant using natural gas or coal gasification. We estimate that the total project cost to build a 100 MGY ethanol plant with a coal gasification energy system is approximately $238,485,000.

The main difference in cost between a natural gas powered plant and a coal gasification plant is the additional engineering and design costs to build the coal gasification energy center. However, we will still have the flexibility to power our plant with natural gas, which will reduce the amount of down-time for our plant in the event of a shortage of either coal or natural gas.

We estimate that the cost to construct this energy center will be approximately $64,500,000. Coal gasification systems are a relatively untested technology for powering ethanol plants. However, according to the US Department of Energy, many experts predict that coal gasification will be the focus of clean coal technology plants in the future. A coal gasification system does not burn coal directly. Rather, it breaks down coal into its basic chemical constituents by being exposed to hot steam and oxygen at high temperatures and high pressure. This process starts a chemical reaction that produces a hot gas, which is predominantly carbon monoxide and nitrogen. This gas rises through the gasifier where more reactions take place to produce hydrogen and carbon dioxide, which are used to power the plant.

Coal gasification systems are designed to be more efficient than a typical coal combustion plant, as there is less wasted heat with a coal gasification system. Our management anticipates that our financial results will improve by utilizing coal gasification because of the potential savings in natural gas costs. Current natural gas prices are approximately $7.00 per MMBtu and our estimated gas cost from the gasifier is approximately $2.50 per MMBtu. We estimate that our plant will use approximately 10,000 MMBtu’s per day and should operate at least 353 days per year. This translates to an anticipated approximate savings per year of $15,885,000 by using a coal gasification energy center. However, we have not entered into any contracts for the procurement of coal and the cost of coal may increase in the future, which would increase our operating costs.

Project Development Agreement with Burns & McDonnell

We entered into a Project Development Assistance Agreement with Burns & McDonnell, (“B&Mc”), on January 8, 2007. Pursuant to the agreement, B&Mc will provide support for the development of the ethanol and co-product facility near New Hampton, Iowa using a coal gasification facility as the source of energy. B&Mc will utilize professionals from Hill & Associates and Econo-Power International Corporation in supporting the completion of this effort.

Under the agreement, B&Mc arranged a trip to China for members of our board to visit facilities currently operating using coal-gasification systems. The estimated total cost of the design services is $461,750, excluding the cost of travel to China to research currently operating coal-burning gasification facilities. The cost for the trip to China was approximately $7,200 per person. Five of our board members toured China on February 2^nd-10^th, 2007. The members toured coal gasifiers that have been in production for two years up to fifty years. The coal gasifiers were running a glass plant, anhydrous ammonia facility and many other small industries. The use of coal gasification as an energy source for an ethanol plant is a new concept and has not been thoroughly tested at other facilities. Thus, due to the lack of experience in the combination of technologies, we may encounter delays in production as the gasification system and the ethanol plant are integrated.

Permitting and Regulatory Activities

We will be subject to extensive air, water and other environmental regulation and we will need to obtain a number of environmental permits to construct and operate the plant. In addition, it is likely that our senior debt financing will be contingent on our ability to obtain the various required environmental permits.

We have entered into an agreement with Air Resource Specialists, Inc., in which they would provide consulting services to obtain the necessary State of Iowa air quality and stormwater permits prior to commencement of construction activities. The cost of Air Resource Specialists, Inc.’s services will be based on a time and material basis. Additional costs may be imposed if Air Resource Specialists, Inc. is required to address significant public comment and/or assist in lengthy agency negotiations regarding specific permit terms and conditions.

We do not anticipate a problem receiving these required environmental permits. However, if for any reason any of these permits are not granted, construction costs for the plant may increase, or the plant may not be constructed at all. In addition, the Iowa Department of Natural Resources (“IDNR”) could impose conditions or other restrictions in the permits that are detrimental to us or which increase costs to us above those assumed in this project. The IDNR and the Federal Environmental Protection Agency (“EPA”) could also change their interpretation of applicable permit requirements or the testing protocols and methods necessary to obtain a permit either before, during or after the permitting process. The IDNR may also require us to conduct an environmental assessment prior to considering granting any of those permits.

Even if we receive all required permits from the IDNR, we may also be subject to regulations on emissions from the United States Environmental Protection Agency, “EPA”. Currently the EPA’s statutes and rules do not require us to obtain separate EPA approval in connection with construction and operation of the proposed plant. Additionally, environmental laws and regulations, both at the federal and state level, are subject to change and changes can be made retroactively. Consequently, even if we have the proper permits at the present time, we may be required to invest or spend considerable resources to comply with future environmental regulations or new or modified interpretations of those regulations, to the detriment of our financial performance.

Environmental Permits to be in Place Prior to the Start of Significant Construction

Construction, Operation and Title V Air Permits

There will be a number of emission sources at our plant that are expected to require permitting. These sources include the boiler, ethanol process equipment, storage tanks, scrubbers, and bag houses. The types of regulated pollutants that are expected to be emitted from our plant include Particulates, Carbon Monoxide, Oxides of Nitrogen, “NOx”, SO(2), and Volatile Organic Compounds. These activities and emissions mean that we expect to obtain air pollution construction and operation new source permits from the IDNR for each source of emission, regardless of the fuel source (natural gas or coal gasification). If the limitations contained in these permits are exceeded, we could be subjected to expensive fines, penalties, injunctive relief, and civil or criminal law enforcement actions.

We have applied with the IDNR for a Title V permit, as we expect that our emissions will be at a level high enough to require this permit. Before the IDNR will issue us our Title V air permit, it must go through a period of public notice and comment. We estimate that the cost to obtain our Title V permit will be approximately $50,000. Additionally, costs required during construction to comply with the permit will be approximately $500,000. Costs to maintain compliance with the Title V permit will likely be approximately $50,000 per year. These costs have been figured in to our business plan and budget. There is also a risk that the Department of Natural Resources might reject our Title V air permit application and request additional information, further delaying start-up and increasing expenses.

