##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 þ
    
    Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the fiscal quarter ended March 31, 2009
 o
    
    Transition report under Section 13 or 15(d) of the Exchange Act of 1934.
 Commission file number 000-53202
 HOMELAND ENERGY SOLUTIONS, LLC
  Iowa
    
    20-3919356(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)2779 Highway 24, Lawler, Iowa
    
    52154(Address of principal executive offices)
    
    (Zip Code)
 (563) 238-5555
  þ
Yes o No
 þ Yes o No
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o Yes þ No




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##### 



INDEX
 PagePART I  FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    21Item 3. Quantitative and Qualitative Disclosures about Market Risks
    
    
    33Item 4. Controls and Procedures
    
    
    33PART II  OTHER INFORMATION
    
    
    34Item 1. Legal Proceedings
    
    
    34Item 1A. Risk Factors
    
    
    34Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    34Item 3. Defaults Upon Senior Securities
    
    
    34Item 4. Submission of Matters to a Vote of Security Holders
    
    
    34Item 5. Other Information
    
    
    35Item 6. Exhibits
    
    
    35SIGNATURES
    
    
    35Exhibit 10.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 Homeland Energy Solutions, LLC
 Balance Sheets  March 31, 2009 and December 31, 2008
 3/31/2009
    
    
    12/31/2008Unaudited
    
    
    AuditedASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    3,043
    
    
    $
    44,599Attorney escrow account
    
    
    527
    
    
    
    527Inventory
    
    
    1,857,300
    
    
    
    Due from broker
    
    
    291,346
    
    
    
    Prepaid expenses
    
    
    1,913,720
    
    
    
    115,340Total current assets
    
    
    4,065,936
    
    
    
    160,466PROPERTY AND EQUIPMENTLand
    
    
    3,705,585
    
    
    
    3,705,585Equipment
    
    
    467,602
    
    
    
    58,963Construction in progress
    
    
    149,986,168
    
    
    
    136,065,515154,159,355
    
    
    
    139,830,063Less accumulated depreciation
    
    
    21,959
    
    
    
    7,886Total property and equipment
    
    
    154,137,396
    
    
    
    139,822,177OTHER ASSETSLoan fees, net of amortization 2009 $273,613; 2008 $229,382
    
    
    899,359
    
    
    
    943,590Restricted cash
    
    
    10,122,227
    
    
    
    10,044,677Assets held for sale
    
    
    250,000
    
    
    
    Other assets
    
    
    2,716,583
    
    
    
    2,085,708Total other assets
    
    
    13,988,169
    
    
    
    13,073,975TOTAL ASSETS
    
    $
    172,191,501
    
    
    $
    153,056,618
 3/31/2009
    
    
    12/31/2008LIABILITIES AND MEMBERS EQUITYCURRENT LIABILITIESAccounts payable
    
    $
    9,838,838
    
    
    $
    2,877,051Checks issued in excess of bank balance
    
    
    213,034
    
    
    
    Derivative instruments
    
    
    183,063
    
    
    
    Retainage payable
    
    
    6,061,418
    
    
    
    6,532,576Interest Payable
    
    
    213,036
    
    
    
    Property tax payable
    
    
    4,818
    
    
    
    6,424Payroll payable
    
    
    118,915
    
    
    
    20,870Current maturities of long term liabilities
    
    
    2,030,000
    
    
    
    20,000Total current liabilities
    
    
    18,663,122
    
    
    
    9,456,921COMMITMENTS AND CONTINGENCIES (NOTE 6)LONG-TERM DEBT, less current maturities
    
    
    62,704,469
    
    
    
    51,636,807MEMBERS EQUITYCapital units, less syndication costs
    
    
    89,572,744
    
    
    
    89,572,744Equity accumulated during development stage
    
    
    1,251,166
    
    
    
    2,390,146Total members equity
    
    
    90,823,910
    
    
    
    91,962,890TOTAL LIABILITIES AND MEMBERS EQUITY
    
    $
    172,191,501
    
    
    $
    153,056,618
  3




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Homeland Energy Solutions, LLC
 Statements of Operations
 Period FromThree Months
    
