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                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND
         EXCHANGE ACT OF 1934. For the fiscal year ended December 31, 2002.

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934.  For the transition period from ____________to____________

                        Commission file number: 333-60580


                                 HUSKER AG, LLC
             (Exact name of registrant as specified in its charter)

          Nebraska                           2689                47-0836953
          --------                           ----                ----------
(State or other jurisdiction of (Primary Standard Industrial    (IRS Employer
 Incorporation or organization)  Classification Code Number) Identification No.)

                                54048 Highway 20
                                   P.O. Box 10
                            Plainview, Nebraska 68769
                                 (402) 582-4446
   --------------------------------------------------------------------------
   (Address and telephone number of registrant's principal executive offices)


         Securities registered under Section 12(g) of the Exchange Act:

                       Membership Units ($1,000 per unit)
                       ----------------------------------
                                (Title of class)



     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 90 days.
Yes [X] No [ ]

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B and no disclosure will be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]

     State issuer's revenues for its most recent fiscal year:    $0

     As of March 26, 2003, the aggregate market value of the membership units
held by non-affiliates of the Company was $7,632,000, based on the aggregate
price paid for the membership units. Membership units held by each executive
officer and director of the Company have been excluded in that such persons may
be deemed to be affiliates of the Company. This determination of affiliate
status is not necessarily a conclusive determination for other purposes. As of
March 26, 2003, 15,318 shares of the Company's membership units were
outstanding.


     DOCUMENTS INCORPORATED BY REFERENCE.    None.

     Transitional Small Business Disclosure Format (check one): Yes [ ]  No [X]

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                                 HUSKER AG, LLC
                       INDEX TO 10-KSB FOR THE FISCAL YEAR
                             ENDED DECEMBER 31, 2002


PART I

         ITEM 1.     DESCRIPTION OF BUSINESS...................................3

         ITEM 2.     DESCRIPTION OF PROPERTY...................................7

         ITEM 3.     LEGAL PROCEEDINGS.........................................7

         ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.......7


PART II

         ITEM 5.     MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                     MEMBERSHIP MATTERS........................................7

         ITEM 6.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                     CONDITION AND PLAN OF OPERATIONS..........................8

         ITEM 7.     FINANCIAL STATEMENTS.....................................16

         ITEM 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                     AND FINANCIAL DISCLOSURE.................................31


PART III

         ITEM 9.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
                     PERSONS; SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING
                     COMPLIANCE...............................................31

         ITEM 10.    EXECUTIVE COMPENSATION...................................33

         ITEM 11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                     MANAGEMENT...............................................34

         ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...........36

         ITEM 13.    EXHIBITS AND REPORTS ON FORM 8-K.........................37

         ITEM 14.    CONTROLS AND PROCEDURES..................................39

                     SIGNATURES...............................................40

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                                     PART I


ITEM 1.  DESCRIPTION OF BUSINESS

(a)  Business Development.

     Husker Ag, LLC, a Nebraska limited liability company f/k/a Husker Ag
Processing, LLC ("Husker Ag" or the "Company"), was organized on August 29, 2000
to construct and operate an ethanol plant to be located near Plainview,
Nebraska. The Company's corporate offices are currently located in the
administrative building at 54048 Highway 20, P.O. Box 10, Plainview, Nebraska
68769, phone number (402) 582-4446. Husker Ag is managed by a 13 member Board of
Directors.

(b)  Business of Issuer.

     Husker Ag was formed to construct and operate a 20 million gallon per year
ethanol plant to be located near Plainview, Nebraska. Preliminary planning for
the ethanol plant project began in spring 2000. Husker Ag's ethanol plant is
expected to convert, on an annual basis, 7.5 to 8 million bushels of corn into
approximately 20 million gallons of ethanol per year. The ethanol plant is also
expected to produce approximately 160,000 tons annually of animal feed known as
distiller grains, which may be sold as distillers dried grains with solubles,
distillers modified wet grains and distillers wet grains. These are the
principal co-products of the ethanol production process.

     The Husker Ag ethanol plant is located on approximately 47 acres of real
property 3 1/2 miles east of Plainview, Nebraska between the railroad and US
Highway 20 located in Pierce County, Nebraska. Husker Ag exercised the option
and purchased the property on March 9, 2001 for a purchase price of $50,525.
Husker Ag's Board of Directors chose the plant site based on access to rail
transportation, natural gas, and water, proximity and cost of raw material
supplies, proximity to product markets and amenity to construction.

     Design Build Contract and Change Order
     --------------------------------------

     On November 30, 2001, Husker Ag executed its Design-Build Contract with
Fagen, Inc., Granite Falls, Minnesota ("Fagen"). Under the Design-Build
Contract, Fagen has been the Company's design-builder and constructed a 20
million gallon per year ethanol plant for a contract price of $26.9 million,
subject to adjustments made in accordance with the general conditions of the
contract. The Company was responsible for construction of the administration
building at the ethanol plant site; office, maintenance and power equipment
required at the plant; and construction of an on-site rail spur. The Company
also entered into a limited license to use the technology and information in the
design and construction of the ethanol plant with ICM, Inc., a Kansas
corporation.

     Based on discussions with the Nebraska Department of Environmental Quality
and Fagen, Inc. regarding the evolving federal EPA standards governing ethanol
plant air emissions, in the 3rd quarter of 2002, the Company purchased a thermal
oxidizer with a heat recovery boiler in order to assist the Company in complying
with evolving federal EPA standards. A thermal oxidizer with a heat recovery
boiler typically costs approximately $1,400,000. However, the thermal oxidizer
and heat recovery boiler replace the original boiler and some additional
equipment that were part of the original plant design which totaled
approximately $650,000. Therefore, the net additional cost to the Company
totaled $715,480.

     In the contract change order to the Design Build Contract with Fagen, Inc.
dated August 7, 2002, the Company and Fagen, Inc. also agreed to a 47 calendar
day extension to the "substantial completion date," under the contract, which
relates to the possible payment of an early completion bonus or liquidated
damages, thereby moving the substantial completion date from the original date
of April 26, 2003 to June 12, 2003. As a result of the contract change order,
the period from April 26, 2003 to June 12, 2003 is a "neutral period" with
respect to the payment of an early completion bonus or liquidated damages. As a
result, Fagen, Inc. is entitled to an early completion bonus of $8,000 per day,
for every day that substantial completion has been attained in advance of April
26, 2003, and Husker Ag is entitled to liquidated damages of $8,000 per day, for
each day that substantial completion extends beyond June 12, 2003.

     The Company broke ground at the plant site on November 16, 2001. Husker Ag
then submitted a valid notice to proceed to Fagen on December 20, 2001. During
the 4th quarter of 2002, the Company continued the construction and development
of the ethanol plant. On November 15, 2002, electrical start-up of the ethanol
plant commenced. On March 4, 2003, the production process for the ethanol plant
commenced and the plant commenced grinding corn. After the production process
commences, there is a ramp-up production period until the plant begins producing
ethanol at 100% of its capacity. The Design Build Contract requires a seven (7)
day testing period to confirm that the plant was

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consistently producing at capacity. The Company is currently in discussions with
Fagen, Inc. regarding whether the plant successfully completed the seven-day
test and whether the plant has attained "substantial completion" as defined
under the Design Build Contract. Under the Design Build Contract, "substantial
completion" requires a joint inspection of the plant by the Company and Fagen,
and a certification by the Company to Fagen that the plant is substantially
complete.

     Description of Dry Mill Process
     -------------------------------

     Our ethanol plant produces ethanol by processing corn. The corn will be
received by semi-trailer truck, and will be weighed and then unloaded in a
receiving building. It will then be transported to a scalper to remove rocks and
debris before it is conveyed to storage bins. Thereafter, the corn will be
transported to a hammermill or grinder where it will be ground into flour and
conveyed into a tank for processing. We will add water, heat and enzymes to
break down the starch in the ground corn. The resulting slurry will be heat
sterilized and pumped to a tank where additional enzyme will be added to further
breakdown the starch. Next, the mash will be pumped into fermenters, where other
enzymes and yeast will be added, to begin a batch fermentation process. A
distillation process will divide the alcohol from the corn beer. The alcohol,
which exits the distillation process, will then be further dried using a
molecular sieve. The resulting 200 proof alcohol will then be pumped to farm
shift tanks and blended with five percent gasoline denaturant as it is pumped
into storage tanks.

     Stillage from the distillation process will then be pumped into one of
several centrifuges. Water from the centrifuges will be evaporated into a thick
syrup. The solids that exit the centrifuge are called wet cake and may be
conveyed to dryer for drying. Syrup may be added to the wet cake as it enters
the dryer, where moisture will be removed. This process produces Distiller Dried
Grains Solubles, which may be used as animal feed. The wet grain and syrup may
be combined and sold as animal feed without drying or with only partial drying.

     Ethanol
     -------

     Ethanol is ethyl alcohol, a fuel component made primarily from corn and
various other grains, and can be used as: (a) an octane enhancer in fuels; (b)
an oxygenated fuel additive that can reduce ozone and carbon monoxide vehicle
emissions; and (c) a non-petroleum-based gasoline extender. Ethanol has
important applications and is used primarily as a high quality octane enhancer
and an oxygenate capable of reducing air pollution and improving automobile
performance. Approximately 95% of all ethanol is used in its primary form for
blending with unleaded gasoline and other fuel products. As a fuel additive, the
demand for ethanol is derived from the overall demand for gasoline, as well as
the competition of ethanol versus competing oxygenate products and technologies.

         Husker Ag anticipates receiving benefits from economic incentives to
produce ethanol. Ethanol blenders can claim a 5.4 cents per gallon of blended
gasoline exemption from the federal gasoline excise tax. This federal ethanol
tax subsidy, which was set to expire in 2000, has been extended through December
31, 2007. The exemption will gradually drop to 5.1 cents in 2005. Husker Ag also
anticipates receiving the benefits of the federal small producer's credit which
is a 10(cent) per gallon of ethanol tax credit available for ethanol produced at
plants with 30 million gallons or less of annual capacity. Ethanol producers
that qualify can deduct from their federal income tax 10(cent) per gallon on the
first 15 million gallons produced annually. The small producer tax credit is
scheduled to sunset December 31, 2007. The pass-through nature of Husker Ag's
partnership taxation structure applies to any small producer tax credit
received. The credit, if any, received by Husker Ag, will be passed through to
its members; however, the amount of any such credit received by a member must
also be included in the gross income of the member, which could result in the
taxation of the amount of the credit distributed to the member.

         Husker Ag anticipates receiving economic benefits to produce ethanol at
the state level as well. The State of Nebraska established a production tax
credit of 18(cent) per gallon of ethanol produced during a 96 consecutive month
period by newly constructed ethanol facilities in production prior to June 30,
2004. The tax credit is only available to offset Nebraska motor fuels excise
taxes. The tax credit is transferable and therefore Husker Ag intends to
transfer credits received to a Nebraska gasoline retailer who then will
reimburse Husker Ag for the face value of the credit amount less a handling fee.
No producer can receive tax credits for more than 15,625,000 gallons of ethanol
produced in one year and no producer shall receive tax credits for more than 125
million gallons of ethanol produced over the consecutive 96 month period. The
minimum production level to qualify for credits is 100,000 gallons of ethanol
annually. Once operational and assuming Husker Ag is producing at least
15,625,000 gallons of ethanol in one year, this producer tax credit could result
in payments of up to $2,812,500 to Husker Ag annually; subject to the statutory
maximum limit. The production incentive is scheduled to expire June 30, 2012.

     Distiller Grains.
     ----------------

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     A principal co-product of the ethanol production process are distiller
grains, a high protein, high-energy animal feed supplement primarily marketed to
the dairy and beef industry. Dry mill ethanol processing may create three forms
of distiller grains: distillers wet grains, distillers modified wet grains, and
distillers dried grains. Distillers wet grain is processed corn mash that
contains approximately 70% moisture. It has a shelf life of approximately 3
summer days (5 winter days). Distillers modified wet grain is similar except
that it has been dried to approximately 50% moisture. It has a slightly longer
shelf life of approximately two to three weeks and is often sold to nearby
markets. Dried distillers grain is corn mash that has been dried to 10%
moisture. It has an almost indefinite shelf life and may be sold and shipped to
any market regardless of its vicinity to an ethanol plant.

Marketing and Distribution Methods
----------------------------------

     Ethanol. Husker Ag retained Eco-Energy Systems to sell and market its
ethanol through normal and established markets which management expects will
include local, regional and national markets. The Company believes that Eco
Energy Systems will market and sell most of its ethanol throughout the United
States and the ethanol will be primarily by rail. The target market area for the
ethanol produced at the plant is expected to include local, regional and
national markets. The local and regional markets include the State of Nebraska,
as well as markets in South Dakota, Kansas, Missouri, Indiana, Colorado,
Minnesota, Illinois, Wisconsin and Iowa.

     The plant was designed with rail facilities and connections to the
Northeast Nebraska Railway railroad system, which will facilitate transporting
the ethanol Husker Ag produces to its national target markets. The Company
expects to ship its ethanol by rail and by truck and will determine which
shipment method to utilize based on management's review and analysis of the
current market conditions and any applicable environmental regulatory
limitations. The national target rail markets for the facility will include the
Pacific Northwest, the Southern and Southwest markets, as well as potential new
markets on the East Coast and California due to anticipated MTBE phase outs.

     Distiller Grains. The dry milling process that produces ethanol also
produces distiller grains, which are primarily used as a high protein animal
feed. The price of distiller grains generally varies with grain prices, so that
increases in grain costs are partially offset by increases in distiller grain
prices. Husker Ag intends to pursue development of a local distillers wet grain
or modified distillers wet grain market. Husker Ag expects to sell its
distillers wet grain primarily to feedlots, cattle feeders and dairies within a
120-mile radius of the ethanol plant.

     On November 12, 2002, Husker Ag entered into a Marketing Agreement with
Jack G. Frahm ("Frahm") pursuant to which Frahm will sell and market Husker Ag's
distiller grains and corn syrup. Under the terms of the Marketing Agreement,
Husker Ag will pay Frahm a commission based on the total gross sales contracted
for by Frahm and collected by Husker Ag with the commission rate established at
1.25% of total collections during the month. The Marketing Agreement expires on
March 31, 2004; however, the Marketing Agreement automatically renews for one
year periods on the same terms and conditions unless either party notifies the
other party of its intent not to renew the agreement. Either party may terminate
the Marketing Agreement upon sixty days written notice to the other party. Frahm
is also Secretary of the Company and a member of its Board of Directors. The
Board of Directors therefore reviewed and approved the Marketing Agreement in
accordance with the Company's Affiliated Transactions Policy. As a result of the
affiliation between Frahm and Husker Ag, the Marketing Agreement requires that
all contracts written by Frahm under such agreement must state that they are
subject to final approval by the Husker Ag General Manager. During the term of
the Marketing Agreement, and for a period of two years thereafter, Frahm may not
provided similar services to any other person or firm without Husker Ag's prior
written approval.