Even if we obtain an air pollution construction permit prior to construction, the air quality standards or the interpretation of those standards may change, thus requiring additional control equipment or more stringent permitting requirements. There is also a risk that the area in which the plant is situated may be determined to be a non-attainment area for a particular pollutant, which would subject us to additional more stringent permitting requirements. If the IDNR determines that the area in which the plant will be situated is a non-attainment area, then the IDNR may require additional investigation into the permit applications to make sure that the plant will not significantly impact emissions for the particular pollutant. In this event we may be required to file for and obtain a Prevention of Significant Deterioration (“PSD”) permit, which would likely include strict emissions limitations and to install Best Available Control Technologies (“BACT”) for any future modifications or expansions of the plant. This would significantly increase the operating costs and capital costs associated with any future expansion or modification of the plant.

We may begin preliminary dirt moving and site excavation, at our own risk, before we have obtained the permits. However, we may not begin concrete work until we have received the permits. If granted, the permits will be valid until the plant is modified or there is a process change that changes air emission estimates, at which time an appropriate modification will be applied for. Although we currently do not anticipate any significant problems, there can be no assurance that the IDNR will grant us these permits.

Construction Site Storm Water Discharge Permit

Prior to the commencement of construction of the plant, we must file a notice of intent and application for a Construction Site Storm Water Discharge Permit. If the IDNR does not object to the notice of intent, we could begin construction and allow storm water discharge fourteen days after the filing. As part of the application for the Construction Site Storm Water Discharge Permit, we will need to prepare a construction site erosion control plan. We would also be subject to certain reporting and monitoring requirements. We anticipate, but there can be no assurances, that we will be able to obtain these permits.

Environmental Permits and Plans to be in Place Prior to the Start of Operations

•

Waste Water Discharge Permit

•

New Source Performance Standards

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Storm Water Discharge Permit and Storm Water Pollution Prevention Plan (SWPPP Permits)

•

Spill Prevention, Control and Countermeasures Plan

•

High Capacity Well Permit

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Alcohol Fuel Producer’s Permit

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Risk Management Plan

Nuisance

Even if we receive all EPA and Iowa environmental permits for construction and operation of the plant, we may be subject to the regulations on emissions by the EPA. Ethanol production has been known to produce an odor to which surrounding residents could object, and may also increase dust in the area due to our operations and the transportation of grain to the plant and ethanol and distillers dried grains from the plant. Such activities could subject us to nuisance, trespass or similar claims by employees or property owners or residents in the vicinity of the plant. To help minimize the risk of nuisance claims based on odors related to the production of ethanol and its byproducts, we intend to install a thermal oxidizer in the plant. See “BUSINESS — Thermal Oxidizer.” Nonetheless, any such claims, or increased costs to address complaints, may reduce our cash flows and have a negative impact on our financial performance. In addition, we anticipate installing a dust collection system to limit the emission of dust.

We are not currently involved in any litigation involving nuisance claims.

Additional Environmental Issues for Coal Gasification

We have determined to utilize a coal gasification energy system as our energy source. The use of coal as an energy source for an ethanol plant is a new concept and has not been thoroughly tested at other facilities. Although burning coal as a fuel source can result in higher NOx emissions, carbon monoxide (CO) and sulfur dioxide (SO(2)) emissions, coal gasification can be a cleaner process as engineering methods are used to reduce those emissions. If we decide to use coal gasification as a fuel source once we have started operations, the IDNR may require additional environmental assessments prior to considering the granting of the permits for the coal gasification system.

Our operation of the coal gasification system may generate significant levels of fly ash. Thus, the IDNR may require us to obtain a laboratory characterization of the fly ash before allowing the fly ash to be disposed of in a landfill. In addition, disposal at a landfill may require that we obtain a special waste authorization from the IDNR. We do not anticipate that the IDNR will prevent us from obtaining a special waste authorization for disposal in a landfill. In the alternative, we may be able to locate a business that can use fly ash in its operation, such as a cement plant. We must locate a landfill that will accept the fly ash or a business to purchase or receive the fly ash before commencing operations.

Finally, the use of coal as an energy source will create an added risk that coal fines or dust will be discharged during the loading and storage process. Such activities could subject us to nuisance, trespass or similar claims by employees or property owners or residents in the vicinity of the plant. Excessive moisture in on-ground coal storage piles can also generate acidic runoff. We anticipate that covering the on-ground storage piles would significantly reduce the risk of nuisance suits based on either coal fines and dust or acidic runoff.

Trends and Uncertainties Impacting the Ethanol Industry and our Future Operations

If we are able to build the plant and begin operations, we will be subject to industry-wide factors that affect our operating and financial performance. These factors include, but are not limited to, the available supply and cost of corn from which our ethanol and distillers grains will be processed; the cost of natural gas, which we will use in the production process; dependence on our ethanol marketer and distillers grain marketer to market and distribute our products; the intensely competitive nature of the ethanol industry; possible legislation at the federal, state and/or local level; changes in federal ethanol tax incentives; and, the cost of complying with extensive environmental laws that regulate our industry.

We expect our revenues will consist primarily of sales of ethanol and distillers grains. Ethanol prices have recently been much higher than their 10 year average. Increased demand, however, due to the increase in the supply of ethanol from the number of new ethanol plants scheduled to begin production and the expansion of current plants, we do not expect current ethanol prices to be sustainable in the long term unless the demand for ethanol also continues to increase. The total production of ethanol is at an all time high. According to the Renewable Fuels Association, as of April 25, 2007, there were 116 operational ethanol plants nationwide that have the capacity to produce approximately 5.91 billion gallons annually. In addition, there are 81 ethanol plants and 8 expansions under construction, which when operational are expected to produce approximately another 6.6 billion gallons of ethanol per year. A greater supply of ethanol on the market from other plants could reduce the price we are able to charge for our ethanol. This would have a negative impact on our future revenues once we become operational.