    
    Three Months
    
    
    InceptionEnded 3/31/09
    
    
    Ended 3/31/08
    
    
    (12/7/05) to 3/31/09Unaudited
    
    
    Unaudited
    
    
    UnauditedOPERATING REVENUE
    
    $
    
    
    
    $
    
    
    
    $
    OPERATING EXPENSESStart-up costs
    
    
    70,733
    
    
    
    
    
    
    
    70,733Asset impairment
    
    
    480,875
    
    
    
    
    
    
    
    480,875Professional expenses
    
    
    139,167
    
    
    
    143,955
    
    
    
    871,664Engineering & design
    
    
    
    
    
    
    
    
    
    
    18,652Feasibility studies
    
    
    
    
    
    
    
    
    
    
    84,750Filings fees/permits
    
    
    2,660
    
    
    
    9,192
    
    
    
    25,735Land options
    
    
    
    
    
    
    
    
    
    
    1,650Insurance
    
    
    
    
    
    
    
    
    
    
    23,297Office expense
    
    
    30,423
    
    
    
    2,218
    
    
    
    55,426Depreciation
    
    
    14,073
    
    
    
    949
    
    
    
    21,959Amortization
    
    
    
    
    
    
    
    
    
    
    390Rent
    
    
    
    
    
    
    1,414
    
    
    
    10,473Utilities
    
    
    8,918
    
    
    
    2,036
    
    
    
    22,638Wages & benefits
    
    
    450,316
    
    
    
    8,148
    
    
    
    533,068Property tax
    
    
    
    
    
    
    
    
    
    
    341Miscellaneous expense
    
    
    19,372
    
    
    
    12,366
    
    
    
    39,106Total operating expenses
    
    
    1,216,537
    
    
    
    180,278
    
    
    
    2,260,757OTHER INCOME (EXPENSE)Interest income
    
    
    77,557
    
    
    
    359,457
    
    
    
    3,479,350Crop income
    
    
    
    
    
    
    
    
    
    
    7,573Grant income
    
    
    
    
    
    
    
    
    
    
    25,00077,557
    
    
    
    359,457
    
    
    
    3,511,923Net income (loss)
    
    $
    (1,138,980
    )
    
    $
    179,179
    
    
    $
    1,251,166Basic & diluted net income (loss) per unit
    
    $
    (12.46
    )
    
    $
    1.96Weighted average of units outstanding for the
calculation of basic & diluted net income per unit
    
    
    91,445
    
    
    
    91,445
   4




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Homeland Energy Solutions, LLC
 Statements of Cash Flows
 Period FromThree Months
    
    
    Three Months
    
    
    InceptionEnded 3/31/09
    
    
    Ended 3/31/08
    
    
    (12/7/05) to 3/31/09Unaudited
    
    
    Unaudited
    
    
    UnauditedCASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)
    
    $
    (1,138,980
    )
    
    $
    179,179
    
    
    $
    1,251,166Adjustments to reconcile net income to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    14,073
    
    
    
    949
    
    
    
    21,959Unrealized loss (gain) on risk management activities
    
    
    183,063
    
    
    
    
    
    
    
    183,063Asset impairment
    
    
    480,875
    
    
    
    
    
    
    
    480,875Write off land options
    
    
    
    
    
    
    
    
    
    
    1,650Change in working capital components:(Increase) decrease in inventory
    
    
    (1,857,300
    )
    
    
    
    
    
    
    (1,857,300
    )(Increase) decrease in cash due to (from) broker
    
    
    (291,346
    )
    
    
    
    
    
    
    (291,346
    )(Increase) decrease in prepaid expenses
    
    
    (1,798,380
    )
    
    
    
    
    
    
    (1,798,380
    )Increase (decrease) in accounts payable
    
    
    1,422,553
    
    
    
    (77,572
    )
    
    
    1,882,045Increase (decrease) in other current liabilities
    
    
    96,439
    
    
    
    (217,164
    )
    
    
    123,733Net cash provided by (used in) operating activities
    
    
    (2,889,003
    )
    
    
    (114,608
    )
    
    
    (2,535
    )CASH FLOWS FROM INVESTING ACTIVITIESProceeds from maturity of certificate of deposit
    
