S-3/A 1 s3ano2.htm FORM S-3/A NO. 2

As filed with the Securities and Exchange Commission on June 9, 2006.

Registration Statement No. 333-134016
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------

FORM S-3/A
Registration Statement Under
the Securities Act of 1933
(Amendment No. 2)

Green Plains Renewable Energy, Inc.
(Exact name of registrant as specified in its charter)

Iowa
(State or jurisdiction of incorporation or organization)

84-1652107
(I.R.S. Employer Identification No.)

7945 W. Sahara Avenue, Suite 107, Las Vegas, NV 89117
Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)

Barry A. Ellsworth
Chairman of the Board and President
7945 W. Sahara Avenue, Suite 107
Las Vegas, NV 89117
(702) 363-9307
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Copies to:
Eric L. Robinson
BLACKBURN & STOLL, LC
257 East 200 South, Suite 800
Salt Lake City, UT 84101 (801) 521-7900

Approximate date of proposed sale to the public: From time to time
after the effective date of this registration statement.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]

If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: [X]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]

If this Form is a registration statement is a registration statement
pursuant to General Instruction I.D. or post-effective amendment thereto that
shall become effective upon filing with the Commission pursuant to Rule 462(e)
under the Securities Act, check the following box. [ ]

If this Form is a post-effective amendment to a registration statement
filed pursuant to General Instruction I.D. filed to register additional
securities or additional classes of securities pursuant to Rule 413(b) under the
Securities Act, check the following box. [ ]

CALCULATION OF REGISTRATION FEE

======================================== ============ ============ ===================== =====================
Proposed Maximum Amount of
Title of Each Class of Securities to be Aggregate Registration
Registered (1) Offering Price (2) Fee (3)
---------------------------------------- ------------ ------------ --------------------- ---------------------
Common Stock -- --
---------------------------------------- ------------ ------------ --------------------- ---------------------
Warrants -- --
---------------------------------------- ------------ ------------ --------------------- ---------------------
Total $150,000,000 $16,050(4)
======================================== ============ ============ ===================== =====================

(1) There are being registered hereunder an indeterminate number of
shares of common stock, an indeterminate number of warrants to purchase common
stock and an indeterminate number of shares of common stock issuable upon
exercise of the warrants, as may be sold from time to time. In no event will the
aggregate offering price of all securities issued from time to time pursuant to
this registration statement exceed initial offering price of $150,000,000.

(2) The proposed maximum aggregate offering price per class of security
will be determined from time to time by the registrant in connection with the
issuance by the registrant of the securities registered hereunder and is not
specified as to each class of security pursuant to General Instruction II.D. of
Form S-3 under the Securities Act.

(3) Calculated pursuant to Rule 457(o) of the Securities Act.

(4) Previously paid.

---------------

The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any jurisdiction where the offer or sale is not permitted.

Subject to completion, dated o , 2006.
Green Plains Renewable Energy, Inc.
an Iowa Corporation

We may offer and sell an indeterminate number of shares of our common
stock and warrants in one or more offerings. Those securities may be offered and
sold to or through one or more underwriters, dealers or agents or directly to
purchasers by the directors of the Company on a continuous or delayed basis.
Sales may be made at market prices prevailing at the time of the sale, prices
related to the then-current market price, fixed prices or in privately
negotiated transactions or otherwise. When securities are offered and sold using
this prospectus, we will provide a supplement to this prospectus that will
contain specific information about the offering. The prospectus supplement may
also add to or update information contained in this prospectus. You should read
this prospectus and the prospectus supplement carefully before you invest.

Our common stock is currently traded on the NASDAQ Capital Market under
the symbol GPRE. On May 10, 2006, the last reported sales price of our common
stock was $50.50 per share.

Our principal executive offices are located at 7945 W. Sahara Ave.,
Suite 107, Las Vegas, Nevada 89117 and our telephone number at that address is
(702) 363-9307.

Investing in our securities involves substantial risks. See "Risk
Factors" beginning on page 3 for a discussion of certain factors that should be
considered by prospective purchasers of our securities.

-------------------------

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.

This Prospectus is dated _______, 2006

You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different or additional information. You should not assume that the information
provided by this prospectus is accurate as of any date other than the date on
the front of this prospectus. Our business, financial condition, results of
operations and prospects may have changed since then.

