##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 þ
    
    Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the fiscal quarter ended June 30, 2008
 o
    
    Transition report under Section 13 or 15(d) of the Exchange Act of 1934.
 Commission file number 000-53202
 HOMELAND ENERGY SOLUTIONS, LLC
  Iowa
    
    20-3919356(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer Identification No.)106 W. Main Street, Riceville, IA
    
    50466(Address of principal executive offices)
    
    (Zip Code)
 (641) 985-4025
  o þ
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
  o þ




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##### 



INDEX
 PagePART I  FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19Item 3. Quantitative and Qualitative Disclosures about Market Risks
    
    
    30Item 4. Controls and Procedures
    
    
    30PART II  OTHER INFORMATION
    
    
    31Item 1. Legal Proceedings
    
    
    31Item 1A. Risk Factors
    
    
    31Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    31Item 3. Defaults Upon Senior Securities
    
    
    32Item 4. Submission of Matters to a Vote of Security Holders
    
    
    32Item 5. Other Information
    
    
    32Item 6. Exhibits
    
    
    32SIGNATURES
    
    
    33Exhibit 10.1Exhibit 10.2Exhibit 10.3Exhibit 10.4Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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PART I  FINANCIAL INFORMATION
 
 Item 1.
Financial Statements.
 Homeland Energy Solutions, LLC
(A Development Stage Company)
 Balance Sheets  June 30, 2008 and December 31, 2007
 06/30/2008
    
    
    12/31/2007Unaudited
    
    
    AuditedASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    13,803,254
    
    
    $
    64,986,226Attorney escrow account
    
    
    527
    
    
    
    527Prepaid expenses
    
    
    233,791
    
    
    
    277,746Total current assets
    
    
    14,037,572
    
    
    
    65,264,499PROPERTY AND EQUIPMENTLand
    
    
    3,556,482
    
    
    
    3,556,482Equipment
    
    
    23,816
    
    
    
    23,816Construction in progress
    
    
    86,435,505
    
    
    
    40,044,45690,015,803
    
    
    
    43,624,754Less accumulated depreciation
    
    
    5,988
    
    
    
    4,08990,009,815
    
    
    
    43,620,665OTHER ASSETSLoan fees, net of amortization 2008 $140,921; 2007 $52,459
    
    
    1,032,051
    
    
    
    1,120,513Other assets
    
    
    334,783
    
    
    
    423,6651,366,834
    
    
    
    1,544,178$
    105,414,221
    
    
    $
    110,429,342
   3




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Homeland Energy Solutions, LLC  (A Development Stage Company)
 Balance
Sheets  June 30, 2008 and December 31, 2007
 06/30/2008
    
    
    12/31/2007Unaudited
    
    
    AuditedLIABILITIES AND MEMBERS EQUITYCURRENT LIABILITIESAccounts payable
    
    $
    7,184,169
    
    
    $
    6,978,172Accounts payable, related parties
    
    
    
    
    
    
    66,400Retainage payable
    
    
    5,835,775
    
    
    
    3,592,124Rejected subscriptions payable
    
    
    
    
    
    
    7,500,000Accrued interest related to rejected subscriptions
    
    
    
    
    
    
    217,164Property tax payable
    
    
    5,836
    
    
    
    5,836Payroll tax payable
    
    
    12,199
    
    
    
    2,458Current portion of long term liabilities
    
    
    20,000
    
    
    
    15,000Total current liabilities
    
    
    13,057,979
    
    
    
    18,377,154COMMITMENTS AND CONTINGENCIES (NOTE 6)LONG-TERM DEBT, less current maturities
    
    
    175,000
    
    
    
    185,000MEMBERS EQUITYCapital units, less syndication costs
    
    
    89,572,744
    
    
    
    89,558,501Equity accumulated during development stage
    
    
    2,608,498
    
    
    
    2,308,68792,181,242
    
    
    
    91,867,188$
    105,414,221
    
    
    $
    110,429,342
 See Notes to Unaudited Financial Statements. 4




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Homeland Energy Solutions, LLC 
(A
Development Stage Company)
 Statements of Operations
 Period FromThree Months
    