    
    
    
    
    
    
    
    
    
    1,214,488Purchase of certificate of deposit
    
    
    
    
    
    
    
    
    
    
    (1,214,488
    )Increase in restricted cash
    
    
    (77,550
    )
    
    
    
    
    
    
    (10,122,227
    )Payments for construction in progress
    
    
    (9,076,185
    )
    
    
    (20,570,604
    )
    
    
    (135,653,708
    )Purchase of equipment
    
    
    (408,639
    )
    
    
    
    
    
    
    (467,602
    )Purchase of land
    
    
    
    
    
    
    
    
    
    
    (3,705,585
    )Payments for other assets
    
    
    (880,875
    )
    
    
    
    
    
    
    (3,354,168
    )Purchase of land options
    
    
    
    
    
    
    
    
    
    
    (38,387
    )Net cash (used in) investing activities
    
    
    (10,443,249
    )
    
    
    (20,570,604
    )
    
    
    (153,341,677
    )CASH FLOWS FROM FINANCING ACTIVITIESIncrease in outstanding checks in excess of bank balance
    
    
    213,034
    
    
    
    
    
    
    
    213,034Proceeds from short-term borrowing
    
    
    
    
    
    
    
    
    
    
    4,883,540Payments on short-term borrowing
    
    
    
    
    
    
    
    
    
    
    (4,883,540
    )Proceeds from long-term borrowing
    
    
    13,082,662
    
    
    
    
    
    
    
    64,754,469Payments on long-term borrowing
    
    
    (5,000
    )
    
    
    
    
    
    
    (20,000
    )Payments for origination fees on long-term borrowing
    
    
    
    
    
    
    
    
    
    
    (1,172,992
    )Contributed capital
    
    
    
    
    
    
    
    
    
    
    89,920,000Proceeds from rejected subscription funds
    
    
    
    
    
    
    
    
    
    
    7,500,000Payments for rejected subscriptions
    
    
    
    
    
    
    (7,500,000
    )
    
    
    (7,500,000
    )Payments for syndication and offering costs
    
    
    
    
    
    
    
    
    
    
    (347,256
    )Net cash
provided by (used in) financing activities
    
    
    13,290,696
    
    
    
    (7,500,000
    )
    
    
    153,347,255Net increase (decrease) in cash
    
    $
    (41,556
    )
    
    $
    (28,185,212
    )
    
    $
    3,043CASH AND CASH EQUIVALENTSBeginning
    
    
    44,599
    
    
    
    64,986,226
    
    
    
    Ending
    
    $
    3,043
    
    
    $
    36,801,014
    
    
    $
    3,043SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATIONCash paid for interest
    
    $
    354,150
    
    
    $
    217,164
    
    
    $
    1,218,974SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIESAccounts payable related to construction in progress
    
    $
    7,956,793
    
    
    $
    4,698,525
    
    
    $
    7,956,793Retainage payable related to construction in progress
    
    
    6,061,418
    
    
    
    5,564,647
    
    
    
    6,061,418Interest capitalized
    
    
    354,150
    
    
    
    
    
    
    
    1,218,974Insurance costs capitalized
    
    
    71,273
    
    
    
    70,762
    
    
    
    379,748Loan fee amortization capitalized
    
    
    44,231
    
    
    
    44,231
    
    
    
    273,613
  5




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Homeland Energy Solutions, LLC
 Statement of Members Equity  For the Period from December 7, 2005 (Date of Inception) to March 31, 2009
 UnauditedBalance, December 7, 2005
    
    $
    Capital contributions for 600 units at $333.33 per unit
    
    
    200,000Capital contributions for 2,250 units at $500 per unit
    
    
    1,125,000Syndication and offering costs
    
    
    (19,107
    )Net (loss) from inception to December 31, 2006
    
    
    (143,796
    )Balance, December 31, 2006
    
    
    1,162,097Capital contributions for 88,595 units at $1,000 per unit
    
    
    88,595,000Syndication and offering costs
    
    
    (328,149
    )Net income for the year ended December 31, 2007
    
    
    2,438,240Balance, December 31, 2007
    
    
    91,867,188Net income for the year ended December 31, 2008
    
    
    95,702Balance, December 31, 2008
    
    
    91,962,890Net loss for the quarter ended March 31, 2009
    
    
    (1,138,980
    )Balance, March 31, 2009
    
    $
    90,823,910
   6




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HOMELAND ENERGY SOLUTIONS, LLC
  1. Nature of Business and Significant Accounting Policies
   Nature of business
  Fiscal Reporting Period:
 Accounting Estimates
 Cash and Cash Equivalents
  Inventories
 Property and Equipment
  7