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TABLE OF CONTENTS

ABOUT THIS PROSPECTUS........................................................1

SUMMARY......................................................................1

RISK FACTORS.................................................................3

FORWARD-LOOKING STATEMENTS..................................................17

ESTIMATED USE OF PROCEEDS...................................................18

DISCRIPTION OF SECURITIES TO BE REGISTERED..................................18

PLAN OF DISTRIBUTION........................................................20

LEGAL MATTERS...............................................................22

EXPERTS.....................................................................22

WHERE YOU CAN FIND MORE INFORMATION.........................................22

DOCUMENTS INCORPORATED BY REFERENCE.........................................22

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement filed with the
Securities and Exchange Commission using a "shelf" registration process. Under
the shelf registration process, we may sell our common stock and warrants in one
or more offerings up to an aggregate dollar amount of $150,000,000. This
prospectus provides you with a general description of the securities we may
offer. Each time we sell any securities under this prospectus, we will provide a
prospectus supplement that will contain more specific information about the
terms of those securities. We may also add, update or change in a prospectus
supplement any of the information contained in this prospectus or in documents
we have incorporated by reference into this prospectus. This prospectus,
together with the applicable prospectus supplements and the documents
incorporated by reference into this prospectus and the prospectus supplements,
includes the material information relating to this offering. You should
carefully read both this prospectus and the applicable prospectus supplement
together with the additional information described herein under "Where You Can
Find More Information" before buying securities in this offering.

We may sell the securities to or through underwriters, dealers or
agents or the directors of the Company may sell directly to purchasers. We and
our agents reserve the sole right to accept and to reject in whole or in part
any proposed purchase of securities. A prospectus supplement, which we will
provide to you each time we offer securities, will provide the names of any
underwriters, dealers, or agents involved in the sale of the securities, and any
applicable fee, commission or discount arrangements with them.

As used in this prospectus, "GPRE," "Company," "we," "our," and "us"
refer to Green Plains Renewable Energy, Inc., except where the context otherwise
requires or as otherwise indicated.

SUMMARY

This summary contains basic information about us and this prospectus
and the information incorporated by reference in this prospectus. Because it is
a summary, it does not contain all of the information that you should consider
before investing. You should read this entire prospectus and the other documents
which are incorporated by reference in this prospectus carefully, including the
section titled "Risk Factors" and our financial statements and the notes
thereto, before making an investment in our securities.

The Company

Green Plains Renewable Energy, Inc., an Iowa Corporation, was organized
on June 29, 2004 to construct and operate a 50 million gallon dry mill, fuel
grade ethanol plant in Shenandoah, Iowa (the "Plant"). We raised approximately
$637,500 in seed capital in 2004 to further the project. We then raised gross
proceeds of $34,459,900 in our initial public offering that closed in November
2005. We expect that the Shenandoah project will cost approximately $81.4
million. We have also entered into loan arrangements whereby Farm Credit
Services of America, FLCA and other participating lenders have agreed to loan us
up to $47,000,000 to use for construction costs and working capital. Therefore,
we believe that we have the necessary funding to build the Shenandoah Plant.

We plan to build the Plant such that it will, according to
representatives of our design-builder, Fagen, Inc. ("Fagen"), have an annual
capacity to process approximately 18 million bushels of corn into approximately
50 million gallons of ethanol and will produce approximately 160,000 tons
annually of animal feed known as Distillers Dried Grains with Solubles ("DDGS")
on a dry matter basis. These are the principal by-products of the ethanol
production process. Fagen, Inc. representatives have indicated to us that the
Plant will also produce approximately 148 thousand tons of raw carbon dioxide
annually as another by-product of the ethanol production process. We are still
exploring the options available to us to recover and market the raw carbon
dioxide. However, because there is significant ethanol production in the areas
where we intend to locate the Plant, we may not be able to find a market for our
CO(2) and may end up venting it off as many other producers do.

On February 22, 2006, we acquired all of the outstanding ownership
interest in Superior Ethanol, LLC. Superior has options to acquire at least 135
acres of property in Dickinson County, Iowa, has a feasibility study relating to
the anticipated supply and cost of corn in the surrounding area as well as the
potential returns of an ethanol plant built at this site, the site is zoned as
"heavy industrial," the site has been awarded a 100% property tax abatement from
Dickinson County, Iowa for a period of 12 years and a 80% abatement for the
following three years.

Operational plans continue to progress on the Superior ethanol plant
project with the builder, the rail engineers, the permitting processes, and the
utility consultants. We intend to build a 50 million gallon ethanol plant at
this site. The location of the plant at the site has been determined, 68 acres
of land have been purchased, and an application for an air permit has been filed
with the Iowa Department of Natural Resources (IDNR). In Iowa, such approvals
usually take between 60 to 90 days once filed. We do not have the necessary
funding to build this plant.

We also own an option on another property in Atlantic, Iowa. We have
asked the Cass County Board of Supervisors for a Tax Increment Financing ("TIF")
rebate on this project and have also asked them to zone the site as "light
industrial." We are currently waiting for a decision by the Cass County Board of
Supervisors concerning these issues. We do not have the necessary funding to
build this plant.

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RISK FACTORS

Investment in our common stock involves a high degree of risk. You
should carefully consider the following risk factors as well as other
information in this prospectus and in any prospectus supplements before making
your investment decision. The risks described below are not the only risks we
face. Additional risks that we do not yet know of or that we currently think are
immaterial may also impair our business operations. If any of the events or
circumstances described below actually occurs, our business, financial condition
or results of operations could be materially adversely affected. In such case,
the trading price of our common stock could decline, and you may lose all or
part of your investment.

