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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q







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

For the fiscal quarter ended September 30, 2008



| ̈ | Transition report under Section 13 or 15(d) of the Exchange Act of 1934.
|- | ------------------------------------------------------------------------

Commission file number 333-142928





MINNERGY, LLC

(Name of small business issuer in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Minnesota                                                      |  | 74-3176709                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                                      |  |           
|----------------------------------------------------- |  | ----------
|8 North Front Street NW, P.O. Box 86 Eyota, Minnesota |  | 55987-1500
|(Address of principal executive offices)              |  | (Zip Code)

(507) 545-0197

(Issuer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.    x  Yes     ̈  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 definition
of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



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

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

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date: As of November 1, 2008 there were 4,979,920 membership units outstanding.









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MINNERGY, LLC

INDEX



|                              |  |          |  |                                                                                       |  |   
|----------------------------- |  | -------- |  | ------------------------------------------------------------------------------------- |  | --
|PART 1. FINANCIAL INFORMATION |  | 3       
|                              |  | Item 1.  |  | Condensed Financial Statements                                                        |  | 3 
|                              |  | Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 10
|                              |  | Item 3.  |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 22
|                              |  | Item 4.  |  | Controls and Procedures                                                               |  | 22
|PART II - OTHER INFORMATION   |  | 23      
|                              |  | Item 1.  |  | Legal Proceedings                                                                     |  | 23
|                              |  | Item 1A. |  | Risk Factors                                                                          |  | 23
|                              |  | Item 2.  |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 23
|                              |  | Item 3.  |  | Defaults Upon Senior Securities                                                       |  | 24
|                              |  | Item 4.  |  | Submission of Matters to a Vote of Security Holders                                   |  | 24
|                              |  | Item 5.  |  | Other Information                                                                     |  | 24
|                              |  | Item 6.  |  | Exhibits                                                                              |  | 24
|SIGNATURES                    |  | 24      



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PART 1. FINANCIAL INFORMATION



|Item 1. | Financial Statements.
|------- | ---------------------

MINNERGY, LLC

(A Development Stage Company)

Condensed Balance Sheet



|                                                    |  |                   |           |   |                  |           |  
|--------------------------------------------------- |  | ----------------- | --------- | - | ---------------- | --------- | -
|                                                    |  | September 30,2008 |           |   | December 31,2007 |          
|                                                    |  | (unaudited)       |           |   |                  |          
|Assets:                                             |  |                   |           |   |                  |           |  
|Current assets:                                     |  |                   |           |   |                  |           |  
|Cash and cash equivalents                           |  | $                 | 1         |   |                  | 148,881   |  
|Grant receivable                                    |  |                   | 5,139     |   |                  | 5,692     |  
|Prepaids and other                                  |  |                   | 11,118    |   |                  | 14,172    |  
|                                                    |  |                   |           |   |                  |           |  
|Total current assets                                |  |                   | 16,258    |   |                  | 168,745   |  
|                                                    |  |                   |           |   |                  |           |  
|Land options                                        |  |                   | 250,347   |   |                  | 325,000   |  
|Property and equipment, net                         |  |                   | 3,675,332 |   |                  | 1,210,606 |  
|Deferred offering costs                             |  |                   | 496,234   |   |                  | 358,458   |  
|                                                    |  |                   |           |   |                  |           |  
|Total assets                                        |  | $                 | 4,438,171 |   |                  | 2,062,809 |  
|                                                    |  |                   |           |   |                  |           |  
|Liabilities and Members Equity:                    |  |                   |           |   |                  |           |  
|Current liabilities:                                |  |                   |           |   |                  |           |  
|Accounts payable                                    |  | $                 | 321,013   |   |                  | 122,759   |  
|Accrued expenses                                    |  |                   | 45,237    |   |                  | 3,985     |  
|Deferred revenue                                    |  |                   | 7,185     |   |                  |          |  
|Notes payable                                       |  |                   | 321,819   |   |                  |          |  
|                                                    |  |                   |           |   |                  |           |  
|Total current liabilities                           |  |                   | 695,254   |   |                  | 126,744   |  
|                                                    |  |                   |           |   |                  |           |  
|Mortgage payable                                    |  |                   | 2,040,000 |   |                  |          |  
|                                                    |  |                   |           |   |                  |           |  
|Members equity:                                    |  |                   |           |   |                  |           |  
|Members contributions, 4,979,920 units outstanding |  |                   | 2,214,760 |   |                  | 2,214,760 |  
|Deficit accumulated during development stage        |  |                   | (511,843  | ) |                  | (278,695  | )
|                                                    |  |                   |           |   |                  |           |  
|Total members equity                               |  |                   | 1,702,917 |   |                  | 1,936,065 |  
|                                                    |  |                   |           |   |                  |           |  
|Total liabilities and members equity               |  | $                 | 4,438,171 |   |                  | 2,062,809 |  
|                                                    |  |                   |           |   |                  |           |  

The accompanying notes are an integral part of the condensed financial statements



3



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MINNERGY, LLC

(A Development Stage Company)

Condensed Statement of Operations

(unaudited)



|                                                     |  |                    |           |   |                   |           |   |                                                      |           |   |               |           |   |      |           |  
|---------------------------------------------------- |  | ------------------ | --------- | - | ----------------- | --------- | - | ---------------------------------------------------- | --------- | - | ------------- | --------- | - | ---- | --------- | -
|                                                     |  | Three months ended |           |   | Nine months ended |           |   | Period fromInception(March 31, 2006)to September 30, |          
|                                                     |  | September 30,      |           |   | September 30,     |           |   | September 30,                                        |           |   | September 30, |           |  
|                                                     |  | 2008               |           |   | 2007              |           |   | 2008                                                 |           |   | 2007          |           |   | 2008 |          
|Net sales                                            |  | $                  |          |   |                   |          |   |                                                      |          |   |               |          |   |      |          |  
|Operating expenses:                                  |  |                    |           |   |                   |           |   |                                                      |           |   |               |           |   |      |           |  
|Professional fees                                    |  |                    | 31,391    |   |                   | 25,080    |   |                                                      | 84,155    |   |               | 80,240    |   |      | 217,706   |  
|General and administrative expenses                  |  |                    | 71,116    |   |                   | 22,891    |   |                                                      | 117,891   |   |               | 54,387    |   |      | 327,204   |  
|                                                     |  |                    |           |   |                   |           |   |                                                      |           |   |               |           |   |      |           |  
|Total operating expenses                             |  |                    | 102,507   |   |                   | 47,971    |   |                                                      | 202,046   |   |               | 134,627   |   |      | 544,910   |  
|                                                     |  |                    |           |   |                   |           |   |                                                      |           |   |               |           |   |      |           |  
|Operating loss                                       |  |                    | (102,507  | ) |                   | (47,971   | ) |                                                      | (202,046  | ) |               | (134,627  | ) |      | (544,910  | )
|                                                     |  |                    |           |   |                  
|Other income (expense):                              |  |                    |           |   |                   |           |   |                                                      |           |   |               |           |   |      |           |  
|Interest income                                      |  |                    | 317       |   |                   | 8,608     |   |                                                      | 1,891     |   |               | 28,769    |   |      | 66,064    |  
|Interest expense                                     |  |                    | (53,035   | ) |                   |          |   |                                                      | (74,330   | ) |               |          |   |      | (74,330   | )
|Other income                                         |  |                    | 22,756    |   |                   |          |   |                                                      | 41,333    |   |               |          |   |      | 41,333    |  
|                                                     |  |                    |           |   |                   |           |   |                                                      |           |   |               |           |   |      |           |  
|Net loss                                             |  | $                  | (132,469  | ) |                   | (39,363   | ) |                                                      | (233,152  | ) |               | (105,858  | ) |      | (511,843  | )
|                                                     |  |                    |           |   |                   |           |   |                                                      |           |   |               |           |   |      |           |  
|Basic and diluted loss per unit                      |  | $                  | (0.03     | ) |                   | (0.01     | ) |                                                      | (0.05     | ) |               | (0.02     | ) |      | (0.12     | )
|                                                     |  |                    |           |   |                   |           |   |                                                      |           |   |               |           |   |      |           |  
|Basic and diluted weighted average units outstanding |  |                    | 4,979,920 |   |                   | 4,979,920 |   |                                                      | 4,979,920 |   |               | 4,284,320 |   |      | 4,234,663 |  
|                                                     |  |                    |           |   |                   |           |   |                                                      |           |   |               |           |   |      |           |  

The accompanying notes are an integral part of the condensed financial statements



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MINNERGY, LLC

(A Development Stage Company)