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HOMELAND ENERGY SOLUTIONS, LLC
  Long-Lived Assets:
  Derivative Instruments
    Intangible Assets
 Restricted Cash & Cash Equivalents
 Cost of Raising Capital
  8




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HOMELAND ENERGY SOLUTIONS, LLC
  Organizational and Start-up Costs
 Capitalization of interest
 Revenue Recognition
 Fair Value
 Grant Income
 Income Taxes
 Net Income (loss) per Unit
 Environmental liabilities
 Risks and Uncertainties
   9




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HOMELAND ENERGY SOLUTIONS, LLC
   Reclassification
 Recently Issued Accounting Standards
     10




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HOMELAND ENERGY SOLUTIONS, LLC
   2. Development Stage Company
  3. Inventory
  March 31, 2009Raw Materials
    
    $
    1,857,300Work in Process
    
    
    Finished Goods
    
    
    Totals
    
    $
    1,857,300
 4. Debt
 Master Loan Agreement with Home Federal Savings Bank
  Construction Loan
    11




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HOMELAND ENERGY SOLUTIONS, LLC
  Conversion to Term Loan and Term Revolving Loan
    Revolving Line of Credit Loan
   12




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HOMELAND ENERGY SOLUTIONS, LLC
  Letter of Credit
  Security Interests and Mortgages
     5. Members Equity
   13




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HOMELAND ENERGY SOLUTIONS, LLC
   6. Related Party Transactions
    7. Commitments, Contingencies and Agreements
   Coal to Fuel Gas Conversion Agreement between Homeland Energy Solutions, LLC and Homeland
Gasification, LLC, a proposed joint venture of Homeland Energy Solutions, LLC and Econo Power
International Corporation
   14




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HOMELAND ENERGY SOLUTIONS, LLC
          15




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HOMELAND ENERGY SOLUTIONS, LLC
         
    
    Refund of sales, service or use taxes paid to contractors and subcontractors during
construction work (estimated at $4,289,600).
 
    
    Investment tax credit (limited to $10,000,000. To be amortized over 5 years). This
Iowa tax credit may be claimed for qualifying expenditures, not to exceed $10,000,000,
directly related to new jobs created by the start-up, location, expansion or modernization
of the company under the program. This credit is to be taken in the year the qualifying
asset is placed into service and is amortized over a 5 year period.
 
    
    Local Value-added Property Tax Exemption (estimated at $10,350,000). The Community has
approved an exemption from taxation on all or a portion of the value added by improvements
to real property directly related to new jobs created by location or expansion of the
company and used in the operations of the company.
  16




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HOMELAND ENERGY SOLUTIONS, LLC
            8. LEASE OBLIGATIONS
   17




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HOMELAND ENERGY SOLUTIONS, LLC
   2009
    
    $
    604,1252010
    
    
    756,0002011
    
    
    739,5002012
    
    
    184,8752013
    
    
    Total lease commitments
    
    $
    2,284,500
 9. DERIVATIVE INSTRUMENTS
     Balance Sheet
    
    Asset Fair
    
    
    Liability FairClassification
    
    Value
    
    
    ValueDerivatives not designated as
hedging instruments:Commodity Contracts
    
    Derivative Instruments
    
    $
    
    
    
    $
    183,063
  18




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HOMELAND ENERGY SOLUTIONS, LLC
   Total GainIncome Statement
    
    Realized
    
    
    Unrealized
    
    
    (Loss) inClassification
    
    Gain (Loss)
    
    
    Gain (Loss)
    