Risks Related to the Common Stock

We plan to construct the ethanol plants by means of substantial leverage of
equity, resulting in substantial debt service requirements that could reduce the
value of your investment.

We are borrowing approximately 60% of the cost to construct the
Shenandoah plant. We anticipate borrowing 50% or more of cost to construct the
Superior and Atlantic plants should we choose to build those plants. Upon
completion of the Shenandoah plant, we anticipate that the principal amount of
our total term debt obligations will be approximately $47,000,000. The plants we
intend to build in Superior and Atlantic, Iowa would require us to raise
approximately 50% of the total costs in equity or $46.75 million for each plant.
As a result, our capital structure will be highly leveraged. Our debt load and
service requirements could have important consequences which could reduce the
value of your investment, including:

o Limiting our ability to borrow additional amounts for operating
capital and other purposes or creating a situation in which such
ability to borrow may be available on terms that are not favorable to
us;

o Reducing funds available for operations and distributions because a
substantial portion of our cash flow will be used to pay interest and
principal on our debt;

o Making us vulnerable to increases in prevailing interest rates;

o Placing us at a competitive disadvantage because we may be
substantially more leveraged than some of our competitors;

o Subjecting all, or substantially all of our assets to liens, which
means that there will be virtually no assets left for stockholders in
the event of a liquidation; and,

o Limiting our ability to adjust to changing market conditions, which
could increase our vulnerability to a downturn in our business or
general economic conditions.

In the event that we are unable to pay our debt service obligations, we
could be forced to: (a) reduce or eliminate dividends to stockholders, if they
were to commence or (b) reduce or eliminate needed capital expenditures. It is
possible that we could be forced to sell assets, seek to obtain additional
equity capital or refinance or restructure all or a portion of our debt. In the
event that we are unable to refinance our indebtedness or raise funds through
asset sales, sales of equity or otherwise, our business would be adversely
affected and we may be forced to liquidate, and you could lose your entire
investment.

There is no assurance that the current public trading market for our common
stock will continue at current prices or at all and your investment may be
illiquid for an indefinite amount of time.

There can be no assurance that our common stock will continue to be
traded on the NASDAQ Capital Market or that any other public trading market will
continue after this offering.

Lenders are requiring us to abide by restrictive loan covenants that may hinder
our ability to operate and reduce our profitability.

Our current loan arrangements and future loan arrangements governing
our secured debt financing will contain a number of restrictive affirmative and
negative covenants. These covenants may limit our ability to, among other
things:

o Incur additional indebtedness;

o Make capital expenditures in excess of prescribed thresholds;

o Pay dividends to stockholders;

o Make various investments;

o Create liens on our assets;

o Utilize the proceeds of asset sales; or,

o Merge or consolidate or dispose of all or substantially all of our
assets.

We are also required to maintain specified financial ratios, including
minimum cash flow coverage, minimum working capital and minimum net worth. We
are also required to utilize a portion of any excess cash flow generated by
operations to prepay our term debt. A breach of any of these covenants or
requirements could result in a default under our debt agreements. If we default,
and if such default is not cured or waived, a lender could, among other
remedies, accelerate our debt and declare that such debt is immediately due and
payable. If this occurs, we may not be able to repay such debt or borrow
sufficient funds to refinance our debt. Even if new financing is available, it
may not be on terms that are acceptable. Such an occurrence could cause us to
cease building the Plant, or if the Plant is constructed, such an occurrence
could cause us to cease operations. No assurance can be given that our future
operating results will be sufficient to achieve compliance with such covenants
and requirements, or in the event of a default, to remedy such default.

The common stock will be diluted in value and will be subject to further
dilution in value.

We issued a total of 765,000 shares of common stock to our founders and
to seed capital investors in a private offering. Initially, 550,000 shares of
common stock were sold to our two founding stockholders at $0.25 per share. We
then issued an additional 215,000 shares to seed capital investors at a price of
$2.50 per share. We then issued 3,445,990 shares of common stock at $10 per
share, which included warrants exercisable for approximately 861,498 shares of
common stock for aggregate consideration of approximately $25,844,940 in our
public offering that closed in November 2005. Soon thereafter we issued an
additional 5,000 shares to a director of our Company for services rendered, and
an additional 5,000 shares were issued in January 2006, to the engineering firm
that designed the rail layout for our plant in Shenandoah, Iowa for services
rendered. In February 2006, we issued an additional 100,000 shares of our common
stock to a director of the Company from whom we acquired Superior Ethanol, LLC.
Superior Ethanol is now a wholly owned subsidiary of GPRE that has various

assets including, but not limited to, cash in the amount of approximately
$210,000, land and options to purchase land near Superior, Iowa, where we intend
to build an ethanol plant, and property tax abatements that we believe will be
beneficial to our Company, if we are successful in our attempts to build a plant
in Superior, Iowa.

The common stock being offered to investors with this offering will be
at significantly higher prices. The issuance of the prior shares is dilutive to
the common stock offered in this offering. In addition, if for any reason we are
required in the future to raise additional equity capital, and if such equity
capital is raised at a lesser price or on more favorable terms than those in
this offering, investors in this offering will suffer further dilution to their
investment. There is no assurance that further dilution will not occur in the
future.

