**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10-Q**




**T
        **Quarterly
        report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
        1934.****




**For
      the quarterly period ended March 31, 2008**




**OR**
  **£
          **Transition
          report 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 registrant 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)
            
            (Zip
                Code)


**(515)
        825-3161**
 (Registrant's
        telephone number)


Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the preceding 12 months (or for such shorter period that the registrant was
      required to file such reports), and (2) has been subject to such filing
      requirements for the past 90 days.




ýYes ̈No




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




Large
                Accelerated Filer ̈
            Accelerated
                Filer ̈Non-Accelerated
                Filer ̈(Do not check if a smaller reporting company)
            Smaller
                reporting companyý





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




 ̈YesýNo





Indicate
      the number of shares outstanding of each of the issuer’s classes of common
      equity, as of the latest practicable date:  As of May 12, 2008 there were
      920 membership units outstanding.




1


**INDEX**




**Page
                No.****PART I - FINANCIAL
              INFORMATION**
            
            **3****ITEM
                1. UNAUDITED FINANCIAL STATEMENTS**
            
            **3****ITEM
                2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                AND RESULTS OF OPERATIONS**
            
            **8****ITEM
                3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
                RISK**
            
            **18****ITEM
                4. CONTROLS AND PROCEDURES**
            
            **18****PART II - OTHER
              INFORMATION**
            
            **18****ITEM
                1. LEGAL PROCEEDINGS**
            
            **18****ITEM
                1A. RISK FACTORS**
            
            **18****ITEM
                2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
                PROCEEDS**
            
            **18****ITEM
                3. DEFAULTS UPON SENIOR SECURITIES**
            
            **19****ITEM
                4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
                HOLDERS**
            
            **19****ITEM
                5. OTHER INFORMATION**
            
            **19****ITEM
                6. EXHIBITS**
            
            **19****SIGNATURES**
            
            **20**




2


**PART
      I - FINANCIAL INFORMATION**





**ITEM
      1. UNAUDITED FINANCIAL STATEMENTS.**




**Prairie
        Creek Ethanol, LLC**


**(A
        Development Stage Company)**
  **Balance
          Sheets**
  **March
                  31, 2008**
              
              December
                  31, 2007**(Unaudited)****ASSETS**CURRENT
                  ASSETSCash
                  and cash equivalents
              
              **$**
              **296,622**
              
              $
              454,238Prepaid
                  insurance
              
              
              **10,369**
              
              
              26,570**306,991**
              
              
              480,808OTHER
                  ASSETSDeferred
                  offering costs
              
              
              **723,670**
              
              
              513,827Land
                  options
              
              
              **189,200**
              
              
              189,200Other
                  assets and deposits
              
              
              **98,158**
              
              
              92,270**1,011,028**
              
              
              795,297**$**
              **1,318,019**
              
              $
              1,276,105**LIABILITIES
                  AND MEMBERS' EQUITY**CURRENT
                  LIABILITIES, accounts payable
              
              **$**
              **131,606**
              
              $
              23,781MEMBERS’
                  EQUITYMembers’
                  capital
              
              
              **1,540,597**
              
              
              1,540,597Loss
                  accumulated during development stage
              
              
              **(354,184**
              **)**
              
              (288,273
              )**1,186,413**
              
              
              1,252,324**$**
              **1,318,019**
              
              $
              1,276,105




See
        Notes
        to Unaudited Condensed Financial Statements.
  3
 **Prairie
          Creek Ethanol, LLC**
 **(A
        Development Stage Company)**


**Statements
        of Operations (Unaudited)**
 
 For
                  the PeriodFor
                  the three
              
              For
                  the three
              
              from
                  April 19, 2006Months
                  Ended
              
              Months
                  Ended
              
              (inception)
                  toMarch
                  31, 2008
              
              March
                  31, 2007
              
              March
                  31, 2008Revenues
              
              $
              -
              
              $
              -
              
              $
              -Operating
                  expenses:Project
                  development
              
              
              11,856
              
              
              69,993
              
              
              185,120General
                  and administrative
              
              
              54,055
              
              
              9,299
              
              
              169,06465,911
              
              
              79,292
              
              
              354,184**Loss
                  accumulated during****development
                  stage**
              
              $
              (65,911
              )
              $
              (79,292
              )
              $
              (354,184
              )Weighted
                  Average Units Outstanding
              
