**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**




**Washington,
      D.C. 20549**




**FORM
      10-QSB**




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




**For
      the fiscal quarter ended September 30, 2007**




**OR**




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




**For
      the transition period from   to  .**




**Commission
      file number 333-141585**




**PRAIRIE
      CREEK ETHANOL, LLC**


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




**Iowa**
            
            **20-4956139**(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (I.R.S.
                Employer Identification No.)





**415
      N. Locust Street, PO Box 280, Goldfield, IA 50542**


(Address
      of principal executive offices)





**(515)
      825-3161**


(Issuer's
      telephone number)





Check
      whether the issuer: (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days.   oYes   xNo





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


oYesxNo




State
      the
      number of shares outstanding for each of the issuer's classes of common equity
      as of the latest practicable date: As of November 9, 2007 there were 1,523
      membership units outstanding.





Transitional
      Small Business Disclosure Format (Check one):  oYesxNo





**INDEX**





**Page
                No.****PART
                I.     FINANCIAL
                INFORMATION**
            **3****Item
                1. Financial Statements.**
            **3****Item
                2. Management’s Discussion and Analysis and Plan of
                Operations**
            **8****Item
                3. Controls and Procedures**
            **20****PART
                II. OTHER INFORMATION**
            **20****Item
                1. Legal Proceedings**
            **20****Item
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds**
            **21****Item
                3. Defaults Upon Senior Securities**
            **21****Item
                4. Submission of Matters to a Vote of Security
                Holders**
            **21****Item
                5. Other Information**
            **21****Item
                6. Exhibits**
            **21****SIGNATURES**
            **22**


2


**PART
      I.     FINANCIAL INFORMATION**





**Item
      1. Financial Statements.**





**Prairie
      Creek Ethanol, LLC**


**(A
      Development Stage Company)**





**Balance
      Sheet**


**September 30, 2007**
              
              December 31, 2006**(unaudited)**
              
              (audited)**ASSETS**CURRENT
                  ASSETSCash
                  and cash equivalents
              
              **$**
              **680,555**
              
              $
              1,287,023Prepaid
                  insurance
              
              
              **42,771**
              
              
              10,809**723,326**
              
              
              1,297,832OTHER
                  ASSETSDeferred
                  offering costs
              
              
              **396,666**
              
              
              -Land
                  options
              
              
              **144,200**
              
              
              94,200Other
                  assets and deposits
              
              
              **75,011**
              
              
              71,669**615,877**
              
              
              165,869**$**
              **1,339,203**
              
              $
              1,463,701**LIABILITIES
                  AND MEMBERS' EQUITY**CURRENT
                  LIABILITIES, accounts payable
              
              
              **48,109$**
              
              $
              1,665COMMITMENTS
                  AND CONTINGENCIESMEMBERS’
                  EQUITYMembers’
                  capital
              
              
              **1,540,603**
              
              
              1,544,103Loss
                  accumulated during development stage
              
              
              **(249,509**
              **)**
              
              (82,067
              )**1,291,094**
              
              
              1,462,036**$**
              **1,339,203**
              
              $
              1,463,701


See
        Notes
        to Unaudited Financial Statements.





3


**Prairie
      Creek Ethanol, LLC**


**(A
      Development Stage Company)**





**Statement
      of Operations (Unaudited)**


For the Three
              Months Ended
              September 30,
              2007
            
            For
                the Three
              Months
                Ended
              September 30,
              2006
            
            For
                the Nine
              Months
                Ended
              September 30,
              2007
            
            For
                the Period
              from April 19, 2006
              (inception) to
              September 30,
              2006
            
            For the Period
              from April 19, 2006
              (inception) to
              September 30,
              2007Revenues
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Operating
                expenses:Project
                development
            
            
            2,706
            
            
            21,134
            
            
            84,250
            
            
            21,134
            
            
            161,408General
                and administrative
            
            
            35,179
            
            
            3,665
            
            
            83,192
            
            
            3,665
            
            
            88,10137,885
            
            
            24,799
            
            
            167,442
            
            
            24,799
            
            
            249,509**Loss
                accumulated during development stage**
            
            $
            (37,885
            )
            $
            (24,799
            )
            $
            (167,442
            )
            $
            (24,799
            )
            $
            (249,509
            )Weighted
                Average Units Outstanding
            
            
            1,523
            
            
            1,239
            
            
            1,523
            
            
            1,239
            
            
            1,427Net
                Loss per Unit-Basic and Diluted
            
            $
            (24.88
            )
            $
            (20.02
            )
            $
            (109.94
            )
            $
            (20.02
            )
            $
            (174.85
            )




See
        Notes
        to Unaudited Financial Statements.


4


**Prairie
      Creek Ethanol, LLC**


**(A
      Development Stage Company)**





**Statement
      of Cash Flows (unaudited)**


For the Nine
                Months Ended
                September 30, 2007
              
              For the Period
                from April 19, 2006
                (inception) to
                September 30, 2006
              
              For the Period
                from April 19, 2006
                (inception) to
                September 30, 2007OPERATING
                  ACTIVITIESNet
                  (loss) accumulated during development stage
              
              $
              (167,442
              )
              $
              (24,799
              )
              
              (249,509)
                  $Change
                  in working capital components:(Increase)
                  in prepaid expenses
              
              
              (31,962
              )
              
              -
              
              
              (42,771
              )Increase
                  in accounts payable
              
              
              10,229
              
              
              8,082
              
              
              11,894**Net
                  cash (used in) operating activities**
              
              
              (189,175
              )
              
              (16,717
              )
              
              (280,386
              )INVESTING
                  ACTIVITIES(Increase)
                  in other assets and deposits
              
              
              (3,342
              )
              
              (8,931
              )
              
              (75,011
              )Payment
                  for land option
              
              
              (50,000
              )
              
              (49,200
              )
              
              (144,200
              )**Net
                  cash (used in) investing activities**
              
              
              (53,342
              )
              
              (58,131
              )
              
              (219,211
              )FINANCING
                  ACTIVITIESMember
                  contributions
              
              
              -
              
              
              870,000
              
              
              1,580,000Payment
                  of offering costs
              
              
              (3,500
              )
              
              (25,152
              )
              
              (39,397
              )Payment
                  of deferred offering costs
              
              
              (360,451
              )
              
              -
              
              
              (360,451
              )**Net
                  cash provided by (used in) financing activities**
              
              
              (363,951
              )
              
              844,848
              
              
              1,180,152**Net
                  increase (decrease) in cash and cash equivalents**
              
              
              (606,468
              )
              
              770,000
              
              
              680,555CASH
                  AND CASH EQUIVALENTSBeginning
              
              
              1,287,023
              
              
              -
              
              
              -Ending
              
              $
              680,555
              
              $
              770,000
              
              
              680,555
                  $SUPPLEMENTAL
                  NONCASH OPERATING, INVESTING AND FINANCING ACTIVITYDeferred
                  offering costs in accounts payable
              
              $
              36,215
              
              $
              -
              
              
              36,215
                  $Deposits
                  in accounts payable
              
              
              -
              
              
              100,000
              
              
              -
  See
        Notes
        to Unaudited Financial Statements.




5


Prairie
      Creek Ethanol, LLC


(A
      Development Stage Company)





**Notes
      to Financial Statements**




**Note
      1.**   **Summary
      of Significant Accounting Policies**


The
      accompanying unaudited condensed financial statements have been prepared
      pursuant to the rules and regulations of the Securities and Exchange Commission.
      Certain information and footnote disclosures normally included in annual
      financial statements prepared in accordance with accounting principles generally
      accepted in the United States of America have been condensed or omitted as
      permitted by such rules and regulations. These financials statements and related
      notes should be read in conjunction with the financial statements and notes
      thereto included in the Company’s audited financial statements for the year
      ended December 31, 2006 .