    
    Three Months
    
    
    InceptionEnded
    
    
    Ended
    
    
    (12/7/2005) to06/30/2008
    
    
    06/30/2007
    
    
    06/30/2008Unaudited
    
    
    Unaudited
    
    
    UnauditedOPERATING REVENUE
    
    $
    
    
    
    $
    
    
    
    $
    OPERATING EXPENSESProfessional expenses
    
    
    11,288
    
    
    
    49,461
    
    
    
    522,993Engineering & design
    
    
    
    
    
    
    
    
    
    
    18,652Feasibility studies
    
    
    
    
    
    
    
    
    
    
    84,750Filings fees/permits
    
    
    (9,192
    )
    
    
    1,676
    
    
    
    23,075Land options
    
    
    
    
    
    
    
    
    
    
    1,650Insurance
    
    
    
    
    
    
    4,619
    
    
    
    23,297Office expense
    
    
    3,217
    
    
    
    710
    
    
    
    20,399Depreciation
    
    
    950
    
    
    
    950
    
    
    
    5,988Amortization
    
    
    
    
    
    
    
    
    
    
    390Rent
    
    
    1,221
    
    
    
    900
    
    
    
    6,860Utilities
    
    
    1,673
    
    
    
    898
    
    
    
    10,239Wages
    
    
    12,139
    
    
    
    
    
    
    
    20,020Payroll taxes
    
    
    1,265
    
    
    
    
    
    
    
    1,532Property tax
    
    
    
    
    
    
    341
    
    
    
    341Miscellaneous expense
    
    
    (2,087
    )
    
    
    4,758
    
    
    
    13,936Total operating expenses
    
    
    20,474
    
    
    
    64,313
    
    
    
    754,122OTHER INCOMEInterest income
    
    
    155,349
    
    
    
    10,306
    
    
    
    3,334,947Crop income
    
    
    
    
    
    
    
    
    
    
    2,673Grant income
    
    
    
    
    
    
    
    
    
    
    25,000155,349
    
    
    
    10,306
    
    
    
    3,362,620Net income (loss)
    
    $
    134,875
    
    
    $
    (54,007
    )
    
    $
    2,608,498Income (loss) per unit
    
    $
    1.47
    
    
    $
    (18.95
    )Weighted average of units outstanding
    
    
    91,445
    
    
    
    2,850
   5




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Homeland Energy Solutions, LLC 
(A
Development Stage Company)
 Statements of Operations
 Six Months
    
    
    Six MonthsEnded
    
    
    Ended06/30/2008
    
    
    06/30/2007Unaudited
    
    
    UnauditedOPERATING REVENUE
    
    $
    
    
    
    $
    OPERATING EXPENSESProfessional expenses
    
    
    155,243
    
    
    
    100,622Filings fees/permits
    
    
    
    
    
    
    2,834Insurance
    
    
    
    
    
    
    9,239Office expense
    
    
    5,435
    
    
    
    3,879Depreciation
    
    
    1,899
    
    
    
    1,899Amortization
    
    
    
    
    
    
    390Rent
    
    
    2,635
    
    
    
    2,100Utilities
    
    
    3,709
    
    
    
    4,069Crop input expense
    
    
    
    
    
    
    4,552Wages
    
    
    20,020
    
    
    
    Payroll taxes
    
    
    1,532
    
    
    
    Property tax
    
    
    
    
    
    
    341Miscellaneous expense
    
    
    10,279
    
    
    
    1,027Total operating expenses
    
    
    200,752
    
    
    
    130,952OTHER INCOMEInterest income
    
    
    514,806
    
    
    
    21,633Grant income
    
    
    
    
    
    
    14,125514,806
    
    
    
    35,758Net income (loss)
    
    $
    314,054
    
    
    $
    (95,194
    )Income (loss) per unit
    
    $
    3.43
    
    
    $
    (33.40
    )Weighted average of units outstanding
    
    
    91,445
    
    
    
    2,850
   6




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Homeland Energy Solutions, LLC
 (A
Development Stage Company)
 Statement of Members Equity  For the Period from December 7, 2005 (Date of Inception) to June 30, 2008
 UnauditedBalance, December 7, 2005
    