              
              920
              
              
              1,523
              
              
              1,362Net
                  Loss per Unit-Basic and Diluted
              
              $
              (71.64
              )
              $
              (52.06
              )
              $
              (260.05
              )
  See
          Notes
          to Unaudited Condensed Financial Statements.
  4
 **Prairie
            Creek Ethanol, LLC**
 **(A
          Development Stage Company)**
  **Statements
            of Members' Equity (Unaudited)**
 **For
            the period from April 19, 2006 (inception) to March 31,
            2008**
 LossAccumulatedMembers'
                
                DuringDevelopment
                
                TotalMembers'Capital
                
                Stage
                
                EquityBalance,
                    beginning
                
                $
                -
                
                $
                -
                
                $
                -Issuance
                    of 1,523 member units
                
                
                1,580,000
                
                
                -
                
                
                1,580,000Offering
                    cost
                
                
                (35,897
                )
                
                -
                
                
                (35,897
                )Loss
                    accumulated during development stage
                
                
                -
                
                
                (82,067
                )
                
                (82,067
                )Balance,
                    December 31, 2006
                
                
                1,544,103
                
                
                (82,067
                )
                
                1,462,036Offering
                    cost
                
                
                (3,500
                )
                
                -
                
                
                (3,500
                )Redemption
                    of 603 member units
                
                
                (6
                )
                
                -
                
                
                (6
                )Loss
                    accumulated during development stage
                
                
                -
                
                
                (206,206
                )
                
                (206,206
                )Balance,
                    December 31, 2007
                
                
                1,540,597
                
                
                (288,273
                )
                
                1,252,324Loss
                    accumulated during development stage
                
                
                -
                
                
                (65,911
                )
                
                (65,911
                )Balance,
                    March 31, 2008
                
                $
                1,540,597
                
                $
                (354,184
                )
                $
                1,186,413
  See
          Notes
          to Unaudited Condensed Financial Statements.
  5
 **Prairie
            Creek Ethanol, LLC**
 **(A
          Development Stage Company)**
  **Statements
            of Cash Flows (unaudited)**
 For
                    the PeriodFor
                    the three
                
                For
                    the three
                
                from
                    April 19, 2006Months
                    Ended
                
                Months
                    Ended
                
                (inception)
                    toMarch
                    31, 2008
                
                March
                    31, 2007
                
                March
                    31, 2008OPERATING
                    ACTIVITIESNet
                    (loss) accumulated during development stage
                
                $
                (65,911
                )
                $
                (79,292
                )
                $
                (354,184
                )Change
                    in working capital components:(Increase)
                    decrease in prepaid expenses
                
                
                16,201
                
                
                10,809
                
                
                (10,369
                )Increase
                    (decrease) in accounts payable
                
                
                (448
                )
                
                6,903
                
                
                23,327Net
                    cash (used in) operating activities
                
                
                (50,158
                )
                
                (61,580
                )
                
                (341,226
                )INVESTING
                    ACTIVITIES(Increase)
                    in other assets and deposits
                
                
                (5,888
                )
                
                30,027
                
                
                (98,158
                )Payment
                    for land option
                
                
                -
                
                
                -
                
                
                (189,200
                )Net
                    cash (used in) investing activities
                
                
                (5,888
                )
                
                30,027
                
                
                (287,358
                )FINANCING
                    ACTIVITIESMember
                    contributions
                
                
                -
                
                
                -
                
                
                1,580,000Payment
                    of offering costs
                
                
                -
                
                
                (3,500
                )
                
                (39,397
                )Payment
                    of deferred offering costs
                
                
                (101,570
                )
                
                (38,559
                )
                
                (615,397
                )Net
                    cash provided by (used in) financing activities
                
                
                (101,570
                )
                
                (42,059
                )
                
                925,206Net
                    increase (decrease) in cash and cash equivalents
                
                
                (157,616
                )
                
                (73,612
                )
                
                296,622CASH
                    AND CASH EQUIVALENTSBeginning
                
                
                454,238
                
                
                1,287,023
                
                
                -Ending
                
                $
                296,622
                
                $
                1,213,411
                
                $
                296,622SUPPLEMENTAL
                    NONCASH OPERATING, INVESTING ANDFINANCING
                    ACTIVITYDeferred
                    offering costs in accounts payable
                
                $
                108,273
                
                $
                44,537
                
                $
                108,273Redemption
                    of membership units in accounts payable
                
                
                6
                
                
                -
                
                
                6
 See
            Notes
            to Unaudited Condensed Financial Statements.
  6


Prairie
          Creek Ethanol, LLC
 (A
        Development Stage Company)
  **Notes
            to Financial Statements**




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





The
      accompanying unaudited condensed interim 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 financial statements and the
      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, 2007 included in the
      Company’s Annual Report on Form 10-KSB. In the opinion of management, the
      condensed interim financial statements reflect all adjustments (consisting
      of
      normal recurring accruals) that we consider necessary to present fairly the
      Company’s results of operations, financial position and cash flows. The results
      reported in these condensed interim financial statements should not be regarded
      as necessarily indicative of results that may be expected for the entire
      year.