Condensed Statement of Cash Flows

(unaudited)



|                                                                                  |  |                   |            |   |                                                         |            |   |  |            |  
|--------------------------------------------------------------------------------- |  | ----------------- | ---------- | - | ------------------------------------------------------- | ---------- | - |  | ---------- | -
|                                                                                  |  | Nine months ended |            |   | Period fromInception(March 31, 2006)toSeptember 30,2008 |           
|                                                                                  |  | September 30,2008 |            |   | September 30,2007                                       |            |  
|Cash flows from operating activities:                                             |  |                   |            |   |                                                         |            |   |  |            |  
|Net loss                                                                          |  | $                 | (233,152   | ) |                                                         | (105,858   | ) |  | (511,843   | )
|                                                                                  |  |                   |           
|Adjustments to reconcile net loss to net cash used in operating activities        |  |                   |            |   |                                                         |            |   |  |            |  
|Depreciation expense                                                              |  |                   | 552        |   |                                                         |           |   |  | 824        |  
|Change in operating assets and liabilities:                                       |  |                   |            |   |                                                         |            |   |  |            |  
|Grant receivable                                                                  |  |                   | 553        |   |                                                         |           |   |  | (5,139     | )
|Prepaid and other                                                                 |  |                   | 3,054      |   |                                                         | (2,720     | ) |  | (11,118    | )
|Accounts payable                                                                  |  |                   | 4,125      |   |                                                         | (94,191    | ) |  | 37,194     |  
|Deferred revenue                                                                  |  |                   | 7,185      |   |                                                         |           |   |  | 7,185      |  
|Accrued expenses                                                                  |  |                   | 41,252     |   |                                                         |           |   |  | 45,237     |  
|                                                                                  |  |                   |            |   |                                                         |            |   |  |            |  
|Net cash used in operating activities                                             |  |                   | (176,431   | ) |                                                         | (202,769   | ) |  | (437,660   | )
|                                                                                  |  |                   |            |   |                                                         |            |   |  |            |  
|Cash flows from investing activities:                                             |  |                   |            |   |                                                         |            |   |  |            |  
|Payments for land options                                                         |  |                   | (82,500    | ) |                                                         | (132,500   | ) |  | (407,500   | )
|Purchase of property and equipment                                                |  |                   | (2,170,797 | ) |                                                         | (893,541   | ) |  | (3,333,627 | )
|                                                                                  |  |                   |            |   |                                                         |            |   |  |            |  
|Net cash used in investing activities                                             |  |                   | (2,253,297 | ) |                                                         | (1,026,041 | ) |  | (3,741,127 | )
|                                                                                  |  |                   |            |   |                                                         |            |   |  |            |  
|Cash flows from financing activities:                                             |  |                   |            |   |                                                         |            |   |  |            |  
|Proceeds from sales of membership units                                           |  |                   |           |   |                                                         | 734,800    |   |  | 2,214,760  |  
|Deferred offering costs                                                           |  |                   | (80,971    | ) |                                                         | (222,793   | ) |  | (397,791   | )
|Proceeds from notes and mortgage payable                                          |  |                   | 2,361,819  |   |                                                         |           |   |  | 2,361,819  |  
|                                                                                  |  |                   |            |   |                                                         |            |   |  |            |  
|Net cash provided by financing activities                                         |  |                   | 2,280,848  |   |                                                         | 512,007    |   |  | 4,178,788  |  
|                                                                                  |  |                   |            |   |                                                         |            |   |  |            |  
|Net increase (decrease) in cash and cash equivalents                              |  |                   | (148,880   | ) |                                                         | (716,803   | ) |  | 1          |  
|                                                                                  |  |                   |           
|Cash and cash equivalents at beginning of period                                  |  |                   | 148,881    |   |                                                         | 1,012,990  |   |  |           |  
|                                                                                  |  |                   |            |   |                                                         |            |   |  |            |  
|Cash and cash equivalents at the end of period                                    |  | $                 | 1          |   |                                                         | 296,187    |   |  | 1          |  
|                                                                                  |  |                   |            |   |                                                         |            |   |  |            |  
|Supplemental disclosure of cash flow information:                                 |  |                   |            |   |                                                         |            |   |  |            |  
|                                                                                  |  |                   |           
|Deferred offering costs included in accounts payable or accrued expenses          |  | $                 | 98,443     |   |                                                         | 10,000     |   |  | 98,443     |  
|Property and equipment purchases included in accounts payable or accrued expenses |  |                   | 185,376    |   |                                                         | 86,833     |   |  | 185,376    |  
|Cash payments for interest                                                        |  |                   | 34,168     |   |                                                         |           |   |  | 34,168     |  

The accompanying notes are an integral part of the condensed financial statements



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MINNERGY, LLC

(A Development Stage Company)

Notes to Condensed Financial Statements

September 30, 2008

(unaudited)



|(1) | Basis of Presentation
|--- | ---------------------

The accompanying unaudited condensed financial
statements of MinnErgy, LLC (referred to as the Company, MinnErgy, or by terms such as we, our, or us) have been derived from the Companys audited December 31, 2007 financial statements and the unaudited September 30, 2008 financial
statements and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) which include the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements. These condensed financial statements should be read in conjunction with the financial statements and related notes included in our Registration Statement filed with the SEC.
In the opinion of management, the unaudited condensed financial statements contain all recurring adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. The
operating results for the three and nine month periods ended September 30, 2008 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008.

Principal business activity  MinnErgy, LLC, a development stage Minnesota limited liability company was organized with the intentions of developing, owning and
operating a 55 million gallon dry mill corn-processing ethanol plant in southeastern Minnesota approximately 100 miles southeast of Minneapolis. The two potential plant sites selected by the Company are located between Winona and Rochester,
Minnesota. Construction is anticipated to begin in the Summer of 2009 with expected completion in late 2010. As of September 30, 2008, the Company was in the development stage with its efforts being principally devoted to obtaining necessary
permits, organizational activities and project financing.



|(2) | Members Equity
|--- | --------------

The Company was formed on March 31, 2006 to have a
perpetual life. The Company was initially capitalized by seven founding members, contributing approximately $500,000 in exchange for 1,500,000 units. The Company was further capitalized by 30 additional members contributing $999,960 in exchange for
1,999,920 units during 2006 and by 28 existing members contributing $740,000 in exchange for 1,480,000 units during May 2007. Income and losses are allocated to all members based upon their respective percentage of units held.

As specified in the Companys member control agreement, the Company is authorized to issue additional units as needed. The membership units include certain transfer
restrictions as specified in the member control agreement and pursuant to applicable tax and securities laws. Each unit represents a pro rata ownership interest in the Companys capital, profits, losses and distributions.

The Company filed a Form S-1 Registration Statement with the Securities and Exchange Commission (SEC) which was declared effective in May 2008. The offering is for a
minimum of 58,000,000 and up to 89,000,000 membership units for sale at $1 per unit. The minimum purchase requirement is 20,000 units for a minimum investment of $20,000. The Company has one class of membership units with each unit representing a
pro rata ownership interest in the Companys capital, profits, losses and distributions.

Offering proceeds will be held in escrow until seven
conditions are met. These conditions include: (1) cash proceeds from unit sales deposited in the escrow account equal or exceed $58,000,000, exclusive of interest; (2) the receipt of a written commitment for debt financing ranging from
$41,800,000 to $72,800,000, depending on the amount necessary to fully capitalize the project; (3) the receipt of a signed definitive design build agreement with the general contractor (Fagen, Inc.); (4) the issuance of environmental
permits necessary to construct the ethanol plant; (5) the election, in writing, to terminate the escrow agreement; (6) Winona National Bank providing an affidavit to the states in which the units have been registered stating that the
requirements to release funds have been satisfied and shall have provided to the Commissioner of the Minnesota Department of Commerce documentation that the



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MINNERGY, LLC

(A Development Stage Company)

Notes to Condensed Financial Statements

September 30, 2008

(unaudited)



foregoing conditions have been met; and (7) the receipt of consents to release funds from escrow from each state securities department from which such
consent is required. However, none of the funds, regardless of the state of residence of the investor contributing such funds, shall be released until the Commissioner of the Minnesota Department of Commerce has provided written express
authorization to the release of the escrow proceeds. There is no assurance that the units can be sold and that related proceeds will be received. As of November 1, 2008, the Company has received subscriptions for approximately $1,570,000
(1,570,000 units) under this offering.



|(3) | Related Party Transactions
|--- | --------------------------

The Company is currently in negotiations with
All American Cooperative for grain origination for its plant. All American Cooperative is a current member of the Company and has a seat on the board of governors.

The Company leases office space in Eyota, Minnesota in a building owned by All American Cooperative (relationship described above). The Company has incurred rent of $600 per month since January 2008.

The Companys Chairman currently serves on the board of directors of the Companys escrow agent, Winona National Bank. Pursuant to the terms of our escrow
agreement, Winona National Bank is to hold proceeds from subscriptions for the Companys units in an interest-bearing escrow account. Winona National Bank may invest such proceeds in short-term securities issued by the United States government.
Winona National Bank will hold such funds in escrow until specific conditions are satisfied. See Note 5 for discussion of transactions with Winona National Bank.

In April 2008 the Company purchased approximately 175 acres of farmland for the purchase price of $2,200,000 from three individuals (two of which are members of the Company). The loan necessary to fund this purchase includes guarantees by
some of the Companys current members. The Company anticipates compensating these members through a fee equal to approximately 7% of the amount of their respective guaranty after the closing of the Companys registered offering.