    $
    Capital contributions for 600 units at $333.33 per unit
    
    
    200,000Capital contributions for 2,250 units at $500 per unit
    
    
    1,125,000Syndication and offering costs
    
    
    (19,107
    )Net (loss) from inception to December 31, 2006
    
    
    (143,796
    )Balance, December 31, 2006
    
    
    1,162,097Capital contributions for 88,595 units at $1,000 per unit
    
    
    88,595,000Syndication and offering costs
    
    
    (328,149
    )Net income for the year ended December 31, 2007
    
    
    2,438,240Balance, December 31, 2007
    
    
    91,867,188Net income for the six months ended June 30, 2008
    
    
    314,054Balance, June 30, 2008
    
    $
    92,181,242
   7




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Homeland Energy Solutions, LLC
(A
Development Stage Company)
 Statements of Cash Flows
 Period FromSix Months
    
    
    Six Months
    
    
    InceptionEnded
    
    
    Ended
    
    
    (12/7/2005) to06/30/2008
    
    
    06/30/2007
    
    
    06/30/2008Unaudited
    
    
    Unaudited
    
    
    UnauditedCASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)
    
    $
    314,054
    
    
    $
    (95,194
    )
    
    $
    2,608,498Adjustments to reconcile net income to net cash
(used in) operating activities:Depreciation and amortization
    
    
    1,899
    
    
    
    2,289
    
    
    
    6,378Write off land options
    
    
    
    
    
    
    
    
    
    
    1,650Change in working capital components:(Increase) decrease in other current assets
    
    
    
    
    
    
    15,257
    
    
    
    (278,273
    )Increase (decrease) in accounts payable
    
    
    (165,144
    )
    
    
    (67,436
    )
    
    
    22,403Increase (decrease) in other current liabilities
    
    
    (207,423
    )
    
    
    4,090
    
    
    
    18,035Net cash provided by (used in)
operating activities
    
    
    (56,614
    )
    
    
    (140,994
    )
    
    
    2,378,691CASH FLOWS FROM INVESTING ACTIVITIESProceeds from maturity of certificate of deposit
    
    
    
    
    
    
    614,488
    
    
    
    1,214,488Purchase of certificate of deposit
    
    
    
    
    
    
    
    
    
    
    (1,214,488
    )Payments for construction in progress
    
    
    (43,616,358
    )
    
    
    (321,784
    )
    
    
    (73,263,110
    )Purchase of equipment
    
    
    
    
    
    
    
    
    
    
    (23,816
    )Purchase of land
    
    
    
    
    
    
    (3,528,524
    )
    
    
    (3,554,519
    )Payments for other assets
    
    
    
    
    
    
    
    
    
    
    (393,891
    )Purchase of land options
    
    
    (5,000
    )
    
    
    (18,125
    )
    
    
    (38,387
    )Net cash (used in) investing activities
    
    
    (43,621,358
    )
    
    
    (3,253,945
    )
    
    
    (77,273,723
    )CASH FLOWS FROM FINANCING ACTIVITIESProceeds from short-term borrowing
    
    
    
    
    
    
    3,500,000
    
    
    
    4,883,540Payments on short-term borrowing
    
    
    
    
    
    
    
    
    
    
    (4,883,540
    )Proceeds from long-term borrowing
    
    
    
    
    
    
    
    
    
    
    200,000Payments on long-term borrowing
    
    
    (5,000
    )
    
    
    
    
    
    
    (5,000
    )Payments for origination fees on long-term borrowing
    
    
    
    
    
    
    (50,000
    )
    
    
    (1,150,000
    )Payments for offering costs
    
    
    
    
    
    
    (1,824
    )
    
    
    (247,607
    )Contributed capital
    
    
    
    
    
    
    
    
    
    
    89,920,000Proceeds from rejected subscription funds
    
    
    
    
    
    
    
    
    
    
    7,500,000Payments for rejected subscriptions
    
    
    (7,500,000
    )
    
    
    
    
    