     Competition
     -----------

     Once operational, Husker Ag will be in direct competition with numerous
other ethanol producers, many of whom have greater resources than it does. The
Company also expects that additional ethanol producers will enter the market if
the demand for ethanol continues to increase. Husker Ag's proposed ethanol plant
will compete with other ethanol producers on the basis of price and, to a lesser
extent, delivery service. Husker Ag believes it can compete favorably with other
ethanol producers due to its proximity to ample corn supplies at favorable
prices. Historically, prices for corn grown in Nebraska have been lower,
compared to prices for corn grown in other areas of the United States.

     During the last twenty years, ethanol production capacity in the United
States has grown from almost nothing to an estimated 2.3 billion gallons per
year. Plans to construct new plants or to expand existing plants have been
announced which would increase capacity by approximately 235 million gallons per
year and this increase in capacity may continue in the future. Husker Ag cannot
determine the effect of this type of an increase upon the demand or price of
ethanol, although such plants may compete with the Company in the sale of
ethanol and related products.

                                       5

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     The ethanol industry has grown to over 65 production facilities in the
United States. Industry authorities estimate that these facilities are capable
of producing approximately 2.3 billion gallons of ethanol per year. The largest
ethanol producers include Archer Daniels Midland, Cargill, Midwest Grain,
Williams Energy Service, New Energy Corporation and High Plains Corporation, all
of which are capable of producing more ethanol than the Company expects to
produce. In addition, there are several regional entities recently formed, or in
the process of formation, of a similar size and with similar resources to Husker
Ag's.

     Corn Supply and Corn Prices
     ---------------------------

     Husker Ag anticipates that its ethanol plant will need between
approximately 7.5 to 8 million bushels of corn per year or 21,000 bushels per
day as the feedstock for its dry milling process. The grain supply for the
ethanol plant will be obtained primarily from local markets. During the five
year period between 1996 to 2000, in the five county area surrounding the plant,
corn production averaged 94 million bushels annually.

     The price and availability of corn are subject to significant fluctuations
depending upon a number of factors which affect commodity prices in general,
including crop conditions, weather, governmental programs and foreign purchases.
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. Husker
Ag therefore anticipates that its plant's profitability will be negatively
impacted during periods of high grain prices.

     The Company enters into option and futures contracts, which are designated
as hedges of specific volumes of corn expected to be used in the manufacturing
process once the plant is completed. The Company uses derivative financial
instruments to manage the exposure to price risk related to corn purchases. The
Company does not typically enter into derivative instruments for any reason
other than cash flow hedging purposes. During the 3rd quarter of 2002, the
Company established certain hedging contracts and margin accounts with FCStone
Group, Inc. a commodities risk intelligence firm. As of December 31, 2002, the
Company had purchased 5,250,000 bushels of corn inventory through the purchase
and sale of call and put options for March 2003 to July 2004 through FCStone
Group, Inc. As of December 31, 2002, the Company had open long and short
positions in option contracts. The Company had recorded these positions at fair
value. As a result, the Company has recognized $280,000 and $972,000 of losses
for the three month and twelve month periods ending December 31, 2002.

     In the 4th quarter 2002, the Company also retained Husker Trading, Inc. to
originate and acquire corn for plant usage rather than hiring an on-site
commodities manager. As part of its responsibilities, Husker Trading, Inc. will
ensure the consistent scheduling of grain deliveries and to establish and fill
forward contracts through grain elevators and will coordinate grain deliveries
between the railroad, participating elevators and producers, as well as
negotiate price protection with hedging specialists.

     Government Regulation and Environmental Matters
     -----------------------------------------------

     The operations of Husker Ag are subject to various federal, state and local
laws and regulations with respect to environmental matters, including air and
water quality and underground fuel storage tanks. Husker Ag believes it is
currently in substantial compliance with environmental laws and regulations and
that it will maintain its substantial compliance once operational. Protection of
the environment requires Husker Ag to incur expenditures for equipment,
processes and permitting. If Husker Ag were found to have violated federal,
state or local environmental regulations, the Company could incur liability for
cleanup costs, damage claims from third parties and civil or criminal penalties
that could materially adversely affect its business.

     The Company filed an application with the Nebraska Department of
Environmental Quality (the "NDEQ") for its National Pollutant Discharge
Elimination System (NPEDS) waste water permit on August 2, 2002. The NDEQ issued
a letter to the Company on August 29, 2002 in which the NDEQ raised questions
regarding the discharge content and quantities set forth in the Company's
permit. The Company filed a response to the NDEQ letter on October 16, 2002 in
which the Company responded to the NDEQ's questions. The Company received its
waste water permit from the NDEQ and such permit was effective February 26,
2003.

     As of March 26, 2003, the NDEQ had not yet issued Husker Ag its Air Quality
Operating Permit. Because Husker Ag elected to purchase the thermal oxidizer,
the NDEQ determined that the Husker Ag Air Quality Operating Permit needed
modification to include the impact of the thermal oxidizer on the plant's
dispersion modeling. The Company's Air Quality Construction Permit expires on
July 15, 2003. The Company has twelve months once the plant becomes operational
to obtain an Air Quality Operating Permit from the NDEQ and once granted, the
Company expects the

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permit will be valid for five years.

     Management currently anticipates that the Air Quality Operating Permit
issued by the NDEQ will have two material differences from the Company's Air
Quality Construction Permit. First, the Air Quality Construction Permit was
submitted based on the assumption that the Company would use paved roads in the
plant; however, the plant is going to operate utilizing roads with a rock
aggregate. As a result, management anticipates that the Air Quality Operating
Permit issued will require that the Company limit corn unloading operations to
certain hours in order to comply with the environmental regulations limiting the
amount of dust in the air. Management also anticipates that the Company will
need to purchase a water truck in order to control the dust emissions from the
rock aggregate roads. Second, because the plant will not have a vapor recovery
system located at the ethanol truck load out system, management anticipates that
the NDEQ will issue the Air Quality Operating Permit with provisions restricting
the number of gallons of ethanol that the Company may load by truck per month
and per year.

     Employees
     ---------

     As of March 10, 2003, Husker Ag had hired approximately 30 employees needed
to operate the ethanol facility and operations. Husker Ag is not subject to any
collective bargaining agreements and has not experienced any work stoppages.
Husker Ag considers its relationship with its employees to be good.

ITEM 2.  DESCRIPTION OF PROPERTY

     The Company's corporate offices are currently located at the plant site in
the administrative building at 54048 Highway 20, P.O. Box 10, Plainview,
Nebraska 68769, phone number (402) 582-4446. The administrative building
consists of approximately 5,700 square feet. Husker Ag owns 47 acres of real
property located 3 1/2 miles east of Plainview, Nebraska between the railroad
and US Highway 20 located in Pierce County, Nebraska. Husker Ag's management
believes the properties and facilities of Husker Ag will be adequate to support
Husker Ag's proposed business operations.

ITEM 3.  LEGAL PROCEEDINGS

     Husker Ag has not been informed of any legal matters that would have a
material adverse effect on its financial condition results or operation or cash
flow.

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

         No matters were submitted to a vote of members during the quarterly
period ended December 31, 2002.


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     There is no established trading market for Husker Ag's membership units. To
maintain its partnership tax status, members of Husker Ag may not trade the
membership units on an established securities market or readily trade the
membership units on a secondary market (or the substantial equivalent thereof).
All transfers are subject to a determination that the transfer will not cause
Husker Ag to be deemed a publicly traded partnership.

     Husker Ag restricted the ability of members to transfer membership units in
its Operating Agreement. To help ensure that a secondary market does not
develop, Husker Ag's Operating Agreement prohibits transfers without the
approval of its Board of Directors. The Board of Directors will not approve
transfers unless they fall within "safe harbors" contained in the
publicly-traded partnership rules under the tax code, which include: (a)
transfers by gift, (b) transfer upon death of a member, (c) transfers between
family members, and (d) transfers that comply with the "qualifying matching
services" requirements. Any transfers of membership units in violation of the
publicly traded partnership rules or without the prior consent of the Board will
be invalid.

     Under the Internal Revenue Code and the related rules and regulations (the
"Tax Code"), a matching service is qualified only if: (1) it consists of a
computerized or printed system that lists customers' bid and/or ask prices in
order to match members who want to sell with persons who want to buy, (2)
matching occurs either by matching the list of interested buyers with the list
of interested sellers or through a bid and ask process that allows interested
buyers to bid on the listed interest, (3) the seller cannot enter into a binding
agreement to sell the interest until the 15th calendar day

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after his interest is listed (which date must be confirmable by maintenance of
contemporaneous records), (4) the closing of a sale effected through the
matching service does not occur prior to the 45th calendar day after the
interest is listed, (5) the matching service displays only quotes that do not
commit any person to buy or sell an interest at the quoted price (non firm price
quotes) or quotes that express an interest in acquiring an interest without an
accompanying price (nonbinding indications of interest) and does not display
quotes at which any person is committed to buy or sell a interest at the quoted
price (firm quotes), (6) the seller's information is removed within 120 days of
its listing and is not reentered into the system for at least 60 days after its
deletion, and (7) the sum of the percentage interests transferred during the
entity's tax year (excluding private transfers) cannot exceed 10% of the total
interests in partnership capital or profits.

     As of February 17, 2003, Husker Ag has retained the services of Variable
Investment Advisors, Inc., a broker-dealer registered with the SEC and the
National Association of Securities Dealers, Inc. ("NASD"), pursuant to a Trading
Services Agreement, to administer and operate an electronically accessible
alternative trading system which conforms to state and federal securities laws
and also complies with the qualified matching service rules set forth in the Tax
Code. VAI operates a website, http://www.agstocktrade.com that posts offers to
buy and sell membership units. Users of this method of buying and selling stock
do so using a username with the user's actual identity kept confidential.
Prospective sellers will post the quantity of membership units being offered for
sale and the minimum price per share they would accept. Prospective buyers,
either existing members or new buyers, will post a price per membership unit
they would be willing to pay for the membership units. Membership units must be
posted for a minimum of 15 days to be eligible for a sale. Once the buyer and
seller have reached agreement, and the contracts have been executed, the buyer
will remit all funds in full to an escrow agent. Under this system, there is a
1.5% sellers' fee charge, with a $175.00 minimum, which is deducted from the
sale proceeds. Trading on the alternative trading system will be conducted on a
trimester basis with all trades becoming effective on the first day of the
following trimester. The next trading trimester begins May 1, 2003.

     Husker Ag has never declared or paid any cash dividends on the membership
units. Husker Ag does not expect to generate revenues until the ethanol plant
construction is completed and the ethanol plant is operational. Once
operational, subject to loan covenants and restrictions, Husker Ag anticipates
distributing its net cash flow to its members in proportion to the membership
units held. By net cash flow, Husker Ag means its gross cash proceeds received
less any portion, as determined by its Board of Directors in their sole
discretion, used to pay or establish reserves for the Company's expenses, debt
payments, capital improvements, replacements and contingencies. If Husker Ag's
financial performance and loan covenants permit, the Board of Directors will try
to make cash distributions at times, and in amounts that will permit members to
make income tax payments, but Husker Ag may never be in a position to pay cash
distributions.

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN
          OF OPERATIONS

FORWARD-LOOKING STATEMENTS

     Husker Ag and its representatives may from time to time make written or
oral forward-looking statements, including statements made in this report, that
represent Husker Ag's expectations or beliefs concerning future events,
including statements regarding future sales, future profits and other results of
operations, the continuation of historical trends, the sufficiency of cash
balances and cash generated from operating and financing activities for Husker
Ag's future liquidity and capital resource needs, and the effects of any
regulatory changes. Such statements are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Husker Ag
cautions you that any forward-looking statements made by Husker Ag in this
report, in other reports filed by Husker Ag with the Securities and Exchange
Commission or in other announcements by Husker Ag are qualified by certain risks
and other important factors that could cause actual results to differ materially
from those in the forward-looking statements. Such risks and factors include,
but are not limited to, the risk factors set forth in the section below entitled
"RISK FACTORS".

LIQUIDITY AND CAPITAL RESOURCES

     As of December 31, 2002 the Company had current assets of $808,165,
including cash of $306,320 and the Company had total assets of $25,721,394. The
Company's cash generated interest or other income of $123,973 for the twelve
months ended December 31, 2002. As of December 31, 2002, the Company had current
liabilities totaling $12,421,299 consisting of accounts payable, accrued
expenses, short-term debt expected to be refinanced and short positions and
option contracts. As of December 31, 2002, the Company had an accumulated
deficit of $1,683,917 and member's equity was $12,847,245.

                                       8

<PAGE>

     On October 3, 2002, the Company made its first draw against its
construction loan and borrowed $2,169,386. From October 3, 2002 through December
31, 2002, the Company had borrowed $10,192,114 from Stearns Bank, N.A. under its
construction loan. The Company's source of liquidity until commencement of
operations will be borrowing under its construction loan.

     For the three months and twelve months ended December 31, 2002, the Company
had no revenue. The Company's net losses for the three months and twelve months
ended December 31, 2002 totaled $481,278 and $1,543,378 respectively. Cash used
for operating activities for the three months and twelve months ended December
31, 2002 totaled $372,555 and $1,079,313 respectively primarily to fund
salaries, office and administrative expenses, and consulting, legal, and
permitting fees as well as commodity option contracts.

     Cash used for investing activities for the three months and twelve months
ended December 31, 2002 totaled $11,926,117 and $22,489,954 respectively. Cash
used for investing activities for the twelve months ended December 31, 2002 was
spent on the construction and development of the ethanol plant and the plant
site ($21,914,069) and the purchase of property and equipment ($575,885). Cash
provided by financing activities for the twelve months ended December 31, 2002
totaled $10,392,421, which consists of advances under the construction loan and
the return to the Company of $240,000 deposit previously paid in connection with
a USDA loan guarantee fee offset partially by $39,694 of offering costs accrued
previously and paid during the twelve month period.

     The Company is still in the development phase, and until the proposed
ethanol plant is complete and operating, will generate no revenue. Management
anticipates the accumulated losses will continue to increase until the ethanol
plant is operating. As set forth below, funds to construct the ethanol plant
come from the proceeds of the Company's public offering and the construction
loan from Stearns Bank, N.A.

MANAGEMENT'S PLAN OF OPERATIONS

     The net proceeds to Husker Ag from its private offering and director option
exercise totaled $394,726. During Husker Ag's public offering, the Company
raised $14,402,000, with net proceeds to the Company, after offering expenses,
of $14,116,186. The total net proceeds to the Company during the fiscal year
ended December 31, 2001 from the private and public offerings equaled
$14,510,912.