The increased production of ethanol has placed upward pressure on the price and supply of corn, resulting in higher than normal corn prices. The spread between petroleum prices and corn prices has narrowed, which has reduced ethanol plant profit margins from the levels reached during 2006. However, the rise in corn prices has motivated farmers to plant additional acres of corn in 2007, which has helped to offset the upward pressure on the price of corn in the short-term. According to a March 30, 2007 report released by the United States Department of Agriculture, corn growers intend to plant 90.5 million of acres of corn in 2007, which is up 15% from 2006.

We also expect to benefit from federal and ethanol supports and tax incentives. Changes to these supports or incentives could significantly impact demand for ethanol. The most recent ethanol supports are contained in the Energy Policy Act of 2005. Most notably, the Act creates a 7.5 billion gallon Renewable Fuels Standard (RFS). The RFS requires refiners to use 4 billion gallons of renewable fuels in 2006, 4.7 billion gallons in 2007, and increasing to 7.5 billion gallons by 2012. According to the Renewable Fuels Association, the RFS is expected to lead to about $6 billion in new investment in ethanol plants across the country. An increase in the number of new plants will bring an increase in the supply of ethanol. Thus, while the RFS may cause ethanol prices to increase in the short term due to additional demand, future supply could outweigh the demand for ethanol in the future. This would have a negative impact on our earnings. Since the current national ethanol production capacity exceeds the 2007 RFS requirement, it is management’s belief that other market forces are primarily responsible for current ethanol prices. Accordingly, it is possible that the RFS requirement may not significantly impact ethanol prices in the short term and future supply could outweigh the demand for ethanol. This could have an adverse effect on our future earnings.

The Energy Policy Act of 2005 also created a new credit that permits taxpayers to claim a 30% credit (up to $30,000) for the cost of installing clean-fuel vehicle refueling equipment, such as an E85 fuel pump, to be used in a trade or business of the taxpayer or installed at the principal residence of the taxpayer. Under the provision, clean fuels are any fuel, at least 85% of the volume of which consists of ethanol, natural gas, compressed natural gas, liquefied natural gas, liquefied petroleum gas, or hydrogen and any mixture of diesel fuel and biodiesel containing at least 20% biodiesel. The provision is effective for equipment placed in service after December 31, 2005, and before January 1, 2010. While it is unclear how this credit will affect the demand for ethanol in the short term, we expect it will help raise consumer awareness of alternative sources of fuel and could positively impact future demand for ethanol.

On January 4, 2007, the BioFuels Security Act legislation, known as Senate bill 23, sponsored by Tom Harkin and Richard Lugar, among others, was reintroduced during the 110^th Congress. The legislation would accelerate the current renewable fuels standard by requiring 10 billion gallons of renewable fuels to be used by 2010, 30 billion gallons by 2020 and 60 billion gallons by 2030. Other provisions would require additional E85 pumps at branded gasoline stations, increased use of alternative fuels in the federal fleet and an increase in the percentage of flex fuel vehicles produced. The Senate bill has been referred to the Senate Commerce Committee and the corresponding bill in the House of Representatives (H.R. 559) has been referred to the committees on Energy and Commerce, Oversight and Government Reform and the Judiciary Committee. A similar piece of legislation passed the Senate Committee on Energy and Natural Resources on May 2, 2007. This legislation would increase the RFS to 36 billion gallons of renewable fuels to be used by 2022. Beginning in 2016, the legislation would also require that a growing percentage of the RFS requirement be met with cellulosic ethanol, resulting in at least 21 billion gallons of cellulosic ethanol usage by 2022, and also would place a limit on the amount of corn-based ethanol that can be counted towards the RFS requirement to no more than 15 billion gallons per year. This proposed legislation has not been signed into law, and there is no certainty that it, or any portion of it will be passed. In addition, there is no certainty that this legislation, if passed, would provide any benefit to us or to the industry as a whole.

Ethanol production is also expanding internationally. Ethanol produced or processed in certain countries in Central America and the Caribbean region is eligible for tariff reduction or elimination upon importation to the United States under a program known as the Caribbean Basin Initiative. Large ethanol producers, such as Cargill, have expressed interest in building dehydration plants in participating Caribbean Basin countries, such as El Salvador, which would convert ethanol into fuel-grade ethanol for shipment to the United States. Ethanol imported from Caribbean Basin countries may be a less expensive alternative to domestically produced ethanol and may affect our ability to sell our ethanol profitably. Reduction or elimination of tariffs on imported ethanol into our country could have a significant effect on our business.

Technology Developments

A new technology has recently been introduced, to remove corn oil from concentrated thin stillage (a by-product of “dry milling” ethanol processing facilities) which would be used as an animal feed supplement or possibly as an input for biodiesel production. Although the recovery of oil from the thin stillage may be economically feasible, it fails to produce the advantages of removing the oil prior to the fermentation process. The FWS Group of Companies, headquartered in Canada with offices in the United States, is currently working on a starch separation technology that would economically separate a corn kernel into its main components. The process removes the germ, pericarp and tip of the kernel leaving only the endosperm of the corn kernel for the production of ethanol. This technology has the capability to reduce drying costs and the loading of volatile organic compounds. The separated germ would also be available through this process for other uses such as high oil feeds or biodiesel production. Each of these new technologies is currently in its early stages of development. There is no guarantee that either technology will be successful or that we will be able to implement the technology in our ethanol plant.

Trends and Uncertainties impacting the Corn, Coal and Natural Gas Markets and our Future Cost of Goods Sold.

We expect our future cost of goods sold will consist primarily of costs relating to the corn, coal and natural gas supplies necessary to produce ethanol and distillers grains for sale.