Principal
      business activity :
      Prairie
      Creek Ethanol, LLC (the Company), an Iowa Limited Liability Company, intends
      to
      develop, own and operate a 55 million gallon per year ethanol manufacturing
      facility to be located in Wesley, Iowa. Construction is anticipated to begin
      in
      2008 with expected completion within 17 to 22 months after construction
      commences. As of March 31, 2008, 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.





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.** **Commitments
      and Contingencies**





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 $82,000,000. This letter of intent is subject to the Company
      successfully obtaining adequate financing for the project.





Land
      options :
      The
      Company has an option agreement to purchase approximately 200 acres of land
      for
      $1,500,000. As of March 31, 2008, The Company had paid $180,000 for this option,
      which extends through May 2008. The Company has the ability to extend the
      option's 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.





The
      Company also has an additional option agreement to purchase approximately 75
      acres of land in exchange for 28 acres acquired in the first option above plus
      approximately $631,000. The Company paid $9,200 for this option, which extended
      through April 2008. In April 2008, the Company paid $20,000 to
      further extend the option agreement through December 31, 2008. All other
      terms of the amended and restated option agreement remain the same.





7


**ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS** **OF
      FINANCIAL CONDITION AND RESULTS OF OPERATIONS** **.**





**Forward
      Looking Statements**





Some
      of
      the statements in this report may contain forward-looking statements that
      reflect our current view on future events, future business, industry and other
      conditions, our future performance, and our plans and expectations for future
      operations and actions. In some cases you can identify forward-looking
      statements by the use of words such as “may,” “should,” “will,” “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. Important factors that could significantly
      affect our assumptions, plans, anticipated actions and future financial and
      other results include, among others, those matters set forth in Item 1A
      (“Risk Factors”) of Part I of our annual report on Form 10-KSB for the fiscal
      year ended December 31, 2007. You are urged to consider all of those risk
      factors when evaluating any forward-looking statement, and we caution you not
      to
      put undue reliance on any forward-looking statements.





You
      should read this report thoroughly with the understanding that our actual
      results may differ materially from those set forth in the forward-looking
      statements for many reasons, including events beyond our control and assumptions
      that prove to be inaccurate or unfounded. We cannot provide any assurance with
      respect to our future performance or results. 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 raise sufficient equity and close our equity
                    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 or operating
                          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.




We
      are
      not under any duty to update the forward-looking statements contained in this
      report. 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, our annual report on Form 10-KSB for the fiscal year ended December
      31,
      2007 and the documents that we reference in those reports 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.





8


**Overview**





We
      are a
      development stage Iowa limited liability company formed on April 19, 2006.
      We
      intend to develop, build and operate a 55 million gallon per year ethanol plant
      expected to be located near Wesley, Kossuth County, Iowa, approximately 130
      miles northwest of Des Moines, Iowa. We have not yet engaged in the production
      of ethanol, distillers grains or corn oil and we do not expect to generate
      any
      revenue until the plant is completely constructed and operational. Based upon
      engineering specifications produced by Fagen, Inc., we expect the plant to
      annually consume approximately 19.7 million bushels of corn each year and
      annually produce approximately 55 million gallons of fuel grade ethanol,
      approximately 149,000 tons of distillers grains and approximately 3.5 million
      gallons of corn oil. We currently estimate that it will take approximately
      17 to
      22 months after construction commences to complete plant
      construction.





We
      intend
      to finance the development and construction of the ethanol plant with a
      combination of equity and debt.  Through private placements, we raised
      aggregate proceeds of $1,580,000 to fund our development, organizational and
      offering expenses.




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 first became effective on September 21,
      2007.  We later made changes to the terms of our offering and filed a
      post-effective amendment to our registration statement, which became effective
      on January 23, 2008. The changes to the terms of our offering included the
      following: (i) our proposed ethanol plant will have a production capacity of
      55
      million gallons per year rather than 100 million gallons per year; (ii) our
      total project cost is now estimated to be $121,000,000 rather than $196,250,000;
      (iii) we are seeking to raise a minimum of $36,000,000 and a maximum of
      $85,000,000, rather than a minimum of $59,000,000 and a maximum of $138,000,000;
      and (iv) we now expect to utilize corn oil extraction technology to extract
      corn
      oil as a co-product of the ethanol production process. We also registered our
      units with the state securities authorities in Florida, Illinois, Iowa, Kansas,
      Missouri, South Dakota and Wisconsin.