Principal
      business activity :
      Prairie
      Creek Ethanol, LLC (the Company), a Iowa Limited Liability Company, was
      organized with the intentions of developing, owning and operating a 100 million
      gallon ethanol manufacturing facility to be located in Wesley, Iowa.
      Construction is anticipated to begin in 2008 with expected completion in 2009.
      As of September 30, 2007, the Company is in the development stage with its
      efforts being principally devoted to organizational and equity-raising
      activities.





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





Cash
      and cash equivalents :
      The
      Company considers checking and money market accounts to be cash and cash
      equivalents. At times throughout the year, the Company’s cash balances may
      exceed amounts insured by the Federal Deposit Insurance
      Corporation.





Fair
      value of financial instruments :
      The
      carrying amount for accounts payable approximate fair value due to the
      short-term nature of this instrument.





Income
      taxes :
      The
      Company is organized as a limited liability company under Iowa state law. Under
      this type of organization, the Company is treated as a partnership for federal
      and state income tax purposes with the earning passing through to the members
      and being taxed at the member level. Accordingly, no income tax provision has
      been calculated.





Organizational
      and start-up costs :
      The
      Company expenses all organizational and start-up costs as they are
      incurred.





Loss
      per unit :
      Basic
      and diluted loss per unit are computed using the weighted-average number of
      units outstanding during the period. Diluted loss per unit for all periods
      presented is the same as basic loss per unit as no equivalent units existed.




**Note
      2.**   **Members’
      Equity**


The
      Company was formed on April 19, 2006 to have a perpetual life. The Company
      has
      one class of membership units with each unit representing a pro rata ownership
      interest in the Company’s capital, profits, losses and distributions. Income and
      losses are allocated to all members in proportion to units held. Transfer of
      units is restricted pursuant to the operating agreement and requires approval
      of
      the board of managers.





The
      Company was initially capitalized by the founding members who contributed a
      total of $870,000 in exchange for 1,239 units. A private placement memorandum
      was finalized on December 29, 2006 which raised additional equity of $710,000
      in
      exchange for 284 units.




**Note
      3.**   **Commitments
      and Contingencies**


Consulting :
      In June
      2006, the Company entered into an energy management agreement with a consulting
      company to provide consulting and energy management services for thermal and
      electricity requirements for the plant. These services will be provided through
      out the construction of the plant at a monthly fee of $3,952.


6


Prairie
      Creek Ethanol, LLC


(A
      Development Stage Company)





**Notes
      to Financial Statements**





Construction
      contracts :
      In
      December 2006, the Company signed a letter of intent with an unrelated party
      for
      the design and construction of the proposed plant. The estimated cost for the
      services is $136,000,000. This letter of intent is subject to the Company
      successfully obtaining adequate financing for the project.





The
      total
      cost of the project, including start-up cost, required working capital and
      the
      contracts discussed above, is currently estimated at $196,250,000.





Land
      options :
      In May
      2006, the Company entered into an option agreement to purchase approximately
      200
      acres of land for $1,500,000. As of June 30, 2006, The Company had paid $135,000
      for this option which extends through November 2007. The Company has the ability
      to extend the options term for an additional six months with the payment of
      $45,000 for each six month extension. If the Company exercises the option to
      purchase the land $45,000 can be applied toward the purchase price. If the
      option is allowed to expire, the seller will be entitled to retain any fees
      paid.





In
      May
      2006, the Company entered into an additional option agreement to purchase
      approximately 28 acres of land in exchange for 28 acres acquired in the first
      option above for $140,000. The Company paid $4,200 for this option which extends
      through November 2007. The Company has amended the second option to include
      an
      additional 47 acres of land for $630,720. The company paid $5,000 for the
      amendment to the option agreement.


7


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




**Forward
      Looking Statements**





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


•
              Investors’
                  ability to pay the outstanding balances on promissory notes after
                  the
                  closing of the offering;
 
 •
              Our
                  ability to obtain the debt financing necessary to construct and
                  operate
                  our plant;
 
 •
              Changes
                  in our business strategy, capital improvements or development
                  plans;
 
 •
              Construction
                  delays and technical difficulties in constructing the
                  plant;
 
 •
              Changes
                  in the environmental regulations that apply to our plant site and
                  operations;
 
 •
              Changes
                  in general economic conditions or the occurrence of certain events
                  causing
                  an economic impact in the agriculture, oil or automobile
                  industries;
 
 •
              Changes
                  in the availability and price of corn and natural gas and the market
                  for
                  ethanol and distillers grains;
 
 •
              Changes
                  in federal and/or state laws (including the elimination of any
                  federal
                  and/or state ethanol tax
                  incentives);
 
 •
              Changes
                  and advances in ethanol production technology;
                  and
  •
              Competition
                  from alternative fuel
                  additives.





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





**Overview**





We
      are an
      Iowa limited liability company organized on April 19, 2006, with the name of
      Prairie Creek Ethanol, LLC. We were formed for the purpose of constructing
      and
      operating a 100 million gallon dry mill corn-processing ethanol plant which
      is
      expected to be located near Wesley, Iowa in Kossuth County. Based upon
      engineering specifications produced by Fagen, Inc., we expect that the plant
      will annually consume approximately 35 million bushels of corn and as much
      as 3,400,000 Million British Thermal Units (“MMBtu”) of natural gas per year and
      produce approximately 100 million gallons of fuel grade ethanol and 320,000
      tons of distillers grains for animal feed each year.


8


We
      estimate the total project will cost approximately $196,250,000. We have entered
      into a letter of intent with Fagen, Inc., for the design and construction of
      our
      proposed ethanol plant for a price of approximately $128,095,190, which does
      not
      include the anticipated cost of our water treatment facility, any change orders,
      increases in the costs of materials pursuant to the Construction Cost Index
      (“CCI”) costs escalator provision contained in the letter of intent or increases
      in costs pursuant to the fixed monthly surplus provision contained in the letter
      of intent. We anticipate entering into, but have not yet entered into, a
      definitive design-build agreement with Fagen, Inc. Our letter of intent with
      Fagen, Inc. provides for an upward adjustment of the construction price in
      an
      amount equal to the percentage increase in the CCI for the month in which we
      give a notice to proceed to Fagen, Inc. or September 2007, whichever is earlier,
      over the CCI published for December 2006. The amount of the contract price
      increase will be equal to the percentage increase in the CCI based upon the
      December 2006 CCI of 7,887.62. Because a notice to proceed was not issued by
      September 2007, the estimated increase in the contract price is approximately
      $2,631,167. Additionally, the contract price is subject to a surcharge of
      one-half of one percent (0.5%) for each calendar month that passes between
      December 2006 and the month in which we issue to Fagen, Inc., a notice to
      proceed with plant construction or July 2007, whichever is earlier. Because
      a
      notice to proceed was not issued by July 2007, the estimated increase in the
      contract price due to this surcharge, which is in addition to the CCI increase,
      is approximately $4,482,982. We have budgeted $8,414,810 for our construction
      contingency to help offset higher construction costs; however, this may not
      be
      sufficient to offset all of the increased costs we may face. In addition, our
      contract price assumes the use of non-union labor. If Fagen, Inc. is required
      to
      employ union labor, the contract price will be increased to include any
      increased costs associated with the use of union labor.





We
      expect
      to capitalize our project using a combination of equity and debt to supplement
      the proceeds from our previous private placements. Through our previous private
      placements, we raised aggregate proceeds of $1,580,000 to fund our development,
      organizational and offering expenses. We expect the funds raised in our previous
      private placements to supply us with enough cash to cover our costs until we
      release offering proceeds from escrow. However, if the funds raised in our
      previous private placements are not sufficient to cover our costs prior to
      releasing offering proceeds from escrow, we will need to seek interim debt
      financing. If we are unable to obtain additional interim financing, we may
      be
      forced to abandon our business altogether.





