##### 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 September 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
    
    (I.R.S. Employer Identification No.)incorporation or organization)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(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 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
    
    
    32Exhibit 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
September 30, 2008 and December 31, 2007
 9/30/2008
    
    
    12/31/2007Unaudited
    
    
    AuditedASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    
    
    
    $
    64,986,226Attorney escrow account
    
    
    527
    
    
    
    527Prepaid expenses
    
    
    169,727
    
    
    
    277,746Total current assets
    
    
    170,254
    
    
    
    65,264,499PROPERTY AND EQUIPMENTLand
    
    
    3,575,856
    
    
    
    3,556,482Equipment
    
    
    23,816
    
    
    
    23,816Construction in progress
    
    
    117,834,726
    
    
    
    40,044,456121,434,398
    
    
    
    43,624,754Less accumulated depreciation
    
    
    6,937
    
    
    
    4,089121,427,461
    
    
    
    43,620,665OTHER ASSETSLoan fees, net of amortization 2008 $185,151; 2007 $52,459
    
    
    987,821
    
    
    
    1,120,513Other assets
    
    
    334,783
    
    
    
    423,6651,322,604
    
    
    
    1,544,178$
    122,920,319
    
    
    $
    110,429,342
   3




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Homeland Energy Solutions, LLC
(A Development Stage Company)
 Balance Sheets
September 30, 2008 and December 31, 2007
 9/30/2008
    
    
    12/31/2007Unaudited
    
    
    AuditedLIABILITIES AND MEMBERS EQUITYCURRENT LIABILITIESAccounts payable
    
    $
    15,273,584
    
    
    $
    6,978,172Accounts payable, related parties
    
    
    
    
    
    
    66,400Outstanding checks in excess of bank balance
    
    
    3,250
    
    
    
    Retainage payable
    
    
    6,379,337
    
    
    
    3,592,124Accrued interest payable
    
    
    38,586
    
    
    
    Rejected subscriptions payable
    
    
    
    
    
    
    7,500,000Accrued interest related to rejected subscriptions
    
    
    
    
    
    
    217,164Property tax payable
    
    
    7,243
    
    
    
    5,836Payroll tax payable
    
    
    
    
    
    
    2,458Current portion of long term liabilities
    
    
    20,000
    
    
    
    15,000Total current liabilities
    
    
    21,722,000
    
    
    
    18,377,154COMMITMENTS AND CONTINGENCIES (NOTE 6)LONG-TERM DEBT, less current maturities
    
    
    9,095,248
    
    
    
    185,000MEMBERS EQUITYCapital units, less syndication costs
    
    
    89,572,744
    
    
    
    89,558,501Equity accumulated during development stage
    
    
    2,530,327
    
    
    
    2,308,68792,103,071
    
    
    
    91,867,188$
    122,920,319
    
    
    $
    110,429,342
   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) to9/30/2008
    
    
    9/30/2007
    
    
    9/30/2008Unaudited
    
    
    Unaudited
    
    
    UnauditedOPERATING REVENUE
    
    $
    
    
    
    $
    
    
    
    $
    OPERATING EXPENSESProfessional expenses
    
    
    77,777
    
    
    
    29,381
    
    
    
    600,770Engineering & design
    
    
    
    
    
    
    
    
    
    
    18,652Feasibility studies
    
    
    
    
    
    
    17,000
    
    
    
    84,750Filings fees/permits
    
    
    
    
    
    
    3,509
    
    
    
    23,075Land options
    
    
    
    
    
    
    
    
    
    
    1,650Insurance
    
    
    
    
    
    
    4,500
    
    
    
    23,297Office expense
    
    
    1,530
    
    
    
    1,955
    
    
    
    21,929Depreciation
    
    
    949
    
    
    
    949
    
    
    
    6,937Amortization
    
    
    
    
    
    
    
    
    
    
    390Rent
    
    
    2,470
    
    
    