Risks Related to the Company

We have a limited operating history and our management has limited experience in
the ethanol industry.

We were recently formed and have no history of operations. Our proposed
operations are subject to all the risks inherent in the establishment of a new
business enterprise. We have limited experience in the ethanol industry. Should
we decide to build facilities at the Superior or Atlantic sites, there is no
assurance that we will be successful in securing additional equity or debt
financing, and/or in our efforts to build and operate these plants. Even if we
successfully meet all of these objectives and begin plant operations, there is
no assurance that we will be able to market the ethanol produced or operate the
proposed plants profitably.

We may not be able to manage our start-up period effectively.

We anticipate a period of significant growth, involving the
construction and start-up of operations of the proposed plants and the hiring of
our employees. This period of growth and the start-up of the proposed plants are
likely to be a substantial challenge to us. We have limited financial and human
resources. We will need to implement operational, financial and management
systems and to recruit, train, motivate and manage our employees. We will be
operating in areas of relatively low unemployment. Though we believe that we can
manage start-up effectively and properly staff our operations, there is no
assurance that this will occur, and any failure by us to manage our start-up
effectively could have a material adverse effect on us, our financial condition,
cash flows, results of operations and our ability to execute our business plan.

If our cash flow from operations is not sufficient to service our debts, then
the business may fail and you may lose your entire investment.

Our ability to repay our debt will depend on our financial and
operating performance and on our ability to successfully implement our business
strategy. We cannot assure you that we will be successful in implementing our
strategy or in realizing our anticipated financial results. Our financial and
operational performance depends on numerous factors including prevailing
economic conditions and certain financial, business and other factors beyond our
control. Our cash flows and capital resources may be insufficient to repay our
debt obligations. If we cannot pay our debt service, we may be forced to reduce
or delay capital expenditures, sell assets, restructure our indebtedness or seek
additional capital. If we are unable to restructure our indebtedness or raise
funds through sales of assets, equity or otherwise, our ability to operate could
be harmed and the value of your common stock could decline.

The lenders who finance the construction of our plants have and will
take a security interest in our assets, including our real property and the
plants. If we fail to make our debt financing payments, the lenders will have
the right to repossess the secured assets, including our real property and the
plants, in addition to other remedies. Such action would end our ability to
continue operations. If we fail to make our financing payments and we cease
operations, your rights as a holder of common stock are inferior to the rights
of our creditors. We may not have sufficient assets to make any payments to you
after we pay our creditors.

No Assurance of Equity Financing

Based on our business plan and current construction cost estimates,
which have risen significantly in the past several months due to price increases
in raw materials, such as steel, stainless steel, cement, etc, we believe we
will need to raise approximately $93,500,000 in funding for construction and
start-up expenses relating to the Superior Plant and approximately $93,500,000
in funding for construction and start-up expenses relating to the Atlantic
Plant, or $187,000,000 in total funding for construction and start-up expenses
for both plants. We believe that we must raise approximately (i) $46,750,000 in
an equity financing after deduction of selling commissions in order to obtain
debt financing sufficient to complete the Superior Plant, (ii) $46,750,000 in an
equity financing after deduction of selling commissions in order to obtain debt
financing sufficient to complete the Atlantic Plant, and (iii) $93,500,000 in
equity financings offering after deduction of selling commissions in order to
obtain debt financing sufficient to complete both plants. There is no assurance
that we will be successful in raising these amounts.

A necessary part of our plan of operations in connection with the construction
of the Superior and Atlantic sites is the receipt of significant debt funding,
of which there can be no assurance.

Assuming that we are able to raise sufficient funds from the sale of
our common stock, we will seek to secure approximately $93,500,000 in senior
long term debt from one or more commercial banks or other lenders to complete
the financing for the Superior and Atlantic plants. We anticipate that the
amount of the debt will be raised proportionately to achieve the approximately
50% equity, 50% debt ratio that is expected to be needed to borrow the term debt
necessary to fund the projects. Because the amount of equity raised is not known
at this time, the amount and nature of total debt is also not known.

We have no contracts or commitments with any bank, lender or financial
institution for this debt financing. We have initiated discussions with
potential lenders regarding debt financing, but have not received any commitment
for such financing. There is no assurance that such commitment will be received,
or if it is received, that it will be on anticipated terms or terms that are
otherwise acceptable to us. If debt financing on acceptable terms is unavailable
for any reason, we will be forced to abandon our efforts to build plants in
Superior and Atlantic.

Our business success is dependent on unproven management.