As of April 10, 2007, the United States Department of Agriculture estimated the 2006 corn crop at 10.5 billion bushels, which is the third largest production estimate on record. Despite the large 2006 corn crop, corn prices have increased sharply since late 2006 and we expect corn prices to remain at historical high price levels well into 2007. While the rise in corn prices has motivated farmers to plant additional acres of corn in 2007, which has helped to offset the upward pressure on the price of corn, those corn acres have not yet been planted and actual corn production is contingent upon many factors over which we have little control. Although we do not expect to begin operations until fall 2008, we expect these same factors will continue to cause volatility in the price of corn, which may significantly impact our cost of goods sold.

The price at which we will purchase corn will depend on prevailing market prices. A shortage may develop, particularly if there are other ethanol plants competing for these feedstocks, an extended drought, flooding, or other production problems. Historical grain pricing information indicates that the price of grain has fluctuated significantly in the past and may fluctuate significantly in the future. Because the market price of ethanol is not related to grain prices, ethanol producers are generally not able to compensate for increases in the cost of grain feedstock through adjustments in prices charged for their ethanol. We, therefore, anticipate that our plant’s profitability will be negatively impacted during periods of high grain prices.

We will rely heavily on coal as the primary input for our coal gasification energy center to power our plant. We must enter into agreements for the procurement of our coal, and as of the date of this report, we have not yet done so. Current natural gas prices are approximately $7.00 per MMBtu and current coal costs using the gasification are approximately $2.50 per MMBtu. We estimate that our plant will use approximately 10,000 MMBtu’s per day and should operate at least 353 days per year. This would translate to an anticipated approximate savings per year of $15,885,000, less transportation costs, by using a coal gasification energy center. However, we have not entered into any contracts for the procurement of coal and there is no guarantee that the cost of coal will not increase in the future, which would increase our operating costs. We will also incur additional costs to transport the necessary coal to our plant.

Although we intend to primarily utilize our coal gasification energy center to power our plant, we will still have the flexibility to power our plant using natural gas. Recently, the price of natural gas has risen along with other energy sources. Natural gas prices are considerably higher than the 10-year average. We anticipate continued volatility in the natural gas market. Any ongoing increases in the price of natural gas will increase our cost of production and may negatively impact our future profit margins.

Operating Expenses

When the ethanol plant nears completion, we expect to incur various operating expenses, such as supplies, utilities and salaries for administration and production personnel. Along with operating expenses, we anticipate that we will have significant expenses relating to financing and interest. We have allocated funds in our budget for these expenses, but cannot assure that the funds allocated will be sufficient to cover these expenses. We may need additional funding to cover these costs if sufficient funds are not available or if costs are higher than expected.

Liquidity and Capital Resources

Our prospectus dated November 30, 2006 states that our total estimated project cost was $159,000,000 based on using natural gas as our energy source to power the plant. However, our prospectus dated November 30, 2006, also states that we may decide to use coal gasification as an alternative power source to natural gas, and that we would incur significant additional engineering and design costs which would increase our estimated project cost from $159,000,000 to approximately $224,000,000 should we determine to use coal gasification. Our management has since determined that is in our best interests to install a coal gasification energy system to power the plant. However, our initial estimated total project cost to build a 100 MGY ethanol plant with a coal gasification energy system has increased from $224,000,000 to approximately $238,485,000. The additional increase of approximately $14,985,000 in our total project cost is due to several factors including increased site development costs of approximately $3,000,000, increased rail construction costs of approximately $6,500,000 and construction costs of approximately $4,000,000 for pipeline construction. In addition, the cost of materials is another significant contributor to the estimated cost increase.

The main difference in cost between a natural gas powered plant and a coal gasification plant is the additional engineering and design costs to build the coal gasification energy center. We estimate that the cost to construct this energy center will be approximately $64,500,000. The additional increase of approximately $14,985,000 in our total project cost is due to several factors including increased site development costs of approximately $3,000,000, increased rail construction costs of approximately $6,500,000 and construction costs of approximately $4,000,000 for pipeline construction. In addition, the cost of materials is another significant contributor to the estimated cost increase. Our letter of intent with Fagen, Inc., our design-build firm, includes an escalator provision based on the Construction Cost Index (“CCI”) which is a construction materials index published by Engineering News-Record Magazine. Based on our letter of intent with Fagen, Inc. and the change in the CCI, we have increased our allowance for the increase in the CCI by approximately $3,000,000. However, these increases have been offset by a decrease of $2,515,000 in our estimated cost for fire protection.

ESTIMATED SOURCES OF FUNDS

The following tables set forth various updated estimates of our sources of funds, depending upon the amount of units sold to investors and based upon various levels of equity that our lenders may require. The information set forth below represents estimates only and actual sources of funds could vary significantly due to a number of factors, including those described in our prospectus dated November 30, 2006, in the section entitled “RISK FACTORS” and elsewhere in the prospectus.


	Maximum
	110,000		Percent of
Sources of Funds⁽¹⁾	Units Sold		Total
Unit Proceeds	$	110,000,000		46.12	%
Seed Capital Proceeds	$	1,325,000		0.56	%
Senior Debt Financing	$	127,160,000		53.32	%
Total Sources of Funds	$	238,485,000		100.00	%


	If 94,069		Percent of
Sources of Funds^{(1) (2)}	Units Sold		Total
Unit Proceeds	$	94,069,000		39.44	%
Seed Capital Proceeds	$	1,325,000		0.56	%
Senior Debt Financing	$	143,091,000		60.00	%
Total Sources of Funds	$	238,485,000		100.00	%


	Minimum 55,000		Percent of
Sources of Funds⁽¹⁾	Units Sold		Total
Unit Proceeds	$	55,000,000		23.06	%
Seed Capital Proceeds	$	1,325,000		0.56	%
Senior Debt Financing	$	182,160,000		76.38	%
Total Sources of Funds	$	238,485,000		100.00	%


(1)		We may receive federal and state grants. Additionally, we may receive bond financing. If we receive grants or bond financing, we expect to reduce the amount of equity proceeds or senior debt financing necessary for our capitalization by the same or similar amount.