In April 2008 the Company entered into a Farm Lease with Hadar Farms Partnership. Hadar Farms Partnership is a current member of the Company. The Company
is leasing approximately 153 acres of the 175 acres of our purchased farmland to Hadar Farms Partnership for $46,665 which was paid to the Company upon execution of the Farm Lease. The Farm Lease terminates on November 1, 2008.



|(4) | Commitments and Contingencies
|--- | -----------------------------

Design- build agreement

The total cost of the project, including the construction of the ethanol plant and start-up expenses, is expected to approximate $133,000,000. The Company will be
highly dependent upon the anticipated general contractor for construction of the ethanol plant. The Company signed a Letter of Intent in March 2007 with a general contractor, Fagen, Inc. (Fagen) an unrelated party, in anticipation of entering into
an agreement with such builder to design and build the ethanol plant at a total contract price of approximately $83,400,000. This Letter of Intent was amended in September 2007, December 2007 and again in June 2008. Pursuant to the third
amendment, the Letter of Intent will terminate on June 21, 2009 unless a definitive Design-Build Agreement and other ancillary agreements have been entered into. The Letter of Intent requires the basic size and design of the plant to have been
agreed upon, a site selected and at least 10% of the equity raised by June 21, 2009. This date may be extended by mutual agreement. Furthermore, if the Company has not issued a valid Notice to Proceed by June 21, 2009, Fagen
may terminate any Design Build Agreement executed. In addition, the Company will be charged a surcharge of 0.5% for each month between June 2008 and the month in which a valid Notice to Proceed is given by the Company to Fagen. The cost
estimate indicated above includes $4,170,000 for this surcharge. Under the current amended Letter of Intent, the contract price is subject to changes based on corresponding changes to the Construction Cost Index (CCI), published by Engineering
News-Record magazine, from the benchmark of February 2007 which was 7879.54. As of October



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MINNERGY, LLC

(A Development Stage Company)

Notes to Condensed Financial Statements

September 30, 2008

(unaudited)



2008 the CCI was reported at 8623.28, which is 9.44% higher than the February 2007 level stated in the Letter of Intent. We have estimated a CCI contingency
of $1,668,000 (or 2% of the contract price in our use of proceeds for the project) to account for a possible increase of the contract price in the event the Company is unable to issue a valid Notice to Proceed to Fagen by June, 1, 2008. Computation
of the CCI contingency based on the October 2008 CCI would result in an amount that exceeds the Companys budgeted contingency by approximately $7,706,160. However, the third amendment to the Letter of Intent provides that the total contract
price plus the CCI contingency and the surcharge shall not exceed $88,300,000.

The Company paid a commitment fee of $500,000 to Fagen during 2007 pursuant
to the Letter of Intent. This payment is nonrefundable, is to be credited against the contract price and is included in the construction in progress balance as of September 30, 2008 and December 31, 2007. The Company entered into a Phase I
and Phase II engineering services agreement with an affiliate of the general contractor on June 11, 2007. The cost for the performance of these engineering and design services is estimated at $110,000, which will be credited against the total
design-build cost. The Company will also be required to pay certain reimbursable expenses per the agreement. As of September 30, 2008 the Company has incurred approximately $44,000 related to this agreement, which has been capitalized and is
included in construction in progress. The Company anticipates funding the development of the ethanol plant by raising total equity of at least $58,000,000 and securing financing for up to $72,800,000, less any grants received. The amount of debt
financing needed depends on the amount of equity raised in the Companys current registered offering. No assurance can be given as to whether such equity and debt financing can be secured.

Land contracts

On May 12, 2006 the Company executed a real
estate option agreement with an individual granting it an option to purchase 145 acres of land near Eyota, Minnesota. Under the terms of the option agreement, the Company paid $5,000 for an Initial Option Payment and approximately
$145,000 to extend this option to May 12, 2009. The purchase option may be further extended for an additional one year period upon written notice and payment of an additional $50,000. The Company has the option to purchase the land, including
any buildings, for $1,450,000.

On May 17, 2006 the Company executed a real estate option agreement with an individual granting the option to purchase
138 acres of land near Utica, Minnesota. Under the terms of the option agreement, the Company paid $3,000 for an Initial Option Payment and approximately $87,000 to extend this option to May 17, 2009. The purchase option may be
further extended for an additional one year period upon written notice and payment of $30,000. If the Company exercises the option, all option payments will be credited to the purchase price of the land.

On May 26, 2006 the Company executed a real estate option agreement with Dakota Minnesota and Eastern Railroad Corporation (DM&E) granting it an option to
purchase 12.73 acres of land near Eyota, Minnesota. Under the terms of the option agreement, the Company paid $2,500 for the option and has the option to purchase the land for $25,000. The Company has paid approximately $5,000 to extend this option
to May 23, 2009. If the Company exercises the option, all option payments will be credited to the purchase price of the land.

In April 2008 the
Company purchased approximately 175 acres of farmland and buildings located thereon from three individuals (two of which are members of the Company) for the purchase price of $2,200,000. The real estate is located adjacent to the DM & E
railroad and another parcel for which the Company has obtained an option. The Company executed a Negative Pledge Agreement and note in favor of Winona National Bank in the amount of $2,040,000 to purchase the real estate.

The Company may acquire the aforementioned other three parcels of optioned land, resulting in two potential building sites, a 138 acre Utica site and a 332.73 acre Eyota
site. None of the Companys governors or their affiliates has any relationship with any of the option property owners, except as described in Note 3. The final plant site will have access to both interstate and local roads and the DM&E rail
line for the Companys transportation requirements.



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MINNERGY, LLC

(A Development Stage Company)

Notes to Condensed Financial Statements

September 30, 2008

(unaudited)



|(5) | Notes Payable
|--- | -------------

In June 2008 the Company replaced the Negative Pledge
Agreement and note described above with a conventional mortgage and note in favor of Winona National Bank. Pursuant to the new note, interest is payable on a monthly basis at a fixed rate of 4.1%. The entire balance of principal and interest
accruing on the note will come due on October 6, 2009. Winona National Bank required personal guaranties in the amount of $1,950,000 for the issuance of the loan to the Company. Ten (10) of the governors and one of the members, All
American Cooperative, each executed a Guaranty with Winona National Bank. Each guarantor personally guaranteed a portion of the loan. These guarantors also entered into an agreement with the Company wherein each agreed to provide the personal
guaranty for such funds in exchange for the payment of a fee equal to 7% of the amount of their respective guaranty. No fees will be paid by the Company to any guarantor under the agreement unless and until the Company has reached financial closing
of the debt financing and equity offering proceeds needed for the plant. The Company is recognizing the expense related to the guaranties ratably over the guaranty period. As of September 30, 2008 a guaranty liability of $27,300 is included in
accrued expenses.

In April 2008 the Company executed a promissory note which provides that Fagen, Inc. will advance up to $250,000 to the Company during
the term of the note. The Company received $50,000 on May 5, 2008 and $200,000 on May 27, 2008 pursuant to the Note. The Company is required to repay the entire balance, plus interest, at a rate of seven percent (7%) per annum on the
earlier of July 31, 2009 or upon financial closing of the debt financing and equity offering proceeds needed for the project. The Company plans to use these funds for any expenses incurred prior to financial closing of the debt financing and
equity offering.

In August 2008 the Company obtained a revolving line of credit for working capital from Winona National Bank in the amount of $250,000.
The line of credit is secured by a real estate mortgage on the land the Company previously purchased near Eyota. The Company and each of the guarantors of the previous note with Winona National Bank consented to the subordination of the $2,040,000
mortgage on the real estate to the revolving line of credit mortgage. The line of credit accrues interest at a daily variable rate based upon the Chase Manhattan Bank of New York. The maximum rate of interest that can be charged on the principal
advanced under the line of credit is 19%. The Company will be required to make monthly interest payments on the principal advanced beginning September 1, 2008. The entire balance of principal and interest accruing on the line of credit will
come due on October 6, 2009. As of September 30, 2008 Winona National Bank had made $71,819 in advances pursuant to this line of credit.



|(6) | Subsequent Events
|--- | -----------------

The Company is in the final phase of the permitting
process. The Minnesota Pollution Control Agency (MPCA) met on October 28, 2008 to determine the need for an Environmental Impact Statement (EIS) for the Companys project. The MPCA board asked that the MPCA staff provide more information
in order for the MPCA board to make a final decision on the need for an EIS at the MPCA boards November 25, 2008 meeting. The MPCA boards decision whether to hold a contested case hearing on the National Pollutant Discharge
Elimination System/State Disposal System Permit for our project was also postponed until the November 25, 2008 meeting.