We
      filed
      a Registration Statement for an initial public offering of our units with the
      Securities and Exchange Commission on Form SB-2 (SEC Registration No.
      333-141585), as amended, which became effective on September 21, 2007. We also
      registered these units with the state securities authorities in Florida,
      Illinois, Iowa, Kansas, Missouri, South Dakota and Wisconsin. We plan to raise
      a
      minimum of $59,000,000 and a maximum of $138,000,000 in the offering and secure
      the balance needed to construct the plant through federal, state and local
      grants and debt financing.





As
      of
      November 9, 2007, we have received subscriptions for approximately 267 units,
      for an aggregate amount of $1,335,000. However, we have not yet closed the
      offering, accepted any of the subscription agreements or released funds from
      escrow. Due to the extended 2007 corn and soybean harvest season and tightening
      margins in the ethanol industry, we decided in October 2007 to postpone our
      equity drive meetings until early 2008. Therefore, although we will continue
      to
      accept subscriptions, it is unlikely that we will receive subscriptions for
      a
      significant number of units prior to early 2008. We will require a significant
      amount of debt financing to complete our project. We are engaging in discussions
      with potential senior lenders; however, no agreement has been executed yet.
      We
      must obtain a written debt financing commitment prior to releasing our offering
      proceeds from escrow. If we do not secure the necessary debt financing, we
      will
      not be able to construct our proposed ethanol plant and may have to abandon
      our
      business.





We
      are
      still in the development phase, and until the proposed ethanol plant is
      operational, we will generate no revenue. We anticipate that accumulated losses
      will continue to increase until the ethanol plant is operational. We currently
      estimate that the construction of the plant will be completed in the fall of
      2009.





**Plan
      of Operations to Start-Up of the Ethanol Plant**





We
      expect
      to spend at least the next 12 months focused on completion of project
      capitalization, site development, and plant construction. We do not expect
      to
      complete construction and begin operations until 17 to 22 months from the
      commencement of construction. We expect the funds raised in our previous private
      placements to supply us with enough cash to cover our costs, including staffing,
      office costs, audit, legal, compliance and staff training, until we release
      funds from escrow and procure debt financing. However, in the event that these
      funds do not cover our costs, we may need to seek interim debt financing. If
      we
      are unable to obtain additional interim financing, we may be forced to abandon
      our business altogether.


9


Assuming
      the successful completion of our registered offering and execution of debt
      financing agreements, we expect to have sufficient cash on hand to cover all
      costs associated with construction of the project, including, but not limited
      to, site development, utilities, construction and equipment
      acquisition.





*Project
      Capitalization*





In
      the
      next fiscal quarter, our primary focus is expected to be on project
      capitalization. We expect to continue to raise equity through our registered
      offering, collect the offering proceeds from investors and identify potential
      sources of debt financing. Due to the extended 2007 corn and soybean harvest
      season and tightening margins in the ethanol industry, we decided in October
      2007 to postpone our equity drive meetings until early 2008. Therefore, although
      we will continue to accept subscriptions, it is unlikely that we will receive
      subscriptions for a significant number of units prior to early
      2008.





As
      of
      November 9, 2007, we have received subscriptions for approximately 267 units
      from investors, for an aggregate amount of approximately $1,335,000. We may
      not
      be successful in obtaining subscriptions for units in an amount which exceeds
      our minimum offering amount of $59,000,000. Our subscription procedures require
      subscribers to send 10% of the amount due at the time they sign the subscription
      agreement. At that time, investors are also required to provide a promissory
      note for the remainder of the amount due. As such, even if we receive
      subscriptions for a sufficient number of units, we may not ultimately be able
      to
      collect all funds owed to us by investors under the subscription agreements.
      We
      will not release funds from escrow until we have cash deposits in our escrow
      account in excess of the minimum offering amount of $59,000,000. In addition,
      we
      must obtain a written debt financing commitment for the debt financing we need.
      We have begun discussions with potential lenders, but have no commitments or
      agreements in place.





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





·
            commence
                construction of the plant using all or a part of the equity funds
                raised
                while we seek another debt financing source;





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





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





While
      the
      foregoing alternatives may be available, we do not expect to begin substantial
      plant construction activity before satisfying the loan commitment conditions
      or
      closing the loan transaction because it is very likely that Fagen, Inc. and
      any
      lending institution would prohibit substantial plant construction activity
      until
      satisfaction of loan commitment conditions or loan closing. In the unlikely
      event that the loan commitment and Fagen, Inc. permit us to spend equity
      proceeds prior to closing the loan and obtaining loan proceeds, we may decide
      to
      spend equity proceeds on project development expenses, such as securing critical
      operating contracts or owner’s construction costs such as site development
      expenses.


10





We
      plan
      to apply for grants from various sources, and recently applied for and received
      a grant of $75,000 from the Rail Revolving Loan and Grant Program administered
      by the Iowa Rail Finance Authority. Although we may apply under several programs
      simultaneously and may be awarded grants or other benefits from more than one
      program, it must be noted that some combinations of programs are mutually
      exclusive. Under some state and federal programs, awards are not made to
      applicants in cases where construction on the project has started prior to
      the
      award date. There is no guarantee that applications will result in awards of
      grants or loans.





*Site
      Acquisition and Development*





We
      expect
      to continue working principally on the preliminary design and development of
      our
      proposed ethanol plant, the acquisition and development of a plant site in
      Kossuth County, Iowa, obtaining the necessary construction permits, identifying
      potential sources of debt financing and negotiating the corn supply, ethanol
      and
      co-product marketing, utility and other contracts. We plan to fund these
      activities and initiatives using the funds raised in our previous private
      placements. We believe that our existing funds will permit us to continue our
      preliminary activities through the end of our registered offering. However,
      if
      we exhaust these funds, we will need to seek interim debt financing. In such
      a
      case, if we are unable to obtain sufficient interim financing, we may be forced
      to abandon our project altogether. Likewise, if we are unable to raise
      sufficient capital in our registered offering or otherwise obtain other funds,
      we may need to discontinue operations.





We
      currently hold real estate purchase options on two adjacent parcels of real
      property consisting of approximately 228 acres. Gold-Eagle Cooperative purchased
      the first option on May 25, 2006 for $45,000 and subsequently assigned the
      option to us. The original term of the option was six months, but the option
      agreement provides that the agreement may be renewed for additional six-month
      periods, so long as an additional $45,000 is paid for each such period. We
      renewed the option agreement in November 2006 and again in May 2007 so that
      we
      have the right to purchase the site through November 24, 2007. Under this
      first option agreement, we have the right to purchase approximately 200 acres
      at
      a price of $7,500 per acre, for a total purchase price of $1.5 million. Only
      our
      most recent $45,000 option payment will be applied toward this total purchase
      price, and if we renew the option agreement again, only the most recent $45,000
      option payment following any such renewal will apply toward the total purchase
      price. We anticipate renewing this option again so that we have the right to
      purchase the site through May 24, 2008, but have not yet renewed the
      option.





Gold-Eagle
      Cooperative purchased the second option for $4,200, which amount will not be
      applied to the purchase price, and subsequently assigned the option to us.
      The
      term of this option runs through April 10, 2008. Under the second option
      agreement, we have the right to purchase approximately 28 acres at a price
      of
      $5,000 per acre, for a total purchase price of approximately $140,000. In lieu
      of paying this purchase price, the sellers have the option of requiring us
      to
      exchange a portion of the property acquired under the first option for the
      property covered under this second option agreement. If the seller elects to
      make such an exchange, then the seller is required to pay us $4,000 per acre
      for
      each acre we convey to the seller in excess of the acres the seller conveys
      to
      us. This means that if we exercise both options, depending on whether the seller
      under the second option agreement elects to exchange property in lieu of paying
      the purchase price, we will acquire a net of between approximately 185 and
      228
      acres.