     On December 19, 2001, the Company closed on its construction financing with
Stearns Bank, N.A., St. Cloud, Minnesota. Under the Construction Loan Agreement
with Stearns Bank, N.A. (the "Bank"), the Bank agrees to provide up to
$20,000,000 of debt financing for the purpose of constructing a 20 million
gallon per year ethanol plant. The construction loan is evidenced by a demand
promissory note from the Company to the Bank, with a variable interest rate
which follows the prime rate as published by the Wall Street Journal plus 1/4%
(5.0%, as of the time of the Company's initial borrowing in October 2002 and
4.5% as of March 17, 2003). The construction loan is for an 18-month period,
ending June 19, 2003. The Bank's construction loan is secured by a first
mortgage on the Company's real estate and plant, as well as a first security
interest on all accounts receivable, inventory, equipment, fixtures, all
personal property and general intangibles. The total financing costs incurred by
the Company in connection with the origination of its debt financing were
$445,086. On October 3, 2002, the Company made its first draw against its
construction loan and borrowed $2,169,386 and as of March 17, 2003, the Company
had borrowed approximately $15,600,0000 from Stearns Bank, N.A. under the
construction loan.


     Under the Construction Loan Agreement, the Company must use its equity
funds prior to incurring construction loan indebtedness. In addition, the
Construction Loan Agreement imposes a number of conditions which must be met by
the Company on an on-going basis prior to the Bank's disbursement of loan funds,
including providing the Bank with detailed budget and cash flow projections and
construction schedule, as well as annual audited financial statements and
monthly interim financial statements. The Bank has broad powers of discretion
with respect to its disbursement of construction loan funds, depending upon the
Company's compliance with the Construction Loan Agreement covenants and
conditions.

     Upon the successful completion of construction of the ethanol plant,
subject to required loan documentation, and no material adverse change in the
Company's financial condition, the Bank has agreed to convert the construction
loan into a permanent loan amortized over 10 years which will accrue interest as
follows: (i) 60% ($12,000,000) at prime rate as published by the Wall Street
Journal plus 1/4%, adjusted quarterly; and (ii) 40% ($8,000,000) at prime rate
as published by the Wall Street Journal plus 1/4%, adjusted quarterly, with a
floor of 6.5% and a ceiling of 9.95% for five years beginning July 6, 2001. At
the end of five years the floor and ceiling will adjust to the same spread, plus
or minus, prime rate as

                                       9

<PAGE>

published by the Wall Street Journal at that time. Management currently
anticipates the construction loan to convert to a permanent loan in the 2nd
quarter 2003.

     The permanent loan is subject to a 60% USDA loan guarantee ($12 million).
If the USDA declines the loan, the Bank would proceed with a conventional
permanent loan. Any prepayment of the permanent loan by the Company would be
subject to a 5% (of loan balance) prepayment premium in year one, 4% premium in
year two, 3% premium in year three, 2% premium in year four, and 1% premium in
year five.

Plan of Operations for the Next Twelve Months

     The Company is currently in a transition period where it is shifting from
the construction phase to the operational start-up of the plant. During the 1st
and 2nd quarter of 2003, the Company will continue to work with Fagen, Inc. to
complete construction of the plant and to achieve and maintain operation of the
plant at, or above, full capacity. The Company believes that it will begin
operating at full capacity during the 2nd quarter of 2003.

     Since the completion of the public offering on December 1, 2001, through
the fiscal year ended December 31, 2002, the Company has expended $498,372 in
connection with preparing the site to meet the site specifications required by
Fagen, Inc. and set forth in the Design Build Contract, including leveling and
grading the site and constructing a road from the plant to Highway 20. Through
March 10, 2003 the Company has paid $24,668,424 to Fagen, Inc. in connection
with the construction of the plant and the purchase and installation of
machinery and equipment, including payment of an initial mobilization fee of $1
million (less a 10% retainage), which is applied to the total contract price. O.
Wayne Mitchell sits on the Company's Board of Directors and is an officer and
employed by Fagen, Inc., which is the Company's design-build contractor. As of
March 17, 2003, the Company had borrowed approximately $15,600,000 under its
construction loan with Stearns Bank, N.A. During the fiscal year ended December
31, 2002, the Company expended $681,135 for payments to third parties other than
Fagen, Inc. for expenses related to the construction of the administrative
building and rail spur and the purchase of the on-site power distribution
transformers.

     Operating expenses consisting of general and administrative costs for the
three and twelve month period ended December 31, 2002 totaled $203,297 and
$695,176, respectively. The operating expenses for the three and twelve month
period ended December 31, 2002 included $70,183 and $320,545 respectively on
accounting, legal, lobbying and other professional fees, $4,348 and $16,304
respectively on utilities, rent and depreciation, $93,859 and $241,385
respectively on contract labor and compensation, $15,249 and $47,824
respectively on insurance, licenses and permits, and $19,478 and $69,118
respectively on office supplies, administrative costs and miscellaneous
expenses.

     The Company believes that it will complete construction of the ethanol
plant during the 1st or 2nd quarter of 2003 and management anticipates
commencement of plant operations in the 2nd quarter of 2003. Management
currently expects that it will have sufficient funds to complete construction of
the plant from the proceeds of the Company's equity offering and from its
construction loan with Stearns Bank, N.A. As of March 17, 2003, the Company had
approximately $4,400,000 available under its construction loan.

     The following is management's current estimate of costs and expenditures
through construction of the plant and commencement of operations. Such estimates
are subject to change for the reasons set forth under Forward-Looking Statements
above and the Risk Factors below.

          Capitalized interest                                       $   295,000
          Debt and equity financing costs                              1,040,000
          Rail siding construction                                       395,000
          Site Preparation                                               640,000
          Office equipment                                               126,000
          Construction of plant  total                                28,058,480
              -Fagen, Inc. construction contract -    $26,900,000
              -Administration building                    205,000
              -Electrical hook-up                         210,000
              -Thermal oxidizer                           715,480
          Rolling stock  (trucks, forklifts, etc.)                       195,000
          Fire system and miscellaneous construction costs               332,000
          Purchase of initial inventory                                1,295,000
          Establishment of hedging account                               360,000
          General and administrative expenses                          1,244,000
          Contingency Reserve                                            288,000

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<PAGE>

          Loan Reserves                                                  382,000
                                                                     ===========

          TOTAL                                                      $34,624,480

     Management currently expects to spend a portion of its remaining debt
financing available to the Company on final payments to Fagen Inc. for
construction of the plant currently estimated at $2,982,102 and any early
completion bonus Fagen, Inc. may earn in connection with "substantial
completion" of the plant prior to April 26, 2003. Under the terms of the
Design-Build Agreement and the contract change order dated August 7, 2002,
Fagen, Inc. is entitled to an early completion bonus of $8,000 per day, for
every day that substantial completion has been attained in advance of April 26,
2003, and Husker Ag is entitled to liquidated damages of $8,000 per day, for
each day that substantial completion extends beyond June 12, 2003. The Company
is currently in discussions with Fagen, Inc. regarding the "substantial
completion date" which requires a joint inspection of the plant by the Company
and Fagen and a certification by the Company that the plant is substantially
complete.

     Management expects to spend the remaining portion of the debt financing
available to Husker Ag on plant operation start-up costs in the 2nd quarter of
2003. These costs include the continued purchase of initial corn inventory, as
well as chemicals and incur other start-up expenses, prior to receiving revenue
from the sale of ethanol and distillers grains. In addition, the Company has
received a revolving line of credit from Stearns Bank, N.A. in the amount of
$1,000,000. The term of the revolving credit line is from March 11, 2003 through
March 11, 2004. Advances made to Husker Ag under the credit line will accrue
interest at a variable rate equal to 0.5% over the prime rate as published by
the Wall Street Journal with a minimum interest rate of 6.45%. As of March 17,
2003 the prime rate as published by the Wall Street Journal was 4.25%.

     Management intends to fund its operational costs and expenditures through
the calendar year 2003 through its existing construction loan from Stearns Bank
(which management believes will be converted to a permanent loan in the 2nd
quarter of 2003), the revolving credit line established with Stearns Bank, and
through revenue from operations. The Company is currently transitioning from a
construction phase to operational start-up of the plant and therefore,
management is currently preparing an operational budget that will replace its
existing construction budget once the plant is fully operational. Management
currently believes that the Company has adequate liquidity to fund its remaining
construction costs and its operational costs and expenditures through calendar
year 2003. Management intends to continually review and revise its operational
budget based on its evaluation of the Company's then current revenues, expenses
and cash flow, market risks and possible opportunities for increasing its
liquidity.

     Management currently expects to be paid for its ethanol within 72 hours of
shipment and upon delivery of its distillers grains. The principal costs
associated with the operation of the plant are employment costs, utilities,
purchase of corn inventory, purchase of enzymes, chemicals and other materials
necessary to operate the plant, interest on indebtedness and general and
administrative expenses. Once operational, increases and decreases in the price
of corn and/or the price of ethanol could have a material impact on the
liquidity and profitability of the Company. Increases in the price of corn will
increase costs to the Company and therefore, would reduce its liquidity and
profitability. Rising corn prices produce lower profit margins for the
production of ethanol and therefore, represent unfavorable market conditions.
Similarly, decreases in the price of corn may increase revenues to the Company
and therefore, would increase the liquidity and profitability of the Company.

     In an attempt to minimize the effects of the volatility of corn costs on
operating profits, Husker Ag has taken hedging positions in corn futures and
option markets. Hedging means protecting the price at which the Company buys
corn and the price at which it will sell its products in the future. It is a way
to attempt to reduce the risk caused by price fluctuation. The effectiveness of
hedging activities is dependent upon, among other things, the cost of corn and
Husker Ag's ability to sell sufficient amounts of ethanol and distillers grains
to utilize all of the corn subject to the futures contracts. Hedging activities
can result in costs to the Company because price movements in grain contracts
are highly volatile and are influenced by many factors which are beyond the
Company's control. Husker Ag may incur similar costs in connection with its
hedging transactions and these costs may be significant.

     Prices for ethanol products can vary significantly over time and decreases
in price levels could adversely affect Husker Ag's profitability and viability.
The price for ethanol has some relation to the price for gasoline. The price of
ethanol tends to increase as the price of gasoline increases, and the price of
ethanol tends to decrease as the price of gasoline decreases. Any lowering of
gasoline prices will likely also lead to lower prices for ethanol and adversely
affect the Company's operating results.

     Changes in the cost of utilities may also have a material impact on the
liquidity and profitability of the Company. Ethanol production requires a
constant and consistent supply of energy. If there is any interruption in Husker
Ag's

                                       11

<PAGE>

supply of energy for whatever reason, such as supply, delivery or mechanical
problems, the Company may be required to halt production. If production is
halted for any extended period of time, it will have a material adverse effect
on the Company's business. If Husker Ag were to suffer interruptions in its
energy supply, either during construction or after the Company begins operating
the ethanol plant, its business would be harmed. In addition, natural gas and
electricity prices have historically fluctuated significantly. Increases in the
price of natural gas or electricity would harm Husker Ag's business by
increasing its energy costs. Currently, the price of natural gas has increased
significantly, increasing the cost to the Company to produce ethanol. The
Company will also need to purchase significant amounts of electricity to operate
the proposed ethanol plant. The prices which Husker Ag will be required to pay
for electrical power will have a direct impact on its costs of producing ethanol
and its financial results.

     Husker Ag's liquidity and profitability may also be adversely impacted if
there is an increase in the supply of ethanol. Husker Ag expects that existing
ethanol plants will expand to increase their production and that new fuel grade
ethanol plants will be constructed as well. Although management believes that
there will be a corresponding increase in the demand for ethanol as a result of
the phase out of MTBE, Husker Ag cannot provide any assurance or guarantee that
there will be any material or significant increases in the demand for ethanol,
so the increased production of ethanol may lead to lower prices for ethanol. The
increased production of ethanol could have other adverse effects as well. For
example, the increased production will also lead to increased supplies of
co-products from the production of ethanol, such as distillers grain/solubles.
Those increased supplies could lead to lower prices for those co-products. Also,
the increased production of ethanol could result in increased demand for corn
which could in turn lead to higher prices for corn, resulting in higher costs of
production and lower profits.

     In addition to general market fluctuations and economic conditions, Husker
Ag could experience significant cost increases associated with the on-going
operation of the plant caused by a variety of factors, many of which are beyond
the Company's control. Labor costs can increase over time, particularly if there
is any shortage of labor, or shortage of persons with the skills necessary to
operate the ethanol plant. Changes in price, operation and availability of truck
and rail transportation may affect the Company's profitability with respect to
the transportation of ethanol and other products to its customers. In addition,
the operation of the ethanol plant will be subject to ongoing compliance with
all applicable governmental regulations, such as those governing pollution
control, ethanol production, grain purchasing and other matters. If any of these
regulations were to change, it could cost Husker Ag significantly more to comply
with them. Further, other regulations may arise in future years regarding the
operation of the ethanol plant, including the possibility of required additional
permits and licenses. Husker Ag might have difficulty obtaining any such
additional permits or licenses, and they could involve significant unanticipated
costs. Husker Ag will be subject to all of those regulations whether or not the
operation of the ethanol plant is profitable.

Employees
---------

     As of March 17, 2003, Husker Ag had hired approximately 30 employees needed
to operate the ethanol facility and operations. Husker Ag is not subject to any
collective bargaining agreements and has not experienced any work stoppages.
Husker Ag considers its relationship with its employees to be good.

Books and Records
-----------------

     Husker Ag currently has one full-time receptionist and one part-time
receptionist. The Company is currently dependent on its Board of Directors, a
limited staff and the Company's legal counsel, for the maintenance of its books
and records. Husker Ag has retained the services of an outside consultant to
assist the Company in the maintenance of its accounting books and records from
time to time on an hourly basis. Such personnel are and will be responsible for
compliance with the rules and regulations promulgated under the Securities and
Exchange Act of 1934 concerning the maintenance of accurate books and records,
and the timely and accurate submission of annual and periodic reports with the
Securities and Exchange Commission.

RISK FACTORS

     The project could suffer delays that could postpone Husker Ag's ability to
     generate revenues and make it more difficult for Husker Ag to pay its
     debts.

     Husker Ag currently expects that it will begin operating at full capacity
during the 2nd quarter of 2003. The project could be delayed if Husker Ag
encounters defective material or workmanship from Fagen which could delay
production and the Company's' ability to generate revenues. Under the
Design-Build Contract with Fagen, Fagen warrants that the ethanol plant will be
free from defects in material or workmanship. If this warranty is breached and
there are defects in material or workmanship, it may delay Husker Ag's ability
to commence operations and delay its ability to generate

                                       12

<PAGE>

revenues. If defects are discovered after the Company begins operating, it could
cause the Company to halt or discontinue its operation, which could damage the
Company's ability to generate revenues and reduce the value of the membership
units. Husker Ag's recourse in the event of a breach of this warranty by Fagen
is to file an action against Fagen for breach of contract or breach of warranty
which will be subject to the applicable statutes of limitations under the laws
of the State of Nebraska.