We
      have
      entered into a non-binding letter of intent with Fagen, Inc. for the design
      and
      construction of our proposed plant. We anticipate entering into, but have not
      yet entered into, a definitive design-build agreement with Fagen, Inc. We expect
      that we will be required to satisfy certain conditions pursuant to the
      design-build agreement before Fagen, Inc. will begin construction. We have
      based
      our capital needs on a design for the plant that will cost approximately
      $89,900,000, which includes the cost of our water treatment equipment and fire
      protection system not contemplated by our letter of intent with Fagen, Inc.,
      with additional start-up and development costs of approximately $31,100,000,
      for
      a total project completion cost of approximately $121,000,000.





Except
      for our letter of intent with Fagen, Inc., we do not have any binding or
      non-binding agreements with any other contractor for the labor or materials
      necessary to build the plant. The most recent letter of intent we executed
      with
      Fagen, Inc. supersedes and replaces our prior letter of intent with Fagen,
      Inc.
      Our anticipated total project cost is not a firm estimate and is expected to
      change from time to time as the project progresses.





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
      forfeited our down payment of $100,000 to Indeck Wesley, L.L.C.





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 early
      2010.





9


**Results
      of Operations**





We
      have
      not yet commenced operations and do not expect to commence operations until
      we
      close our equity offering, obtain debt financing and construct the ethanol
      plant. We anticipate that if we are successful in obtaining equity and debt
      financing, we will complete construction of the ethanol plant and commence
      operations in early 2010.





*Trends
      and Uncertainties Impacting the Ethanol Industry*





If
      we are
      successful in building and constructing the ethanol plant, we expect our future
      revenues will primarily consist of sales of ethanol, distillers grains and
      corn
      oil. We expect ethanol sales to constitute the bulk of our revenues.
      Historically, the demand for ethanol increased relative to supply, which caused
      upward pressure on ethanol market prices. Increased demand, firm crude oil
      and
      gas markets, public acceptance, and positive political signals contributed
      to
      those strong ethanol prices.  Those high prices were not sustained in 2007,
      however, due to increased ethanol production and transportation and logistics
      problems in the ethanol industry.  Recently ethanol prices have been
      increasing along with increases in firm crude oil prices. Management believes
      the industry will need to continue to grow demand and have governmental support
      in order for the industry to realize higher ethanol market prices.




We
      expect
      to benefit from federal ethanol supports and federal tax incentives. Changes
      to
      these supports or incentives could significantly impact demand for ethanol,
      and
      could negatively impact our business. On August 8, 2005, President George
      W. Bush signed into law the Energy Policy Act of 2005, which contained numerous
      provisions that favorably impacted the ethanol industry by enhancing both the
      production and use of ethanol. Most notably, the Energy Policy Act created
      a 7.5
      billion gallon renewable fuels standard (the “RFS”). The RFS is a national
      renewable fuels mandate as to the total amount of national renewable fuels
      usage. Although a national mandate, the RFS allows flexibility to refiners
      by
      allowing refiners to use renewable fuel blends in those areas where it is most
      cost-effective, rather than requiring renewable fuels to be used in any
      particular area or state.   The recently enacted Energy Independence
      and Security Act (the “Act”) amended the RFS to set the volume at 9 billion
      gallons in 2008, increasing to 36 billion gallons in 2022.  The Act
      expanded the definition of several renewable fuels which may be used by blenders
      to meet the RFS requirement.  The RFS now includes conventional biofuels,
      advanced biofuels, cellulosic biofuels and biodiesel, all of which can be used
      to meet the RFS.  In addition, the RFS total annual requirement is
      allocated differently in each subsequent year to encourage the use of more
      cellulosic biofuels, advanced biofuels and biodiesel.  The RFS for
      conventional biofuel, including corn-based ethanol, will reach 15 billion
      gallons in 2015 and will not increase in subsequent years.




Ethanol
      production continues to grow rapidly as additional plants and plant expansions
      become operational. According to the Renewable Fuels Association, as of April
      2,
      2008, 147 ethanol plants were producing ethanol with a combined annual
      production capacity of 8.5 billion gallons per year and current expansions
      and
      plants under construction constituted an additional future production capacity
      of 5.1 billion gallons per year.  Excess capacity in the ethanol industry
      would have an adverse effect on our results of operations, cash flows and
      financial condition.  In a manufacturing industry with excess capacity,
      producers have an incentive to manufacture additional products for so long
      as
      the price exceeds the marginal cost of production (i.e., the cost of producing
      only the next unit, without regard to interest, overhead or fixed costs). 
This incentive can result in the reduction of the market price of ethanol to
      a
      level that is inadequate to generate sufficient cash flow to cover costs. 
If the demand for ethanol does not grow at the same pace as increases in supply,
      we expect the price for ethanol to decline.  Declining ethanol prices will
      result in lower revenues and may reduce or eliminate our future
      profits.