*Plant
      Construction*





We
      expect construction of the proposed plant to take approximately 17 to 22 months
      after construction commences. Our activities during this period will include
      completion of the final design and development of the plant and negotiation
      and
      execution of a definitive design-build agreement. We also plan to negotiate
      and
      execute finalized contracts concerning the provision of necessary electricity,
      natural gas and other power sources and marketing agreements for ethanol and
      co-products.





Assuming
      the successful completion of this offering and our obtaining the necessary
      debt
      financing, we expect to have sufficient cash on hand to cover construction
      and
      related start-up costs necessary to make the plant operational. We estimate
      that
      we will need approximately $136,085,190 to construct the plant and our water
      treatment facility, subject to construction cost index and surcharge increases,
      which we have budgeted in the amount of $8,414,810, and a total of approximately
      $51,750,000 to cover all capital expenditures necessary to complete the project,
      commence plant operations and produce revenue.


11





We
      must
      obtain debt financing in order to complete construction of the ethanol plant.
      The amount and nature of the debt financing that we are seeking is subject
      to
      the interest rates, amount of equity raised and the credit environment as well
      as other economic factors over which we have no control. We have no binding
      contracts or commitments with any bank, lender or financial institution for
      our
      debt financing.





*Construction
      Consultants*





*Fagen,
      Inc* *.*





We
      have
      entered into a letter of intent, and anticipate entering into a definitive
      design-build agreement, with Fagen, Inc. in connection with the design,
      construction and operation of our ethanol plant. Under the terms of the letter
      of intent, Fagen, Inc. will construct our plant for a price of approximately
      $
      128,085,190, which does not include the anticipated cost of our water treatment
      facility, any change orders, increases in the costs of materials pursuant to
      the
      CCI costs escalator provision contained in the letter of intent or increases
      in
      costs pursuant to the fixed monthly surplus provision contained in the letter
      of
      intent. Our letter of intent terminates on December 31, 2007, unless the size
      and design of the ethanol plant have been determined and mutually agreed upon,
      a
      specific site has been determined and mutually agreed upon, and at least ten
      percent (10%) of the necessary equity has been raised. This termination date
      may
      be extended upon mutual written agreement. Because we do not anticipate raising
      at least ten percent of the necessary equity to complete the project prior
      to
      December 31, 2007, it is likely that we will seek to extend the termination
      date
      of the letter of intent. In addition, our letter of intent requires that we
      enter into a definitive design-build agreement with Fagen, Inc. by December
      31,
      2007.





Under
      our
      letter of intent, the contract price of approximately $128,085,190 may be
      further increased if the Construction Cost Index ("CCI") published by
      Engineering News-Record Magazine reports a CCI greater than 7,887.62 in the
      month in which we issue to Fagen, Inc., a notice to proceed with plant
      construction or September 2007, whichever is earlier. The amount of the contract
      price increase will be equal to the percentage increase in the CCI based upon
      the December 2006 CCI of 7,887.62. Because a notice to proceed was not issued
      by
      September 2007, the estimated increase in the contract price is approximately
      $2,631,167. Additionally, the contract price is subject to a surcharge of
      one-half of one percent (0.5%) for each calendar month that passes between
      December 2006 and the month in which we issue to Fagen, Inc., a notice to
      proceed with plant construction or July 2007, whichever is earlier. Because
      a
      notice to proceed was not issued by July 2007, the estimated increase in the
      contract price due to this surcharge, which is in addition to the CCI increase,
      is approximately $4,482,982. We have included in our budget $8,414,810 for
      construction contingency to help offset any increases in construction costs.
      However, this allowance may not be sufficient to offset all of the increased
      costs we may face. If it is not sufficient, we intend to seek additional debt
      financing to offset any increase in the total project cost. We may also seek
      additional equity investments in this offering if necessary. In no event will
      we
      exceed the maximum offering amount of $138,000,000.





*Fagen
      Engineering, LLC*





We
      anticipate entering into an engineering services agreement with Fagen
      Engineering, LLC, an affiliated with Fagen, Inc., for the performance of certain
      engineering and design services, although we have not yet entered into such
      an
      agreement. Fagen Engineering, LLC performs the engineering services for projects
      constructed by Fagen, Inc.





*ICM,
      Inc.*





ICM,
      Inc.
      is a full-service engineering, manufacturing and merchandising firm based in
      Colwich, Kansas. We have not entered into any legally binding agreements with
      ICM, Inc. Based on discussions we have had with both Fagen, Inc. and ICM, Inc.
      and provisions found in our letter of intent with Fagen, Inc., we expect that
      ICM, Inc. will serve as the principal subcontractor for the plant and provide
      the process engineering operations for Fagen, Inc. We have also engaged ICM,
      Inc. to provide assistance in securing state approval to start construction
      of
      the plant, primarily in the form of obtaining the environmental permits we
      require to construct and operate the ethanol plant. The cost of ICM, Inc.’s
      services will be based on a time and material basis. Additional costs may be
      imposed if ICM, Inc. is required to address significant public comment and/or
      assist in lengthy agency negotiations regarding specific permit terms and
      conditions.


12





*Other
      Consultants*





We
      have
      engaged Yaggy Colby Associates of Iowa Inc. (“Yaggy Colby”) to provide to us
      certain engineering services relating to the proposed ethanol plant site,
      including design survey, land survey and other pre-design services. Under our
      agreement with Yaggy Colby, such services will be provided to us on an hourly
      rate basis.





We
      anticipate entering into, but have not yet entered into, a grain procurement
      agreement with Gold-Eagle Cooperative (“Gold-Eagle”) and North Central
      Cooperative (“North Central”). Under such an agreement, Gold-Eagle and North
      Central would have the exclusive right and responsibility to provide us with
      our
      daily requirements of corn. Under such an agreement, we anticipate that we
      would
      purchase corn at the local market price delivered to the ethanol plant, plus
      a
      fixed fee per bushel of corn purchased. Because several of our directors also
      serve as directors of Gold Eagle and North Central, such directors may have
      a
      conflict of interest when negotiating or approving a grain procurement
      agreement. Additionally, Gold-Eagle and North Central are two of our founders
      and are currently our two largest unit-holders. As a result, Gold-Eagle and
      North Central may be able to obtain a grain procurement agreement on more
      favorable terms than if Gold-Eagle and North Central were not unit-holders.
      Some
      of our directors are also directors of Corn, LP, an ethanol plant in Goldfield,
      Iowa that is one of our founders. Gold-Eagle procures all the corn needed for
      the operations of Corn, LP. This means that our directors that also serve as
      directors of Corn, LP may have a conflict of interest in negotiating or
      approving a grain procurement agreement with Gold-Eagle. Additionally, our
      directors that also serve as directors of Gold-Eagle may have a conflict of
      interest due to Gold-Eagle’s obligations to Corn, LP.





We
      have
      engaged U.S. Energy Services, Inc. to provide us with natural gas and
      electricity management services. In exchange for these services, we will pay
      U.S. Energy a monthly retainer fee of $3,800 for an initial contract term of
      12
      months. This monthly retainer increases four percent (4%) every twelve months,
      unless the agreement is terminated. If we decide to utilize U.S. Energy’s
      hedging service we will have to pay an additional $.01 per MMBTu administrative
      fee for physical or financial natural gas hedging. Additional fees may apply
      for
      additional services and for time and travel.