(2)		We have used 94,069 units as a mid-point because based on our directors’ past experience with similar projects, preliminary discussions with lenders and our independent research regarding capitalization requirements for similar ethanol plants, financing our project with 60% in senior debt financing and the balance in equity financing is a feasible capitalization ratio.

ESTIMATED USE OF PROCEEDS

We intend to use the net proceeds of the offering to construct and operate an ethanol plant with a 100 million gallon per year nameplate manufacturing capacity. We must supplement the proceeds of this offering with debt financing to meet our stated goals. We estimate that the total capital expenditures for the construction of the plant will be approximately $238,485,000. The total project cost is a preliminary estimate primarily based upon the experience of our design-build firm, Fagen, Inc., with ethanol plants similar to the plant we intend to construct and operate and management’s independent research. We expect the total project cost will change from time to time as the project progresses.

The following table describes our revised proposed use of proceeds as set forth in Prospectus Supplement No. 1 dated March 6, 2007. The actual use of funds is based upon contingencies, such as the estimated cost of plant construction, the suitability and cost of the proposed site, the regulatory permits required and the cost of debt financing and inventory costs, which are driven by the market. Therefore, the following figures are intended to be estimates only, and the actual use of funds may vary significantly from the descriptions given below depending on contingencies such as those described above. In addition, we have decided to use coal gasification as an alternative to natural gas as our power source for the plant. This will require significant additional costs for technical and design of the coal gasification energy system. Also, please see the section in our prospectus dated November 30, 2006 entitled “RISKS RELATED TO THE PRODUCTION OF ETHANOL” for a discussion of the risks associated with using coal gasification as an alternative to natural gas an energy source for the production of ethanol.


			Percent of
Use of Proceeds	Amount		Total
Plant construction	$	109,706,788		46.00	%
CCI contingency		8,500,000		3.56	%
Coal Gasification Energy Center		64,500,000		27.05	%
Land cost		3,500,000		1.47	%
Site development costs		7,670,000		3.22	%
Pipeline costs		4,000,000		1.68	%
Construction contingency		2,013,212		0.85	%
Construction performance bond		400,000		0.17	%
Construction insurance costs		150,000		0.06	%
Construction manager fees		125,000		0.05	%
Administrative building		760,000		0.32	%
Office equipment		85,000		0.03	%
Computers, Software, Network		175,000		0.07	%
Rail Infrastructure		12,300,000		5.16	%
Rolling stock		500,000		0.21	%
Fire Protection, water supply and water treatment		3,500,000		1.47	%
Capitalized interest		2,000,000		0.84	%


Start up costs:
Financing costs		2,750,000	1.15	%
Organization costs(1)		1,400,000	0.59	%
Pre production period costs		950,000	0.40	%
Working capital		7,000,000	2.94	%
Inventory — corn		2,000,000	0.84	%
Inventory — chemicals and ingredients		500,000	0.21	%
Inventory — Ethanol		2,500,000	1.04	%
Inventory — DDGS		500,000	0.21	%
Inventory — Coal		250,000	0.10	%
Spare parts — process equipment		750,000	0.31	%

Total	$	238,485,000	100.00	%


(1)		Includes estimated offering expenses of $480,000.

Plant Construction. The construction of the plant itself is by far the single largest expense at approximately $109,706,788. We have a letter of intent with Fagen, Inc., but we have not yet signed a binding definitive agreement for plant construction. See the section entitled “Design-Build Team; Letter of Intent with Fagen, Inc.” in our prospectus dated November 30, 2006.

CCI Contingency.Under our letter of intent with Fagen, Inc., the contract price of $109,706,788 may be further increased if the construction cost index (“CCI”) published by Engineering News-Record Magazine reports a CCI greater than 7540.38 in the month in which we issue to Fagen, Inc., a notice to proceed with plant construction. The amount of the contract price increase will be equal to the increase in the CCI based upon the September 2005 CCI of 7540.38. The CCI is reported on a monthly basis and since September 2005 has shown a steady increase. As of May 9, 2007, the CCI was reported at 7942.00, which is significantly higher than the September 2005 level stated in the letter of intent. Thus, we have allowed for a contingency of $8,500,000 in our total estimated costs of the project.

Coal Gasification Energy Center. We entered into a Project Development Assistance Agreement with Burns & McDonnell, (“B&Mc”), on January 8, 2007. Pursuant to the Agreement, B&Mc will provide support for the development of the ethanol and co-product facility near New Hampton, Iowa using a coal gasification facility as the source of energy. B&Mc will utilize professionals from Hill & Associates and Econo-Power International Corporation in supporting the completion of this effort. Under the Agreement, B&Mc will prepare cost estimates for and preliminary design of the coal gasification system, including but not limited to a Process Flow Diagram, Piping and Instrumentation Diagram, Electrical Single Line Diagrams, General Arrangement Drawings, Equipment Data Sheets, Equipment List, and Gasifier General Arrangements. We have not yet entered into a definitive agreement for the construction of this energy center, but we anticipate that the cost to construct the coal gasification energy center will be approximately $64,500,000.

Land Cost. We paid an approximate purchase price of $3,500,000 to purchase the land for our plant site.

Site Development. We estimate that site development costs will be approximately $7,670,000.

Construction Contingency. We project approximately $2,013,212 for unanticipated expenditures in connection with the construction of our plant. We plan to use excess funds for our general working capital.

Construction Performance Bond and Insurance Costs. We estimate the construction bond for the project to cost approximately $400,000. We have budgeted approximately $150,000 for builder’s risk insurance, general liability insurance, workers’ compensation and property insurance. We have not yet determined our actual costs and they may exceed this estimate.

Administration Building, Furnishings, Office and Computer Equipment.We anticipate spending approximately $760,000 to build our administration building on the plant site. We expect to spend an additional $85,000 on our furniture and other office equipment and $175,000 for our computers, software and network.