Consumer
      resistance to the use of ethanol may affect the demand for ethanol, which could
      affect our ability to market our product. According to media reports in the
      popular press, some consumers believe that use of ethanol will have a negative
      impact on retail gasoline prices. 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 in the ethanol that is produced.
      In
      addition, recent high corn prices have added to consumer backlash against
      ethanol, as many consumers blame ethanol for high food prices.  These
      consumer beliefs could potentially be wide-spread. Additionally, some consumers
      and interest groups are calling for the federal government to repeal the RFS
      requirement contained in the Energy Independence and Security Act. If consumers
      choose not to buy ethanol, it would affect the demand for the ethanol we
      produce, which could negatively affect our ability to sell our product and
      negatively affect our profitability.





10


*Technology
      Developments*





Most
      ethanol is currently produced from corn and other raw grains, such as milo
      or
      sorghum.  The current trend in ethanol production research is to develop an
      efficient method of producing ethanol from cellulose-based biomass, such as
      agricultural waste, forest residue, municipal solid waste, and energy
      crops.  This trend is driven by the fact that cellulose-based biomass is
      generally cheaper than corn, and producing ethanol from cellulose-based biomass
      would create opportunities to produce ethanol in areas which are unable to
      grow
      corn.  Although current technology is not sufficiently efficient to be
      competitive, a report by the United States Department of Energy entitled
“Outlook for Biomass Ethanol Production and Demand” indicates that new
      conversion technologies may be developed in the future.




The
      Energy Independence and Security Act expanded the definition of several
      renewable fuels which may be used by blenders to meet the RFS requirement. 
The RFS now includes conventional biofuels, advanced biofuels, cellulosic
      biofuels and biodiesel, all of which can be used to meet the RFS.  In
      addition, the RFS total annual requirement is allocated differently each year
      to
      encourage the use of more cellulosic biofuels, advanced biofuels and
      biodiesel.




The
      Energy Independence and Security Act also authorized several grants for the
      advancement of the renewable fuels industry.  It authorized $500 million
      annually for 2008 to 2015 for the production of advanced biofuels that have
      at
      least an 80% reduction in GHG emissions.  In addition, it authorized $25
      million annually in 2008 through 2010 for research and development and
      commercial application of biofuels production in states with low rates of
      ethanol and cellulosic ethanol production.





Advances
      and changes in the technology used to produce ethanol may make the technology
      we
      plan to install in our plant less desirable or obsolete.  These advances
      could also allow our competitors to produce ethanol at a lower cost than
      us.  If we are unable to adopt or incorporate technological advances, our
      ethanol production methods and processes could be less efficient than our
      competitors, which could cause our plant to become uncompetitive or completely
      obsolete.




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





We
      expect
      our future cost of goods sold will consist primarily of costs relating to the
      corn and natural gas supplies necessary to produce ethanol and distillers grains
      for sale. Corn prices have continued to trend higher. The weak value of the
      dollar has kept exports of corn strong and high input costs have led to
      producers planting fewer acres of corn this year, as indicated by the planting
      intentions report released March 31, 2008. Producers have indicated that they
      expect to plant approximately 86 million acres to corn in 2008, a reduction
      of
      nearly 7.6 million acres from 2007. Additionally, cool, wet weather has
      prevented the timely planting of crops in some regions, which may result in
      lower yields and even fewer acres of corn planted. These developments are likely
      to result in continued upward pressure on corn prices. Although we do not expect
      to begin operations until early 2010, we expect continued volatility in the
      price of corn, which could significantly impact our cost of goods sold. 
The number of operating and planned ethanol plants in our immediate surrounding
      area and nationwide will also significantly increase the demand for corn. This
      increase will likely drive the price of corn upwards in our market which will
      impact our ability to operate profitably.