Prior to hiring Allen Sievertsen, our general manager, no one in the
management of our Company had any prior experience in the ethanol business.
Allen oversaw the construction of the Husker Ag ethanol plant in Plainview, NE
and acted as its general manager for approximately 4.5 years, prior to joining
our Company. In March of 2006, Wayne Hoovestol was elected to our Board of
Directors. Mr. Hoovestol presently serves on the boards of two other operating
ethanol plants and has done so for several years. Although Mr. Sievertsen has
overseen the construction of an ethanol plant before, and has successfully
managed an extremely profitable Fagen built plant, and Mr. Hoovestol has been an
investor in other ethanol plants for several years and has served on the boards
of other operating ethanol plants, we are still presently, and likely will
continue to be, heavily dependent upon our current management, who, with the
exception of Mr. Sievertsen and Mr. Hoovestol, have no experience in operating
ethanol plants. We presently have only five employees, and our founders and
directors will therefore be instrumental to our success.

We currently have eight directors. These individuals are experienced in
business generally, some have experience in raising capital, others in
construction, as well as in governing and operating companies, one serves on the
boards of two other operating ethanol plants and has done so for the past
several years and has a good working knowledge of ethanol plants in general, but
none have significant experience in organizing, building and operating an
ethanol plant. It is also possible that one or more of our founding stockholders
and/or directors may later become unable to serve, and we may be unable to
recruit and retain suitable replacements. Our dependence on our founding
stockholders and directors may have a material adverse impact upon our
operations, our cash flows and overall financial performance.

Our board of directors will have the exclusive right to make all
decisions with respect to the management and operation of our business and our
affairs. Investors will have no right to participate in the decisions of our
board of directors or in the management of the proposed plants. Investors will
only be permitted to vote in a limited number of circumstances. Accordingly, no
person should purchase securities unless such person is willing to entrust all
aspects of our management to the board of directors. We are presently managed by
our board of directors. Only one of our directors has expertise in the ethanol
industry. In addition, all members of our board of directors are presently
engaged in business and other activities outside of and in addition to our
business, with the exception of Mr. Ellsworth, our Chairman, President and CEO,
who is currently devoting all of his time to the operations of the Company.
These other activities impose substantial demands on the time and attention of
such directors.

We anticipate hiring a general manager and a plant manager for each
plant we build. We expect to hire general managers and plant managers with
experience in the ethanol industry and a production plant similar to our plants.
We also intend to hire a controller that has both experience as a controller of
a public company and experience with ethanol production. However, there is no
assurance that we will be successful in attracting or retaining such individuals
because of a limited number of individuals with expertise in the area and a
competitive market with many new plants being constructed. Furthermore, we may
have difficulty in attracting other competent personnel to relocate to Iowa, or
other locations in the event that such personnel are not available locally. Our
failure to attract and retain such individuals would likely have a material
adverse effect on our operations, cash flows and financial performance.

We have a history of losses and may never become profitable.

For the period from our formation on June 29, 2004 through February 28,
2006, we incurred an accumulated net loss of $435,921. We believe we will
continue to incur significant losses from this time forward until we are able to
secure financing and successfully complete construction and commence operations
of the Plant. There is no assurance that we will be successful in completing
this Offering, in securing additional financing and/or in our efforts to build
and operate the proposed ethanol plants. Even if we successfully meet all of
these objectives and begin operations at one or more of the proposed ethanol
plants, there is no assurance that we will be able to operate profitably.

We are dependent on Fagen, Inc. for expertise in the commencement of operation
in the ethanol industry and any loss of this relationship could result in
diminished returns or the loss of your investment.

We are dependent on our relationship with Fagen, Inc., and its
employees in connection with the construction of our plant in Shenandoah, Iowa.
Specifically, we are dependent upon the Fagen, Inc. employees Mr. Roland "Ron"
Fagen and Mr. Wayne Mitchell. Mr. Fagen and Mr. Mitchell have considerable
experience in the construction, start-up and operation of ethanol plants. Any
loss of our relationship with Fagen, Inc., Mr. Fagen, or Mr. Mitchell,
particularly during the construction and start-up period for the Shenandoah
plant, may have a material adverse impact on our operations, cash flows and
financial performance.

We will be dependant on our relationship will Agra, and its employees,
particularly, Mr. Pat Hinner, its President, in the same manner we are dependant
upon Fagen, Inc. at the plant in Shenandoah, at the plants in Superior and
Atlantic, Iowa, should we commence construction of those plants.

Risks Related to Plant Construction

We will depend on key suppliers, whose failure to perform could hinder our
ability to operate profitably and decrease the value of your investment.

We are highly dependent upon Fagen, Inc. and ICM, Inc. to design and
build the Shenandoah plant. We have a Design-Build Agreement with Fagen, Inc.
relating to the Shenandoah Plant. However, because Fagen, Inc. is presently so

busy, we have decided to use another builder and another process technology
provider on the two other plants we intend to build. We are presently
negotiating a final Design-Build Contract with Agra concerning the Superior
site. However, we do not have definitive binding agreement relating to the
design or construction of the Superior or Atlantic plants. We anticipate that we
will execute definitive binding Design-Build Contracts with Agra to construct
the Superior and Atlantic Plants. We anticipate that Delta-T will be the process
technology provider at both the Superior and Atlantic plants if we decide to
build at these locations. Delta-T technology is used in various ethanol plants
throughout the United States and we believe we will be able to enter into an
agreement with Delta-T to provide the process technology for these plants if we
decide to build them. However, there is no assurance that such agreements will
be executed.