    
    IncomeDerivatives not designated as
hedging instruments:Commodity Contracts
    
    Operating Expense
    
    $
    193,347
    
    
    
    (183,063
    )
    
    
    10,284
 10. FAIR VALUE MEASUREMENTS
       Derivative financial instruments
 Asset held for sale
  19




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HOMELAND ENERGY SOLUTIONS, LLC
   Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Other Assets, asset held for sale
    
    $
    250,000
    
    
    $
    
    
    
    $
    
    
    
    $
    250,000Liabilities, derivative financial instruments
    
    
    (183,063
    )
    
    
    (183,063
    )
    
    
    
    
    
    
    
   Assets heldfor SaleBalance January 1, 2009
    
    $
    Transfers in and/or out of Level 3
    
    
    250,000Ending balance March 31, 2009
    
    $
    250,000
 11. Subsequent Events
    20




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Cautionary Statements Regarding Forward-Looking Statements
   
    
    Changes in our business strategy, capital improvements or development plans;
 
    
    Volatility of corn, natural gas, ethanol, unleaded gasoline, distillers grain and
other commodities prices;
 
    
    Changes in economic conditions or the occurrence of certain events causing an
economic impact in the agriculture, oil or automobile industries;
 
    
    Limitations and restrictions contained in the instruments and agreements governing
our indebtedness;
 
    
    Our ability to generate sufficient liquidity to fund our operations, debt service
requirements and capital expenditures;
 
    
    The results of our hedging transactions and other risk management strategies;
 
    
    Our inelastic demand for corn, as it is the only available feedstock for our plant;
 
    
    Changes in the environmental regulations or in our ability to comply with the
environmental regulations that apply to our plant site and our anticipated operations;
 
    
    The effects of mergers, bankruptcies or consolidations in the ethanol industry;
 
    
    Changes in the availability of credit to support the level of liquidity necessary to
implement our risk management activities;
 
    
    Changes in or elimination of federal and/or state laws having an impact on the
ethanol industry (including the elimination of any federal and/or state ethanol tax
incentives);
 
    
    Overcapacity within the ethanol industry;
 
    
    Difficulties or disruptions we may encounter during the initial operating period at
our plant;
 
    
    Changes and advances in ethanol production technology that may make it more
difficult for us to compete with other ethanol plants utilizing such technology;
 
    
    Our reliance on key management personnel;
 
    
    Our ability to hire adequate administrative and operational personnel;
 
    
    The development of infrastructure related to the sale and distribution of ethanol;
 
    
    Fluctuation in U.S. petroleum prices and corresponding oil consumption; and
 
    
    Competition and
consolidation in the ethanol industry and from alternative fuel additives.
  Available Information
 www.homelandenergysolutions.com
  21




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Overview
     Plan of Operations for the Next 12 Months
  Construction Activity and Plant Operations
    22




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Utilities
      23




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Ethanol and Distillers Grain Marketing Agreements
      Risk Management
    24




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Management and Employees
  Permitting and Regulatory Activities
  
    
    High Capacity Consumption Well Permit
 
    
    Alcohol Fuel Producers Permit.
 
    
    Risk Management Plan
 
    
    NPDES General Permit #1
 
    
    Air Quality Construction Permit
 
    
    Stormwater Pollution Prevention Plan (SWPPP)
 
    
    Spill Prevention, Control and Countermeasures Plan (SPCC)
 
    
    Alcohol Production Permit
 
    
    Renewable Identification Number (RIN) Registration
  
    
    Title V Operating Air Permit
 
    
    We will apply for this permit after we have been operational for one
year. Our Construction Air Permit covers our operations for the first year. Our
emissions during the first year will be utilized to determine the conditions that
will be placed in the Title V Operating Air Permit. While we do not anticipate any
problems obtaining our Title V Operating Air Permit, there is a risk that the Iowa
Department of Natural Resources (IDNR) could reject our Title V air permit
application and request additional information, which could delay or stall our
operations.
 
    
    New Source Performance Standards
 
    
    By obtaining and complying with our air permits, we expect to be in
compliance with these standards.
 