There
      is
      no assurance that a corn shortage will not develop, particularly if there are
      other ethanol plants competing for corn, an extended drought or other production
      problems. Historical grain pricing information indicates that the price of
      grain
      has fluctuated significantly in the past and may fluctuate significantly in
      the
      future. Because the market price of ethanol is not related to grain prices,
      ethanol producers are generally not able to compensate for increases in the
      cost
      of grain feedstock through adjustments in prices charged for their ethanol.
      We,
      therefore, anticipate that our plant’s profitability will be negatively impacted
      during periods of high corn prices.  However, the negative impact on
      profitability resulting from high corn prices may be mitigated, in part, by
      the
      increased value of the distillers grains we intend to market, as the price
      of
      corn and the price of distillers grains tend to fluctuate in
      tandem.




11


Natural
      gas is also an important input commodity to our manufacturing process. We
      estimate that our natural gas usage will be approximately 10% to 15% of our
      annual total production cost. We will use natural gas to dry our distillers
      grain products to moisture contents at which they can be stored for extended
      periods of time and transported greater distances.  Over the past several
      years natural gas has been available only at prices exceeding historical
      averages, including a sharp increase in price in the last six months.  We
      expect continued volatility in the natural gas market. Any ongoing increases
      in
      the price of natural gas will increase our cost of production and may negatively
      impact our future profit margins.





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





We
      expect
      to spend at least the next twelve 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.





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*





We
      have
      not yet closed on our registered offering. Our registered offering is for a
      minimum of 7,200 units and a maximum of 17,000 units at a purchase price of
      $5,000 per unit. There is a minimum purchase requirement of two units to
      participate in the offering, with additional units to be purchased in one unit
      increments. The minimum aggregate offering amount is $36,000,000 and the maximum
      aggregate offering amount is $85,000,000. As of May 5, 2008, we have received
      subscriptions for approximately 1,734 units from investors, for an aggregate
      amount of approximately $8,670,000. Our subscription procedures require
      subscribers to send ten percent (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 $36,000,000.
      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





12


·
            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 lending institution 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.





We
      plan
      to apply for grants from various sources, and have 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
      currently hold real estate purchase options on two adjacent parcels of real
      property consisting of approximately 275 acres. Under the 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 $1,500,000. We have paid $180,000
      for this option, which is set to expire on May 24, 2008. If we exercise this
      option, $45,000 will be applied toward the total purchase price. We anticipate
      renewing this option again for an additional $45,000 so that we have the right
      to purchase the site through November 24, 2008, but have not yet renewed the
      option.





Under
      the
      second option agreement, we have the right to acquire a total of approximately
      75 acres for a purchase price of $630,720. The terms of the second option
      agreement require us to exchange approximately 28 acres of the property acquired
      under the first option for 28 acres to be acquired under this second option
      agreement. This means that if we exercise both options, due to the 28 acre
      exchange provision contained in the second option agreement we will acquire
      a
      net of approximately 247 acres. We have paid $29,200 for this option, which
      is
      set to expire on December 31, 2008.





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.





Based
      on
      a resolution adopted by the Kossuth County Board of Supervisors, we expect
      to
      receive a local property tax exemption for one hundred percent of the new taxes
      on the proposed ethanol plant site for a period of twenty (20)
      years.





*Plant
      Construction*





We
      have entered into a non-binding 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. We expect Fagen, Inc.
      will construct the plant for a contract price of approximately $81,900,000
      based
      on our letter of intent, which does not include the anticipated cost of our
      water treatment facility or fire protection system, any change orders, increases
      in the costs of materials provided by the CCI costs escalator provision
      contained in letter of intent, increases in cost provided by the fixed monthly
      surcharge provision, or the early completion bonus contained in the letter
      of
      intent. The contract price may be increased if the construction cost index
      (“CCI”) published by Engineering News-Record Magazine in the month in which we
      issue to Fagen, Inc. a notice to proceed with plant construction is greater
      than
      the February 2007 CCI of 7,879.54. We expect the amount of the contract price
      increase will be equal to the percentage increase in the CCI based upon the
      February 2007 CCI of 7,879.54. If the CCI increases above that level in the
      month in which we issue to Fagen, Inc. a notice to proceed with plant
      construction, the contract price will accordingly increase. Additionally, we
      expect the contract price will be subject to a surcharge of one-half of one
      percent (0.5%) for each calendar month that passes between February 2007 and
      the
      month in which we issue to Fagen, Inc., a notice to proceed with plant
      construction. Since approximately fifteen months have passed between February
      2007 and the date we are filing this report, we anticipate that the contract
      price will be increased by a minimum of 7.5%, or approximately $6,142,500.
      Finally, we expect Fagen, Inc. will be entitled to an early completion bonus
      of
      $10,000 per day (not to exceed $1,000,000) for each day that substantial
      completion of the ethanol plant occurs in advance of 425 days after the date
      we
      issue a notice to proceed with plant construction. Thus, in our total estimated
      costs of the project we have allowed for a $10,500,000 contingency for costs
      related to a CCI increase and the monthly surcharge, and a $1,800,000
      contingency for other construction costs, including any early completion bonus.
      Our non-binding letter of intent with Fagen, Inc. terminates on November 30,
      2008, 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.