Rail Infrastructure and Rolling Stock. If the plant is constructed near New Hampton, Iowa, rail improvements, such as siding and switches may need to be installed at an estimated cost of $13,000,000. We anticipate the need to purchase rolling stock at an estimated cost of $500,000.

Fire Protection System, Water Supply and Water Treatment System.We anticipate spending $3,500,000 to equip the plant with adequate fire protection and water supply and to install a water treatment system at our plant.

Capitalized Interest. This consists of the interest we anticipate incurring during the development and construction period of our project.

Financing Costs. Financing costs consist of all costs associated with the procurement of our debt financing. These costs include bank origination and legal fees, loan processing fees, appraisal and title insurance charges, recording and deed registration tax, our legal and accounting fees associated with the financing and project coordinator fees, if any, associated with securing the financing. Our actual financing costs will vary depending on the amount we borrow.

Organizational Costs. We have budgeted $1,400,000 for developmental, organizational, legal, accounting and other costs associated with our organization and operation as an entity, including, but not limited to estimated offering expenses of $480,000.

Pre-Production Period Costs. We project $950,000 of pre-production period costs. These represent costs of beginning production after the plant construction is finished, but before we begin generating income. Pre-production period costs are comprised of $170,000 of start-up and administrative labor costs, $250,000 of production labor, $500,000 of utilities, and $30,000 of training costs. We do not anticipate compensating our directors during this period other than reimbursement for travel and a reasonable per diem fee for board meeting attendance.

Inventory.We project $13,500,000 of inventory costs for the period between the completion of construction and our beginning generation of income. The $11,000,000 inventory is comprised of $2,000,000 of initial inventories of corn and other ingredients, initial $2,500,000 of ethanol, $250,000 of coal, $500,000 of dried distillers grain work in process inventories, $750,000 of spare parts for our process equipment, $500,000 in chemicals and other ingredients and $7,000,000 of working capital.

Financial Results for the Fiscal Quarter Ended March 31, 2007 and the period from Inception through March 31, 2007

As of March 31, 2007, we had total assets of approximately $4,727,446 consisting primarily of cash, cash equivalents, land and land options. We have current liabilities of approximately $3,606,535 consisting primarily of notes payable. Total members’ equity as of March 31, 2007, was approximately $1,120,911. Since our inception, we have generated no revenue from operations. For the three months ended March 31, 2007, we had a net loss of approximately $41,186. For the period from inception to March 31, 2007, we had a net loss of approximately $184,982, primarily due to start-up business costs.

Employees

Prior to completion of the plant construction and commencement of operations, we intend to hire approximately 45 full-time employees. Approximately five of our employees will be involved primarily in management and administration and the remainder will be involved primarily in plant operations. Our officers are Stephen Eastman, President; James Boeding, Vice President; Bernard Retterath, Treasurer; Steve Dietz, Secretary and Pat Boyle, Vice President of Project Development. As of the date of this prospectus, we have hired no full time employees.

The following table represents some of the anticipated positions within the plant and the minimum number of individuals we expect will be full-time personnel:


	# Full-Time
Position	Personnel
Production Supervisors		4
Operating Workers		12
Compliance Officers		3
Maintenance/Repair Workers		3
Welders		3
Electrical/Electronic Engineering Technicians		2
Director of Lab Operations		1
Lab Assistant		2
Laborers		10
General Manager		1
Plant/Commodity Managers		2
Director of Finance and Accounting		1
Office Clerk		1

TOTAL		45

The positions, titles, job responsibilities and number allocated to each position may differ when we begin to employ individuals for each position.

Off Balance Sheet Arrangements

We currently have no off-balance sheet arrangements.

Item 3. Controls and Procedures

Management of Homeland Energy Solutions is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal controls over financial reporting. The Company’s internal control system over financial reporting is a process designed under the supervision of our Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements in accordance with U.S. generally accepted accounting principles.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions.

At the end of the period covered by this report, an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”) was carried out under the supervision and with the participation of our Principal Executive Officer, Stephen Eastman, and our Principal Financial Officer, Bernard Retterath. Based on their evaluation of our disclosure controls and procedures, they have concluded that during the period covered by this report, such disclosure controls and procedures were not effective to detect the inappropriate application of US GAAP rules. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our disclosure controls and that may be considered to be “material weaknesses.”

Homeland Energy Solutions has formed an audit committee and that committee will increase its review of our disclosure controls and procedures. The material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Except as set forth above, there have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2007 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None.

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

During the time period beginning on Homeland Energy Solutions’ formation on December 7, 2005 and ending on May 10, 2006, we issued and sold 2,250 membership units to our seed capital investors at a purchase price of $500 per unit and 600 units to our founders at a purchase price of $333.33 per unit, without registering the units with the Securities and Exchange Commission. All sales were made pursuant to Rule 506 of Regulation D. Each of these sales was deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) and Rule 506 of the Securities Act of 1933 as transactions by an issuer not involving a public offering. No underwriting discounts or commissions were paid in these transactions and we conducted no general solicitation in connection with the offer or sale of the securities.

The purchasers of the securities in each transaction made representations to us regarding their status as accredited investors as defined in Regulation D and their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof. Appropriate legends were affixed to unit certificates and instruments issued in such transactions. All purchasers were provided a private placement memorandum containing all material information concerning our company and the offering. All purchases were made with cash and the total amount of cash consideration for those securities was $1,325,000.

We filed a Registration Statement for an initial public offering of our units with the Securities and Exchange Commission on Form SB-2 (SEC Registration No. 333-135967), which was declared effective on November 30, 2006. We commenced our initial public offering of our units shortly thereafter. Certain of our officers and directors are offering and selling the units on a best efforts basis without the assistance of an underwriter. We do not pay these officers or directors any compensation for services related to the offer or sale of the units.