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|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. 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, but not limited to, the following factors:



| |  |  | 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 general economic conditions or the occurrence of certain events causing an economic impact in the agriculture, oil or automobile industries;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Investors ability to pay the outstanding balances on promissory notes after the closing of the offering;
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | Changes in our business strategy, capital improvements or development plans;
| | - |  | ----------------------------------------------------------------------------



| |  |  | Increases in construction costs or delays or technical difficulties in constructing or operating the plant;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | Changes in the environmental regulations that apply to our plant site and operations;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | Changes in the availability of and volatility in the price of corn;
| | - |  | -------------------------------------------------------------------



| |  |  | Changes in the market for and price of ethanol and distillers grains and changes in the availability and price of natural gas;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | Lack of transport, storage and blending infrastructure preventing ethanol from reaching available markets;
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | Ethanol supply exceeding demand and corresponding ethanol price reductions;
| | - |  | ---------------------------------------------------------------------------



| |  |  | Changes and advances in ethanol production technology;
| | - |  | ------------------------------------------------------



| |  |  | Competition from alternative fuel additives; and
| | - |  | ------------------------------------------------



| |  |  | Changes in international, federal and/or state laws (including the elimination of any ethanol tax incentives or import tariffs);
| | - |  | --------------------------------------------------------------------------------------------------------------------------------

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



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read this report, financial statements for the fiscal year ended December 31, 2007 contained in our Registration Statement filed on Form S-1 and the
documents that we reference in that report and have filed as exhibits completely and with the understanding that our actual future results may be materially different from what we currently expect. We qualify all of our forward-looking statements by
these cautionary statements.

Overview

We are a development
stage Minnesota limited liability company formed in March 2006. We intend to develop, build and operate a 55 million gallon (per year) dry mill corn-processing ethanol plant expected to be located in southeastern Minnesota, approximately 100
miles southeast of Minneapolis, Minnesota. We have not yet engaged in the production of ethanol or distillers grains and we do not expect to generate any revenue until our plant is completely constructed and operational. Based upon engineering
specifications produced by Fagen, Inc., our anticipated design-builder, we expect the plant to annually consume approximately 19.7 million bushels of corn and to annually produce approximately 55 million gallons of fuel grade ethanol and
approximately 176,800 tons of distillers grains. We currently estimate that it will take approximately 16 to 20 months after construction commences to complete plant construction.

We have based our capital needs on a design for the plant that will cost approximately $83,400,000 and a total project completion and start-up cost of approximately $133,000,000. Our anticipated total project cost is
not a firm estimate and is expected to change from time to time as the project progresses. We intend to finance the development and construction and start-up of the ethanol plant with a combination of equity and debt. We have raised net
proceeds of $2,214,760 through private placements and have obtained interim financing in the amount of $2,540,000. We used $2,040,000 of the interim debt financing to purchase real estate and $376,200 was used for development, organizational and
offering expenses. We have not requested advances for approximately $123,800 remaining under our interim financing line of credit with Winona National Bank. We anticipate that these funds will be used as working capital over the next several months.
If we are unable to close our offering or obtain additional interim financing once these funds are expended, we may be unable to proceed with the project.

We filed a Registration Statement for an initial public offering of our units with the Securities and Exchange Commission on Form S-1 as amended, which became effective on May 9, 2008. We have registered our units with the
state securities authorities in Iowa, Minnesota, and Wisconsin. We are currently involved in efforts to raise capital in our initial public offering. Our offering will close no later than May 9, 2009 whether or not we raise sufficient capital
to proceed with our project. As of November 1, 2008, the Company has received subscriptions for approximately $1,570,000 (1,570,000 units) under this offering.

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. 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.

Because we are a development stage
company with no operating history, we do not yet have comparable income, production and sales data for the nine and three month periods ended September 30, 2008. If you undertake your own review and comparison of the nine and three month
periods ended September 30, 2008 and 2007, respectively, it is important that you keep in mind that we expect our financial results to change significantly if and when we become operational.

Plan of Operations until Start-Up of Ethanol Plant

Over the next
several fiscal quarters we expect to focus on three primary activities: (1) project financing; (2) site acquisition and development; and (3) plant design, construction and start-up operations. Assuming the successful completion of the
registered offering and related debt financing, for which no assurance can be given, we expect to have sufficient cash on hand to cover all costs associated with construction of the project, including, but not limited to, site acquisition and
development, utilities, construction and equipment acquisition.



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During and after the registered offering, we expect to continue working principally on the preliminary design and
development of our proposed ethanol plant, negotiating and executing a design-build agreement for our project, development of our plant site in southeastern Minnesota, obtaining necessary construction permits, identifying potential sources of debt
financing and negotiating corn supply, ethanol and co-product marketing, utility and other contracts. We plan to fund these activities and initiatives plus staffing, office costs, audit, legal, compliance and staff training costs using the
approximately $2,240,000 of our seed capital and interim financing arrangements. As of October 24, 2008 we had only $123,800 in remaining funds available under our interim financing arrangements. If we are unable to fund these activities with
our existing funds we may have to seek additional interim financing. There is no guarantee we will be able to obtain sufficient interim financing to continue our project.

The following outline represents our anticipated development schedule at this time:



| |  |  | June 2008  Commence equity drive
| | - |  | ---------------------------------



| |  |  | Spring 2009  Negotiate and close debt financing
| | - |  | ------------------------------------------------



| |  |  | Summer 2009  Commence plant construction
| | - |  | -----------------------------------------



| |  |  | 2009 to 2010  Manage plant construction
| | - |  | ----------------------------------------



| |  |  | 2010  Plant completion and commencement of operations
| | - |  | ------------------------------------------------------

This schedule is only an estimate and could be delayed for a variety of reasons including our inability to raise sufficient equity or obtain the debt financing necessary to commence plant construction as anticipated.

Project Financing

Debt and Equity

Our current registered offering will close upon the earlier of May 9, 2009 or when we have raised the minimum offering amount of $58,000,000. In the event we raise
the minimum offering amount prior to May 9, 2009, we may continue selling units until we reach the maximum number of units available in this offering, but in no event will we continue selling units after May 9, 2009. Even if we
successfully close the offering by selling at least the minimum number of units by May 9, 2009, we will not release the offering proceeds from escrow until we have met all of the conditions to release funds from escrow which include the
following:

(1) Cash proceeds from unit sales deposited in the escrow account equals or exceeds $58,000,000, exclusive of interest;

(2) Our receipt of a written debt financing commitment for debt financing ranging from $41,800,000 to $72,800,000, depending on the amount
necessary to fully capitalize the project;

(3) We have signed a definitive design-build agreement with Fagen, Inc.;

(4) We have been issued the environmental permits necessary to construct the ethanol plant;

(5) We elect, in writing, to terminate the escrow agreement;

(6) Winona National Bank provides an affidavit to the states in which the units have been registered stating that the requirements to release funds have been satisfied and shall have provided to the Commissioner of
the Minnesota Department of Commerce documentation that the foregoing conditions have been met; and

(7) We obtain consents to releasing
funds from escrow from each state securities department from which such consent is required provided; however, that none of the funds, regardless of the state of residence of the investor contributing such funds, shall be released until the
Commissioner of the Minnesota Department of Commerce has provided written express authorization to release the escrow proceeds.

In the event we have not
reached the minimum offering amount or have not met all of the requirements to release funds from escrow prior to May 9, 2009, the proceeds in the escrow account will be returned to investors pursuant to the terms of our escrow agreement.

We are attempting to raise capital in our current registered offering. We have held several informational investor meetings in Minnesota and plan to
continue our capital raising efforts through the use of extensive solicitation efforts in those states in which our units are registered.



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We anticipate that our debt financing will contain both long-term and short-term debt components. We anticipate that the
short-term debt component will consist of a working capital line of credit which will be used for operational expenses including inventory and hedging costs. We have not yet obtained any commitments for debt or bond financing. We have begun
interviewing potential senior lenders; however, we have not signed any commitment or contract for debt financing necessary to construct and operate our plant. Completion of the project relies entirely on our ability to attract these loans and raise
the equity in our registered offering necessary to adequately fund the project.

Interim Financing

On April 2, 2008 we executed a promissory note which provides that Fagen, Inc. will advance up to $250,000 to the Company during the term of the note. We received
the sum of $50,000 from Fagen on May 5, 2008 and $200,000 on May 27, 2008. We are required to repay the entire balance, plus interest, at a rate of seven percent (7%) per annum on the earlier of July 31, 2009 or upon financial
closing of the debt financing and equity offering proceeds needed for our project. We intend to use these funds for any expenses incurred prior to the equity closing.

On April 11, 2008 we entered into a Negative Pledge Agreement and note for the sum of $2,040,000 in favor of Winona National Bank to purchase real estate owned by Gary, Linda and Dana Allen near Eyota. In June
2008 we replaced the Negative Pledge Agreement and note with a conventional mortgage and note with Winona National Bank. Pursuant to the renegotiated note, interest shall be payable on a monthly basis at a fixed rate of 4.1%. The entire balance of
principal and interest accruing on the note will come due on October 6, 2009. Winona National Bank required personal guaranties in the amount of $1,950,000 for the issuance of the loan. Ten (10) of our governors/members and one member, All
American Cooperative, each executed a Guaranty with Winona National Bank as security for the loan. Each guarantor is liable for a certain portion of the debt identified in his/her/its guaranty agreement. In exchange for their personal guaranty, each
of the eleven (11) guarantors entered into an agreement with us wherein we agreed to pay a fee equal to seven percent (7%) of the amount of his/her/its guaranty in exchange for the personal guaranty. No payments will be made to any of
these guarantors unless and until we have reached financial closing of the debt financing and equity offering proceeds needed to fund the plant. We are recognizing the expense related to the guaranties ratably over the guaranty period. As of
September 30, 2008 a liability of $27,300 was included in accrued expenses.