We
      expect
      that the Iowa, Chicago & Eastern Railroad Corporation (the “IC&E
      Railroad”), an affiliate of Cedar American Rail Holdings, Inc., will provide
      rail service to the proposed plant site. We have a preliminary agreement with
      Cedar American Rail Holdings, Inc. to provide us rebates of up to $170,000
      in
      the form of $50.00 per car for the construction and maintenance of two mainline
      switches. Under this preliminary agreement, we are required to pay Cedar
      American Rail Holdings, Inc. $3,000 per year for a term of ten years for
      mainline switch maintenance.





We
      anticipate that we will retain TranSystems Corporation for rail infrastructure
      design and construction services; however, we do not currently have such an
      agreement. We will need to establish rail access directly to the plant from
      the
      main rail line. We have engaged TranSystems Corporation to provide us with
      certain engineering services on a project-by-project basis.





Our
      letter of intent with Fagen, Inc. requires us to market our ethanol through
      US
      BioEnergy Corporation for a period of two years from the date the ethanol plant
      is completed, provided that US BioEnergy Corporation provides competitive rates
      and services compared to other marketing firms. Fagen, Inc. and certain of
      its
      affiliates are affiliates of US BioEnergy Corporation. Our obligation to market
      our ethanol through US BioEnergy Corporation means that we may not be able
      to
      market our ethanol as effectively as we otherwise would have.





We
      anticipate that Gold-Eagle Cooperative, currently our largest unit-holder,
      will
      manage the ethanol plant, market a portion of our distiller’s grains, and
      provide other services under long-term contracts. However, we have not entered
      into any definitive agreements with Gold-Eagle Cooperative at this time
      regarding the management of the ethanol plant. Because several of our directors
      also serve as directors of Gold Eagle Cooperative, such directors may have
      a
      conflict of interest when negotiating or approving the contemplated
      agreements.


13







We
      executed a memorandum of understanding to engage Indeck Wesley, L.L.C. to design
      and build an Illinois Basin coal-based energy plant as our energy source.
      However, we have since decided to power the ethanol plant with natural gas
      rather than coal. As a result, pursuant to our memorandum of understanding
      we
      may be forced to forfeit our down payment of $100,000 to Indeck Wesley,
      L.L.C.





We
      anticipate entering into an electric service agreement with Prairie Energy
      Cooperative, but have not yet entered into a definitive agreement.





*Permitting
      and Regulatory Activities*





We
      will
      be subject to extensive air, water and other environmental regulations and
      we
      will need to obtain a number of environmental permits to construct and operate
      the plant. We have not applied for any of these permits, but anticipate doing
      so
      before we begin construction. We have engaged ICM, Inc. to assist us in applying
      for the permits required to construct and operate the ethanol
      plant.





Some
      of
      the permits we will be required to obtain include, but are not necessarily
      limited to, air pollution construction and operation permits, a storm water
      discharge permit, a high capacity water withdrawal permit and an alcohol fuel
      producer’s permit. Additionally, we must put a pollution prevention plan and
      spill prevention control and countermeasure plan in place prior to commencing
      operations. If for any reason any of these permits are not granted, construction
      costs for the plant may increase, or the plant may not be constructed at all.
      Currently, we do not anticipate problems in obtaining the required permits;
      however, such problems may arise in which case our plant may not be allowed
      to
      operate.





*Trends
      and Uncertainties Impacting the Ethanol Industry*





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





We
      expect
      ethanol sales to constitute the bulk of our future revenues. Recently ethanol
      prices have been experiencing a decline and our profit margins may not be as
      high as they have been in the industry over the past few years once we are
      operational. A number of factors have contributed to the decline in the price
      of
      ethanol, including, but not limited to, the increased price of corn. In
      addition, the total domestic production of ethanol is at an all time high,
      and
      the ethanol supply is expected to exceed current demand projections by the
      end
      of 2007. A greater supply of ethanol on the market from other plants could
      reduce the price we are able to charge for our ethanol. This would have a
      negative impact on our future revenues once we become operational. There also
      exists the potential that blenders may be logistically unable to blend ethanol
      into gasoline at the pace at which ethanol is being produced; some refer to
      this
      as the “blend wall problem.” Furthermore, many blending terminals may need to
      make infrastructure changes to blend ethanol instead of methyl tertiary butyl
      ether (MTBE) and to blend the quantities of ethanol that are being produced.
      A
      consultant to the Renewable Fuels Association stated that about 85% of the
      nation's 400 to 500 gasoline terminals that blend ethanol are not equipped
      to
      take in rail cars. In addition, most gasoline blenders must install new tanks,
      pipes and pumps to handle ethanol. Blenders may be unwilling to spend large
      amounts of capital to expand infrastructure, or may be disinclined to blend
      ethanol absent a legislative mandate to increase blending. If the blending
      terminals do not have sufficient capacity or the necessary infrastructure to
      market this switch, or are reluctant to make such large capital expenditures
      to
      blend ethanol, there may be an oversupply of ethanol on the market, which could
      depress ethanol prices and negatively impact our financial performance. Thus,
      due to the anticipated increase in the supply of ethanol from new ethanol plants
      scheduled to begin production and the expansion of current plants, we believe
      current price levels will continue to be subject to downward pressure.


14





The
      direct competition of local ethanol plants could significantly affect our
      ability to operate profitably. A greater supply of ethanol on the market from
      other plants could reduce the price we are able to charge for our ethanol.
      This
      would have a negative impact on our future revenues once we become operational.
      Our ability to commence operations as quickly as possible will have a
      significant impact on our ability to be successful.





In
      order
      to sustain the ethanol market, the demand for ethanol must meet the current
      increase in supply. Increased gasoline prices, firm crude oil and gas markets,
      Federal and State legislative support, a positive political environment and
      increased consumer acceptance and exposure to ethanol would have a positive
      impact on the demand for ethanol and if these occur we would expect such
      increased demand to have a positive impact on our ability to operate profitably.
      For instance, if gasoline prices continue to trend higher, consumers will look
      for lower priced alternative fuels. Since ethanol blended fuel is currently
      a
      cheaper alternative for consumers, the demand for such ethanol blended fuel
      could increase, thus increasing the overall demand for ethanol. This could
      positively affect our earnings. However, this may not occur and a greater supply
      of ethanol on the market from additional plants and plant expansions could
      reduce the price we are able to charge for our ethanol, especially if supply
      continues to outpace demand.





Demand
      for ethanol may also increase as a result of consumption of E85 fuel. E85 is
      a
      blend of 70% to 85% ethanol and gasoline. According to the Energy Information
      Administration, E85 consumption is projected to increase from a national total
      of 11 million gallons in 2003 to 47 million gallons in 2025. E85 is used as
      an
      aviation fuel and as a hydrogen source for fuel cells. In the United States,
      there are currently about 6 million flexible fuel vehicles capable of operating
      on E85 and nearly 1,400 retail stations supplying it according to the National
      Ethanol Vehicle Coalition. Furthermore, automakers have indicated that by 2012,
      one-half of vehicles they produce will be flexible fuel vehicles.





Consumer
      resistance to the use of ethanol may adversely affect the demand for ethanol,
      which could adversely affect our ability to operate profitably and may
      negatively impact the value of your investment. Some individuals believe that
      use of ethanol has a negative impact on prices at the pump or that it reduces
      fuel efficiency to such an extent that it costs more to use ethanol than it
      does
      to use gasoline. Many also believe that ethanol adds to air pollution and harms
      car and truck engines. Still other consumers believe that the process of
      producing ethanol actually uses more fossil energy, such as oil and natural
      gas,
      than the amount of energy contained in the ethanol produced. These consumer
      beliefs could potentially be wide-spread. If consumers choose not to buy
      ethanol, it would affect the demand for the ethanol we produce which could
      also
      negatively affect our ability to sell our product and our profitability.