    
    (7,500,000
    )Payments for syndication costs on capital units issued
    
    
    
    
    
    
    
    
    
    
    (19,107
    )Net cash provided by (used in)
financing activities
    
    
    (7,505,000
    )
    
    
    3,448,176
    
    
    
    88,698,286
   8




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Homeland Energy Solutions, LLC
(A
Development Stage Company)
 Statements of Cash Flows (continued)
 Period FromSix Months
    
    
    Six Months
    
    
    InceptionEnded
    
    
    Ended
    
    
    (12/7/2005) to06/30/2008
    
    
    06/30/2007
    
    
    06/30/2008Unaudited
    
    
    Unaudited
    
    
    UnauditedNet increase (decrease) in cash
    
    $
    (51,182,972
    )
    
    $
    53,237
    
    
    $
    13,803,254CASH AND CASH EQUIVALENTSBeginning
    
    
    64,986,226
    
    
    
    357,709
    
    
    
    Ending
    
    $
    13,803,254
    
    
    $
    410,946
    
    
    $
    13,803,254SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION, cash payments for interest
    
    $
    217,164
    
    
    $
    
    
    
    $
    427,586SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIESAccounts payable related to construction in progress
    
    
    7,081,224
    
    
    
    31,135
    
    
    
    7,081,224Retainage payable related to construction in progress
    
    
    5,835,775
    
    
    
    
    
    
    
    5,835,775Interest capitalized
    
    
    
    
    
    
    78,712
    
    
    
    210,422Insurance costs capitalized
    
    
    141,309
    
    
    
    
    
    
    
    141,309Loan fee amortization capitalized
    
    
    88,462
    
    
    
    17,938
    
    
    
    140,921Loan fees related to short-term borrowings
    
    
    
    
    
    
    17,572
    
    
    
    17,572
   9




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HOMELAND ENERGY SOLUTIONS, LLC
  Note 1. Nature of Business and Significant Accounting Policies
 Nature of business
 Significant accounting policies
    Fiscal Reporting Period:
 Accounting Estimates
 Cash and Cash Equivalents
  Property and Plant
  Intangible Asset
  10




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HOMELAND ENERGY SOLUTIONS, LLC
  Cost of Raising Capital
 Organizational and Start-up Costs
 Revenue Recognition
 Fair Value
 Grant Income
  Income Taxes
 Recently Issued Accounting Standards Effective Date of FASB Statement
No. 157
    11




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HOMELAND ENERGY SOLUTIONS, LLC
   The Meaning of
 Note 2. Development Stage Company
   Note 3. Debt
 Master Loan Agreement with Home Federal Savings Bank
  Construction Loan
   12




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HOMELAND ENERGY SOLUTIONS, LLC
  Conversion to Term Loan and Term Revolving Loan
    Revolving Line of Credit Loan
   13




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HOMELAND ENERGY SOLUTIONS, LLC
  Letter of Credit
  Security Interests and Mortgages
      14




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HOMELAND ENERGY SOLUTIONS, LLC
   Twelve months ending June 30,2009
    
    $
    20,0002010
    
    
    20,0002011
    
    
    20,0002012
    
    
    20,0002013
    
    
    15,000$
    95,000
 Note 4. Members Equity
    Note 5. Related Party Transactions
   Note 6. Commitments and Contingencies
   15




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HOMELAND ENERGY SOLUTIONS, LLC
   Coal to Fuel Gas Conversion Agreement between Homeland Energy Solutions, LLC and Homeland
Gasification, LLC, a proposed joint venture of Homeland Energy Solutions, LLC and Econo Power
International Corporation
       16




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HOMELAND ENERGY SOLUTIONS, LLC
         17




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HOMELAND ENERGY SOLUTIONS, LLC
   1.
    
    Refund of sales, service or use taxes paid to contractors and subcontractors during
construction work (estimated at $4,289,600).
 2.
    
    Investment tax credit (limited to $10,000,000. To be amortized over 5 years). This
Iowa tax credit may be claimed for qualifying expenditures, not to exceed $10,000,000,
directly related to new jobs created by the start-up, location, expansion or modernization
of the company under the program. This credit is to be taken in the year the qualify asset
is placed into service and is amortized over a 5 year period.3.
    