On August 2, 2008 we obtained a revolving line of credit for working
capital from Winona National Bank in the amount of $250,000. The line of credit is secured by a real estate mortgage on the land we previously purchased near Eyota. The Company and each of the guarantors of the previous note with Winona National
Bank consented to the subordination of the $2,040,000 mortgage on the real estate to the revolving line of credit mortgage. The line of credit accrues interest at a daily variable rate based upon the Chase Manhattan Bank of New York. The maximum
rate of interest that can be charged on the principal advanced under the line of credit is 19%. We have begun to make monthly interest payments on the principal advanced beginning September 1, 2008. The entire balance of principal and interest
accruing on the line of credit will come due on October 6, 2009. As of October 24, 2008 Winona National Bank has made $126,200 in advances pursuant to this line of credit.

Grants and Government Programs

On October 5, 2007, we executed a Value-Added Producer Grant Agreement for grant
funds of up to $300,000 with the Rural Business-Cooperative Service of the United States Department of Agriculture (USDA). The Grant Agreement required us to match the grant funds provided by the USDA. The grant funds were available
through October 1, 2008. We have incurred qualifying expenses and received approximately $53,000 related to this grant. We will be required to submit an audit prepared by a Certified Public Accountant to the USDA setting forth the expenditures
of the grant and matching funds on or before December 29, 2008.

We plan to apply for additional grants from the USDA and other sources. 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.



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Site Acquisition and Development

Site Acquisition

We have focused on two specific areas in southeastern Minnesota for site selection. One potential
site is located near Eyota and the other potential site is located near Utica. While we continue to assess the adequacy of each site to meet our needs, we have determined that the site near Eyota may provide the best location for our plant. Our
board will look at several factors in making the final determination of the best site for our plant, including environmental risks, accessibility to necessary utilities, and rail and truck transportation. We have purchased a portion of the potential
site near Eyota and have obtained two additional options for land adjacent to this parcel. We have also obtained an option for a parcel of land near Utica. We may acquire all three optioned parcels, resulting in a total of two potential building
sites, a 138 acre Utica site and a 332.73 acre Eyota site. Our board reserves the right to select one or more plant sites in its sole discretion.

Eyota

On April 11, 2008, we purchased approximately 175 acres of farmland and buildings located thereon from Gary D. Allen and Linda
M. Allen, husband and wife, and Dana Allen, a single person for the purchase price of $2,200,000. Gary and Linda Allen are members of the Company. The real estate makes up a portion of our anticipated plant site and is located adjacent to the
DM & E railroad and the VonWald parcel described below. On April 16, 2008 we entered into a Farm Lease with Hadar Farms Partnership (Hadar) for approximately 153 acres of this 175 acre parcel. Hadar is a current member of
the Company. The Farm Lease provides that Hadar may use the parcel for farming and agriculture uses. We received $46,665 upon execution of the Farm Lease. The Farm Lease expires on November 1, 2008. We have the right to remove or destroy any of
Hadars crop and use the leased premises in our business operations during the lease term. We will be required to pay Hadar $305 per acre plus their crop input costs for any crops we remove or destroy.

On May 12, 2006 we executed a real estate option agreement with Steven C. VonWald granting us an option to purchase 145 acres of land near Eyota, Minnesota for
$1,450,000. Under the terms of the option agreement, we have paid $5,000 for an Initial Option Payment and approximately $145,000 to extend this option to May 12, 2009. The option may be further extended for an additional one year
period upon written notice and payment of an additional $50,000 for each extension. If we choose to exercise the option, all option and extension payments will be credited to the purchase price of the land.

On May 26, 2006 we executed a real estate option agreement with Dakota Minnesota and Eastern Railroad Corporation (DM&E) granting us an option to purchase 12.73
acres of land near Eyota, Minnesota adjacent to the Allen parcel. Under the terms of the option agreement, we paid $2,500 for the option and have the option to purchase the land for $25,000. In addition, we have paid approximately $5,000 to extend
this option to May 23, 2009. If we choose to exercise the option, all option and extension payments will be credited to the purchase price of the land.

Utica

On May 17, 2006 we executed a real estate option agreement with Isabelle O. Timm granting us an option to
purchase 138 acres of land near Utica, Minnesota for $1,380,000. Under the terms of the option agreement, we paid $3,000 for an Initial Option Payment and approximately $87,000 to extend this option to May 17, 2009. The purchase
option may be further extended for one additional one year period upon written notice and payment of $30,000 for the extension. If we choose to exercise the option, all option and extension payments will be credited to the purchase price of the
land.

Site Development

We hired Yaggy Colby
Associates (Yaggy) to provide design survey and land survey work for the project. The design survey work included gathering detailed topographic surface and utility features to provide the basis of design for the project and the land
survey work included property research, determination of boundaries, setting property pins and a certificate of survey. In addition, Yaggy provided services in connection with annexation and zone changes, construction plans and specifications for a
water main, streets and parking, a grading plan, drainage report and on-site septic design.



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American Engineering Testing, Inc. (AET) was hired to provide geotechnical services for the project. AET
performed soil borings at the proposed sites, soil sample testings and preparation of an engineering report regarding grading procedures for the building and structural supports, foundation types and depths, ground floor slab support, backfilling
procedures and preparation of subgrade for pavement and rail road spurs.

We hired Brookfield Resources, Inc. (Brookfield) to conduct surface
geophysical surveys to identify sinkholes.

We hired Thein Well Co., Inc. (Thein) to drill a well and perform testing as needed for the
permitting process.

Rail

We have
engaged TranSystems Corporation (TranSystems) for the development of a conceptual railway service plan for the plant. TranSystems will develop a plan which will be in accordance with the standards and specifications of the DM&E
railroad and the Iowa, Chicago and Eastern Railroad (ICE).

Utilities

U.S. Energy Services, Inc. (U.S. Energy) has provided consulting and energy management services for supplies of natural gas and electricity for the project

We received a preliminary cost estimate from Northern Natural Gas for construction of a natural gas pipeline to our proposed facilities. The preliminary cost estimate
indicates that the estimated cost for the pipeline is between $2,813,500 and $5,263,000. However, this is simply an estimate and there is no assurance that the actual cost of the pipeline construction will not be higher.

Permitting and Regulatory Activities

On May 30, 2006, we
entered into an agreement with Natural Resource Group, Inc. (NRG), a Minnesota corporation, to provide professional environmental services at our request. NRG did not identify any environmental fatal flaws that may significantly impact the intended
use of the land at our two proposed site locations in southeastern Minnesota. NRG evaluated the sites for the presence of recognized environmental conditions.

Pursuant to the agreement NRG will also perform reviews of published soil surveys and wetland information, attainment status and any large neighboring air emission sources, air toxics emission and potential air emission risk analysis (AERA)
concerns, fuel source availability, transportation construction and existing modifications for rail and roads and the facilitys potential to be permitted as a synthetic minor source. NRG will also evaluate water source and water discharge
options.

NRG is also required to conduct an extensive regulatory review including a review of air permit rules related to ethanol production facilities
and a confirmation of attainment status. NRG will assist us in preparing permit applications and has agreed to work with the engineering and construction firms to ensure that the permit requirements are incorporated into the plant design and
construction. NRG will also provide services regarding air pollution control, our environmental assessment worksheet (EAW), NPDES permitting, water appropriation permitting, and an aboveground storage tank permit. The scope of NRGs
work includes additional requirements set forth by various governmental units involved in the permitting process.

Our EAW is currently in the final phase
of the permitting process. The Minnesota Pollution Control Agency (MPCA) met on October 28, 2008 to determine the need for an Environmental Impact Statement (EIS) for our project. An EIS is an in-depth environmental review that examines the
probable environmental damage a project could cause and proposes alternatives to mitigate that damage. At the meeting the MPCA board asked that the MPCA staff provide more information in order for the MPCA board to make a final decision on the need
for an EIS at the MPCA boards November 25, 2008 meeting. The MPCA boards decision whether to hold a contested case hearing on the National Pollutant Discharge Elimination System/State Disposal System Permit for our project was also
postponed until the November 25, 2008 meeting.



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Plant Construction and Start-up of Plant Operations

We expect to complete construction of the proposed plant and commence operations approximately 16 to 20 months after construction commences. We are currently working towards completion of the final design and
development of the plant. We also plan to negotiate and execute finalized contracts concerning the construction of the plant, provision of necessary electricity, natural gas and other power sources and marketing agreements for ethanol and
co-products. Assuming the successful completion of our current registered offering and our ability to obtain the necessary debt financing, we expect to have sufficient cash on hand to cover construction and related start-up costs necessary to begin
plant operations. We estimate that we will need approximately $133,000,000 to construct the plant, which includes all capital expenditures necessary to complete the project, make the plant operational and produce revenue.