Even with an executed Design-Build Contract, there are general risks
and potential delays associated with such projects, including, but not limited
to, fire, weather, permitting issues, and delays in the provision of materials
or labor to the construction site. Any significant delay in a planned completion
date may have a material adverse effect on our operations, cash flows and
financial performance.

If a design-builder were to terminate its relationship with us after
plant construction was initiated, there is no assurance that we would be able to
obtain a replacement design-builder. Any such event would likely have a material
adverse affect on our operations, cash flows and financial performance. There
can be no assurance that we will be able to retain a design-builder for the
Superior or Atlantic plants.

We anticipate that the agreement with Agra relating to the Superior and
Atlantic plants will contain a number of provisions that are favorable to Agra
and unfavorable to us. The agreement could also include a liquidated damages or
consequential damages provision like our agreement with Fagen, Inc. This would
benefit us, but it could result in an early completion bonus clause for Agra.
Although no such provisions have been discussed, if such a provision is
ultimately agreed upon, our payment of an early completion bonus could
substantially reduce our net cash flows and financial performance during the
periods of the payment of such bonus.

We will depend on our general contractors and technology providers for timely
completion of our proposed plants and training of personnel, but our general
contractors' involvement in other projects could delay the commencement of our
operations and further delay our ability to commence operations.

We believe that Fagen, Inc. and Agra are negotiating with other parties
to begin construction with other ethanol plants in 2006, 2007 and 2008. If our
general contractors have entered into other Design-Build contracts with
liquidated damage or consequential damage clauses with other plants, there could
be substantial risk to our projects. For example, if one or both of our general
contractors is under pressure to complete another project in order to avoid the
operation of such a clause or is already operating under such a clause, such
general contractor may prioritize the completion of these other plants ahead of
one or more of our proposed plants. As a result, our ability to sell ethanol
products would be delayed having a material adverse effect upon our operations,
cash flows, and financial performance.

We are also highly dependent upon our general contractors' and process
technology providers' experience and ability to train our personnel in operating
the proposed plants. If the proposed plants are built and do not operate to the
level anticipated by us in our business plan, we will rely on our general
contractors to adequately address such deficiency. There is no assurance that
our general contractors will be able to address such deficiency in an acceptable
manner. Failure to do so could have a material adverse affect on our operations,
cash flows and financial performance.

Construction delays could result in a delay in our commencement of operations
and generation of revenue, if any.

We expect that our Shenandoah Plant will not begin operating until
approximately June of 2007 and that our proposed Superior Plant will not begin
operations until at least the fall of 2007, assuming construction begins in the
summer of 2006 of which there can be no assurance. The Atlantic project is not

as advanced as the Superior project and there is a local group that also wants
to build an ethanol plant in Atlantic. Due to the local politics that exist in
Atlantic, there are greater risks associated with the Atlantic site - risks that
may hinder our ability to build at that site. However, we are pressing forward
in Atlantic and are looking at other possible sites as well. Even if we are
eventually able to build in Superior and Atlantic, construction projects often
involve delays in obtaining permits, construction delays due to weather
conditions, or other events that delay the construction schedule. In addition,
changes in interest rates or the credit environment or changes in political
administrations at the federal, state or local level that result in policy
change towards ethanol or these projects, could cause construction and operation
delays. If it takes longer to raise the financing, obtain necessary permits or
construct the proposed plants than we anticipate, it would delay our ability to
generate revenues and make it difficult for us to meet our debt service
obligations. This could reduce the value of our common stock and could
negatively affect our ability to execute our plan of operation.

If there are defects in plant construction it may negatively affect our ability
to operate one or more of the proposed plants.

There is no assurance that defects in materials and/or workmanship in
one or more of the proposed plants will not occur. Under the terms of our
existing Design-Build Contract with Fagen, Inc. and we anticipate under the
terms of the proposed Design-Build Contracts for Superior and Atlantic, our
general contractors would warrant that the materials and equipment furnished to
build the proposed plants would be new, of good quality, and free from material
defects in materials or workmanship at the time of delivery. Though these
arrangements are anticipated to require our general contractors to correct all
defects in materials or workmanship for a period of time after substantial
completion of the proposed plant, material defects in materials or workmanship
may still occur. Such defects could cause us to delay the commencement of
operations of one or more of the proposed plants, or, if such defects are
discovered after operations have commenced, to halt or discontinue plant
operations. Any such event may have a material adverse effect on our operations,
cash flows and financial performance.

If the preliminary plant sites identified in Superior or Atlantic are not
viable, it could result in substantial delays and costs.