    900
    
    
    
    9,330Utilities
    
    
    898
    
    
    
    1,055
    
    
    
    11,137Wages
    
    
    9,240
    
    
    
    
    
    
    
    29,260Payroll taxes
    
    
    1,493
    
    
    
    
    
    
    
    3,025Property tax
    
    
    
    
    
    
    
    
    
    
    341Miscellaneous expense
    
    
    5,970
    
    
    
    233
    
    
    
    19,906Total operating expenses
    
    
    100,327
    
    
    
    59,482
    
    
    
    854,449OTHER INCOMEInterest income
    
    
    22,156
    
    
    
    4,603
    
    
    
    3,357,103Crop income
    
    
    
    
    
    
    3,975
    
    
    
    2,673Grant income
    
    
    
    
    
    
    
    
    
    
    35,35322,156
    
    
    
    8,578
    
    
    
    3,395,129Net income (loss)
    
    $
    (78,171
    )
    
    $
    (50,904
    )
    
    $
    2,540,680(Loss) per unit
    
    $
    (0.85
    )
    
    $
    (17.86
    )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
 Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended9/30/2008
    
    
    9/30/2007Unaudited
    
    
    UnauditedOPERATING REVENUE
    
    $
    
    
    
    $
    OPERATING EXPENSESProfessional expenses
    
    
    233,020
    
    
    
    130,003Feasibility studies
    
    
    
    
    
    
    17,000Filings fees/permits
    
    
    
    
    
    
    6,343Insurance
    
    
    
    
    
    
    13,739Office expense
    
    
    6,965
    
    
    
    5,834Depreciation
    
    
    2,848
    
    
    
    2,848Amortization
    
    
    
    
    
    
    390Rent
    
    
    5,105
    
    
    
    2,400Utilities
    
    
    4,607
    
    
    
    5,724Crop input expense
    
    
    
    
    
    
    4,552Wages
    
    
    29,260
    
    
    
    Payroll taxes
    
    
    3,025
    
    
    
    Property tax
    
    
    
    
    
    
    341Miscellaneous expense
    
    
    16,249
    
    
    
    1,260Total operating expenses
    
    
    301,079
    
    
    
    190,434OTHER INCOMEInterest income
    
    
    536,962
    
    
    
    26,236Crop income
    
    
    
    
    
    
    3,975Grant income
    
    
    
    
    
    
    14,125536,962
    
    
    
    44,336Net income (loss)
    
    $
    235,883
    
    
    $
    (146,098
    )Income (loss) per unit
    
    $
    2.58
    
    
    $
    (51.26
    )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 September 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 nine months ended September 30, 2008
    
    
    235,883Balance, September 30, 2008
    
    $
    92,103,071
   7




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Homeland Energy Solutions, LLC
(A Development Stage Company)
 Statements of Cash Flows
 Period FromNine Months
    
    
    Nine Months
    
    
    InceptionEnded
    
    
    Ended
    
    
    (12/7/2005) to9/30/2008
    
    
    9/30/2007
    
    
    9/30/2008Unaudited
    
    
    Unaudited
    
    
    UnauditedCASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)
    
    $
    235,883
    
    
    $
    (146,098
    )
    
    $
    2,540,680Adjustments to reconcile net income to net cash
(used in) operating activities:Depreciation and amortization
    
    
    2,848
    
    
    
    3,238
    
    
    
    7,327Write off land options
    
    
    
    
    
    
    
    
    
    
    1,650Change in working capital components:(Increase) decrease in other current assets
    
    
    
    
    
    
    10,600
    
    
    
    (278,273
    )Increase (decrease) in accounts payable
    
    
    (179,665
    )
    
    
    (33,295
    )
    
    
    7,882Increase (decrease) in other current liabilities
    
    
    (179,629
    )
    
    
    8,535
    
    
    
    45,829Net cash provided by (used in)
operating activities
    
    
    (120,563
    )
    