     Husker Ag is a newly formed company with limited working capital which
     could result in losses.

     Husker Ag, LLC is a newly formed company with no prior operations and no
experience concerning whether it will be successful in the proposed construction
and operation of the ethanol plant or that its plans will materialize or prove
successful. Husker Ag cannot make representations about its future profitable
operation or the future income or losses of Husker Ag. The Company does not know
whether it will ever operate at a profit or that Husker Ag will appreciate in
value. If the Company's plans prove to be unsuccessful, its members will lose
all or a substantial part of their investment.

     Husker Ag's business is not diversified and this could reduce the value of
     the membership units.

     Husker Ag's success depends largely upon its ability to timely complete and
profitably operate its ethanol business. Husker Ag does not have any other lines
of business or other sources of revenue if it is unable to build the ethanol
plant and manufacture ethanol. If Husker Ag were not able to complete
construction, or if economic or political factors adversely affect the market
for ethanol, the value of its membership units could decline because the Company
has no other line of business to fall back on if the ethanol business declines.
Husker Ag's business would also be significantly harmed if it's ethanol plant
could not operate at full capacity for any extended period of time.

     Husker Ag will be operating in an intensely competitive industry and will
     compete with larger, better financed entities which could impact its
     ability to operate profitably.

     There is significant competition among ethanol producers. Husker Ag faces a
competitive challenge from larger factories, from plants that can produce a
wider range of products than it can, and from other plants similar to its
proposed ethanol plant. Husker Ag's ethanol plant will be in direct competition
with other ethanol producers, many of which have greater resources than Husker
Ag currently has. Large ethanol producers such as Archer Daniels Midlands and
Cargill, among others, are capable of producing a significantly greater amount
of ethanol than Husker Ag currently expects to produce. In addition, there are
several Nebraska, Kansas, Minnesota, Wisconsin, South Dakota and other Midwest
regional ethanol producers which have recently formed, are in the process of
forming, or are under consideration, which are or would be of a similar size and
have similar resources to Husker Ag.

     The proposed ethanol plant will also compete with producers of other
gasoline additives made from raw materials other than corn having similar octane
and oxygenate values as ethanol, such as producers of methyl tertiary butyl
ether (MTBE). MTBE is a petrochemical derived from methanol which generally
costs less to produce than ethanol. Many major oil companies produce MTBE and
strongly favor its use because it is petroleum-based. Alternative fuels,
gasoline oxygenates and alternative ethanol production methods are also
continually under development. The major oil companies have significantly
greater resources than Husker Ag has to market MTBE, to develop alternative
products, and to influence legislation and public perception of MTBE and
ethanol. These companies also have significant resources to begin production of
ethanol should they choose to do so.

     Changes in the supply and demand, and production and price with respect to
     corn could make it more expensive to produce ethanol which could decrease
     Husker Ag's profits.

     Ethanol production will require substantial amounts of corn. Corn, as with
most other crops, is affected by weather, governmental policy, disease and other
conditions. A significant reduction in the quantity of corn harvested due to
adverse weather conditions such as drought, farmer planting decisions, domestic
and foreign government farm programs and policies, global demand and supply or
other factors could result in increased corn costs which would increase Husker
Ag's cost to produce ethanol. The significance and relative impact of these
factors on the price of corn is difficult to predict. Significant variations in
actual growing conditions from normal growing conditions also may adversely
affect Husker Ag's ability to procure corn for the proposed plant. Any events
that tend to negatively impact the supply of corn will tend to increase prices
and harm Husker Ag's business.

     Rising corn prices produce lower profit margins for the production of
ethanol and therefore, represent unfavorable market conditions. This is
especially true when market conditions do not allow Husker Ag to pass along
increased corn costs to its customers. The price of corn has fluctuated
significantly in the past and may fluctuate significantly in the

                                       13

<PAGE>

future. Substantial increases in the price of corn in 1996 caused some ethanol
plants to temporarily cease production or lose money. Husker Ag cannot assure
you that it will be able to offset any increase in the price of corn by
increasing the price of its products. If Husker Ag cannot offset increases in
the price of corn, its financial performance may be materially and adversely
affected.

     Husker Ag purchases corn from local producers but Husker Ag does not
currently have any definitive agreements with any corn producers or grain
elevators to provide corn to its ethanol plant. The Company has also commenced
purchases of corn inventory through the futures and option markets.

     Federal regulations concerning tax incentives could expire or change which
     could reduce Husker Ag's revenues.

     Congress currently provides certain federal tax incentives for oxygenated
fuel producers and marketers, including those who purchase ethanol to blend with
gasoline in order to meet federally mandated oxygenated fuel requirements. These
tax incentives include, generally, a lower federal excise tax rate for gasoline
blended with at least 10 percent, 7.7 percent, or 5.7 percent ethanol, and
income tax credits for blenders of ethanol mixtures and small ethanol producers.
Gasoline marketers pay a reduced tax on gasoline that they sell that contains
ethanol.

     The ethanol industry and Husker Ag's business depend on continuation of the
federal ethanol credit. This credit has supported a market for ethanol that
might disappear without the credit. The federal subsidies and tax incentives are
scheduled to expire September 30, 2007. These subsidies and tax incentives to
the ethanol industry may not continue beyond their scheduled expiration date or,
if they continue, the incentives may not be at the same level. The revocation or
amendment of any one or more of those laws, regulations or programs could
adversely affect the future use of ethanol in a material way, and Husker Ag
cannot guarantee that any of those laws, regulations or programs will be
continued. The elimination or reduction of federal subsidy and tax incentives to
the ethanol industry would have a material adverse impact on Husker Ag's
business by making it more costly or difficult for it to produce and sell
ethanol. If the federal ethanol tax incentives are eliminated or sharply
curtailed, Husker Ag believes that a decreased demand for ethanol will result.

     Nebraska state producer incentives may be unavailable or could be modified
     which could reduce Husker Ag's revenues.

     In 2001, LB 536 became law and established a production tax credit of
18(cent) per gallon of ethanol produced during a 96 consecutive month period by
newly constructed ethanol facilities in production prior to June 30, 2004. The
tax credit is only available to offset Nebraska motor fuels excise taxes. The
tax credit is transferable and therefore Husker Ag intends to transfer credits
received to a Nebraska gasoline retailer who will then reimburse Husker Ag for
the face value of the credit amount less a handling fee. No producer can receive
tax credits for more than 15,625,000 gallons of ethanol produced in one year and
no producer will receive tax credits for more than 125 million gallons of
ethanol produced over the consecutive 96 month period. The minimum production
level for a plant to qualify for credits is 100,000 gallons of ethanol annually.
Husker Ag has entered into a written agreement with the Tax Commissioner on
behalf of the State of Nebraska pursuant to which Husker Ag agreed to produce
ethanol at its designated facility and the State of Nebraska agreed to furnish
the producer tax credits in accordance with the terms of the new law.

     In 2002, because of State of Nebraska budget shortfalls, various tax credit
provisions in effect in Nebraska, including LB 536, have come under increased
scrutiny from the Nebraska Unicameral. As a result there can be no assurance
that the Nebraska legislature will not in subsequent legislative sessions enact
new legislation which would revise LB 536, or otherwise adversely impact ethanol
plants, such as that being built by Husker Ag, which are to benefit from LB 536.

     Husker Ag believes there are several existing projects in Nebraska that
could compete with the Company for payments. If another ethanol plant came
online and produced 100,000 or more gallons of ethanol, it could also qualify
for the producer payment. This would require the legislature to increase funding
for the producer incentive program through either an increase in general fund
appropriation or other sources such as the grain checkoff program. Despite the
Company's written agreement with the State of Nebraska, the Nebraska legislature
could reduce or eliminate the producer tax credits at any time; however, a
reduction or elimination would constitute a breach of the contract by the State
of Nebraska. The State of Nebraska could also impose taxes on the ethanol plants
to provide additional funds for the ethanol production incentive fund. Nebraska
legislators are currently discussing and reviewing legislative bills which would
establish a direct tax on distiller grains. If the State of Nebraska establishes
such a tax, Husker Ag will be required to pay taxes on the distiller grains it
produces which will have a serious adverse impact on Husker Ag's net income from
the production incentive and will reduce its revenue.

                                       14

<PAGE>

     The production incentive is scheduled to expire June 30, 2012, and the
longer it takes Husker Ag to complete construction of the plant and to become
operational, the greater the risk that the Company will receive less subsidy
payments than the maximum permitted under Nebraska law.

     Husker Ag is subject to extensive environmental regulation and operational
     safety regulations that could result in higher than expected compliance
     costs and liabilities.

     The Company may be subject to regulations on emissions from the United
States Environmental Protection Agency. Further, EPA and Nebraska's
environmental regulations are subject to change and often such changes are not
favorable to industry. Consequently, even if Husker Ag has the proper permits
now, the Company may be required to invest or spend considerable resources to
comply with future environmental regulations.

     The Company's failure to comply or the need to respond to threatened
actions involving environmental laws and regulations may adversely affect its
business, operating results or financial condition. Once Husker Ag's ethanol
plant becomes operational and as its business grows, Husker Ag will have to
develop and follow procedures for the proper handling, storage, and
transportation of finished products and materials used in the production process
and for the disposal of waste products. In addition, state or local requirements
may also restrict the Company's production and distribution operations. Husker
Ag could incur significant costs to comply with applicable laws and regulations
as production and distribution activity increases. Protection of the environment
will require Husker Ag to incur expenditures for equipment or processes.

     Husker Ag could also be subject to environmental nuisance or related claims
by employees, property owners or residents near the proposed ethanol plant
arising from air or water discharges. Ethanol production has been known to
produce an odor to which surrounding residents could object. If odors become a
problem, Husker Ag may be subject to fines and could be forced to take costly
curative measures. Environmental litigation or increased environmental
compliance costs could increase its operating costs.

     Members may be required to pay taxes on their share of Husker Ag's income
     even if it makes no distributions to members.

     Husker Ag expects to be treated as a partnership for federal income tax
purposes unless there is a change of law or trading in the membership units is
sufficient to classify Husker Ag as a "publicly traded partnership." This means
that Husker Ag will pay no income tax and all profits and losses will
"pass-through" to its members who will pay tax on their share of Husker Ag's
profits. It is likely that Husker Ag's members may receive allocations of
taxable income that exceed any cash distributions made, if any. This may occur
because of various factors, including but not limited to, accounting
methodology, lending covenants that restrict Husker Ag's ability to pay cash
distributions, or its decision to retain or use the cash generated by the
business to fund its operating activities and obligations. Accordingly, members
may be required to pay income tax on the allocated share of Husker Ag's taxable
income with personal funds, even if the members receive no cash distributions
from the Company.

                                       15

<PAGE>

                                 Husker Ag, LLC
                        (A Development Stage Enterprise)
                           December 31, 2002 and 2001


ITEM 7.  FINANCIAL STATEMENTS


Contents



    Independent Accountants' Report...........................................17



    Financial Statements

        Balance Sheets........................................................18

        Statements of Operations..............................................19

        Statements of Members' Equity (Deficit)...............................20

        Statements of Cash Flows..............................................21

        Notes to Financial Statements.........................................23


                                       16

<PAGE>

                         Independent Accountants' Report


Board of Directors
Husker Ag, LLC
Plainview, Nebraska


We have audited the accompanying balance sheets of Husker Ag, LLC (a development
stage limited liability company) as of December 31, 2002 and 2001 and the
related statements of operations, members' equity (deficit), and cash flows for
the years ended December 31, 2002 and 2001, and the periods February 24, 2000
(inception) through December 31, 2002 and 2001. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Husker Ag, LLC as of December
31, 2002 and 2001, and the results of it operations and its cash flows for the
years ended December 31, 2002 and 2001, and the periods February 24, 2000
(inception) through December 31, 2002 and 2001, in conformity with accounting
principles generally accepted in the United States of America.



                                        /s/ BKD, LLP

Lincoln, Nebraska
January 31, 2003, except for Note 9,
    as to which the date is March 18, 2003

                                       17

<PAGE>

                                 Husker Ag, LLC
                        (A Development Stage Enterprise)
                                 Balance Sheets

<TABLE>
<CAPTION>
Assets
                                                                          2002            2001
                                                                      ------------    ------------
<S>                                                                   <C>             <C>
       Current Assets
           Cash and cash equivalents                                  $    306,320    $ 13,483,166
           Margin account cash                                             321,950              --
           Option contracts                                                158,050              --
           Prepaid expenses                                                 21,845              --
           Accrued interest receivable                                          --             194
                                                                      ------------    ------------

                  Total current assets                                     808,165      13,483,360
                                                                      ------------    ------------

       Property and Equipment, at cost
           Land                                                             84,318          50,525
           Site development and construction in progress                23,650,254         272,968
           Equipment                                                       345,626           7,352
           Office building                                                 200,518              --
           Vehicles                                                         17,200              --
                                                                      ------------    ------------

                                                                        24,297,916         330,845
           Less accumulated depreciation                                     7,895           1,223
                                                                      ------------    ------------

                                                                        24,290,021         329,622
                                                                      ------------    ------------

       Other Assets
           Debt origination costs                                          445,086         685,086
           Option contracts                                                173,350              --
           Other                                                             4,772              --
                                                                      ------------    ------------

                                                                           623,208         685,086
                                                                      ------------    ------------

                                                                      $ 25,721,394    $ 14,498,068
                                                                      ============    ============


   Liabilities and Members' Equity

       Current Liabilities
           Accounts payable
              Trade                                                   $    298,618    $     90,861
              Related parties                                                   --          16,584
              Retainage on construction in progress                      1,345,000              --
           Short-term debt expected to be refinanced                    10,192,115              --
           Option contracts                                                563,575              --
           Accrued expenses                                                 21,991              --
                                                                      ------------    ------------

                  Total current liabilities                             12,421,299         107,445
                                                                      ------------    ------------

       Option Contracts                                                    452,850              --
                                                                      ------------    ------------

       Members' Equity
           Membership units, issued and outstanding  - 15,318 units     14,531,162      14,531,162
           Deficit accumulated during the development stage             (1,683,917)       (140,539)
                                                                      ------------    ------------

                                                                        12,847,245      14,390,623

                                                                      $ 25,721,394    $ 14,498,068
                                                                      ============    ============
</TABLE>

See Notes to Financial Statements

                                       18

<PAGE>

                                 Husker Ag, LLC
                        (A Development Stage Enterprise)
                            Statements of Operations

<TABLE>
<CAPTION>
                                           Years Ended          February 24, 2000 (Inception)
                                           December 31,             through December 31,
                                   --------------------------    --------------------------
                                       2002           2001           2002           2001
                                   -----------    -----------    -----------    -----------
<S>                                <C>            <C>            <C>            <C>
   Revenue                         $        --    $        --    $        --    $        --

   Operating Expenses
       General and
         administrative                695,176        256,319      1,013,485        318,309
       Loss on options, net            972,175             --        972,175             --
                                   -----------    -----------    -----------    -----------