We have preliminarily selected a site for construction of plant near
Superior, Iowa and Atlantic, Iowa. However, we may locate these or additional
plants elsewhere in Iowa or elsewhere. Although, after choosing a final site,
the site will be tested, prior to commencing construction, there can be no
assurance that we will not encounter hazardous conditions at a site. We are
relying on our general contractor to determine the adequacy of each site for
plant construction. We may encounter hazardous conditions at the site that may
delay the construction of a plant. Our general contractors will not be
responsible for hazardous conditions encountered at a site. Upon encountering a
hazardous condition, our general contractor may suspend work in the affected
area. If we receive notice of a hazardous condition, we may be required to
correct the condition prior to continuing construction. The presence of a
hazardous condition will likely delay construction at the affected site and may
require significant expenditure of our resources to correct the condition. In
addition, it is anticipated that our general contractor will be entitled to an
adjustment in price and time of performance if it has been adversely affected by
the hazardous condition. If we encounter any hazardous conditions during
construction, such event may have a material adverse effect on our operations,
cash flows and financial performance.

If we were not able to obtain the required zoning to build at the Atlantic site,
we may not be able to proceed with our proposed plant.

The site in Superior has already been zoned "heavy industrial" so we do
not anticipate any zoning issues in Superior. The proposed site in Atlantic,
however, is zoned "agricultural" and we will need to have this site rezoned as
"light industrial" or "heavy industrial." We have applied to have the Atlantic
site rezoned as "light industrial" and believe we will receive the required
zoning to build. But there is a risk that we may not be able to secure the
necessary zoning reclassification. If the Cass County Board of Supervisors is
not willing to rezone the land as has been requested, we will not be able to

build at the Atlantic site and will attempt to find another location to build.
No assurance can be given at this time, however, that we would be successful in
finding another site or that we will be successful in getting the Atlantic site
rezoned.

A change in environmental regulations or violations thereof could impede our
ability to successfully operate the Plants.

We will be subject to extensive air, water and other environmental
regulation and we will need to obtain a number of environmental permits to
construct and operate the Plants we intend to build. In addition, it is likely
that our senior debt financing will be contingent on our ability to obtain the
various environmental permits that we will require. Assuming we build the Plant
in Iowa, the Iowa Department of Natural Resources ("IDNR") may also require us
to conduct an environmental assessment prior to considering any permits.

Ethanol production involves the emission of various airborne
pollutants, including particulate (PM10), carbon monoxide (CO), oxides of
nitrogen (N0x) and volatile organic compounds. As a result, we will need to
obtain an air quality permit from the IDNR. We have applied for this permit at
the Superior site and will apply for the same at the Atlantic site once we
receive the necessary zoning and the plant is actually sited on the plot of
ground. We also intend to apply for and receive from the IDNR a storm-water
discharge permit, a water withdrawal permit, public water supply permit, and a
water discharge permit, a storm-water discharge permit, a water withdrawal
permit, public water supply permit, and possibly a waste water discharge permit
at both sites, as we did in Shenandoah. We anticipate applying for these permits
before construction commences. We do not anticipate a problem receiving all
required environmental permits. However, if for any reason any of these permits
are not granted, construction costs for the Plants may increase, or the Plants
may not be constructed at all. In addition, the IDNR could impose conditions or
other restrictions in the permits that are detrimental to us or which increase
costs to us above those assumed in this project. Any such event would likely
have a material adverse impact on our operations, cash flows and financial
performance.

Any delay or unanticipated cost in providing rail service infrastructure to the
Superior or Atlantic Plants could significantly impede our ability to
successfully operate these proposed plants

We anticipate that rail service will be provided to the plant in
Superior, Iowa by the Union Pacific Railroad (UP). We have hired Antioch
International ("Antioch") to help us with those issues. Antioch is the rail
engineering firm that designed the rail layout at the Shenandoah site. Three
different rail options for the plant in Superior have been drawn by Antioch and
Antioch has been in contact with Union Pacific for several months concerning the
Superior site. On April 28, 2006, we received notice from Union Pacific that
they intend to service the site in Superior. However, the preliminary approval
is contingent upon Superior Ethanol and GPRE meeting all UP Engineering and
Operating design standards. Although, with the assistance of Antioch, we believe
we can accomplish this, no assurance can be given that we will not encounter
problems with the rail design. If any such problems were to occur and UP decided
not to service the plant because of this, our cash positions could be negatively
affected, as would our future financial performance and the value of our
securities could decrease substantially.

We anticipate that rail service will be supplied by the Iowa Interstate
Railroad (IIR) at the Atlantic site. We have been in contact with the owners of
the IIR for several months and have engaged Antioch to assist us with the rail
issues and design for the Atlantic site. However, the IIR is not currently able
to transport unit trainloads of ethanol or corn to the east, because the rail is
not heavy enough to carry the weight and is in need of repair. The IIR has been
awarded a $32 million dollar loan to repair and replace the old rail and it is
anticipated that the needed work will be accomplished in a timely manner.
However, if for any reason it was not completed in a timely manner, this could
cause added costs and delays in marketing our products at the Atlantic site and
we may decide not to build at this site if adequate rail service is not
available.