    
    (157,020
    )
    
    
    2,325,095CASH 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
    
    
    (66,259,787
    )
    
    
    (1,567,613
    )
    
    
    (95,916,892
    )Purchase of equipment
    
    
    
    
    
    
    
    
    
    
    (23,816
    )Purchase of land
    
    
    (19,374
    )
    
    
    (3,528,524
    )
    
    
    (3,573,893
    )Payments for other assets
    
    
    
    
    
    
    
    
    
    
    (393,891
    )Purchase of land options
    
    
    (5,000
    )
    
    
    (18,125
    )
    
    
    (38,387
    )Net cash (used in) investing activities
    
    
    (66,284,161
    )
    
    
    (4,499,774
    )
    
    
    (99,946,879
    )CASH FLOWS FROM FINANCING ACTIVITIESProceeds from short-term borrowing
    
    
    
    
    
    
    4,583,540
    
    
    
    4,883,540Payments on short-term borrowing
    
    
    
    
    
    
    
    
    
    
    (4,883,540
    )Increase in outstanding checks in excess of bank balance
    
    
    3,250
    
    
    
    
    
    
    
    3,250Proceeds from long-term borrowing
    
    
    8,925,248
    
    
    
    
    
    
    
    9,125,248Payments on long-term borrowing
    
    
    (10,000
    )
    
    
    
    
    
    
    (10,000
    )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 financing activities
    
    
    1,418,498
    
    
    
    4,531,716
    
    
    
    97,621,784
   8




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Homeland Energy Solutions, LLC
(A Development Stage Company)
 Statements of Cash Flows (Continued)
 Period FromNine Months
    
    
    Nine Months
    
    
    InceptionEnded
    
    
    Ended
    
    
    (12/7/2005) to9/30/2008
    
    
    9/30/2007
    
    
    9/30/2008Unaudited
    
    
    Unaudited
    
    
    UnauditedNet (decrease) in cash
    
    $
    (64,986,226
    )
    
    $
    (125,078
    )
    
    $
    CASH AND CASH EQUIVALENTSBeginning
    
    
    64,986,226
    
    
    
    357,709
    
    
    
    Ending
    
    $
    
    
    
    $
    232,631
    
    
    $
    SUPPLEMENTAL 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
    
    $
    15,185,160
    
    
    $
    2,298,781
    
    
    $
    15,185,160Accounts payable related to pre-paid offering costs
    
    
    
    
    
    
    20,197
    
    
    
    Retainage payable related to construction in progress
    
    
    6,379,337
    
    
    
    160,001
    
    
    
    6,379,337Interest capitalized
    
    
    38,586
    
    
    
    157,519
    
    
    
    249,008Insurance costs capitalized
    
    
    216,590
    
    
    
    
    
    
    
    216,590Loan fee amortization capitalized
    
    
    132,692
    
    
    
    35,600
    
    
    
    185,151Loan fees related to short-term borrowings
    
    
    
    
    
    
    22,972
    
    
    
    22,972
   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 Fair Value Measurements Effective Date of FASB Statement
No. 157
 The Fair Value Option for Financial Assets and
Financial Liabilities
 Noncontrolling Interests in Consolidated Financial
Statements  an amendment of ARB No. 51 (Consolidated Financial Statements) Business Combinations
  11




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HOMELAND ENERGY SOLUTIONS, LLC
  Disclosures about Derivative Instruments and Hedging
Activities
 The Hierarchy of Generally Accepted Accounting
Principles 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 September 30,2009
    
    $
    20,0002010
    
    
    6,803,3372011
    
    
    2,161,9112012
    
    
    20,0002013
    
    
    10,000$
    9,015,248
 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
        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.
  17




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HOMELAND ENERGY SOLUTIONS, LLC
         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 economic conditions or the occurrence of certain events causing an
economic impact in the agriculture, oil or automobile industries;
 