    Local Value-added Property Tax Exemption (estimated at $10,350,000). The Community has
approved an exemption from taxation on all or a portion of the value added by improvements
to real property directly related to new jobs created by location or expansion of the
company and used in the operations of the company.
     Note 7. Subsequent Event
       18




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
Cautionary Statements Regarding Forward-Looking Statements
   
    
    Changes in our business strategy, capital improvements or development plans;
    
    Increases in construction costs or delays or difficulties in the construction of the
plant, resulting in a delay of start-up of plant operations;
    
    Changes in the availability and price of corn;
    
    Our inelastic demand for corn, as it is the only available feedstock for our plant;
    
    Lack of transport, storage and blending infrastructure preventing ethanol from
reaching available markets;
    
    Fluctuation in U.S. petroleum prices and corresponding oil consumption;
    
    Ethanol supply exceeding demand and corresponding ethanol price reductions;
    
    Changes in the environmental regulations or in our ability to comply with the
environmental regulations that apply to our plant site and our anticipated operations;
    
    Changes in general economic conditions or the occurrence of certain events causing
an economic impact in the agriculture or automobile industries;
    
    Changes in the availability and price of natural gas, corn, and/or coal and the
market for ethanol and distillers grains;
    
    Changes in federal and/or state laws (including the elimination of any federal
and/or state ethanol tax incentives);
    
    Changes and advances in ethanol production technology;
    
    Additional ethanol plants or expansions of ethanol plants existing or being
constructed in close proximity to our ethanol facility in north eastern Iowa;
    
    Competition from alternative fuel additives; and
    
    Our ability to hire management personnel, as well as administrative and operational
personnel.
  Available Information
 www.homelandenergysolutions.com
  19




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Overview
     Plan of Operations for the Next 12 Months
    20




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Site Development and Construction Activities and Agreements
     Utilities
     21




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Ethanol and Distillers Grain Marketing Agreements
      Commodities Account
   22




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Management and Employees
   Permitting and Regulatory Activities
  Environmental Permits Obtained as of the Date of this Report
 
    
    Title V Construction Air Permit
    
    Construction Site Storm Water Discharge Permit
    
    Potable Water Well Usage Permit
 Environmental Permits and Plans yet to be Obtained or Developed that must be in Place Prior to
the Start of Operations:
 
    
    NPDES (National Pollutant Discharge Elimination System) Wastewater Discharge Permit: We
have submitted our application for this permit with the Iowa Department of Natural
Resources (IDNR) and are currently working with the IDNR to finalize the conditions of the
permit.
    
    Title V Operating Air Permit: We will apply for this permit after we have been
operational for one year. Our Title V Construction Permit covers our operations for the
first year. Our emissions during the first year will be utilized to determine the
conditions that will be placed in the Title V Operating Air Permit. While we do not
anticipate any problems with obtaining our Title V Operating Air Permit, there is a risk
that the IDNR would reject our Title V air permit application and request additional
information, which could delay or stall our operations.
    
    New Source Performance Standards: By applying for and obtaining our Title V
Construction Air Permit, we are currently in compliance with these standards.
    
    Storm Water Discharge Permit and Storm Water Pollution Prevention Plan (SWPPP Permits):
We anticipate that these permits and plans will be applied for and completed as we get
closer to completion of construction and start-up of operations. We do not anticipate any
problems with obtaining and completing these permits and plans.
    
    Spill Prevention, Control and Countermeasures Plan: We anticipate that this plan will
be completed as we get closer to completion of construction and start-up of operations. We
do not anticipate any problems with obtaining this permit.
    
    High Capacity Well Permit: We have submitted our application for our permits for our
production wells and expect them to be granted when the plant nears completion and we are
ready for start-up of operations.
  23




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
    
    Alcohol Fuel Producers Permit: This will be applied for prior to start-up of
operations. We do not anticipate any problems with obtaining this permit.
    