Fagen Letter of Intent

On March 28, 2007 we entered into a
non-binding Letter of Intent with Fagen in connection with the design, construction and operation of the proposed plant. The Letter of Intent was subsequently amended on September 13, 2007, December 17, 2007 and June 18, 2008.
The Letter of Intent provides the proposed terms and conditions under which Fagen will enter into exclusive negotiations with us to implement design and construction services for our plant. We have not yet executed a binding agreement. The Letter of
Intent, as amended, provides for a nameplate capacity of 55 million gallons of ethanol annually and a performance guarantee in that same amount. Unless the parties mutually agree to extend the termination date, the Letter of Intent, as amended,
will terminate on June 21, 2009. In addition, unless extended by mutual agreement, the Letter of Intent requires that the basic design and size of the plant be agreed upon, a site be selected and 10% of the equity be raised by June 21,
2009. Furthermore, if MinnErgy has not issued a valid Notice to Proceed prior to June 21, 2009, Fagen may terminate any Design Build Agreement that has been executed by the parties as of that date.

The Letter of Intent provides a base price estimate of $83,400,000 for construction of the plant that is subject to changes in construction costs. During the term of the
Letter of Intent, Fagen has the exclusive right to provide design and construction services for our project. Substantial completion under the Letter of Intent is to occur within 635 days after the date of the Notice to Proceed. We have
paid a commitment fee of $500,000 to Fagen in accordance with the terms of the Letter of Intent. This fee is nonrefundable and is to be credited against the contract price.

The Letter of Intent, as amended, provides that the contract price will be adjusted by the percentage increase, if any, from the reported CCI of 7879.53 in February 2007 to the CCI reported in the month we issue a
valid Notice to Proceed to Fagen. We will also be charged a surcharge of 0.50% for every month occurring between June 2008 and the month in which we issue a valid Notice to Proceed. However, the contract price will not exceed
$88,300,000 as a result of adjustments made for the CCI or the surcharge. We have not issued a Notice to Proceed as of the date of the filing of this report.

In addition, the Letter of Intent states that Fagen will utilize certain proprietary property and information of ICM, Inc. in the design and construction of the project and that our use of such proprietary property and information of ICM
will be governed by the terms and conditions of a license agreement between us and ICM.

Fagen Phase I and Phase II Engineering Services Agreement

On June 11, 2007 we entered into a Phase I and Phase II Engineering Services Agreement with Fagen Engineering, LLC. Pursuant to the Agreement, Fagen
Engineering is to perform a Phase I design package for grading and drainage and a Phase II design package for the engineering and design of the site work and utilities for the plant. The fixed fee for such services is $110,000 which will be included
in and credited to the design-build contract price with Fagen. Either party may terminate the agreement upon twenty (20) days written notice if the non-terminating party has defaulted through no fault of the terminating party.



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Employees

We expect
to hire between 30 and 36 full-time employees before commencing plant operations. Our officers are Ron Scherbring, President/Chief Executive Officer and Chris Arnold, Chief Financial Officer and Secretary. We currently have three office employees.
Their primary duties consist of managing and operating the Companys office and providing internal accounting services.

Results of Operations for
the Nine and Three Month Periods Ended September 30, 2008

We are in the development stage and therefore we have not yet commenced operations. We
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 late 2010. We will generate no revenue and we anticipate that accumulated losses will continue to increase until the ethanol plant is operational.

Trends and Uncertainties Impacting the Ethanol Industry and Our Future Revenues

In October 2008 the equity markets around the world tumbled in the wake of the collapse of several major financial institutions and a $700 billion bailout for lending institutions approved and funded by the U.S.
government. The failure of these financial lending institutions caused a severe tightening of credit availability in the U.S. which led to instability in the equity markets. The tightening of credit availability will likely result in significant
difficulty obtaining the debt financing needed to fund our project. The volatility of the equity markets will likely also inhibit our ability to secure the equity needed in our current registered offering to fund our project. The U.S. economy is
also facing a recession. Any one of these factors may result in our inability to proceed with our project as planned.

In addition to national economic
factors, we are also subject to industry-wide factors that we expect will affect our future operating and financial performance. Ethanol prices experienced a gradual climb during the first half of 2008, but began declining in September 2008. In
October 2008, gas prices plummeted causing the price and demand for ethanol to decrease as well. The demand for ethanol may continue to weaken due to the downturn in the U.S. economy. The average rack price for ethanol in July 2008 was approximately
$2.90 per gallon. According to the DTN Ethanol Center website as of October 21, 2008, the average rack price for ethanol was down to $2.11, which was a decrease of approximately $0.15 from the previous week. Many operating plants are currently
facing tighter profit margins as a result of the lower ethanol prices. A major ethanol producer, Verasun, filed for Chapter 11 bankruptcy at the beginning of November 2008. Verasun has blamed low ethanol margins, a tight credit market and high corn
prices for its need to seek Chapter 11 protection. It was reported that Verasun entered into long-term purchasing contracts for the purchase of corn when corn prices reached historic highs. However, the price of corn sank after reaching those highs
resulting in substantial losses.

Even though the price of ethanol has declined in recent months, we expect that the supply of ethanol in the market may
continue to increase which may also have a negative effect on the price of ethanol. As of October 23, 2008, the Renewable Fuels Association reported the current capacity of approximately 178 operating ethanol refineries in the United Sates was
nearly 11 billion gallons per year. The Renewable Fuels Association also reported that several operating facilities are currently under expansion which will increase annual production capacity by 671 million gallons. As of October 23, 2008
there were approximately 26 ethanol plants under construction which will increase annual ethanol production by an additional 2 billion gallons. If demand for ethanol does not grow in relation to the increase in supply, the price of ethanol may trend
lower which would negatively impact our earnings.

The principal purchasers of ethanol are petroleum terminals located throughout the United States. The
Renewable Fuels Standard (the RFS) led to significant new investment in ethanol production across the country. The RFS is a national flexible program that does not require that any renewable fuels be used in any particular area or state,
allowing refiners to use renewable fuel blends in those areas where it is most cost-effective. In addition to demand created by the RFS, some blenders may be motivated to reduce the cost of gasoline by blending additional ethanol into the gasoline.

The RFS requirement for 2008 is 9 billion gallons. The RFS will progressively increase to a 36 billion gallon requirement by 2022, 15 billion of which
must be corn-based ethanol with the remainder from non-corn based



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ethanol sources. The Energy Independence and Security Act of 2007 (the Act) includes provisions for a variety of studies focusing on the
optimization of flex fuel vehicles and the feasibility of the construction of pipelines dedicated to the transportation of ethanol. While the provisions in the Act are intended to stimulate an increase in the usage and price of ethanol, there is no
guarantee or assurance that this legislation will have the desired impact on the ethanol industry or that it will not be amended or repealed in the future. The following chart provides the new RFS ethanol production schedule:



|     |  |                  |  |                 |  |                   |  |                     |  |                                 |  |          
|---- |  | ---------------- |  | --------------- |  | ----------------- |  | ------------------- |  | ------------------------------- |  | ---------
|Year |  | RenewableBiofuel |  | AdvancedBiofuel |  | CellulosicBiofuel |  | Biomass-basedDiesel |  | UndifferentiatedAdvancedBiofuel |  | Total RFS
|2008 |  | 9.0              |  |                 |  |                   |  |                     |  |                                 |  | 9.0      
|2009 |  | 10.5             |  | .6              |  |                   |  | .5                  |  | 0.1                             |  | 11.1     
|2010 |  | 12               |  | .95             |  | .1                |  | .65                 |  | 0.2                             |  | 12.95    
|2011 |  | 12.6             |  | 1.35            |  | .25               |  | .8                  |  | 0.3                             |  | 13.95    
|2012 |  | 13.2             |  | 2               |  | .5                |  | 1                   |  | 0.5                             |  | 15.2     
|2013 |  | 13.8             |  | 2.75            |  | 1                 |  |                     |  | 1.75                            |  | 16.55    
|2014 |  | 14.4             |  | 3.75            |  | 1.75              |  |                     |  | 2                               |  | 18.15    
|2015 |  | 15               |  | 5.5             |  | 3                 |  |                     |  | 2.5                             |  | 20.5     
|2016 |  | 15               |  | 7.25            |  | 4.25              |  |                     |  | 3.0                             |  | 22.25    
|2017 |  | 15               |  | 9               |  | 5.5               |  |                     |  | 3.5                             |  | 24       
|2018 |  | 15               |  | 11              |  | 7                 |  |                     |  | 4.0                             |  | 26       
|2019 |  | 15               |  | 13              |  | 8.5               |  |                     |  | 4.5                             |  | 28       
|2020 |  | 15               |  | 15              |  | 10.5              |  |                     |  | 4.5                             |  | 30       
|2021 |  | 15               |  | 18              |  | 13.5              |  |                     |  | 4.5                             |  | 33       
|2022 |  | 15               |  | 21              |  | 16                |  |                     |  | 5                               |  | 36       

Source: Renewable Fuels Association

The Act authorizes $25 million annually in 2008, 2009 and 2010 for research and development and commercial application of biofuels production in states with low rates of ethanol and cellulosic ethanol production. Due
to volatile corn prices, discussion of cellulose based ethanol has recently increased. Public criticism of the ethanol industry may lead to more pressure to produce ethanol from sources other than corn due to negative public sentiment regarding the
use of corn for ethanol production. Cellulosic ethanol is ethanol that is produced using cellulose as the feedstock instead of corn. Cellulose is the main component of plant cell walls and is the most common organic compound on earth. Cellulose is
found in wood chips, corn stalks, rice straw, amongst other common plants. Currently, production of cellulosic ethanol is in its infancy. It is technology that is as yet unproven on a commercial scale.