13


We
      anticipate entering into an engineering services agreement with Fagen
      Engineering, LLC, an affiliate of 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.





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. 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. relating to
      subcontracting or process engineering operations. However, we have 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
      necessary to construct and operate the ethanol plant.





*Other
      Agreements*





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”). We expect Gold-Eagle and North Central would have
      the exclusive right and responsibility to provide us with our daily requirements
      of corn. 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 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.





14


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.





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





We
      have
      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 permitting 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.




*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 required permits 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.





**Liquidity
      and Capital Resources**





*Estimated
      Sources of Funds*





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 obtained and the amount of
      any
      bond financing we may pursue.





**Sources
                of Funds**(1)
            
            
            
            **Percent**Offering
                Proceeds (2)
            
            $
            58,845,000
            
            
            49.19
            %Seed
                Capital Proceeds (3)
            
            $
            1,580,000
            
            
            0.81
            %Iowa
                Rail Finance Authority Grant
            
            $
            75,000
            
            
            0.06
            %Senior
                Debt Financing (4)
            
            $
            60,500,000
            
            
            50.00
            %**Total
                Sources of Funds**
            
            $
            121,000,000
            
            
            100.00
            %




15




(1)
            Our
                sources of funds may vary in the future depending on the amount of
                equity
                and debt financing we obtain as well as any federal or state grants
                we are
                awarded and any bond financing we receive.





(2)
            As
                of May 5, 2008, we had subscriptions from investors for approximately
                $8,670,000.





(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.
                We
                subsequently redeemed 603 of the units purchased by our founders
                for $0.01
                per unit as part of our capitalization
                strategy.





(4)
            We
                currently do not have a definitive loan agreement with a senior lender
                for
                debt financing in the amount of $60,500,000. 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.





*Estimated
      Uses of Proceeds*





The
      following tables describe our proposed estimated use of our offering and debt
      financing proceeds for the ethanol plant to be built near Wesley, Iowa. 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
            
            $
            81,900,000
            
            
            67.69
            %Water
                treatment facility
            
            
            1,500,000
            
            
            1.24
            %CCI
                and surcharge contingency
            
            
            10,500,000
            
            
            8.68
            %Administration
                building/equipment
            
            
            400,000
            
            
            0.33
            %Construction
                performance bond
            
            
            100,000
            
            
            0.08
            %Construction
                insurance costs
            
            
            150,000
            
            
            0.12
            %Construction
                contingency
            
            
            1,800,000
            
            
            1.49
            %Development
                costs
            
            
            3,250,000
            
            
            2.69
            %Land
                costs
            
            
            2,300,000
            
            
            1.90
            %Railroad
            
            
            3,000,000
            
            
            2.48
            %Rolling
                stock
            
            
            250,000
            
            
            0.21
            %Fire
                Protection and water supply
            
            
            2,000,000
            
            
            1.65
            %Capitalized
                interest
            
            
            2,000,000
            
            
            1.65
            %**Start
                up costs:**Financing
                costs
            
            
            600,000
            
            
            0.50
            %Organization
                costs(1)
            
            
            1,250,000
            
            
            1.03
            %Pre-production
                period costs
            
            
            1,000,000
            
            
            0.83
            %Working
                capital
            
            
            7,500,000
            
            
            6.20
            %Inventory
                - corn(2)
            
            
            1,500,000
            
            
            1.24
            %**Total**
            
            **$**
            **121,000,000**
            
            
            100.00
            %





16




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





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




*Changes
      in Financial Condition for the Three Months Ended March 31, 2008 Compared to
      the
      Fiscal Year Ended December 31, 2007.*





Assets
      totaled approximately $1,318,000 on March 31, 2008, as compared to approximately
      $1,276,000 on December 31, 2007. Current assets totaled approximately $307,000
      on March 31, 2008, as compared to approximately $481,000 on December 31, 2007.
      Current liabilities totaled approximately $132,000 on March 31, 2008, as
      compared to approximately $24,000 on December 31, 2007. Members’ equity totaled
      approximately $1,186,000 on March 31, 2008, as compared to approximately
      $1,252,000 on December 31, 2007. Since our inception, we have generated no
      revenue from operations, and from inception to March 31, 2008, we have
      accumulated net losses of approximately $354,000 due to start-up and development
      costs, including net losses of approximately $66,000 during the fiscal quarter
      ended March 31, 2008.