   Operating Loss                   (1,667,351)      (256,319)    (1,985,660)      (318,309)
                                   -----------    -----------    -----------    -----------

   Other Income
       Non-member contributions          3,554         19,322         65,071         61,517
       Grant                                --         75,000         75,000         75,000
       Interest and other income       120,419         41,253        161,672         41,253
                                   -----------    -----------    -----------    -----------

                                       123,973        135,575        301,743        177,770
                                   -----------    -----------    -----------    -----------

   Net Loss                        $(1,543,378)   $  (120,744)   $(1,683,917)   $  (140,539)
                                   ===========    ===========    ===========    ===========

   Basic and Diluted Loss Per
      Membership Unit              $   (100.76)   $    (36.83)   $   (256.42)   $    (78.25)
                                   ===========    ===========    ===========    ===========

   Weighted Average Units
      Outstanding                       15,318          3,278          6,567          1,796
                                   ===========    ===========    ===========    ===========
</TABLE>

See Notes to Financial Statements

                                       19

<PAGE>

                                 Husker Ag, LLC
                        (A Development Stage Enterprise)
                     Statements of Members' Equity (Deficit)

<TABLE>
<CAPTION>
                                                                   Deficit
                                                                 Accumulated
                                         Membership Units          During          Members'
                                   ---------------------------   Development        Equity
                                      Number         Amount         Stage          (Deficit)
                                   ------------   ------------   ------------    ------------
<S>                                      <C>      <C>            <C>             <C>
   Initial member contributions              18   $      2,250   $         --    $      2,250

   Net loss                                  --             --        (19,795)        (19,795)
                                   ------------   ------------   ------------    ------------

   Balance, December 31, 2000                18          2,250        (19,795)        (17,545)

   Member contributions from
      private offering, net of
      offering costs of $38,274             834        378,726             --         378,726

   Member contributions from
      public offering, net of
      offering costs of $285,814         14,402     14,116,186             --      14,116,186

   Director options exercised                64         34,000             --          34,000

   Net loss                                  --             --       (120,744)       (120,744)
                                   ------------   ------------   ------------    ------------

   Balance, December 31, 2001            15,318     14,531,162       (140,539)     14,390,623

   Net loss                                  --             --     (1,543,378)     (1,543,378)
                                   ------------   ------------   ------------    ------------

   Balance, December 31, 2002            15,318   $ 14,531,162   $ (1,683,917)   $ 12,847,245
                                   ============   ============   ============    ============
</TABLE>

See Notes to Financial Statements

                                       20

<PAGE>

                                 Husker Ag, LLC
                        (A Development Stage Enterprise)
                            Statements of Cash Flows

<TABLE>
<CAPTION>
                                              Years Ended             February 24, 2000 (Inception)
                                              December 31,                 through December 31,
                                      ----------------------------    ----------------------------
                                          2002            2001            2002            2001
                                      ------------    ------------    ------------    ------------
<S>                                   <C>             <C>             <C>             <C>
   Operating Activities
     Net loss                         $ (1,543,378)   $   (120,744)   $ (1,683,917)   $   (140,539)
     Items not requiring cash
         Noncash compensation                   --          18,000          18,000          18,000
         Depreciation expense                6,672           1,149           7,895           1,223
         Unrealized loss on option
           contracts                       972,175              --         972,175              --
     Changes in
         Margin account cash              (321,950)             --        (321,950)             --
         Option contracts                 (287,150)             --        (287,150)             --
         Prepaid expenses                  (21,845)             --         (21,845)             --
         Interest receivable                   194            (194)             --            (194)
         Other assets                       (4,772)             --          (4,772)             --
         Accounts payable and
           accrued expenses                120,741          (9,581)        137,489          16,748
                                      ------------    ------------    ------------    ------------
             Net cash provided by
               operating activities     (1,079,313)       (111,370)     (1,184,075)       (104,762)
                                      ------------    ------------    ------------    ------------

   Investing Activities
     Land purchase, site
       development and
       construction in progress        (21,914,069)       (267,990)    (22,186,559)       (272,490)
     Purchase of property and
       equipment                          (575,885)         (6,251)       (583,237)         (7,352)
                                      ------------    ------------    ------------    ------------
             Net cash used in
               investing activities    (22,489,954)       (274,241)    (22,769,796)       (279,842)
                                      ------------    ------------    ------------    ------------

   Financing Activities
     Gross proceeds from issuance
       of membership units                      --      14,835,000      14,837,250      14,837,250
     Offering costs paid                   (39,694)       (284,394)       (324,088)       (284,394)
     Advances on construction loan      10,192,115              --      10,192,115              --
     Receipt (payment) of debt
       origination costs, net              240,000        (685,086)       (445,086)       (685,086)
                                      ------------    ------------    ------------    ------------
             Net cash provided by
               financing activities     10,392,421      13,865,520      24,260,191      13,867,770
                                      ------------    ------------    ------------    ------------

   Increase in Cash and Cash
     Equivalents                       (13,176,846)     13,479,909         306,320      13,483,166

   Cash and Cash Equivalents,
     Beginning of Period                13,483,166           3,257              --              --
                                      ------------    ------------    ------------    ------------

   Cash and Cash Equivalents, End
     of Period                        $    306,320    $ 13,483,166    $    306,320    $ 13,483,166
                                      ============    ============    ============    ============
</TABLE>

See Notes to Financial Statements

                                       21

<PAGE>

                                 Husker Ag, LLC
                        (A Development Stage Enterprise)
                      Statements of Cash Flows - Continued

<TABLE>
<CAPTION>
                                            Years Ended            February 24, 2000 (Inception)
                                            December 31,                through December 31,
                                    ----------------------------   ----------------------------
                                        2002            2001           2002            2001
                                    ------------    ------------   ------------    ------------
<S>                                 <C>             <C>            <C>             <C>
   Supplemental Disclosures of
     Noncash Investing and
     Financing Activities

         Net increase (decrease)
           in accounts payable
           incurred for offering
           costs                    $    (39,694)   $     12,053   $         --    $     39,694

         Net increase in accounts
           payable incurred for
           site development and
           construction in
           progress                 $  1,477,117    $     51,003   $  1,528,120    $     51,003
</TABLE>

See Notes to Financial Statements

                                       22

<PAGE>

                                 Husker Ag, LLC
                        (A Development Stage Enterprise)
                          Notes to Financial Statements
                           December 31, 2002 and 2001


Note 1:   Nature of Operations and Summary of Significant Accounting Policies


    Nature of Operations

        Husker Ag, LLC (the Company), a Nebraska Limited Liability Company, was
        formed August 29, 2000 and is located in Plainview, Nebraska. Prior to
        formation of the LLC, the Company operated as a partnership.
        Accordingly, the financial statements reflect all activities of the LLC
        and partnership since inception in February 2000.

        The Company has been organized to obtain equity investors and debt
        financing to construct, own and operate an ethanol plant with an annual
        production capacity of 20 million gallons. Construction began in 2001
        and operations are expected to commence in March 2003. The Company's
        products will include fuel grade ethanol and distiller grains. The
        Company expects to sell ethanol in limited markets throughout the United
        States and distiller grains in the surrounding counties in Nebraska.

        Since inception, the Company has devoted substantially all its efforts
        to organization, project feasibility, plant construction and financing
        activities. Accordingly, the Company is in the development stage as it
        has not commenced operations and generated revenues.

        The Company is subject to the risks and uncertainties encountered by
        development stage enterprises. The Company's success will depend on
        management's ability to implement the Company's business plan. Even if
        the Company successfully implements its business plan, it may not
        succeed financially due to numerous other factors.


    Fiscal Reporting Period

        The Company has adopted a fiscal year ending December 31 for reporting
        financial operations.


    Non-Member Contributions and Grant

        The Company received certain non-recurring contributions from various
        local businesses and individuals in the surrounding area to assist the
        Company in paying for its costs during the development stage. These
        contributions represent unconditional transfers from non-members and do
        not obligate the Company in any manner or give the contributors any
        future investment rights. Accordingly, such non-member contributions are
        recognized as other income.

        In January 2001, the Company received a $75,000 grant from the Nebraska
        Department of Agriculture to assist the Company in paying for
        development stage expenses. The Company recognized this amount as income
        upon meeting the conditions of the grant. The amount is included in
        other income in 2001 in the accompanying financial statements.

                                       23

<PAGE>

                                 Husker Ag, LLC
                        (A Development Stage Enterprise)
                          Notes to Financial Statements
                           December 31, 2002 and 2001


Note 1:   Nature of Operations and Summary of Significant Accounting Policies -
          Continued


    Cash and Cash Equivalents

        The Company considers all investments with original maturities of three
        months or less to be cash equivalents. At December 31, 2002 and 2001,
        cash equivalents consisted primarily of money market accounts.

        The Company maintains its cash accounts primarily at three financial
        institutions. At times throughout the periods and at December 31, 2002
        and 2001, the Company's cash balances at individual institutions
        exceeded federally insured limits. The Company believes it is not
        exposed to any significant credit risk on cash.


    Property and Equipment

        Property and equipment are recorded at cost. The Company has and will
        continue to incur plant development costs that will be capitalized and
        depreciated when the facility commences operations. Depreciation will be
        computed using the straight-line method over the estimated useful lives
        of property and equipment from the date the assets are placed in
        service. Other property and equipment is being depreciated using the
        straight-line method over their estimated useful life.

        The Company capitalizes interest as a component of construction in
        progress, based on the weighted average rates paid for long-term
        borrowing. The Company incurred $49,924 in interest during 2002, which
        was all capitalized.


    Deferred Offering Costs

        During 2001, the Company incurred certain costs directly related to
        efforts to raise equity financing. These costs were netted against the
        proceeds received as a result of the offerings. Total offering costs
        netted against member contribution proceeds amounted to $324,088 during
        2001.


    Debt Origination Costs

        During 2001, the Company paid $685,086 related to loan origination
        costs, other fees and a United States Department of Agriculture (USDA)
        guarantee application fee related to the construction loan agreement
        described in Note 5. The USDA fee, in the amount of $240,000, was
        refunded to the Company in 2002. Such costs have been deferred and will
        be amortized over the life of the loan using a method approximating the
        interest method.

                                       24

<PAGE>

                                 Husker Ag, LLC
                        (A Development Stage Enterprise)
                          Notes to Financial Statements
                           December 31, 2002 and 2001


Note 1:   Nature of Operations and Summary of Significant Accounting Policies -
          Continued


    Income Taxes

        The Company, as a limited liability Company, is treated as a partnership
        for Federal and state income tax purposes and does not incur income
        taxes. Under this type of organization, the Company's income and losses
        pass through to the members based on their respective percentage of
        membership interest, and are taxed at the member level. Accordingly, no
        income tax provision has been included in these financial statements.

        Differences between the financial statement bases and tax bases of
        assets and liabilities amount to approximately $1,735,000 of deferred
        deductions at December 31, 2002. These relate to capitalization and
        future amortization of organization and start up costs for tax purposes
        of approximately $763,000 (whereas these costs are expensed for
        financial statement purposes), and unrealized net losses on option
        contracts of approximately $972,000.


    Membership Units Split

        In March 2001, the Company effected a two-for-one membership unit split.
        The number of units, prices paid for units issued, and earnings per
        membership unit have been retroactively restated to give effect to the
        unit split.


    Earnings Per Membership Unit

        For purposes of calculating basic earnings per membership unit, units
        subscribed and issued by the Company are considered outstanding on the
        effective date of issue. For purposes of calculating diluted earnings
        per membership unit, units subscribed for but not issued by the Company
        are also included in the computation of outstanding membership units.


    Use of Estimates

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

                                       25

<PAGE>

                                 Husker Ag, LLC
                        (A Development Stage Enterprise)
                          Notes to Financial Statements
                           December 31, 2002 and 2001


Note 2:   Members' Equity

        During January 2001, the Company completed a private offering of 834
        membership units to accredited investors for $500 per unit. Upon
        completion of the private offering, each director was also granted an
        option to purchase up to eight units for $250 per unit until the option
        expired February 15, 2001. The Company recognized $18,000 of
        compensation expense related to the granting of these options. The
        directors purchased 64 units upon exercise of the options. In total, the
        Company sold 898 units and realized net proceeds of $394,726, net of
        offering costs of $38,274.

        The Company used the net proceeds of the private offering in part to pay
        for costs associated with obtaining debt financing of $20,000,000, as
        described in Note 5, and a public equity offering. The purpose of these
        capital-raising activities is to raise sufficient capital to build the
        ethanol plant and commence operations. In connection with the public
        offering, which was completed on December 1, 2001, the Company sold
        14,402 membership units and realized net proceeds of $14,116,186, net of
        offering costs of $285,814.

        There are significant transfer restrictions on transferability of
        membership units. The Company's Operating Agreement, as well as relevant
        portions of the Nebraska Limited Liability Act and regulations of the
        Internal Revenue Service (IRS) significantly restricts the transfer of
        the membership units. Unit holders cannot assign or transfer a
        membership unit without approval from the Company's Board of Directors
        and the transfer or assignment must comply with applicable Nebraska laws
        and IRS regulations.

        The Board of Directors will not approve transfers if the Board
        determines the transfer would cause the Company to be treated as a
        "publicly traded partnership." Any transfers of membership units in
        violation of the publicly traded partnership rules or without the prior
        consent of the Board of Directors will be null and void.



Note 3:   Commitments and Related Party Transactions

        On August 29, 2002, the Company entered into a natural gas distribution
        agreement under which the distributor has agreed to transport a minimum
        of 35 million therms of natural gas at a fixed price over a five-year
        initial term. The agreement is renewable at the end of the initial term
        for an additional five-year period.

        In November 2002, the Company entered into a marketing agreement with an
        officer of the Company to sell and market the Company's distiller grains
        and corn syrup. Under the terms of the agreement, the Company will pay a
        commission to the officer based on total gross sales contracted for and
        collected. The marketing agreement expires on March 31, 2004; however,
        it automatically renews for one year periods on the same terms and
        conditions unless terminated by either party.

        At December 31, 2002, the Company had entered into agreements to
        purchase 885,500 bushels of corn to be delivered between March 2003 and
        June 2003. The average purchase price under these contracts is $2.38 per
        bushel. One contract for 5,500 bushels is with a related party.

                                       26

<PAGE>

                                 Husker Ag, LLC
                        (A Development Stage Enterprise)
                          Notes to Financial Statements
                           December 31, 2002 and 2001

                                       27

<PAGE>

                                 Husker Ag, LLC
                        (A Development Stage Enterprise)
                          Notes to Financial Statements
                           December 31, 2002 and 2001


Note 4:   Design-Build Agreement

        On November 30, 2001 the Company entered into a definitive design-build
        agreement with a general contractor for the design and construction of
        the ethanol plant. Plant construction costs are estimated to be
        $27,615,480 excluding land, site development, construction of the
        administration building, connection of a rail spur, and capitalized
        interest costs. As of December 31, 2002, the Company has approximately
        $4,000,000 of remaining costs to be incurred under this agreement. The
        general contractor is a member of the Company.