The
      support for and use of ethanol and ethanol-blended fuel has been and will likely
      continue to be supported by Federal and State legislation. For example, the
      Energy Policy Act of 2005 includes various provisions that are expected to
      favorably impact the ethanol industry by enhancing both the production and
      use
      of ethanol. The Energy Policy Act of 2005 created a 7.5 billion gallon renewable
      fuels standard (RFS). The RFS is a national flexible program that promotes
      ethanol production while allowing refiners to use renewable fuel blends in
      those
      areas where it is most cost-effective rather than setting requirements for
      ethanol use in any particular area or state. The RFS began at 4 billion gallons
      in 2006, and increases to 7.5 billion gallons by 2012. According to the
      Renewable Fuels Association, as of November 7, 2007, there were 130 operational
      ethanol plants nationwide that have the capacity to produce approximately 6.88
      billion gallons annually. Thus, current ethanol production capacity exceeds
      the
      2007 RFS requirement of 4.7 billion gallons, which could lead to a short-term
      oversupply. In addition, ethanol production capacity for 2007 is expected to
      increase significantly due to a number of plants becoming operational or
      expanding production capacity, again leading to the concern of oversupply.
      U.S.
      production of ethanol in 2006 also exceeded the RFS requirement of 4 billion
      gallons, as total U.S. production for 2006 was approximately 4.8 billion
      gallons. However, according to the Renewable Fuels Association, the demand
      for
      ethanol in 2006 was approximately 5.3 billion gallons, which would indicate
      that
      demand for ethanol remains strong.





Although
      the Energy Policy Act of 2005 did not impose a national ban of MTBE, the primary
      competitor of ethanol as a fuel oxygenate, the Energy Policy Act of 2005’s
      failure to include liability protection for manufacturers of MTBE could result
      in refiners and blenders using ethanol as an oxygenate rather than MTBE to
      satisfy the Clean Air Act’s reformulated gasoline oxygenate requirement. While
      this may create some additional demand in the short term, the Energy Policy
      Act
      of 2005 repealed the Clean Air Act’s 2% oxygenate requirement for reformulated
      gasoline immediately in California and 270 days after enactment elsewhere.
      However, the Clean Air Act also contains an oxygenated fuel requirement for
      areas classified as carbon monoxide non-attainment areas. These areas are
      required to establish an oxygenated fuels program for a period of no less than
      three months each winter. The minimum oxygen requirement for gasoline sold
      in
      these areas is 2.7% by weight. This is the equivalent of 7.7% ethanol by volume
      in a gasoline blend. This requirement was unaffected by the Energy Policy Act
      and a number of states, including California, participate in this
      program.


15





There
      has
      been recent Congressional activity in both the Senate and the House of
      Representatives to accelerate the current RFS and provide additional incentives
      for the use of alternative fuels. The BioFuels Security Act, known as S. 23
      or
      H.R. 559, for example, was reintroduced on January 4, 2007, by co-sponsors
      Tom
      Harkin, Richard Luger and others. If passed, the legislation would accelerate
      the current RFS by requiring 10 billion gallons of renewable fuels to be used
      by
      2010, 30 billion gallons by 2020 and 60 billion gallons by 2030. Other
      provisions would require additional E85 pumps at branded gasoline stations,
      increased use of alternative fuels in the federal fleet and an increase in
      the
      percentage of flex fuel vehicles produced. The Senate bill (S. 23) has been
      referred to the Senate Committee on Commerce, Science and Transportation and
      the
      corresponding bill in the House of Representatives (H.R. 559) has been referred
      to the Subcommittee on Government Management, Organization and Procurement.
      This
      legislation has not been signed into law, and there is no certainty that the
      legislation will be passed. In addition, there is no certainty the legislation,
      if passed, would provide any benefit to us or to the industry as a
      whole.





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





Ethanol
      production is also expanding internationally. Imported ethanol is generally
      subject to a $0.54 per gallon tariff that was designed to offset the $0.51
      per
      gallon ethanol incentive available under the federal excise tax program for
      refineries that blend ethanol in their fuel. There is, however, a special
      exemption from this tariff under a program known as the Caribbean Basin
      Initiative for ethanol imported from 24 countries in Central America and the
      Caribbean Islands. Under this exemption, up to 7% of the U.S. ethanol market
      may
      be supplied duty-free by Caribbean Basin Initiative Ethanol containing no local
      feedstock. Imports from the exempted countries may increase as a result of
      new
      plants in development. Since production costs for ethanol in these countries
      are
      significantly less than what they are in the U.S., the duty-free import of
      ethanol through the countries exempted from the tariff pursuant to the Caribbean
      Basin Initiative may negatively affect the demand for domestic ethanol and
      the
      price at which we sell our ethanol.





The
      United States Supreme Court recently held in the case of *Massachusetts
      v. EPA* ,
      that
      the EPA has a duty under § 202 of the Clean Air Act to regulate the level of
      emissions of the four main “greenhouse gases,” including carbon dioxide, from
      new motor vehicles. Other similar lawsuits have been filed seeking to require
      the EPA to regulate the level of carbon dioxide emissions from stationary
      sources, such as ethanol plants. If these lawsuits are successful, our cost
      of
      complying with new or changing environmental regulations may increase in the
      future.





*Technology
      Developments*





Ethanol
      is typically produced from the starch contained in grains, such as corn.
      However, ethanol can potentially be produced from cellulose, the main component
      of plant cell walls and the most common organic compound on earth. The main
      attraction towards cellulosic ethanol is based on the idea that the products
      used to make it are less expensive than corn. However, the downside is that
      the
      technology and equipment needed to convert such products into ethanol are more
      complicated and more expensive than the technology currently used for the
      production of corn-based ethanol. Recently, there has been an increased interest
      in cellulosic ethanol due to the relatively low maximum production capacity
      of
      corn-based ethanol. The products used to produce cellulosic ethanol exist in
      a
      far greater quantity than corn, and therefore cellulosic ethanol production
      may
      be an important aspect of expanding ethanol production capacity. Recognizing
      this need, Congress supplied large monetary incentives in the Energy Policy
      Act
      of 2005 to help initiate the creation of cellulosic ethanol plants in the United
      States. If such cellulosic ethanol plants are constructed and begin production
      on a commercial scale, the production of potentially lower-cost cellulosic
      ethanol may hinder our ability to compete effectively.


16


*Trends
      and Uncertainties Impacting the Corn and Natural Gas Markets and Our Cost of
      Goods Sold*





We
      expect
      our costs of goods sold will consist primarily of costs relating to the corn
      and
      natural gas supplies necessary to produce ethanol and distillers grains for
      sale. We expect to grind approximately 2,920,000 bushels of corn each month.
      With the increased demand for corn from increased ethanol production, we expect
      corn prices will continue to increase. These high corn prices might be mitigated
      somewhat due to increased corn planting. Farmers responded to high corn prices
      by planting an estimated 93.6 million acres of corn in 2007, an approximately
      16% increase over the corn production acres for the 2006 growing season of
      approximately 78.3 million acres. This is expected to increase the number of
      bushels of corn produced in the 2007 growing season to approximately 13.2
      billion bushels. If this is the case, it could offset some of the additional
      corn demand from the ethanol industry. Management expects continued volatility
      in corn prices, which will negatively affect our ability to operate profitably.