Several companies and researchers have commenced pilot projects to study the feasibility of commercially producing cellulosic ethanol. If this technology can be
profitably employed on a commercial scale, it could potentially lead to ethanol that is less expensive to produce than corn based ethanol, especially if corn prices remain high. Cellulosic ethanol may also capture more government subsidies and
assistance than corn based ethanol. This could decrease demand for our product or result in competitive disadvantages for our ethanol production process as our plant is not designed to produce cellulosic ethanol. It is unlikely that our plant could
be easily converted to producing ethanol from cellulose or that it would be economically feasible to do so.

The Act also authorizes $500 million annually
for 2008 to 2015 for the production of advanced biofuels that have at least an 80% reduction in greenhouse gas (GHG) emissions. The Act sets forth a new GHG emissions standard. Starch-based renewable fuels must now meet a 20 percent
lifecycle greenhouse gas threshold relative to the gasoline



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or diesel fuel they displace. The Act requires all ethanol facilities that had not commenced construction prior to the enactment of the Act to comply with
the 20 percent GHG emissions reduction requirement. Since we have not yet begun construction of our plant, we will be required to comply with this new GHG emissions standard. The EPA has not yet provided definitive rules regarding the new GHG
emissions standard. Therefore we are unable to determine at this time whether our plant will be able to meet the GHG emissions standard. If we are unable to meet the GHG emissions standard or if we are unable to meet the standard cost effectively we
may be forced to abandon the project.

On June 18, 2008, the United States Congress overrode a presidential veto of the Food, Conservation and Energy
Act of 2008, otherwise known as the Farm Bill to ensure that all parts of the 2008 Farm Bill are enacted into law. Passage of the 2008 Farm Bill reauthorizes the 2002 farm bill and adds new provisions regarding energy, conservation, rural
development, crop insurance as well as other subjects. The energy title continues the energy programs contained in the 2002 farm bill but refocuses certain provisions on the development of cellulosic ethanol technology. The new legislation provides
assistance for the production, storage and transport of cellulosic feedstocks and provides support for ethanol production from such feedstocks in the form of grants, loans and loan guarantees. The 2008 Farm Bill also modifies the ethanol fuel credit
from $0.51 cents per gallon to $0.45 cents per gallon beginning in 2009. The bill also extends the $0.54 cent per gallon tariff on imported ethanol for two years, to January 2011. The 2008 Farm Bill is distinct from the Energy Independence and
Security Act of 2007, which contains the renewable fuels standards as described above.

Challenges to current ethanol incentives may decrease the demand
and profitability of ethanol production in the future. In April, the Texas governor requested a 50% waiver of the RFS mandate for 2008 from the U.S. Environmental Protection Agency (the EPA). In his request the governor stated that the
soaring costs of corn due to increased demand for ethanol production has led to higher food costs within the state and suggested that a partial waiver of the RFS mandate in Texas would help alleviate the higher food prices. The EPA issued a decision
on the governors request on August 7, 2008 indicating that it would not grant the RFS waiver. Even though the EPA denied the waiver of the RFS mandate for Texas, other states may follow suit and request similar waivers which could
significantly hinder the demand for ethanol throughout the country. Also, in September 2008, several news articles indicated that there is a strong possibility that Brazil will challenge the U.S. ethanol tariffs by filing a complaint with the World
Trade Organization. The U.S. currently charges a $0.54 tariff on ethanol imported from Brazil. Reduction of the tariff could increase imports of ethanol into the U.S. which could reduce the demand for ethanol produced domestically and possibly
reduce the price at which we may be able to sell ethanol produced at our plant.

Consumer resistance to the use of ethanol may affect the demand for
ethanol which could affect our ability to market our product and reduce the value of your investment. According to media reports in the popular press, some consumers believe the 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, and that the process of producing ethanol actually uses more fossil energy than is produced. In addition, recent high corn prices have added to consumer backlash
against ethanol, as many blame ethanol for high food prices. These consumer beliefs could potentially be wide-spread. If consumers choose not to buy ethanol, it could negatively affect our ability to sell our product and may negatively impact our
profitability.

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. According to a report released by the National
Agriculture Statistics Service on behalf of the USDA, crop production is estimated at 12.0 billion bushels for 2008. The Report indicates that yields are expected to average 153.9 bushels per acre. If realized, this will be the second highest yield
on record, behind 2004,.

Corn prices have decreased in the last several months. According to an article posted on the USA Today website dated
October 22, 2008, corn, soybean and wheat prices have fallen nearly 50% from the historic highs they reached earlier in the year. Corn contracts for December delivery at the Chicago Board of Trade closed at $3.85 per bushel on October 22,
2008, down from more than $7.80 in June 2008. Although we do not expect to begin operations until 16 to 20 months after construction commences, we expect continued volatility in the price of corn, which will significantly impact our cost of goods
sold. The number of operating and planned ethanol plants in our 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.



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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 use natural gas to dry our distillers grain products to moisture contents at which they can be stored for extended periods of time and transported greater distances.
Distillers dried grains have a much broader market base, including the western cattle feedlots, and the dairies of California and Florida. There has been volatility in the natural gas prices recently and any increases in the price of natural gas
will increase our cost of production and may negatively impact our future profit margins.

Liquidity and Capital Resources

Financial Results for our nine and three month periods ended September 30, 2008

As of September 30, 2008, we have total assets of approximately $4,438,000 consisting primarily of land and land options, property and equipment and deferred offering costs. We have current liabilities of
approximately $695,000 consisting primarily of short-term debt related to the Fagen note and accounts payable. We have non-current liabilities of $2,040,000 consisting of our mortgage with Winona National Bank. Total members equity as of
September 30, 2008, was approximately $1,703,000.

Since our inception through our fiscal quarter ended September 30, 2008, we have generated no
revenue from operations. For the nine month period ended September 30, 2008, we had net losses of approximately $233,000. Our total net loss since inception through our fiscal quarter ended September 30, 2008 is approximately $512,000.

Estimated Sources of Funds

The following tables set
forth various estimates of our sources of funds, depending upon the amount of units sold to investors in our current registered offering and based upon various levels of equity that our lenders may require. The information set forth below represents
estimates only and actual sources of funds excluding any offering costs could vary significantly, and there can be no assurance that such funds will actually be obtained.



|                            |  |                             |             |         |        |  
|--------------------------- |  | --------------------------- | ----------- | ------- | ------ | -
|Sources of Funds (1)        |  | Maximum89,000,000 UnitsSold |             | Percent |       
|Offering Proceeds (2)       |  | $                           | 89,000,000  |         | 66.92  | %
|Seed Capital Gross Proceeds |  | $                           | 2,239,960   |         | 1.68   | %
|Senior Debt Financing       |  | $                           | 41,760,040  |         | 31.40  | %
|                            |  |                             |             |         |        |  
|Total Sources of Funds      |  | $                           | 133,000,000 |         | 100.00 | %
|                            |  |                             |             |         |        |  



|                            |  |                         |             |         |        |  
|--------------------------- |  | ----------------------- | ----------- | ------- | ------ | -
|Sources of Funds (1)        |  | If 74,000,000 UnitsSold |             | Percent |       
|Offering Proceeds (2)       |  | $                       | 74,000,000  |         | 55.64  | %
|Seed Capital Gross Proceeds |  | $                       | 2,239,960   |         | 1.68   | %
|Senior Debt Financing       |  | $                       | 56,760,040  |         | 42.68  | %
|                            |  |                         |             |         |        |  
|Total Sources of Funds      |  | $                       | 133,000,000 |         | 100.00 | %
|                            |  |                         |             |         |        |  