        The design-build contract includes provisions for an incentive bonus to
        or liquidated damages from the general contractor based on the scheduled
        project completion date (Note 9).



Note 5:   Debt Financing

        On December 19, 2001, the Company entered into a written financing
        agreement with Stearns Bank, N.A. for up to $20,000,000 of debt
        financing. The financing agreement provides for, among other things,
        establishing an 18-month construction loan. Borrowings under this
        agreement are classified in the accompanying balance sheet as short-term
        as the construction loan matures on June 19, 2003. However, the loan
        will convert to a ten-year term note upon completion of construction, as
        discussed below. Interest will accrue at a floating interest rate of
        prime plus 0.25% (adjusted daily, payable monthly). Additionally, the
        Company is in the process of applying for a USDA guarantee under which,
        if accepted, the USDA will agree to guarantee 60% of borrowings under
        the term note. At December 31, 2002, there was $10,192,115 in
        outstanding borrowings under this agreement.

        Upon successful completion of construction of the ethanol plant, subject
        to required loan documentation, and no material adverse change in the
        Company's financial condition, the bank has agreed to convert the
        construction loan into a permanent loan amortized over 10 years which
        will accrue interest as follows: (i) 60% ($12,000,000) at prime plus
        0.25%, adjusted quarterly; and (ii) 40% ($8,000,000) at prime plus
        0.25%, adjusted quarterly, with a floor of 6.5% and a ceiling of 9.95%
        for five years beginning July 6, 2001. At the end of five years the
        floor and ceiling will adjust to the same spread based on the prime rate
        in effect at that time.

        The Company also has a letter of credit with the bank amounting to
        $327,825, expiring December 20, 2003, to be used to serve the Company's
        utility obligations.

                                       28

<PAGE>

Note 6:   Derivative Instruments

        The Company enters into option and futures contracts, which are
        designated as hedges of specific volumes of corn expected to be used in
        the manufacturing process once the plant is completed. The Company uses
        derivative financial instruments to manage the exposure to price risk
        related to corn purchases. The Company does not typically enter into
        derivative instruments for any reason other than cash flow hedging
        purposes. The option and futures contracts presented on the December 31,
        2002 balance sheet are recorded at fair value. On the date that the
        contract is entered into, the Company designates the option or contract
        as a hedge of variable cash flows of certain forecasted purchases of
        corn used in the manufacturing process (a "cash flow hedge"). The
        Company formally documents relationships between the option and futures
        contracts, which serve as the hedging instruments, and the hedged items,
        as well as its risk management objective and strategy for undertaking
        various hedge transactions. This process includes linking option and
        futures contracts that are designated as cash flow hedges to certain
        forecasted purchasing activities. The Company also assesses, both at the
        hedge's inception and on an ongoing basis, whether the option or futures
        contracts that are used in hedging transactions are highly effective in
        offsetting changes in cash flows of hedged items. When it is determined
        that an option or futures contract is not highly effective as a hedge or
        that it has ceased to be a highly effective hedge, the Company
        discontinues hedge accounting prospectively.

        Changes in the fair value of option and futures contracts that are
        highly effective and that are designated and qualify as cash flow hedges
        are recorded in other comprehensive income. Gains or losses that are
        realized will be recognized in the statement of operations when the
        finished goods produced using the hedged items are sold.



Note 7:   Future Change in Accounting Principles

        The Financial Accounting Standards Board (FASB) issued Statement of
        Financial Accounting Standards (SFAS) No. 143, Accounting for
        Obligations Associated with the Retirement of Long-lived Assets (SFAS
        143) in August 2001 which is effective for the Company beginning January
        1, 2003. SFAS 143 establishes accounting standards for the recognition
        and measurement of an asset retirement obligation and its associated
        retirement cost. The Company expects that the provisions of SFAS 143
        will not have a material impact on the Company's financial statements
        upon adoption.

        In June 2002, the FASB issued SFAS 146, Accounting for Costs Associated
        with Exit or Disposal Activities. SFAS 146 requires that a liability for
        a cost associated with an exit or disposal activity be recognized when
        the liability is incurred. The Company expects to adopt the provisions
        of SFAS 146 effective January 1, 2003 and does not expect the adoption
        will have a material impact on the financial statements of the Company.

                                       29

<PAGE>

Note 7:   Future Change in Accounting Principles - Continued

        In December 2002, the FASB issued SFAS 148, Accounting for Stock-Based
        Compensation - Transition and Disclosure. SFAS 148 requires certain
        disclosures regarding stock based compensation, which the Company
        adopted in its December 31, 2002 financial statements. The adoption of
        the provisions of SFAS 148 did not have a material effect on the
        financial statements of the Company.

        In November 2002, the FASB issued Interpretation No. 45 (FIN 45),
        Guarantor's Accounting and Disclosure Requirements for Guarantees,
        Including Indirect Guarantees of Indebtedness of Others. The
        Interpretation expands the existing disclosure requirements related to
        guarantees and clarifies that at the time a company issues a guarantee,
        the company must recognize an initial liability for the fair value, or
        market value, of the obligation is assumes under that guarantee. The
        disclosure requirements in this Interpretation are effective for periods
        ending after December 15, 2002 and the measurement principles are
        effective for guarantees issued after December 31, 2002. The Company
        expects that the provisions of FIN 45 will not have a material impact on
        the Company's financial statements.

        In January 2003, the FASB issued FIN 46, Consolidation of Variable
        Interest Entities. Under this interpretation, certain entities known as
        "variable interest entities" must be consolidated by the "primary
        beneficiary" of the entity. The measurement principles of the
        interpretation are effective for the Company for its year end December
        31, 2003 and the Company does not expect the adoption will have a
        material impact on its financial statements.



Note 8:   Disclosure Regarding Fair Value of Financial Instruments

        For all financial instruments held by the Company, including cash,
        interest receivable, accounts payable and long-term debt, and loan and
        construction contract commitments, the carrying amounts are reasonable
        estimates of fair value.

        The fair values of option contracts are reflected in the carrying
        amounts included in the accompanying balance sheet as discussed in Note
        6.



Note 9:   Subsequent Events

        In March 2003 the production process for the Company's ethanol plant
        commenced. The design-build contract (Note 4) requires a testing
        period to confirm that the plant was consistently producing at
        capacity and achieved substantial completion. Management expects the
        plant to achieve substantial completion and commence operations on a
        normal schedule by April 2003.

                                       30

<PAGE>

ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

     Effective January 8, 2002, the Company dismissed Grant Thornton LLP ("Grant
Thornton") as its independent accountants. The Company's Board of Directors
recommended and approved the change in independent accountants. Grant Thornton
audited the Company's financial statements for the period from inception
(February 24, 2000) to December 31, 2000. Grant Thornton's report for the period
ended December 31, 2000 did not contain any adverse opinion or a disclaimer of
opinion, and was not qualified or modified as to uncertainty, audit scope or
accounting principles. Husker Ag filed a current report on Form 8-K on January
15, 2002 reporting the change in its independent accountants. On January 8,
2002, the Company also selected BKD, LLP as its independent accountants to audit
its financial statements for the fiscal year ending December 31, 2001.

                                    PART III

ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; SECTION
          16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     The executive officers and directors of Husker Ag and their respective ages
and positions as of the date of this report are as follows:

<TABLE>
<CAPTION>
      ---------------------------------------------------------------------------------------------
                 NAME             AGE                 POSITION               DIRECTOR TERM EXPIRES
      ---------------------------------------------------------------------------------------------
<S>                               <C>    <C>                                        <C>
       Gary Kuester               57     Class III Director, Chairman and           2004
                                            President
      ---------------------------------------------------------------------------------------------
       Scott Carpenter            40     Class III Director, Vice Chairman          2004
                                            and Vice President
      ---------------------------------------------------------------------------------------------
       Jack G. Frahm              53     Class I Director, Secretary                2005
      ---------------------------------------------------------------------------------------------
       Fredrick J. Knievel        61     Class III Director, Treasurer              2004
      ---------------------------------------------------------------------------------------------
       Cory A. Furstenau          25     Class III Director                         2004
      ---------------------------------------------------------------------------------------------
       O. Kelly Hodson            48     Class I Director                           2005
      ---------------------------------------------------------------------------------------------
       Ryan W. Koinzan            22     Class II Director                          2003
      ---------------------------------------------------------------------------------------------
       Mike Kinney                45     Class II Director                          2003
      ---------------------------------------------------------------------------------------------
       J. Alex Thramer            74     Class II Director                          2003
      ---------------------------------------------------------------------------------------------
       James Hall                 57     Class I Director                           2005
      ---------------------------------------------------------------------------------------------
       Ronald Fick                48     Class I Director                           2005
      ---------------------------------------------------------------------------------------------
       David Kolsrud              54     Class II Director                          2003
      ---------------------------------------------------------------------------------------------
       O. Wayne Mitchell          47     Class I Director                           2005
      ---------------------------------------------------------------------------------------------
</TABLE>

     Gary Kuester is the owner of Kuester Hay, a company that buys and sells
alfalfa and grass hay located near Stanton, Nebraska. Kuester Hay has been in
business for 21 years. Mr. Kuester has been involved in ethanol production for
many years through a small ethanol production facility located on his family
farm and has been licensed to produce ethanol since 1992. He is presently
enlarging his farm facility to two million gallons annual production.

     Scott J. Carpenter is employed by Carpenter Farms, Inc., which is a family
farm corporation in existence since 1991 located near Creighton, Nebraska. He is
currently Vice President of the corporation. Mr. Carpenter has been involved in
farming for 20 years, including grain, cattle and swine production.

     Jack G. Frahm has been Secretary and Treasurer of Frahm Farms, Inc. since
incorporation in 1976. Frahm Farms, Inc. is a crop farming and cattle feeding
business that has used distillers grains for several years. Frahm Farms, Inc. is
located in Plainview, Nebraska and has been a Pioneer Seed representative since
1976.

                                       31

<PAGE>

     Fredrick J. Knievel is the President and co-owner of Knievel Farms, Inc.
which is a farming operation located near Clearwater, Nebraska and engaged in
the production of corn, soybeans, hay and cattle.

     Cory A. Furstenau has been self-employed as a farmer since May 1998. Prior
to May 1998, Mr. Furstenau attended Northeast Community College in Norfolk,
Nebraska where he received a major in Agribusiness/Farm Ranch Management. Mr.
Furstenau and his parents are partners in a partnership which operates their
family farm located near Tilden, Nebraska. They raise corn, soybeans and
alfalfa. They also operate a cow calf operation.

     J. Alex Thramer is self-employed in the irrigation sales and services
industry by Thramer Irrigation located near Ewing, Nebraska which has been in
operation for over 30 years.

     Ryan W. Koinzan is currently a student at the University of
Nebraska-Lincoln and he has recently completed an internship with Cargill in
Argentina. Mr. Koinzan was Nebraska State Star Farmer in Ag Production in 1999.
He owns his own calf herd which is located near Neligh, Nebraska and is
experienced in all phases of agriculture production.

     Mike Kinney has been employed by Kinney, Inc., which is a family farm
corporation located near Elgin, Nebraska since 1974. He is currently serving as
Vice President of Kinney, Inc. Mr. Kinney is also a partner in Kinney Bros.

     O. Kelly Hodson has been President and manager of West-Hodson Lumber
Company, Inc. since 1980, a retail building material sales and construction
company located in Osmond, Nebraska. Mr. Hodson has been President of the
Creighton, Nebraska branch of West-Hodson Lumber Company, Inc since 1999. He has
also been a partner in West-Hodson Lumber Company, a partnership located in
Crofton, Nebraska, since 1995.

     David Kolsrud is the General manager and a member of the Board of Directors
of CORN-er Stone Farmers Cooperative, which was formed in 1995 and served as
Chairman until 2000. Mr. Kolsrud also continues to work as a self-employed
farmer, an occupation he has had since 1973. He also serves as Chairman of the
Valley Springs Farmers Cooperative, a farm supply co-op in Valley Springs, South
Dakota. He has served on that Valley Springs Board for 15 years and has served
as Chairman for the past 12 years. Mr. Kolsrud formerly served as the Chairman
of the Minnesota Coalition for Ethanol. He also served on the Board of Governors
of AGRI-Energy, LLC ( a 12 million gallon a year ethanol plant in Luverne,
Minnesota). He has served on the AGRI-Energy Board since 1997 and served as its
Vice President until 1999.

     Ronald Fick is self-employed and has had a corn and soybean grain farming
operation (Harvest Farms) since 1973. He is also co-owner of a gravel and rock
extraction business. Mr. Fick's operations are located just to the southwest of
Luverne, Minnesota.

     James Hall, of Sioux Falls, South Dakota, is currently the Vice President
of CORN-er Stone Farmers Coop. Mr. Hall has been a farmer for thirty-eight years
in Southeast South Dakota. Mr. Hall is also currently President of the Lincoln
County Farm Bureau and the Lincoln County Soybean Association.

     O. Wayne Mitchell, of Wilmar, Minnesota, is currently the Vice President,
Technology and Business Development for Fagen, Inc. and has worked for Fagen
since June 2000. Prior to joining Fagen, he served as Process Team Leader from
May 1998 to June 2000 for Reilly Industries, Inc., where he directed
multidisciplinary teams engaged in chemical process research and development.
From March 1998 to June 2000, Mr. Mitchell was President and owner of Solid Rock
Consulting, LLC, a private company providing consulting services to the ethanol
industry. Solid Rock Consulting is currently inactive. From May 1996 to May
1998, he worked as Plant Manager and Quality Assurance Manager for
Micronutrients, LLC, an animal feed supplement manufacturer. From January 1993
to May 1996, he served as the Design Engineer for Broin and Associates, Inc.,
where he performed detailed process design and start-up of dry grind ethanol
plants. From August 1991 to January 1993, he served as senior environmental
project engineer for Heritage Environmental Services, Inc. where he was involved
in environmental consulting and project management at major oil refineries.
Prior to that, Mr. Mitchell served as an area manager for Ethyl Corporation. Mr.
Mitchell also serves on the Board of Directors of Golden Triangle Energy, LLC,
an ethanol plant in Craig, Nebraska and Badger State Ethanol, LLC, an ethanol
plant in Monroe, Wisconsin.

     Husker Ag's original Board of Directors consisted of nine (9) members;
however, on December 19, 2001, the Company amended its operating agreement to
expand the Board of Directors to include four additional director seats for a
total of thirteen (13) members on the Board of Directors. On December 19, 2001,
the Board appointed James Hall to fill one of the two Class I vacancies, Dean
Sapp to fill the Class II vacancy and Lee Sapp to fill the Class III vacancy.
Lee Sapp is affiliated with Sapp Bros. Investments, LLC, which purchased 2,540
membership units in the Company's public offering.