We
      expect
      our natural gas usage to be approximately 3,400,000 million British thermal
      units (mmBTU) per year. We will use natural gas to (a) operate a boiler
      that provides steam used in the production process, (b) operate the thermal
      oxidizer that will help us comply with emissions requirements, and (c) dry
      our distillers grain products to moisture contents at which they can be stored
      for long periods of time, and can be transported greater distances. Recently,
      the price of natural gas has followed other energy commodities to historically
      high levels. Current natural gas prices are considerably higher than the 10-year
      average. Global demand for natural gas is expected to continue to increase,
      further driving up prices. As a result, we expect natural gas prices to remain
      higher than average in the short to mid-term. Increases in the price of natural
      gas may increases our cost of production and negatively impact our profit
      margins once we are operational.





**Operating
      Expenses**





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





**Critical
      Accounting Estimates**





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





We
      defer
      offering costs until the sale of units is completed. Upon issuance of the units,
      these costs will be netted against the proceeds received. If the offering is
      not
      completed, such costs will be expensed.





**Employees**





Prior
      to
      commencement of operations, we intend to hire approximately 45 full-time
      employees. Approximately six of our employees will be involved primarily in
      management and administration and the remainder will be involved primarily
      in
      plant operations. Our officers are Clay Hansen, President; Mervin Krauss, Vice
      President; John Stelzer, Treasurer; and Mark Wigans, Secretary. We do not
      presently compensate our officers for their services. As of the date of this
      prospectus, we have not hired any employees.


17





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





**Position**
            
            **# Full-Time****Personnel**Operations
                Manager
            
            
            1Plant
                Manager
            
            
            1Lab
                Manager
            
            
            1Lab
                Technician
            
            
            1Office/Administrative
            
            
            2Load
                Out/Floaters
            
            
            4Shift
                Supervisors
            
            
            2Maintenance
                Manager
            
            
            1Maintenance
                Technicians
            
            
            8Plant
                Operators
            
            
            24**TOTAL**
            
            
            **45**





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





We
      intend
      to enter into written confidentiality and assignment agreements with our key
      officers and employees. Among other things, these agreements will require such
      officers and employees to keep all proprietary information developed or used
      by
      us in the course of our business strictly confidential.





Our
      success will depend in part on our ability to attract and retain qualified
      personnel at a competitive wage and benefit level. We must hire qualified
      managers and other personnel. We operate in a rural area with low unemployment.
      There is no assurance that we will be successful in attracting and retaining
      qualified personnel at a wage and benefit structure at or below those we have
      assumed in our project. If we are unsuccessful in this regard, we may not be
      competitive with other ethanol plants and your investment may lose
      value.





**Liquidity
      and Capital Resources**





*Sources
      of Funds*





Through
      our previous private placements, we raised $1,580,000 of seed capital equity
      to
      fund our development, organizational and offering expenses. We
      expect
      the funds raised in our previous private placements to supply us with enough
      cash to cover our costs until we release offering proceeds from escrow. However,
      if the funds raised in our previous private placements are not sufficient to
      cover our costs prior to releasing offering proceeds from escrow, we will need
      to seek interim debt financing. If we are unable to obtain additional interim
      financing, we may be forced to abandon our business altogether.





We
      filed
      a Registration Statement for an initial public offering of our units with the
      Securities and Exchange Commission on Form SB-2 (SEC Registration No.
      333-141585), as amended, which became effective on September 21, 2007. We also
      registered the units with the state securities authorities in Florida, Illinois,
      Iowa, Kansas, Missouri, South Dakota and Wisconsin. We plan to raise a minimum
      of $59,000,000 and a maximum of $138,000,000 in the offering and secure the
      balance needed to construct the plant through federal, state and local grants
      and debt financing. As of November 9, 2007, we have received subscriptions
      for
      approximately 267 units, for an aggregate amount of approximately $1,335,000.
      We
      have not yet closed the offering or released funds from escrow. Due to the
      extended 2007 corn and soybean harvest season and tightening margins in the
      ethanol industry, we decided in October 2007 to postpone our equity drive
      meetings until early 2008. Therefore, although we will continue to accept
      subscriptions, it is unlikely that we will receive subscriptions for a
      significant number of units prior to early 2008. We will require a significant
      amount of debt financing to complete our project. We are engaging in preliminary
      discussions with potential senior lenders, however, no agreement has been
      executed yet. If we do not secure the necessary debt financing, we will not
      be
      able to construct our proposed ethanol plant and may have to abandon our
      business.





The
      following schedule sets forth estimated sources of funds to build our
      proposed ethanol plant near Wesley, Iowa.  This schedule could change
      in the future depending on the amount of equity raised in our registered
      offering and whether we receive additional grants.  The schedule may
      also change depending on the level of senior debt incurred and the amount of
      any
      bond financing we may pursue.


18





**Sources of**
              **Funds**(1)
            
            
            
            **Percent**Offering
                Proceeds (2)
            
            $
            96,545,000
            
            
            49.19
            %Seed
                Capital Proceeds (3)
            
            $
            1,580,000
            
            
            0.81
            %Senior
                Debt Financing (4)
            
            $
            98,125,000
            
            
            50.00
            %**Total
                Sources of Funds**
            
            $
            196,250,000
            
            
            100.00
            %





(1)
            The
                amount of estimated offering proceeds and senior debt financing may
                be
                adjusted depending on the level of grants or bond financing we are
                able to
                obtain and the amount of any line of operating credit or interim
                financing
                we are able to obtain.(2)
            As
                of November 9, 1007, we had subscriptions from investors for approximately
                $1,335,000.(3)
            We
                issued a total of 1,523 units in our two private placements in exchange
                for proceeds of $1,580,000. We issued a total of 284 units to our
                seed
                capital investors at a price of $2,500.00 per unit. In addition,
                we issued
                1,239 units to our founders at an average price of $702.18 per
                unit.(4)
            We
                currently do not have a definitive loan agreement with a senior lender
                for
                debt financing in the amount of $98,125,000. We have begun preliminary
                discussions with potential lenders, but have no commitments or agreements
                in place.





We
      do not
      expect to begin substantial plant construction activity before closing our
      equity offering, satisfying any loan commitment conditions and closing the
      loan
      transaction.





Assuming
      the successful completion of the offering and execution of loan closing
      agreements, we expect to have sufficient cash on hand to cover all costs
      associated with construction of the project, including, but not limited to,
      site
      development, utilities, construction and equipment acquisition.





*Uses
      of Proceeds*





The
      following tables describe our proposed estimated use of our offering and debt
      financing proceeds. The figures are estimates only, and the actual uses of
      proceeds may vary significantly from the descriptions given below.





**Use
                of Proceeds**
            
            **Amount**
            
            **Percent of**
              **Total**Plant
                construction
            
            $
            128,085,190
            
            
            65.26
            %Water
                treatment facility
            
            
            8,000,000
            
            
            4.08
            %Natural
                gas installation
            
            
            8,000,000
            
            
            4.08
            %CCI
                and surplus contingency
            
            
            8,414,810
            
            
            4.29
            %Grain
                storage and handling
            
            
            3,600,000
            
            
            1.83
            %Administration
                building/equipment
            
            
            450,000
            
            
            0.23
            %Construction
                performance bond
            
            
            100,000
            
            
            0.05
            %Construction
                insurance costs
            
            
            275,000
            
            
            0.14
            %Construction
                contingency
            
            
            3,025,000
            
            
            1.54
            %Development
                costs
            
            
            4,750,000
            
            
            2.42
            %Land
                costs
            
            
            1,750,000
            
            
            0.89
            %Railroad
            
            
            5,300,000
            
            
            2.70
            %Rolling
                stock
            
            
            250,000
            
            
            0.13
            %Fire
                Protection and water supply
            
            
            2,500,000
            
            
            1.27
            %Capitalized
                interest
            
            
            3,000,000
            
            
            1.53
            %**Start
                up costs:**Financing
                costs
            
            
            1,000,000
            
            
            0.51
            %Organization
                costs(1)
            
            
            1,250,000
            
            
            0.64
            %Pre-production
                period costs
            
            
            1,000,000
            
            
            0.51
            %Working
                capital
            
            
            9,000,000
            
            
            4.59
            %Inventory
                - corn(2)
            
            
            6,500,000
            
            
            3.31
            %**Total**
            
            **$**
            **196,250,000**
            
            
            100.00
            %




(1)
            Includes
                estimated offering expenses of
                $550,000.