We registered a total of 110,000 units at $1,000 per unit for an aggregate maximum gross offering price of $110,000,000. As of the date of this report, we have received subscriptions for approximately 88,895 units, for an aggregate amount of $88,895,000. However, we have not yet closed the offering or released funds from escrow. Our units are subject to transfer restrictions under our operating agreement and by applicable tax and securities laws. Except for transfers in limited circumstances, such as a transfer made without consideration to or in trust for an investor’s descendants or spouse or involuntary transfers by operation of law, members will not be able to transfers their units prior to the time that our ethanol plant is substantially operational. Once we reach financial closing, transfers will still be subject to approval by our board and must be made in compliance with applicable tax and securities laws. As a result, investors will not be able to easily liquidate their investment in our company.

Pursuant to our prospectus, all subscription payments from the offering are deposited in an interest-bearing escrow account that we have established with Home Federal Savings Bank, as escrow agent, under a written escrow agreement. We will not release funds from the escrow account until the following conditions are satisfied: (1) cash proceeds from unit sales deposited in the escrow account equals or exceeds the minimum offering amount of $55,000,000, exclusive of interest; (2) we obtain a written debt financing commitment for debt financing for approximately $143,100,000, less any grants and/or tax increment financing we are awarded; (3) we elect, in writing, to terminate the escrow agreement; 4) an affidavit prepared by our escrow agent has been sent to the states in which we have registered units stating that the conditions set out in (1), (2) and (3) have been met; and (5) in each state in which consent is required, the state securities commissioners have consented to release of the funds on deposit. Upon satisfaction of these conditions, the escrow agreement will terminate, and the escrow agent will disburse the funds on deposit, including interest, to us to be used in accordance with the provisions set out in this prospectus. The escrow account may continue for up to one year after the effective date of this registration statement to allow us to collect the 90% balance due under the promissory notes.

Item 3. Defaults Upon Senior Securities

None.

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

None.

Item 5. Other Information

None.

Item 6. Exhibits

The following exhibits are included in or incorporated by reference in this report:


Exhibit No.		Description	Method of Filing

	10.14	Phase I and II Engineering Services Agreement dated December 5, 2006 between Homeland Energy Solutions and Fagen, Inc.	*+

	10.15	Business Loan Agreement dated March 23, 2007 between Homeland Energy Solutions and Home Federal Savings Bank	*

	10.16	Acknowledgement of Assignment of Deposit Account dated March 23, 2007 between Homeland Energy Solutions and Home Federal Savings Bank	*

	10.17	Assignment of Deposit Account dated March 23, 2007 between Homeland Energy Solutions and Home Federal Savings Bank	*

	10.18	Assignment of Rents dated March 23, 2007 between Homeland Energy Solutions and Home Federal Savings Bank	*

	10.19	Disbursement Request and Authorization dated March 23, 2007 between Homeland Energy Solutions and Home Federal Savings Bank	*

	10.20	Limited Liability Company Resolution to Borrow/Grant Collateral dated March 23, 2007 between Homeland Energy Solutions and Home Federal Savings Bank	*

	10.21	Mortgage dated March 23, 2007 between Homeland Energy Solutions and Home Federal Savings Bank	*

	10.22	Promissory Note dated March 23, 2007 between Homeland Energy Solutions and Home Federal Savings Bank	*

	10.23	Change in Terms Agreement dated April 23, 2007 between Homeland Energy Solutions and Home Federal Savings Bank	*

	31.1	Certificate pursuant to 17 CFR 240 15d-14(a)	*

	31.2	Certificate pursuant to 17 CFR 240 15d-14(a)	*

	32.1	Certificate pursuant to 18 U.S.C. Section 1350	*

	32.2	Certificate pursuant to 18 U.S.C. Section 1350	*


(*)		Filed herewith.

(+)		Material has been omitted pursuant to a request for confidential treatment and such materials have been filed separately with the Securities and Exchange Commission.

SIGNATURES

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


	HOMELAND ENERGY SOLUTIONS, LLC
Date: May 15, 2007	/s/ Stephen Eastman
	Stephen Eastman
	President (Principal Executive Officer)


Date: May 15, 2007	/s/ Bernard Retterath
	Bernard Retterath
	Treasurer (Principal Financial and Accounting Officer)

EXHIBIT INDEX


Exhibit No.		Description	Method of Filing

	10.14	Phase I and II Engineering Services Agreement dated December 5, 2006 between Homeland Energy Solutions and Fagen, Inc.	*+

	10.15	Business Loan Agreement dated March 23, 2007 between Homeland Energy Solutions and Home Federal Savings Bank	*

	10.16	Acknowledgement of Assignment of Deposit Account dated March 23, 2007 between Homeland Energy Solutions and Home Federal Savings Bank	*

	10.17	Assignment of Deposit Account dated March 23, 2007 between Homeland Energy Solutions and Home Federal Savings Bank	*

	10.18	Assignment of Rents dated March 23, 2007 between Homeland Energy Solutions and Home Federal Savings Bank	*

	10.19	Disbursement Request and Authorization dated March 23, 2007 between Homeland Energy Solutions and Home Federal Savings Bank	*

	10.20	Limited Liability Company Resolution to Borrow/Grant Collateral dated March 23, 2007 between Homeland Energy Solutions and Home Federal Savings Bank	*

	10.21	Mortgage dated March 23, 2007 between Homeland Energy Solutions and Home Federal Savings Bank	*

	10.22	Promissory Note dated March 23, 2007 between Homeland Energy Solutions and Home Federal Savings Bank	*

	10.23	Change in Terms Agreement dated April 23, 2007 between Homeland Energy Solutions and Home Federal Savings Bank	*

	31.1	Certificate pursuant to 17 CFR 240 15d-14(a)	*

	31.2	Certificate pursuant to 17 CFR 240 15d-14(a)	*

	32.1	Certificate pursuant to 18 U.S.C. Section 1350	*

	32.2	Certificate pursuant to 18 U.S.C. Section 1350	*


(*)		Filed herewith.