                                       32

<PAGE>

Dean Sapp purchased 500 membership units in the Company's public offering. Mr.
Hall is Vice President of CORN-er Stone Farmers Coop, which purchased 1,500
membership units in the Company's public offering. Mr. Hall also purchased 110
membership units. On January 8, 2002, the Board appointed O. Wayne Mitchell to
fill the remaining Class I vacancy. Mr. Mitchell is the Vice President of
Technology and Business Development for Fagen, Inc., which is the Company's
design-build contractor, and which purchased 1,000 membership units in the
Company's public offering. The above referenced members requested representation
on the Company's Board of Directors in light of their significant investments in
the Company. The designation of class of director was done pursuant to a random
drawing among the new Board members.

     In connection with a transfer of membership units representing a 19.98%
ownership interest in the Company to The Better Energy Company, LLC, Dean Sapp
(Class III) Lee Sapp (Class II) and William Sapp (Class I) all resigned from the
Company's Board of Directors and all committee positions effective as of October
23, 2002.

         On October 29, 2002, the Board appointed Scott J. Carpenter to fill the
Class III vacancy, David Kolsrud to fill the Class II vacancy and Ronald Fick to
fill the Class I vacancy. In connection with the transfer of membership units
described above, Better Energy requested representation on the Company's Board
of Directors in light of its significant ownership interest in the Company.
David Kolsrud and Ronald Fick are members of Better Energy. Scott J. Carpenter
is not affiliated with Better Energy.

     All officers have been elected to serve until the next succeeding annual
meeting and until their successors have been elected and qualified.

ITEM 10.  EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>
                                                                                  All Other
       Name and Principal Position                          Year      Salary     Compensation(3)
       ---------------------------                          ----     --------    ------------
<S>                                                         <C>            <C>             <C>
       Gary Kuester(1), Chairman of the Board and
       President                                            2002           $0              $0(3)
                                                            2001           $0              $0(3)

       Scott Carpenter(2), Vice Chairman of the Board
       and Vice President                                   2002           $0              $0(3)
                                                            2001           $0              $0(3)
</TABLE>

       (1) Gary Kuester was elected Chairman of the Board and President on March
           24, 2003 when O. Kelly Hodson resigned. Mr. Hodson served as Chairman
           of the Board and President from June 24, 2002 through March 24, 2003
           and during such period, Mr. Hodson did not receive any salary or
           compensation for his services other than directors' meeting fees.
           Prior to Mr. Hodson, Gary Kuester served as Chairman of the Board and
           President for the preceding two years and Mr. Kuester did not receive
           any salary or other compensation for his services other than
           directors' meeting fees.
       (2) Scott Carpenter was elected Vice Chairman of the Board and Vice
           President on March 24, 2003 when Gary Kuester was elected Chairman
           and President. Prior to Mr. Carpenter, Gary Kuester served as Vice
           Chairman of the Board and Vice President since June 24, 2002 and Mr.
           Kuester did not receive any salary or other compensation for his
           services other than directors' meeting fees. Prior to Mr. Kuester, J.
           Alex Thramer served as Vice Chairman of the Board and Vice President
           for the preceding two years and Mr. Thramer did not receive any
           salary or other compensation for his services other than directors'
           meeting fees.
       (3) Husker Ag paid each individual directors' meeting fees in accordance
           with its directors meeting fee policy described below.

Gary Kuester is currently serving as Husker Ag's President and Scott Carpenter
is currently serving as its Vice President and neither has received any salary
or other compensation from the Company. Neither Mr. Kuester nor Mr. Carpenter is
under any written contract to provide services to Husker Ag. Husker Ag
reimburses its officers for expenses incurred relating to services rendered on
its behalf. The current officers of Husker Ag will continue to serve without
remuneration. Husker Ag may hire a business manager to assist in the
organizational business matters and Husker Ag intends to recruit and hire
permanent employees who will be compensated on a regular basis pursuant to
agreed upon salaries. Husker Ag offers typical health and other employee
benefits.

     As of December 19, 2001, Husker Ag adopted a policy pursuant to which the
Company pays each director $100 per meeting as compensation for services and
$.35/mile for mileage. Based on one meeting per month, the estimated directors
fees to be paid over the next 12 months would be $15,600 plus mileage. The
Company also pays each director $50 per committee meeting.

                                       33

<PAGE>

     Husker Ag does not have any compensatory security option plan for its
executive officers and directors. None of the directors or officers of Husker Ag
have any options, warrants or other similar rights to purchase securities of
Husker Ag.

         On January 8, 2002, Husker Ag adopted an Audit Committee Charter in
compliance with Securities and Exchange Commission rules and established an
audit committee consisting of O. Kelly Hodson, who is the Chairman, Cory
Furstenau, Scott Carpenter and David Kolsrud. Husker Ag established a
compensation/ benefits committee consisting of O. Kelly Hodson, O. Wayne
Mitchell, Cory Furstenau and David Kolsrud. Allen Sievertsen and Linda Demerath
serve as advisory members of the compensation/benefits committee. Husker Ag also
has established a nominating committee consisting of Fred Kneel, Gary Kuester,
Jim Hall and O. Wayne Mitchell.

Section 16(a) Beneficial Ownership Reporting Compliance
-------------------------------------------------------

     In connection with the purchase of membership units by The Better Energy
Company, LLC, Jim Hall did not file a Form 4 reporting an increase in his
indirect beneficial ownership of membership units as a result of his ownership
interest in The Better Energy Company, LLC.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table presents information regarding beneficial ownership of
membership units of Husker Ag as December 31, 2002 by (1) each member known by
Husker Ag to be the beneficial owner of more than 5% of its outstanding
membership units and (2) each director of Husker Ag and each named executive
officer and (3) all directors and executive officers as a group. Based on
information furnished by the owners, management believes that the members listed
below have sole investment and voting power regarding their membership units,
except that co-trustees share investment and voting power.


                                                        Units
                                                     Beneficially     Percentage
     Name and Address of Beneficial Owner               Owned          of Class
     ------------------------------------            ------------     ----------

         O. Kelly Hodson..................................120(1)              *
         807 Hill Street, P.O. Box 40
         Osmond, NE 68765

         J. Alex Thramer...................................50(2)              *
         Box 278
         Ewing, NE 68735

         Jack G. Frahm.....................................90(3)              *
         RR 3, Box 53
         Plainview, NE 68769

         Fredrick J. Knievel...............................65(4)              *
         RR 1, Box 196
         Clearwater, NE 68726


-------------------------------
(1) Includes 5 membership units held by Mr. Hodson with his son as joint tenants
with respect to which Mr. Hodson may be regarded as having shared voting and
dispositive power and also includes 35 membership units held by SENO Partnership
f/b/o the Orville Kelly Hodson IRA. Does not include 35 membership units held by
SENO Partnership f/b/o the Luella T. Hodson IRA, Mr. Hodson's wife for which Mr.
Hodson disclaims beneficial ownership.
(2) Includes 25 membership units held by him and his wife as joint tenants with
respect to which Mr. Thramer may be regarded as having shared voting and
dispositive power.
(3) Includes 30 membership units held by Frahm Farms, Inc. for which Mr. Frahm
has shared voting and dispositive power.
(4) Includes 25 membership units held by him and his wife as joint tenants with
respect to which Mr. Knievel may be regarded as having shared voting and
dispositive power and also includes 10 membership units held by Mr. Knievel in a
partnership with his brother with respect to which Mr. Knievel has shared voting
and dispositive power.

                                       34

<PAGE>

         Cory A. Furstenau ................................24                 *
         RR 2, Box 131
         Tilden, NE 68781

         Ryan W. Koinzan...................................15                 *
         411 "K" Street
         Neligh, NE 68756

         Mike Kinney......................................120(5)              *
         Rt.2, Box 131
         Elgin, NE 68636

         Scott J. Carpenter................................25                 *
         1306 Chase Ave.
         Creighton, NE 68729

         Gary Kuester.......................................2                 *
         56723  835 Road
         Stanton, NE 68779

         David Kolsrud....................................379(6)          2.47%
         RR 1 Box 58
         Beaver Creek, MN  56116

         Ronald Fick......................................610(7)          3.98%
         RR 2 Box 92
         Luverne, MN 56156

         James Hall.......................................620(8)          4.05%
         26941 480th Ave.
         Sioux Falls, SD  57108

         O. Wayne Mitchell.................................-0-              -0-
         2001 Country Club Drive NE
         Wilmar, MN 56201

         Fagen, Inc. ...................................1,000             6.53%
         501 West Highway 212
         P.O. Box 159
         Granite Falls, MN  56241

         CORN-er Stone Farmers Coop ....................1,500             9.79%
         502 S. Walnut
         P.O. Box 871
         Luverne, MN  56156

         The Better Energy Company......................3,060            19.98%
         109 South Main
         Sioux Falls, SD 57105


-------------------------------
(5) Includes 10 membership units held by him and his wife as joint tenants with
respect to which Mr. Kinney may be regarded as having shared voting and
dispositive power and also includes 100 membership units held by Kinney, Inc.
for which Mr. Kinney has shared voting and dispositive power.
(6) This amount also includes 40 membership units held indirectly by Mr. Kolsrud
as a partner of the Wallnut Street Investors Partnership and 239 membership
units held indirectly by him as a member of The Better Energy Company, LLC.
(7) This amount also includes 510 membership units held indirectly by him as a
member of The Better Energy Company, LLC.
(8) This amount also includes 510 membership units held indirectly by him as a
member of The Better Energy Company, LLC.

                                       35

<PAGE>

         Allen H. Sievertsen................................6(9)              *
         54945 868 Road
         Wausa, NE  68768

         -------------------------------------------

         All executive officers and directors as
           a group (14 persons).........................7,686            50.18%


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Conflicts of interest may arise in the future as a result of the
relationships between and among its members, officers, directors and their
affiliates, although its officers and directors have fiduciary duties to Husker
Ag. Husker Ag does not have a committee of independent directors or members or
an otherwise disinterested body to consider transactions or arrangements that
result from conflicts of interest. The Company's Operating Agreement permits
Husker Ag to enter into agreements with directors, officers, members and their
affiliates, provided that any such transactions are on terms no more favorable
to the directors, officers, members (or their affiliates) than generally
afforded to non-affiliated parties in a similar transaction.

     On November 12, 2002, Husker Ag entered into a Marketing Agreement with
Jack G. Frahm ("Frahm") pursuant to which Frahm will sell and market Husker Ag's
distiller grains and corn syrup. Frahm is Secretary of the Company and a member
of its Board of Directors. The Board of Directors therefore reviewed and
approved the Marketing Agreement in accordance with the Company's Affiliated
Transactions Policy. As a result of the affiliation between Frahm and Husker Ag,
the Marketing Agreement requires that all contracts written by Frahm under such
agreement must state that they are subject to final approval by the Husker Ag
General Manager.

     Except for the Marketing Agreement with Frahm and Husker Ag's design-build
contract with Fagen, Inc., who is a member of Husker Ag, as of March 26, 2003,
Husker Ag had not entered into any such agreements with any of its directors,
officers, members or their affiliates.

     O. Wayne Mitchell is an officer and employed by Fagen, Inc., which is the
Company's design-build contractor.

     Each of the original nine (9) founding directors purchased his original two
membership units for $125 per unit to capitalize the Company upon its
organization. During the private offering which expired on January 15, 2001, the
following founding directors purchased membership units for $500 per unit in
accordance with and subject to the terms set forth in the private placement
memorandum:

            -----------------------------------------------------------
                            Director          Number of Units Purchased
            -----------------------------------------------------------
            Scott J. Carpenter                           10
            -----------------------------------------------------------
            Jack G. Frahm(1)                             40
            -----------------------------------------------------------
            Cory A. Furstenau                             4
            -----------------------------------------------------------
            O. Kelly Hodson                              20
            -----------------------------------------------------------
            Mike Kinney(2)                               20
            -----------------------------------------------------------
            Frederick J. Knievel                         10
            -----------------------------------------------------------
            J. Alex Thramer                              20
            -----------------------------------------------------------
            (1)   Includes 30 membership units held by Frahm Farms, Inc.
            (2)   Includes 10 membership units held by him with his wife as
                  joint tenants.

-------------------------------
(8) Includes 6 membership units held by him and his wife as joint tenants with
respect to which Mr. Sievertsen may be regarded as having shared voting and
dispositive power.

                                       36

<PAGE>

     The founding directors did not receive any cash compensation for services
as directors (i.e. directors' or meeting fees) through December 2001. The Board
of Directors granted each of the nine founding director an option to purchase up
to eight membership units for $250 per membership unit upon completion of the
private offering which expired on January 15, 2001. The director option expired
on February 15, 2001. Eight of the nine founding directors exercised their
options and purchased an aggregate of 64 membership units. The Company
recognized $18,000 of compensation expenses related to the grant of the
directors options.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

               (a)    List of Exhibits

                           (2)      Plan of acquisition, reorganization,
                                    arrangement, liquidation or succession.
                                    None.

                           (3)(i)   Articles of Organization. The Company's
                                    Articles of Organization, as amended, are
                                    incorporated by reference to the Company's
                                    Form 10-QSB for the period ended June 30,
                                    2002 filed on August 14, 2002.

                              (ii)  Operating Agreement. The Second Amended and
                                    Restated Operating Agreement of the Company
                                    are incorporated by reference to the
                                    Company's Registration Statement on Form
                                    SB-2 (SEC Registration No. 333-60580, as
                                    amended (the "1933 Act Registration
                                    Statement") filed on May 10, 2001.

                             (4)    Instruments defining the rights of security
                                    holders, including indentures. None
                                    required.

                             (9)    Voting trust agreement.  None required.

                             (10)   Material contracts.

                                    10.1.1  Letter of Intent by and among Fagen
                                            Inc., ICM, Inc. and Husker Ag, LLC
                                            dated May 1, 2001, incorporated by
                                            reference to the Company's
                                            Registration Statement on Form SB-2
                                            (SEC Registration No. 333-60580, as
                                            amended (the "1933 Act Registration
                                            Statement") filed on May 10, 2001.

                                   10.1.2   Amendment dated July 16, 2001 to the
                                            Letter of Intent by and among Fagen
                                            Inc., ICM, Inc. and Husker Ag, LLC
                                            dated January 29, 2001, incorporated
                                            by reference to the Company's
                                            Registration Statement on Form SB-2
                                            (SEC Registration No. 333-60580, as
                                            amended (the "1933 Act Registration
                                            Statement") filed on May 10, 2001.

                                   10.2     Agreement with the Nebraska
                                            Department of Agriculture
                                            incorporated by reference to the
                                            Company's Registration Statement on
                                            Form SB-2 (SEC Registration No.
                                            333-60580, as amended (the "1933 Act
                                            Registration Statement") filed on
                                            May 10, 2001.