    Risk Management Plan: We plan to complete our Risk Management Plan as we get closer to
start-up of operations.
 Plan of Operations Regarding Coal Gasification
     Results of Operations for the Three Months Ended June 30, 2008
  Trends and Uncertainties Impacting our Future Operations
   24




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25




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Trends and Uncertainties Impacting the Corn and Natural Gas Markets and Our Future Cost of Goods
Sold
    Technology Developments
   26




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Liquidity and Capital Resources
  Financial Results for our Fiscal Quarter Ended June 30, 2008
  Estimated Sources of Funds
  Sources of Funds
    
    
    
    
    
    PercentSeed Capital Proceeds (1)
    
    $
    1,325,000
    
    
    
    0.71
    %Registered Unit Proceeds (2)
    
    $
    88,595,000
    
    
    
    47.32
    %Senior Debt Financing (3)
    
    $
    94,000,000
    
    
    
    50.20
    %Interest on Registered Unit Proceeds (4)
    
    $
    3,315,000
    
    
    
    1.77
    %Total Sources of Funds (5)
    
    $
    187,235,000
    
    
    
    100.00
    %
 (1)
    
    We have issued a total of 2,850 units to our founders and seed capital investors in previous
private placement offerings in exchange for proceeds of $1,325,000.(2)
    
    As of the close of our registered offering on November 30, 2007, we issued 88,595 membership
units in exchange for proceeds of $88,595,000.  27




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(3)
    
    We have entered into a definitive agreement with Home Federal Savings Bank for a Construction
Loan of up to $94,000,000 (of which $20,000,000 may be converted into a Term Revolving Loan upon
start-up of operations). In addition, we will have available to us a Revolving Line of Credit Loan
in an amount not to exceed $6,000,000, which will be available upon start-up of operations.(4)
    
    As of June 30, 2008, we had earned approximately $3,315,000 in interest on our equity
proceeds.(5)
    
    Our total sources of funds is expected to be sufficient to cover our estimated project cost of
$173,860,000 as well as to cover the $10,000,000 debt service reserve that we are required to
maintain under our senior debt financing with Home Federal Savings Bank. Estimated Use of Proceeds
  Percent ofUse of Proceeds
    
    Amount
    
    
    TotalPlant construction (1)
    
    $
    120,460,000
    
    
    
    69.29
    %Land cost
    
    
    3,500,000
    
    
    
    2.01
    %Site development costs
    
    
    5,670,000
    
    
    
    3.26
    %Pipeline costs
    
    
    4,000,000
    
    
    
    2.30
    %Construction contingency(2)
    
    
    1,985,000
    
    
    
    1.14
    %Construction insurance costs
    
    
    380,000
    
    
    
    0.22
    %Construction manager fees
    
    
    125,000
    
    
    
    0.07
    %Administrative building
    
    
    1,020,000
    
    
    
    0.59
    %Office equipment
    
    
    85,000
    
    
    
    0.04
    %Computers, Software, Network
    
    
    175,000
    
    
    
    0.10
    %Rail Infrastructure
    
    
    11,000,000
    
    
    
    6.33
    %Rolling stock
    
    
    500,000
    
    
    
    0.29
    %Fire Protection, water supply and
water treatment
    
    
    3,500,000
    
    
    
    2.01
    %Capitalized interest
    
    
    4,000,000
    
    
    
    2.30
    %Start up costs:Financing costs
    
    
    1,200,000
    
    
    
    0.69
    %Organization costs (3)
    
    
    1,400,000
    
    
    
    0.80
    %Pre production period costs
    
    
    950,000
    
    
    
    0.56
    %Working capital
    
    
    7,000,000
    
    
    
    4.03
    %Inventory  corn
    
    
    2,660,000
    
    
    
    1.53
    %Inventory  chemicals and ingredients
    
    
    500,000
    
    
    
    0.29
    %Inventory  Ethanol
    
    
    2,500,000
    
    
    
    1.43
    %Inventory  DDGS
    
    
    500,000
    
    
    
    0.29
    %Spare parts  process equipment
    
    
    750,000
    
    
    
    0.43
    %Total
    
    $
    173,860,000
    
    
    
    100.00
    %
 (1)
    