**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.





**Off-Balance
      Sheet Arrangements**





We
      do not
      have any off-balance sheet arrangements.





**Employees**





We
      currently do not have any employees. Prior to completion of plant construction
      and commencement of operations, we intend to hire approximately 38 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 executive officers are Clay Hansen, President; Mervin
      Krauss, Vice President; John Stelzer, Treasurer; and Mark Wigans, Secretary.
      None of our executive officers are being compensated for their
      services.





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





**#
                Full-Time****Position**
            **Personnel**Operations
                Manager
            1Plant
                Manager
            1Lab
                Manager
            1Lab
                Technician
            1Office/Administrative
            2Load
                Out/Floaters
            4Shift
                Supervisors
            2Maintenance
                Manager
            1Maintenance
                Technicians
            8Plant
                Operators
            18**TOTAL**
            **38**





17


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 will 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.





**ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK.**





Information
      not required of smaller reporting companies.





**ITEM
      4. CONTROLS AND PROCEDURES. .**





Our
      management, including our President (the Principal Executive Officer), Clay
      Hansen, along with our Treasurer, (the Principal Financial and Accounting
      Officer), John Stelzer, have reviewed and evaluated the effectiveness of our
      disclosure controls and procedures (as defined in Rule 15d-15(e) under
      the Securities Exchange Act of 1934, as amended) as of March 31, 2008. 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.





During
      the period covered by this quarterly report, there were no changes in our
      internal control over financial reporting that materially affected, or were
      reasonably likely to materially affect, our internal control over financial
      reporting.





**PART
      II - OTHER INFORMATION**





**ITEM
      1. LEGAL PROCEEDINGS.**





From
      time
      to time in the ordinary course of business, we may be named as a defendant
      in
      legal proceedings related to various issues, including without limitation,
      workers’ compensation claims, tort claims, or contractual disputes.  We are
      not currently involved in any material legal proceedings, directly or
      indirectly, and we are not aware of any claims pending
      or threatened against us or any of the directors that
      could result in the commencement of legal proceedings.




**ITEM
      1A. RISK FACTORS.**





Information
      not required of smaller reporting companies.





**ITEM
      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS.**





The
      Securities and Exchange Commission first declared our Registration Statement
      on
      Form SB-2 (SEC Registration No. 333-141585), as amended, effective on
      September 21, 2007.  We later made changes to the terms of our offering and
      filed a post-effective amendment to our registration statement, which became
      effective on January 23, 2008. 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 are not paying these officers or directors any
      compensation for services related to the offer or sale of the units. We are
      planning to raise a minimum of $36,000,000 and a maximum of $85,000,000 in
      the
      offering through the sale of a minimum of 7,200 membership units and a maximum
      of 17,000 membership units. We expect to secure the balance needed to construct
      the plant through federal, state and local grants and debt
      financing.   As of May 5, 2008, we have received subscriptions for
      approximately 1,734 units for an aggregate amount of approximately
      $8,670,000.  We have not yet accepted any subscriptions or released funds
      from escrow and therefore have not used any proceeds from the offering. We
      expect to incur a total of approximately $550,000 in offering expenses in
      connection with the issuance and distribution of securities in our registered
      offering, including $0 for underwriting discounts and commissions, $0 for
      finders’ fees, $0 for expenses paid to or for underwriters and approximately
      $550,000 for other expenses. Our expected offering expenses are a reasonable
      estimate rather than the actual amount of expense. We anticipate that no portion
      of our offering expenses will be paid to our directors, officers, ten percent
      (10%) or more equity owners or affiliates.





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**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 past of, or are incorporated by reference into,
      this report:




31.1
              Certificate
                  pursuant to 17 CFR 240 15d-14(a) filed
                  herewith.
 31.2
              Certificate
                  pursuant to 17 CFR 240 15d-14(a) filed
                  herewith.
 32.1
              Certificate
                  pursuant to 18 U.S.C. Section 1350 filed
                  herewith.
 32.2
              Certificate
                  pursuant to 18 U.S.C. Section 1350 filed
                  herewith.




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**SIGNATURES**





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





PRAIRIE
                CREEK ETHANOL, LLCDate:
            May
                15, 2008
            
            /s/
                Clay HansenClay
                HansenChairman,
                President and Director (Principal Executive Officer)Date:
            May
                15, 2008
            
            /s/
                John StelzerJohn
                StelzerTreasurer
                (Principal Financial and Accounting
                Officer)




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