                                   10.3     Warranty Deed incorporated by
                                            reference to the Company's
                                            Registration Statement on Form SB-2
                                            (SEC Registration No. 333-60580, as
                                            amended (the "1933 Act Registration
                                            Statement") filed on May 10, 2001.

                                   10.4     Financing Proposal with Stearns
                                            Bank, N.A. dated July 17, 2001
                                            incorporated by reference to the
                                            Company's Registration Statement on
                                            Form SB-2 (SEC Registration No.
                                            333-60580, as amended (the "1933 Act
                                            Registration Statement") filed on
                                            May 10, 2001.

                                   10.5     Contract Labor Agreement with Allen
                                            Sievertsen incorporated by reference
                                            to the Company's Registration
                                            Statement on Form SB-2 (SEC
                                            Registration No. 333-60580, as
                                            amended (the "1933 Act Registration
                                            Statement") filed on May 10, 2001.

                                       37

<PAGE>

                                   10.6     Design Build Contract with Fagen,
                                            Inc. and ICM, Inc. dated November
                                            30, 2001, incorporated by reference
                                            to the Form 10-KSB for the fiscal
                                            year ended December 31, 2001 filed
                                            on March 29, 2002.

                                   10.7     Loan Commitment Agreement with
                                            Stearns Bank dated November 30,
                                            2001, incorporated by reference to
                                            the Form 10-KSB for the fiscal year
                                            ended December 31, 2001 filed on
                                            March 29, 2002.

                                   10.8     Commercial Security Agreement dated
                                            December 19, 2001, incorporated by
                                            reference to the Form 10-KSB for the
                                            fiscal year ended December 31, 2001
                                            filed on March 29, 2002.

                                   10.9     Promissory Note dated December 19,
                                            2001, incorporated by reference to
                                            the Form 10-KSB for the fiscal year
                                            ended December 31, 2001 filed on
                                            March 29, 2002.

                                   10.10    Commercial Security Agreement dated
                                            December 19, 2001, incorporated by
                                            reference to the Form 10-KSB for the
                                            fiscal year ended December 31, 2001
                                            filed on March 29, 2002.

                                   10.11    Construction Deed of Trust dated
                                            December 19, 2001, incorporated by
                                            reference to the Form 10-KSB for the
                                            fiscal year ended December 31, 2001
                                            filed on March 29, 2002.

                                   10.12    Contract Change Order to the Design
                                            Build Contract dated August 7, 2002
                                            between the Company and Fagen, Inc.,
                                            incorporated by reference to the
                                            Form 10-QSB for the period ended
                                            September 30, 2002 filed on November
                                            14, 2002.

                                   10.13    Track Agreement dated August 29,
                                            2002 between the Company and
                                            Nebraska Northeastern Railroad
                                            Company, incorporated by reference
                                            to the Form 10-QSB for the period
                                            ended September 30, 2002 filed on
                                            November 14, 2002.

                                   10.14    Trading Service Agreement dated
                                            February 17, 2003 between the
                                            Company and Variable Investment
                                            Advisers, Inc. filed herewith.

                             (11)   Statement re: computation of per share
                                    earnings. None required.

                             (13)   Annual or quarterly reports, Form 10-QSB
                                    None required.

                             (16)   Letter on change in certifying accountant.
                                    The letter Grant Thornton LLP furnished to
                                    the Securities & Exchange Commission
                                    regarding the disclosure made by the Company
                                    in connection with the dismissal of Grant
                                    Thornton LLP as its independent accountants
                                    and the selection of BKD, LLP is
                                    incorporated by reference to the Current
                                    Form 8-K filed on January 15, 2002.

                             (18)   Letter on change in accounting principles.
                                    None required.

                             (21)   Subsidiaries of the registrant. None
                                    required.

                             (22)   Published report regarding matters submitted
                                    to vote. None required.

                             (23)   Consent of experts and counsel. None
                                    required.

                             (24)   Power of attorney.  None required.

                             (99)   Additional Exhibits. None.

                                       38

<PAGE>

                                   99.1 Form 8-K on November 12, 2002 reporting
                                        the sale of a material amount of shares
                                        of the Company, the resignation of
                                        directors and the appointment of new
                                        directors.

               (b)    Form 8-Ks filed during the period ended December 31, 2002.

                      (1)    The Company filed a current report on Form 8-K on
                             November 12, 2002 reporting the sale of a material
                             amount of shares of the Company, the resignation of
                             directors and the appointment of new directors.


ITEM 14.  CONTROLS AND PROCEDURES

         (a)      Evaluation of Disclosure Controls and Procedures: An
evaluation of the Company's disclosure controls and procedures (as defined in
Section 13(a)-14(c) of the Securities Exchange Act of 1934 (the "Exchange Act"))
was carried out under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer within the 90-day period preceding
the filing date of this quarterly report. Our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures as
currently in effect are effective in ensuring that the information required to
be disclosed by us in the reports that we file or submit under the Exchange Act
is (i) accumulated and communicated to Company management (including the Chief
Executive Officer and Chief Financial Officer) in a timely manner, and (ii)
recorded, processed, summarized and reported within the time periods specified
in the Security and Exchange Commission's rules and forms.

         (b)      Changes in Internal Controls: In the quarter ended December
31, 2002, the Company did not make any significant changes in, nor take any
corrective actions regarding, its internal controls or other factors that could
significantly affect these controls.

                                       39

<PAGE>

                                   SIGNATURES


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

HUSKER AG, LLC



By: /s/ GARY KUESTER                      By: /s/ SCOTT J. CARPENTER
    ------------------------------------      ----------------------------------
    Gary Kuester, Chairman of the Board,      Scott J. Carpenter, Vice Chairman,
      President and Director                     Vice President and Director


      Date:  March 26, 2003                      Date:  March 26, 2003

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


         Signature                           Capacity
         ---------                           --------

         /s/ GARY KUESTER                    Chairman of the Board, President,
         --------------------------------    Director
         Gary Kuester

         Date:  March 26, 2002

         /s/ SCOTT J. CARPENTER              Vice Chairman, Vice President,
         --------------------------------    Director
         Scott J. Carpenter

         Date:  March 26, 2002


         /s/ JACK G. FRAHM                   Secretary and Director
         --------------------------------
         Jack G. Frahm

         Date:  March 26, 2003


         /s/ FREDRICK J. KNIEVEL             Treasurer and Director
         --------------------------------    (Principal Accounting Officer)
         Fredrick J. Knievel

         Date:  March 26, 2003

         /s/ CORY A. FURSTENAU               Director
         --------------------------------
         Cory A. Furstenau

         Date:  March 26, 2003


         /s/ O. KELLY HODSON                 Director
         --------------------------------
         O. Kelly Hodson

                                       40

<PAGE>

         /s/ J. ALEX THRAMER                 Director
         --------------------------------
         J. Alex Thramer

         Date:  March 26, 2003


         /s/ RYAN W. KOINZAN                 Director
         --------------------------------
         Ryan W. Koinzan

         Date:  March 26, 2003


         /s/ MIKE KINNEY                     Director
         --------------------------------
         Mike Kinney

         Date:  March 26, 2003


         /s/ JAMES HALL                      Director
         --------------------------------
         James Hall

         Date:  March 26, 2003


         /s/ DAVID KOLSRUD                   Director
         --------------------------------
         David Kolsrud

         Date:  March 26, 2003

         /s/ RONALD FICK                     Director
         --------------------------------
         Ronald Fick

         Date:  March 26, 2003


         /s/ O. WAYNE MITCHELL               Director
         --------------------------------
         O. Wayne Mitchell

         Date:  March 26, 2003

                                       41

<PAGE>

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report of Husker Ag, LLC (the "Company") on
Form 10-KSB for the period ending December 31, 2002 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), each of the
undersigned, in the capacities and on the dates indicated below, hereby
certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that to his knowledge:

     1)  The Report fully complies with the requirements of section 13(a) or
         15(d) of the Securities Exchange Act of 1934; and

     2)  The information contained in the Report fairly presents, in all
         material respects, the financial condition and result of operations of
         the Company.


     Date: March 26, 2003.


     By: /s/ GARY KUESTER
         ------------------------------------
         Gary Kuester, Chairman of the Board,
            President and Director
            (Principal Executive Officer)



     By: /s/ FREDRICK J. KNIEVEL
         -------------------------------------------
         Fredrick J. Knievel, Treasurer and Director
            (Principal Financial Officer)

                                       42

<PAGE>

                     CERTIFICATIONS PURSUANT TO SECTION 302

         I, Gary Kuester, President, Chairman of the Board and Principal
Executive Officer, certify that:

         1.       I have reviewed this annual report on Form 10-KSB of Husker
Ag, LLC;

         2.       Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report;

         3.       Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this annual report;

         4.       The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the registration and
have:

                  (a)      designed such disclosure controls and procedures to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being prepared;

                  (b)      evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and

                  (c)      presented in this annual report our conclusions about
the effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

         5.       The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons performing
the equivalent functions):

                  (a)      all significant deficiencies in the design or
operation of internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in internal
controls; and

                  (b)      any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal controls; and

         6.       The registrant's other certifying officers and I have
indicated in this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.


Date: March 26, 2003.


By: /s/ GARY KUESTER
    -------------------------------------
    Gary Kuester, Chairman of the Board,
       President and Director
       (Principal Executive Officer)

                                       43

<PAGE>

I, Fredrick Knievel, Treasurer and Principal Financial Officer, certify that:

         1.       I have reviewed this annual report on Form 10-KSB of Husker
Ag, LLC;

         2.       Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report;

         3.       Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this annual report;

         4.       The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the registration and
have:

                  (a)      designed such disclosure controls and procedures to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being prepared;

                  (b)      evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and

                  (c)      presented in this annual report our conclusions about
the effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

         5.       The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons performing
the equivalent functions):

                  (a)      all significant deficiencies in the design or
operation of internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in internal
controls; and

                  (b)      any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal controls; and

         6.       The registrant's other certifying officers and I have
indicated in this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.


Date: March 26, 2003.



By: /s/ FREDRICK J. KNIEVEL
    --------------------------------------------
    Fredrick J. Knievel, Treasurer and Director
       (Principal Financial Officer)

                                       44

<PAGE>

<TABLE>
<CAPTION>
  Exhibit          Description                          Method of Filing
    No.            -----------                          ----------------
  -------
<S>           <C>                                 <C>
    3(i)      Articles of Organization            Incorporated by reference to the Company's Form 10-QSB for the period
                                                  ended June 30, 2002 filed on August 14, 2002.

   3(ii)      Operating Agreement                 Incorporated by reference to the Company's Registration Statement on Form
                                                  SB-2 (SEC Registration No. 333-60580, as amended (the "1933 Act
                                                  Registration Statement") filed on May 10, 2001.

   10.1.1     Letter of Intent by and among       Incorporated by reference to the Company's Registration Statement on Form
              Fagen Inc., ICM, Inc. and Husker    SB-2 (SEC Registration No. 333-60580, as amended (the "1933 Act
              Ag, LLC dated May 1, 2001           Registration Statement") filed on May 10, 2001.

   10.1.2     Amendment dated July 16, 2001 to    Incorporated by reference to the Company's Registration Statement on Form
              the Letter of Intent by and among   SB-2 (SEC Registration No. 333-60580, as amended (the "1933 Act
              Fagen Inc., ICM, Inc. and Husker    Registration Statement") filed on May 10, 2001.
              Ag, LLC dated January 29, 2001

    10.2      Agreement with the Nebraska         Incorporated by reference to the Company's Registration Statement on Form
              Department of Agriculture           SB-2 (SEC Registration No. 333-60580, as amended (the "1933 Act
                                                  Registration Statement") filed on May 10, 2001.

    10.3      Warranty Deed                       Incorporated by reference to the Company's Registration Statement on Form
                                                  SB-2 (SEC Registration No. 333-60580, as amended (the "1933 Act
                                                  Registration Statement") filed on May 10, 2001.

    10.4      Financing Proposal with Stearns     Incorporated by reference to the Company's Registration Statement on Form
              Bank, N.A. dated July 17, 2001      SB-2 (SEC Registration No. 333-60580, as amended (the "1933 Act
                                                  Registration Statement") filed on May 10, 2001.

    10.5      Contract Labor Agreement with       Incorporated by reference to the Company's Registration Statement on Form
              Allen Sievertsen                    SB-2 (SEC Registration No. 333-60580, as amended (the "1933 Act
                                                  Registration Statement") filed on May 10, 2001.

    10.6      Design Build Contract with Fagen,   Incorporated by reference to the Company's Form 10-KSB for the fiscal
              Inc. and ICM, Inc. dated November   year ended December 31, 2001 filed on March 29, 2002.
              30, 2001

    10.7      Loan Commitment Agreement with      Incorporated by reference to the Company's Form 10-KSB for the fiscal
              Stearns Bank dated November 30,     year ended December 31, 2001 filed on March 29, 2002.
              2001

    10.8      Construction Loan Agreement with    Incorporated by reference to the Company's Form 10-KSB for the fiscal
              Stearns Bank dated December 19,     year ended December 31, 2001 filed on March 29, 2002.
              2001.

    10.9      Promissory Note dated December      Incorporated by reference to the Company's Form 10-KSB for the fiscal
              19, 2001.                           year ended December 31, 2001 filed on March 29, 2002.

   10.10      Commercial Security Agreement       Incorporated by reference to the Company's Form 10-KSB for the fiscal
              dated December 19, 2001.            year ended December 31, 2001 filed on March 29, 2002.

   10.11      Construction Deed of Trust dated    Incorporated by reference to the Company's Form 10-KSB for the fiscal
              December 19, 2001.                  year ended December 31, 2001 filed on March 29, 2002.
</TABLE>

                                       45

<PAGE>

<TABLE>
<CAPTION>
  Exhibit          Description                          Method of Filing
    No.            -----------                          ----------------
  -------
<S>           <C>                                 <C>
   10.12      Contract Change Order to the        Incorporated by reference to the Company's Form 10-QSB for the period
              Design Build Contract dated         ended September 30, 2002 filed on November 14, 2002.
              August 7, 2002 between the
              Company and Fagen, Inc.

   10.13      Track Agreement dated August 29,    Incorporated by reference to the Company's Form 10-QSB for the period
              2002 between the Company and        ended September 30, 2002 filed on November 14, 2002.
              Nebraska Northeastern Railroad
              Company.

   10.14      Trading Service Agreement dated     Filed herewith.
              February 17, 2003 between the
              Company and Variable Investment
              Advisors, Inc.

     16       The letter Grant Thornton LLP       Incorporated by reference to the Form 8-K filed on January 15, 2002.
              furnished to the Securities &
              Exchange Commission regarding the
              disclosure made by the Company in
              connection with the dismissal of
              Grant Thornton LLP as its
              independent accountants and the
              selection of BKD, LLP.

    99.1      Form 8-K filed November 12, 2002.   Incorporated by reference to the Company's Form 8-K filed November 12,
                                                  2002.
</TABLE>

                                       46