    On March 26, 2008, we entered into a change order with our design-builder, Fagen, Inc., for
additional work, design and materials required to provide and install larger heat recovery steam
generator units, resulting in an increase in plant construction costs of approximately $587,000.
However, due to subsequent change orders, the contract price at June 30, 2008 was reduced to
approximately $120,460,000.(2)
    
    Our construction contingency has been adjusted to reflect the changes to our Contract Price
with Fagen, Inc.(3)
    
    Includes estimated offering expenses of $347,000.  28




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##### Table of Contents



Short-Term and Long-Term Debt Sources
    Grants and Government Programs
   
    
    Refund of the sales, service and use taxes paid to contractors and subcontractors
during the construction phase of the plant (estimated at $4,289,600);
    
    Investment tax credit up to $10,000,000 for qualifying expenditures directly related
to new jobs created by the plant; and
    
    Local value-added property tax exemption for all or a portion of the value added by
improvements to real property directly related to new jobs created by the plant
(estimated at $10,350,000).
   29




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##### Table of Contents



Grants and Government Programs for Coal Gasification
   Critical Accounting Estimates
  Off-Balance Sheet Arrangements
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risks
  
 Item 4. Controls and Procedures.
     30




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  Amount
    
    
    Aggregate price of the
    
    
    Amount
    
    
    Aggregate price of theRegistered
    
    
    amount registered
    
    
    Sold
    
    
    amount sold110,000
    
    
    $
    110,000,000
    
    
    
    88,595
    
    
    $
    88,595,000
 approximate
 Plant Construction(1)
    
    $
    67,975,000Financing Costs(2)
    
    $
    1,173,000Real Estate Purchases and Land Improvements(3)
    
    $
    9,100,000Repayment of Indebtedness(4)
    
    $
    4,900,000Other Expenses(5)
    
    $
    575,000Total
    
    $
    83,723,000
 (1)
    
    This includes approximate expenses incurred as of June 30, 2008 for plant construction,
road construction and other miscellaneous equipment and construction costs.(2)
    
    We incurred approximately $1,173,000 in bank origination/loan fees for our senior debt
financing and bridge loan.  31




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##### Table of Contents



(3)
    
    We have paid approximately $3,600,000 to purchase the land and to extend land options
for our plant site and approximately $5,500,000 to improve the land as of June 30, 2008.(4)
    
    We incurred approximately $4,900,000 for the repayment of our bridge loan.(5)
    
    This includes payments to director Pat Boyle under his Project Development Agreement,
as well as our employee, Deanna Eastman, and our Construction Manager, Mark W. Zeuhlke.  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
  
 Item 6. Exhibits.
  Exhibit No.
    
    Description10.1
    
    Ethanol Marketing Agreement with
VBV, Inc. dated August 14, 2008+10.2
    
    Distillers Grain Marketing Agreement with CHS, Inc. dated August 8, 200810.3
    
    Rail Facilities Agreement with R & R Contracting dated July 24, 200810.4
    
    Customer Agreement with ADM Investor Services, Inc. dated July 29, 2008.31.1
    
    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.
 (+)
    
    Material has been omitted pursuant to a request for confidential treatment and such materials
have been filed separately with the Securities and Exchange Commission.  32




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##### Table of Contents



SIGNATURES
  HOMELAND ENERGY SOLUTIONS, LLCAugust 14, 2008
    /s/ Stephen K. EastmanStephen K. Eastman, Principal Executive OfficerAugust 14, 2008
    /s/ Bernard RetterathBernard Retterath , Principal Financial Officer  33




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description10.1
    
    Ethanol Marketing Agreement with
VBV, Inc. dated August 14, 2008+10.2
    
    Distillers Grain Marketing Agreement with CHS, Inc. dated August 8, 200810.3
    
    Rail Facilities Agreement with R & R Contracting dated July 24, 200810.4
    
    Customer Agreement with ADM Investor Services, Inc. dated July 29, 2008.31.1
    
    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.
 (+)
    
    Material has been omitted pursuant to a request for confidential treatment and such materials
have been filed separately with the Securities and Exchange Commission.  34