(+)		Material has been omitted pursuant to a request for confidential treatment and such materials have been filed separately with the Securities and Exchange Commission.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 18, 2007

HOMELAND ENERGY SOLUTIONS, LLC
(Exact name of registrant as specified in its charter)


Iowa	333-135967	20-3919356
(State or other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)


106 W. Main Street, Riceville, IA		50466
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code:(641) 985-4025

(Former name or former address if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 — Entry Into Material Definitive Agreements.

Lump Sum Design-Build Agreement between Homeland Energy Solutions, LLC and Fagen, Inc.

On July 18, 2007, we entered into a Lump Sum Design-Build Agreement with Fagen, Inc. for the design and construction of a one hundred (100) million gallon per year dry grind ethanol production facility (the “Design-Build Agreement”) on our plant site located near the City of New Hampton, Iowa. Pursuant to the Lump Sum Design-Build Agreement, the effective date is July 6, 2007. Under the Design-Build Agreement, we will pay Fagen, Inc. a total contract price of $109,706,788, subject to any mutually agreed-upon adjustments and previously paid amounts that may be treated as credits. Fagen, Inc, will design and build the plant using ICM, Inc., technology. As part of the total contract price, we will pay Fagen, Inc. a mobilization fee of $20,000,000 at the earlier of Financial Closing or the issuance of our Notice to Proceed. We currently expect the construction to be completed in winter 2008, however, there is no assurance or guarantee that construction will stay on schedule or that we will be able to commence operations at the plant by summer 2009.

First Amendment to Lump Sum Design-Build Agreement between Homeland Energy Solutions, LLC and Fagen, Inc.

On July 18, 2007, we also entered into a First Amendment to the Design-Build Agreement. Pursuant to the Amendment, Fagen, Inc. will accept Notice to Proceed on an earlier date than that set forth in the Design-Build Agreement. In exchange for beginning work on an earlier date, we have agreed to pay Fagen, Inc. an increased contract price of $120,000,000. So long as we give Fagen, Inc. a valid Notice to Proceed on or prior to November 30, 2007, there will be no adjustment of the Contract Price based on an increase in the Construction Cost Index (“CCI”) published by Engineering News-Record Magazine, as was set forth in the Design-Build Agreement.

In addition, Fagen will finance a portion of the contract price in the form of a progress payment credit in the amount of $1,800,000, plus any increase in the contract price resulting from a change in the CCI should Notice to Proceed not be given prior to November 30, 2007. The credit will be issued after all equity funds have been utilized. At that time, we will execute a Subordinated Secured Promissory Note in favor of Fagen, Inc., which will be subordinate to the construction and working capital loan proceeds obtained at Financial Closing. The increase in the contract price pursuant to the Amendment is within our construction and CCI contingencies in our budget. Thus, we do not anticipate an increase to our total estimated project cost of $238,485,000 unless we do not submit a valid Notice to Proceed prior to November 30, 2007, in which case there may be an increase due to any increase in the baseline CCI as set forth in the Amendment.

Item 7.01 Regulation FD Disclosure

We have issued a newsletter to our investors providing updates on the progress of our ethanol plant. The newsletter is attached hereto as Exhibit 99.1. Pursuant to the rules and regulations of the Securities and Exchange Commission, such exhibit and the information set forth therein and herein shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits

99.1 Investor Newsletter dated July 20, 2007

SIGNATURES

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

HOMELAND ENERGY SOLUTIONS, LLC

Date: July 20, 2007

/s/Stephen Eastman
Stephen Eastman
President
(Principal Executive Officer)

EXHIBIT INDEX


Exhibit
Number		Description
99.1		Investor Newsletter dated July 20, 2007

Exhibit 99.1

July 20, 2007

Homeland Energy Solutions, LLC
P.O. Box C
Riceville, IA 50466

The Board of Directors of Homeland Energy Solutions has been working behind the scenes. As many of you know, no dirt has been moved on the site at this time. This does not mean we have not been busy.

The land for the plant has been purchased and sowed with oats to control weeds on the site before starting the dirt work. Corn has been planted on land that will not be utilized for construction.

Homeland met with the department of Natural Resources on May 23^rd. Homeland has applied for a Title V air permit, which requires a 30 day public comment period. We anticipate that our comment period will approximately run from July 5^th to August 5^th. Homeland has decided to wait with the dirt excavation until the permit had been signed. Homeland may ask you as members to submit your positive comments to the DNR. We will notify you by e-mail or you may look for updates on the web page about up coming public meetings.

In other business, Homeland’s debt financing is on track, as we have entered into a preliminary proposal with Home Federal Savings Bank of Rochester, Minnesota to provide debt financing. Under this proposal, Home Federal is offering credit up to $140 million. We paid an underwriting fee of $50,000 to Home Federal upon signing this proposal. We anticipate that we will be able to enter into a definitive loan agreement with Home Federal for our necessary debt financing.

Homeland has a member equity figure at this time of approximately $98 million. Homeland can accept equity to $110 million. Homeland has budgeted approximately $238 million in which to build our plant. If you would like to purchase additional units, please contact the office and we’ll work out the details.

Homeland Energy Solutions has entered into a design build contract with Fagen Inc. This has been secured within our budgeted values.

EPIC/Burns and McDonald/Peabody (coal gasification contractors) have continued to engineer and provide services to provide our plant the lowest cost of energy for production.

Cornerstone has also negotiated a natural gas line TAP agreement with Alliance for Homeland. Dairyland/Hawkeye REC is working with the utilities board to provide a substation agreement.

Homeland has also been working towards some state and federal grant/loans. Homeland has received a grant for $100,000 from VAAPFAP. We have also applied for state income state tax credits, state sales tax credits and property tax relief.

Homeland continues to move forward each day. The board is taking the necessary steps to get this plant into production. If you have any concerns please feel free to talk to one of the board members or call our office. We would be pleased to answer your questions.

Thank you for your continued support and trust in Homeland Energy Solutions.

Respectively,
Your Board of Directors

Homeland Energy Solutions 424B3Prospectus supplement

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