    
    Stormwater NPDES General #2
 
    
    We have submitted an application to renew this permit, which covers
construction activities, with the IDNR. We do not anticipate any problems with
obtaining a renewal of this permit.
  25




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Plan of Operations Regarding Coal Gasification
     Results of Operations for the Three Months Ended March 31, 2009
  Trends and Uncertainties Impacting the Ethanol Industry and Our Company
   26




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Economic Downturn
  Corn
   Natural Gas
  Ethanol Supply and Demand
   27




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Ethanol Industry Competition
  Derivatives
  Technology Developments
   Government Legislation and Regulations
   28




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Liquidity and Capital Resources
  Financial Results for our Three Month Period Ended March 31, 2009
   Estimated Sources of Funds
  Sources of Funds
    
    
    
    
    
    PercentSeed Capital Proceeds (1)
    
    $
    1,325,000
    
    
    
    0.7
    %Registered Unit Proceeds (2)
    
    $
    88,595,000
    
    
    
    47.3
    %Senior Debt Financing (3)
    
    $
    94,000,000
    
    
    
    50.1
    %Interest on Registered Unit Proceeds (4)
    
    $
    3,479,000
    
    
    
    1.9
    %Total Sources of Funds (5)
    
    $
    187,399,000
    
    
    
    100.0
    %
 (1)
    
    We have issued a total of 2,850 units to our founders and seed capital investors in previous
private placement offerings in exchange for proceeds of $1,325,000.(2)
    
    As of the close of our registered offering on November 30, 2007, we issued 88,595 membership
units in exchange for proceeds of $88,595,000.(3)
    
    We have entered into a definitive agreement with Home Federal Savings Bank for a Construction
Loan of up to $94,000,000 (of which $20,000,000 may be converted into a Term Revolving Loan upon
start-up of operations). In addition, we will have available to us a Revolving Line of Credit Loan
in an amount not to exceed $6,000,000, which will be available upon start-up of operations.  29




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##### Table of Contents



(4)
    
    As of March 31, 2009, we had earned approximately $3,479,000 in interest on our equity
proceeds.(5)
    
    Our total sources of funds is expected to be sufficient to cover our estimated project cost of
$176,000,000 as well as to cover the $10,000,000 debt service reserve (included in our estimated
project cost) that we are required to maintain under our senior debt financing with Home Federal
Savings Bank. Estimated Use of Proceeds
  Percent of TotalUse of Proceeds
    
    Amount
    
    
    AmountsPlant construction
    
    $
    121,798,000
    
    
    
    69.20
    %Land cost
    
    
    3,700,000
    
    
    
    2.10
    %Site development costs
    
    
    5,670,000
    
    
    
    3.22
    %Construction/Paving of turning lane
    
    
    1,600,000
    
    
    
    0.91
    %Site engineering costs*
    
    
    900,000
    
    
    
    0.51
    %Soil Stabilization (pilings)
    
    
    930,000
    
    
    
    2.27
    %Pipeline costs
    
    
    3,800,000
    
    
    
    1.59
    %Electric distribution line costs
    
    
    1,300,000
    
    
    
    0.74
    %Construction contingency
    
    
    1,912,000
    
    
    
    1.09
    %Construction insurance costs
    
    
    225,000
    
    
    
    0.13
    %Construction manager fees
    
    
    210,000
    
    
    
    0.12
    %Administrative building
    
    
    350,000
    
    
    
    0.20
    %Office equipment
    
    
    85,000
    
    
    
    0.05
    %Computers, Software, Network
    
    
    175,000
    
    
    
    0.10
    %Rail Infrastructure
    
    
    8,700,000
    
    
    
    4.94
    %Rolling stock
    
    
    445,000
    
    
    
    0.25
    %Fire Protection, water supply and water treatment
    
    
    4,000,000
    
    
    
    2.27
    %Capitalized interest
    
    
    4,000,000
    
    
    
    2.27
    %Start up costs:
    
    
    
    
    
    
    0.00
    %Financing costs
    
    
    1,600,000
    
    
    
    0.91
    %Organization costs
    
    
    1,400,000
    
    
    
    0.80
    %Pre production period costs
    
    
    950,000
    
    
    
    0.54
    %Working capital
    
    
    7,000,000
    
    
    