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|                            |  |                             |             |         |        |  
|--------------------------- |  | --------------------------- | ----------- | ------- | ------ | -
|Sources of Funds (1)        |  | Minimum58,000,000 UnitsSold |             | Percent |       
|Offering Proceeds (2)       |  | $                           | 58,000,000  |         | 43.61  | %
|Seed Capital Gross Proceeds |  | $                           | 2,239,960   |         | 1.68   | %
|Senior Debt Financing       |  | $                           | 72,760,040  |         | 54.71  | %
|                            |  |                             |             |         |        |  
|Total Sources of Funds      |  | $                           | 133,000,000 |         | 100.00 | %
|                            |  |                             |             |         |        |  



|(1) | We may receive federal and state grants; however, to date we have only entered into one agreement for a Value Added Producer Grant awarded by the Rural Development-Cooperative
Service of the USDA for up to $300,000 of matching funds. Additionally, we may receive bond financing. For any grants or bond financing we receive, we expect to reduce the amount of equity proceeds or senior debt financing necessary for our
capitalization by the same or similar amount. Our sources of funds listed above are not reduced by offering costs.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | We have received subscriptions for 1,570,000 units in our current registered offering for an aggregate amount of approximately $1,570,000 as of November 1, 2008. Our
subscription procedures require subscribers to send ten percent (10%) of the amount due at the time they sign the subscription agreement. We are continuing our efforts to raise capital needed to adequately fund the project, but there can be no
assurance that we will be able to raise the offering proceeds identified in this table. Our offering will close no later than May 9, 2009.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Estimated Use of Proceeds

We intend to use the net proceeds of our current registered offering to construct and operate an ethanol plant
with a 55 million gallon per year nameplate manufacturing capacity. The funds raised in the current registered offering must be supplemented with debt financing to meet our stated goals. We estimate that the total capital expenditures for the
construction and start-up of the plant will be approximately $133,000,000. The total project cost is a preliminary estimate primarily based upon the experience of our anticipated general contractor, Fagen, with ethanol plants similar to the plant we
intend to construct and operate. We expect the total project cost will change from time to time as the project progresses.

The following table describes
our proposed use of net proceeds. The actual use of funds is based upon contingencies, such as the estimated cost of plant construction, the suitability and cost of the proposed site, which our board of governors has the right to select in its sole
discretion, the regulatory permits required and the cost of debt financing and inventory costs, which are driven by the market. Therefore, the following amounts are intended to be estimates only, and the actual use of funds may vary significantly
from the descriptions given below depending on contingencies such as those described above. In addition, depending on the level of equity raised, we may decide to implement technical or design upgrades or improvements to our proposed plant.



|                                      |  |        |             |                |        |  
|------------------------------------- |  | ------ | ----------- | -------------- | ------ | -
|Use of Proceeds                       |  | Amount |             | PercentofTotal |       
|Plant construction                    |  | $      | 83,400,000  |                | 62.75  | %
|Material escalation clause            |  |        | 4,170,000   |                | 3.15   | %
|CCI contingency                       |  |        | 1,668,000   |                | 1.25   | %
|Land costs                            |  |        | 3,675,000   |                | 2.76   | %
|Site development costs                |  |        | 2,682,000   |                | 2.01   | %
|Natural gas pipeline (1)              |  |        | 8,000,000   |                | 6.02   | %
|Electrical service extension          |  |        | 1,163,000   |                | 0.88   | %
|Construction contingency              |  |        | 1,305,000   |                | 0.98   | %
|Construction performance bond         |  |        | 500,000     |                | 0.36   | %
|Construction insurance costs          |  |        | 300,000     |                | 0.23   | %
|Construction manager fee              |  |        | 162,000     |                | 0.12   | %
|Administrative building               |  |        | 400,000     |                | 0.30   | %
|Office equipment                      |  |        | 75,000      |                | 0.05   | %
|Computers, software, network          |  |        | 175,000     |                | 0.13   | %
|Railroad                              |  |        | 6,000,000   |                | 4.51   | %
|Rolling stock                         |  |        | 400,000     |                | 0.30   | %
|Fire protection and water supply      |  |        | 5,300,000   |                | 3.98   | %
|Capitalized interest                  |  |        | 3,000,000   |                | 2.26   | %
|Start up costs:                       |  |        |             |                |        |  
|Financing costs                       |  |        | 700,000     |                | 0.53   | %
|Organization costs(2)                 |  |        | 1,375,000   |                | 1.03   | %
|Pre-production period costs           |  |        | 800,000     |                | 0.60   | %
|Inventory  working capital           |  |        | 3,750,000   |                | 2.82   | %
|Inventory  corn                      |  |        | 1,100,000   |                | 0.83   | %
|Corn hedging costs                    |  |        | 250,000     |                | 0.19   | %
|Inventory  chemicals and ingredients |  |        | 400,000     |                | 0.49   | %
|Inventory  ethanol                   |  |        | 1,250,000   |                | 0.94   | %
|Inventory  DDGS                      |  |        | 500,000     |                | 0.36   | %
|Spare parts  process equipment       |  |        | 500,000     |                | 0.36   | %
|                                      |  |        |             |                |        |  
|Total                                 |  | $      | 133,000,000 |                | 100.00 | %
|                                      |  |        |             |                |        |  



|(1) | Represents a standby letter of credit for natural gas infrastructure improvements.
|--- | ----------------------------------------------------------------------------------

|(2) | Includes estimated offering costs of $710,000.
|--- | ----------------------------------------------



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Critical Accounting Policies and 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. Significant estimates include the deferral of expenditures for offering costs, which are dependent upon successful financing of the project. We
defer the costs incurred to raise equity financing until that financing occurs. At the time we issue new equity, we will net these costs against the equity proceeds received. Alternatively, if the equity financing does not occur, we will expense the
offering costs. It is at least reasonably possible that this estimate may change in the near term.

We have incurred costs to purchase land options. These
land options are capitalized into the land cost once exercised; land options that expire unused, will be expensed at expiration unless we determine we have no intention to exercise them at an earlier date.

Net loss per unit is calculated in accordance with Financial Accounting Standards Board Statement No. 128 Earnings Per Share. The Companys basic
and diluted net loss per share is computed by dividing net loss by the weighted average number of units outstanding during the period. As of September 30, 2008, we did not have any instruments outstanding which may have a dilutive effect on
earnings per share.

Off-Balance Sheet Arrangements

We
do not have any off-balance sheet arrangements.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk.
|------- | -----------------------------------------------------------

We are
a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.



|Item 4. | Controls and Procedures.
|------- | ------------------------

Our management, including our President
(the Principal Executive Officer), Ronald L. Scherbring, along with our CFO, (the Principal Financial and Accounting Officer), Christopher L. Arnold, is responsible for establishing and



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maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal controls over financial reporting. Our
internal control system over financial reporting is a process designed under the supervision of our Principal Executive Officer and our Principal Financial and Accounting Officer to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of the consolidated financial statements in accordance with the U.S. generally accepted accounting principles.

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

At the end of the period covered by this report, an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e) of the Securities Exchange Act of 1934 (the Exchange
Act)) was carried out under the supervision and with the participation of our Principal Executive Officer, Ronald L. Scherbring, and our Principal Financial and Accounting Officer, Christopher L. Arnold. Based on their evaluation of our
disclosure controls and procedures, 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 reasonable likely to materially affect, our internal control over financial reporting.

PART II  OTHER INFORMATION



|Item 1. | Legal Proceedings.
|------- | ------------------

None.



|Item 1A. | Risk Factors.
|-------- | -------------

We are a smaller reporting company as defined by
Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.



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

The
Securities and Exchange Commission declared our Registration Statement on Form S-1 (SEC Registration No.333-142928), as amended, effective on May 9, 2008. 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 $58,000,000 and a maximum
of $89,000,000 in the offering through the sale of a minimum of 58,000,000 membership units and a maximum of 89,000,000 membership units, but there is no assurance that we will be able to sell such units. We expect to secure the balance needed to
construct the plant through federal, state and local grants and debt financing, but there is no assurance that we will be able to secure such grants or debt financing. As of November 1, 2008, we have received subscriptions for approximately
1,570,000 units for an aggregate amount of approximately $1,570,000. 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 $710,000 in offering expenses in connection with the issuance and distribution of securities in our registered offering, including no underwriting discounts and commissions, no finders fees, no expenses paid to or for
underwriters and approximately $710,000 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 included herein:
|------- | -----------------------------------------------------



|            |  |                                              
|----------- |  | ---------------------------------------------
|Exhibit No. |  | Description                                  
|31.1        |  | Certificate Pursuant to 17 CFR 240.15d-14(a).
|            | 
|31.2        |  | Certificate Pursuant to 17 CFR 240.15d-14(a).
|            | 
|32.1        |  | Certificate Pursuant to 18 U.S.C. § 1350.    
|            | 
|32.2        |  | Certificate Pursuant to 18 U.S.C. § 1350.    

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.



|                       |  |                                                 
|---------------------- |  | ------------------------------------------------
|                       |  | MINNERGY, LLC                                   
|                       | 
|Date November 13, 2008 |  | /s/ Ronald L. Scherbring                        
|                       |  | (Ronald L. Scherbring, President)               
|                       |  | (Principal Executive Officer)                   
|                       | 
|Date November 13, 2008 |  | /s/ Christopher L. Arnold                       
|                       |  | (Christopher L. Arnold, Chief Financial Officer)
|                       |  | (Principal Financial Officer)                   



24