    
    Changes in the availability and price of corn;
 
    
    Our inelastic demand for corn, as it is the only available feedstock for our plant;
 
    
    Changes in the environmental regulations or in our ability to comply with the
environmental regulations that apply to our plant site and our anticipated operations;
 
    
    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 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
   Design-Builder,
  Plan of Operations for the Next 12 Months
  Site Development and Construction Activities and Agreements
    20




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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
 
    
    Storm Water Discharge Permit and Storm Water Pollution Prevention Plan
 
    
    High Capacity Production Well Permits (2)
 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 been issued a temporary permit from the Iowa Department of
Natural Resources (IDNR), and, pending some additional testing, we expect the IDNR
to finalize the conditions for our final 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.
 
    
    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 Consumption Well Permit
 
    
    We have submitted our application for our consumption well and expect
them to be granted when the plant nears completion and we are ready for start-up of
operations.
 
    
    Alcohol Fuel Producers Permit
 
    
    We are working on the application for this permit and expect to file
the application as we get closer tostart-upof operations.
 
    
    Risk Management Plan
 
    
    We have begun work on this plan and expect to complete it as we get
closer to start-up of operations.
  23




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Plan of Operations Regarding Coal Gasification
    Results of Operations for the Three Months Ended September 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
   Liquidity and Capital Resources
   26




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Financial Results for our Nine and Three Month Periods Ended September 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
    
    
    
    47.31
    %Senior Debt Financing (3)
    
    $
    94,000,000
    
    
    
    50.19
    %Interest on Registered Unit Proceeds (4)
    
    $
    3,357,000
    
    
    
    1.79
    %Total Sources of Funds (5)
    
    $
    187,277,000
    
    
    
    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.(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 September 30, 2008, we had earned approximately $3,357,000 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.  27




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##### Table of Contents



Estimated Use of Proceeds
  Percent ofUse of Proceeds
    
    Amount
    
    
    TotalPlant construction (1)
    
    $
    120,431,000
    
    
    
    69.27
    %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)
    
    
    2,014,000
    
    
    
    1.16
    %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 September 30, 2008 was reduced to
approximately $120,431,000.(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. Short-Term and Long-Term Debt Sources
    28




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##### Table of Contents



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).
  Grants and Government Programs for Coal Gasification
    29




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##### Table of Contents



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
    
    registered
    
    
    Amount Sold
    
    
    amount sold110,000
    
    $
    110,000,000
    
    
    
    88,595
    
    
    $
    88,595,000
 approximate
 Plant Construction(1)
    
    $
    72,424,000Financing Costs(2)
    
    $
    1,173,000Real Estate Purchases and Land Improvements(3)
    
    $
    9,146,000Repayment of Indebtedness(4)
    
    $
    4,900,000Other Expenses(5)
    
    $
    605,000Total
    
    $
    88,248,000
 (1)
    
    This includes approximate expenses incurred as of September 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.(3)
    
    We have paid approximately $3,600,000 to purchase the land and to extend land options
for our plant site and approximately $5,546,000 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.   31




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##### Table of Contents



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.
    
    Description31.1
    
    Certificate Pursuant to 17 CFR 240.15d-14(a).31.2
    
    Certificate Pursuant to 17 CFR 240.15d-14(a).32.1
    
    Certificate Pursuant to 18 U.S.C. § 1350.32.2
    
    Certificate Pursuant to 18 U.S.C. § 1350.
 (+)
    
    Material has been omitted pursuant to a request for confidential treatment and such materials
have been filed separately with the Securities and Exchange Commission. 
 SIGNATURES
  HOMELAND ENERGY SOLUTIONS, LLCNovember 14, 2008
    /s/ Stephen K. EastmanStephen K. Eastman, 
Principal Executive OfficerNovember 14, 2008
    /s/ Bernard RetterathBernard Retterath, 
Principal Financial Officer  32




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description31.1
    
    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.
  33