(2)
            We
                may finance our corn inventory through Gold-Eagle Cooperative by
                issuing
                up to 1,300 membership units in exchange for $6,500,000 of corn inventory
                financing, equivalent to $5,000 per membership unit. However, we
                have no
                definitive agreement in place to do
                so.


19


*Quarterly
      Financial Results*





As
      of
      September 30, 2007, we had cash and cash equivalents of approximately $680,555
      and total assets of approximately $1,339,203. As of September 30, 2007, we
      had
      current liabilities of approximately $48,109. Total members’ equity as of
      September 30, 2007, was approximately $1,291,094. Since inception, we have
      generated no revenue from operations, and as of September 30, 2007, have
      accumulated net losses of approximately $249,509 due to start-up and development
      costs.





We
      raised
      $1,580,000 in seed capital through previous private placements. We have used
      the
      proceeds to fund development and organizational needs. We expect the funds
      raised in our previous private placements to supply us with enough cash to
      cover
      our costs until we release offering proceeds from escrow. However, if the funds
      raised in our previous private placements are not sufficient to cover our costs
      prior to releasing offering proceeds from escrow, we will need to seek interim
      debt financing. If we are unable to obtain additional interim financing, we
      may
      be forced to abandon our business altogether.





As
      of
      November 9, 2007, we have received subscriptions for approximately 267 units
      through our registered offering for an aggregate amount of approximately
      $1,335,000. We have not yet accepted any of the subscriptions. We may not be
      successful in obtaining subscriptions for units in an amount which exceeds
      our
      minimum offering amount of $59,000,000. We will not release funds from escrow
      until we have cash deposits in our escrow account in excess of the minimum
      offering amount of $59,000,000. In addition, we must obtain a written debt
      financing commitment for the debt financing we need. We have begun preliminary
      discussions with potential lenders, but have no commitments or agreements in
      place.





**Off-Balance
      Sheet Arrangements**





We
      do not
      have any off-balance sheet arrangements.





**Item
      3.**  **Controls
      and Procedures**





Our
      management, including our President (the principal executive officer), Clay
      Hansen, along with our Treasurer, (the principal financial officer), John
      Stelzer, have reviewed and evaluated the effectiveness of our disclosure
      controls and procedures as of September 30, 2007. Based upon this review and
      evaluation, these officers believe that our disclosure controls and procedures
      are effective in ensuring that material information related to us is recorded,
      processed, summarized and reported within the time periods required by the
      forms
      and rules of the Securities and Exchange Commission.





Our
      management, consisting of our President and our Treasurer, have reviewed and
      evaluated any changes in our internal control over financial reporting that
      occurred as of September 30, 2007, and there has been no change that has
      materially affected or is reasonably likely to materially affect our internal
      control over financial reporting.





**PART
      II.**  **OTHER
      INFORMATION**





**Item
      1.**  **Legal
      Proceedings**





None.





20




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





During
      the time period beginning with the formation of Prairie Creek Ethanol, LLC
      on
      April 19, 2006 and ending on December 31, 2006, we issued and sold 284
      membership units to our seed capital investors at a purchase price of $2,500
      per
      unit and 1,239 units to our founders at an average purchase price of $702.18
      per
      unit (969 units were purchased for $588.24 per unit and 270 units were purchased
      were purchased for $1,111.11 per unit), without registering the units with
      the
      Securities and Exchange Commission. Sales to our founders occurred on August
      10,
      2006, while sales to our seed capital investors occurred on December 31, 2006.
      Each of these sales was deemed to be exempt from registration under the
      Securities Act in reliance on Section 4(2) and Rule 506 of the Securities Act
      of
      1933 as transactions by an issuer not involving a public offering. No
      underwriting discounts or commissions were paid in these transactions and we
      conducted no general solicitation in connection with the offer or sale of the
      securities. The purchasers of the securities in each transaction made
      representations to us regarding their status as accredited investors as defined
      in Regulation D, or as investors with such knowledge and experience in financial
      and business matters that they were capable of evaluating the merits and risks
      of the investment (alone or with a purchaser representative), and their
      intention to acquire the securities for investment only and not with a view
      to
      or for sale in connection with any distribution thereof. Appropriate legends
      were affixed to unit certificates and instruments issued in such transactions.
      All seed capital investors were provided a private placement memorandum
      containing all material information concerning our company and the offering.
      All
      purchases were made with cash and the total amount of cash consideration for
      those securities was $1,580,000.




We
      filed
      a Registration Statement for an initial public offering of our units with the
      Securities and Exchange Commission on Form SB-2 (333-141585) as amended, which
      became effective on September 21, 2007. We commenced our initial public offering
      of our units shortly thereafter. Certain of our officers and directors are
      offering and selling the units on a best efforts basis without the assistance
      of
      an underwriter. We do not pay these officers or directors any compensation
      for
      services related to the offer or sale of the units.





We
      registered a total of 27,600 units at $5,000 per unit for an aggregate maximum
      gross offering price of $138,000,000. As of November 9, 2007, we have received
      subscriptions for approximately 267 units, for an aggregate amount of
      $1,335,000. We have not yet accepted any subscriptions and have not yet received
      subscriptions for units in an amount which exceeds our minimum offering amount
      of $59,000,000.





Pursuant
      to our prospectus, all subscription payments from the offering are deposited
      in
      an escrow account. We have not yet met the conditions to breaking escrow. We
      will not break escrow until we satisfy the following conditions:





·
            Cash
                proceeds from unit sales deposited in the escrow account equals or
                exceeds
                the minimum offering amount of $59,000,000, exclusive of
                interest;




·
            We
                obtain a written debt financing commitment for debt financing ranging
                from
                $56,670,000 to $135,670,000 less any grants and/or tax increment
                financing
                we are awarded;




·
            We
                elect, in writing, to terminate the escrow
                agreement;




·
            The
                escrow agent provides to each state securities department in which
                the
                Company has registered its securities for sale an affidavit stating
                that
                the foregoing requirements have been satisfied;
                and


·
            The
                state securities commissioners have consented to release of the funds
                on
                deposit.





For
      the
      period detailed by this report, we did not receive or use any net offering
      proceeds.





**Item
      3.**  **Defaults
      Upon Senior Securities**





None.





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





None.





**Item
      5.**  **Other
      Information**





None.





**Item
      6.**  **Exhibits**





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





**Exhibit**
              **No.**
            
            **Description**
            
            **Method of**
              **Filing**31.1
            
            Certificate
                Pursuant to 17 CFR 240.13a-14(a)
            
            *31.2
            
            Certificate
                Pursuant to 17 CFR 240.13a-14(a)
            
            *32.1
            
            Certificate
                Pursuant to 18 U.S.C. § 1350
            
            *32.2
            
            Certificate
                Pursuant to 18 U.S.C. § 1350.
            
            *







(*)  Filed
      herewith.


21


**SIGNATURES**





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




PRAIRIE
                  CREEK ETHANOL, LLCDate:
                  November 14, 2007
              /s/
                  Clay HansenClay HansenChairman, President and Director (Principal Executive Officer)Date:
                  November 14, 2007
              /s/
                  John StelzerJohn StelzerTreasurer (Principal Financial and Accounting Officer)




22