    3.98
    %Inventory  corn
    
    
    2,000,000
    
    
    
    1.14
    %Inventory  chemicals and ingredients
    
    
    500,000
    
    
    
    0.28
    %Inventory  Ethanol
    
    
    1,500,000
    
    
    
    0.85
    %Inventory  DDGS
    
    
    500,000
    
    
    
    0.28
    %Spare parts  process equipment
    
    
    750,000
    
    
    
    0.43
    %Total
    
    $
    176,000,000
    
    
    
    100.00
    %
 *
    
    Includes approximately $230,875 for the engineering/design work related to a coal gasification
energy center.  30




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##### Table of Contents



Short and Long Term Debt Financing Arrangements
 Master Loan Agreement with Home Federal Savings Bank
     Letter of Credit
  Grants and Government Programs
   31




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##### Table of Contents




    
    A $100,000 forgivable loan and a $100,000 interest-free loan under the Iowa
Value-Added Agricultural Products and Processes Financial Assistance Program
(VAAPPFAP), which were both repaid in full in April 2009;
 
    
    A grant of $240,000 under the Revitalize Iowas Sound Economy program for the
construction of a turning lane off of Iowa Highway 24 to the plant; and
 
    
    The following incentives under the High Quality Jobs Program from the State of
Iowa:
 
    
    Refund of the sales, service and use taxes paid to contractors
and subcontractors during the construction phase of the plant (estimated at
$4,289,600);
 
    
    Investment tax credit up to $10,000,000 for qualifying
expenditures directly related to new jobs created by the plant; and
 
    
    Local value-added property tax exemption for all or a portion
of the value added by improvements to real property directly related to new
jobs created by the plant (estimated at $10,350,000);
  Grants and Government Programs for Coal Gasification
   Application of Critical Accounting Estimates and Significant Accounting Policies
    32




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##### Table of Contents



Off-Balance Sheet Arrangements
  
 Item 3.
Quantitative and Qualitative Disclosures about Market Risks.
  
 Item 4. Controls and Procedures.
 Disclosure Controls and Procedures
     33




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##### Table of Contents



Changes in Internal Controls
  
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
   
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
   34




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##### Table of Contents



For
    
    
    Against
    
    
    AbstainAmendment One  Initial Directors Terms
    
    
    30,620
    
    
    
    272
    
    
    
    610Amendment Two  Board Committees
    
    
    26,813
    
    
    
    1,385
    
    
    
    705
 
 Item 5. Other Information.
  
 Item 6. Exhibits.
  Exhibit No.
    
    Description10.1
    +
    
    Electrical Services Agreement dated March 6, 2009 with Hawkeye REC31.1
    
    
    Certificate Pursuant to 17 CFR 240.15d-14(a).31.2
    
    
    Certificate Pursuant to 17 CFR 240.15d-14(a).32.1
    
    
    Certificate Pursuant to 18 U.S.C. § 1350.32.2
    
    
    Certificate Pursuant to 18 U.S.C. § 1350.
 (+)
    
    Material has been omitted pursuant to a request for confidential treatment and such materials
have been filed separately with the Securities and Exchange Commission. 
 SIGNATURES
  HOMELAND ENERGY SOLUTIONS, LLCDate: May 14, 2009
    
    /s/ Walter W. WendlandWalter W. WendlandPresident/Chief Executive Officer(Principal Executive Officer)Date: May 14, 2009
    
    /s/ Christine A. MarchandChristine A. MarchandTreasurer/Chief Financial Officer(Principal Financial and Accounting Officer)
  35




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description10.1
    +
    
    Electrical Services Agreement dated March 6, 2009 with Hawkeye REC31.1
    
    
    Certificate Pursuant to 17 CFR 240.15d-14(a).31.2
    
    
    Certificate Pursuant to 17 CFR 240.15d-14(a).32.1
    
    
    Certificate Pursuant to 18 U.S.C. § 1350.32.2
    
    
    Certificate Pursuant to 18 U.S.C. § 1350.
 (+)
    
    Material has been omitted pursuant to a request for confidential treatment and such materials
have been filed separately with the Securities and Exchange Commission.  36