At both of these new sites, we will need to establish a rail spur from
the main line and lay more track for railcar storage, similar to the spur and
storage track that is needed at the Shenandoah site. In order to have rail
service for the Plants, a rail siding to accommodate at least 75 rail cars will
need to be added to the site. This is anticipating that 50 million gallon plants
will be built initially. We anticipate that both plants would be expanded to 100
million gallon plants at sometime in the future. To accommodate unit trains of
ethanol from any of the sites, additional rail storage will be needed. It is
anticipated that the Company would add the additional track needed for unit
trains at both sites in the future to realize additional savings in freight
charges. The estimated cost of such rail siding for the 75 car storage is
approximately $3.5 million. We will need to negotiate with the nearest railroad
or with another third party to provide this rail at the Plants. There is no
assurance that an acceptable agreement will be reached with a railroad or other
third party to do this, or on acceptable terms. Failure to reach such an
agreement would have a material adverse effect on us, our cash flows and
financial performance, and could require us to abandon the project.

Any material variance between the actual cost verses our cost estimates relating
to the construction and operation of the Superior and Atlantic plants could
materially and adversely affect our ability to operate the plants profitably.

It is anticipated that AGRA will construct the Superior and Atlantic
ethanol plants for a contract price not to exceed a specified amount, based on
the plans and specifications in the anticipated Design-Build Contract. However,
another builder may be used if a more competitive bid could be secured from
another reliable builder. We have based our future capital needs on a design for
the Plants that will cost approximately $93.5 million for the Superior plant,
and approximately $93.5 million for the Atlantic plant. These numbers include
all costs that are anticipated to be incurred at both sites. The actual
design-build price for the plants will be less than the $93.5 million, just as
the actual cost for the plant itself in Shenandoah was less than the total
capital that is going to be spent to build that plant. The $93.5 million price
includes the needed capital for site preparation prior to the actual
commencement of construction, construction period interest and the working
capital needed to commence operations, which includes the capital needed to
purchase corn, natural gas and the hedging activities associated with these
commodities.

The estimated cost of the plants is based on preliminary discussions,
and there is no assurance that the final cost of the plants will not be higher.
There is no assurance that there will not be design changes or cost overruns
associated with the construction of the plants. Any significant increase in the
estimated construction cost of the plants may have a material adverse effect on
our operations, cash flows and financial performance.

We will acquire insurance that we believe to be adequate to prevent
loss from foreseeable risks. However, events occur for which no insurance is
available or for which insurance is not available on terms that are acceptable
to us. Loss from such an event, such as, but not limited to, earthquake,
tornados, war, riot, terrorism or other risks, may not be insured and such a
loss may have a material adverse effect on our operations, cash flows and
financial performance.

Risks Related to Ethanol Production

Our ability to operate at a profit is largely dependent on grain prices and
ethanol and distillers dried grains prices.

Our results of operations and financial condition will be significantly
affected by the cost and supply of grain and by the selling price for ethanol
and DDGS. Price and supply are subject to and determined by market forces over
which we have no control. We will be dependent on the availability and price of
corn. Although the areas surrounding the proposed plants produce a significant
amount of corn and we do not anticipate problems sourcing corn, there is no
assurance that a shortage will not develop, particularly if there were an
extended drought or other production problem. In addition, our financial
projections assume that we can purchase grain for approximately $2.10 to $2.25
per bushel. During the past year, we have monitored the price of corn in the
areas of Iowa where our proposed Plants are expected to be located and those
prices have been lower, at most times, than the average price per bushel of corn
for Iowa in general. Over the past ten years, the straight average price for

corn in Iowa has been approximately $2.185 per bushel. However, there is no
assurance that we will be able to purchase corn for any of these prices. Corn
prices are primarily dependent on world feedstuffs supply and demand and on U.S.
and global corn crop production. These factors can be volatile because of
weather, stocks prices, export prices and the government's agricultural policy.
The price of corn has fluctuated significantly in the past and may fluctuate
significantly in the future.

We anticipate purchasing our corn from farmers in the areas surrounding
the proposed plants and possibly in the cash market and hedging corn through
futures contracts to reduce short-term exposure to price fluctuations. We intend
to contract with third parties to manage our hedging activities. We anticipate
hiring an experienced corn buyer to purchase our corn. However, we have no
definitive agreements with any third party to do so at this time, nor do we have
any contracts with any corn producers to provide corn to the plants. We may also
enter into supply agreements with local elevators for the origination, supply
and delivery of corn to the plants. There is no assurance that such agreements
will be available or be on acceptable terms. Our purchasing and hedging
activities may or may not lower our price of corn, and in a period of declining
corn prices, these advance purchase and hedging strategies may result in our
paying a higher price for corn than our competitors. Further, hedging for
protection against the adverse changes in the price of corn may be unsuccessful,
and could result in substantial losses to us. Generally, higher corn prices will
produce lower profit margins. This is especially true if market conditions do
not allow us to pass through increased corn costs to our customers. There is no
assurance that we will be able to pass through higher corn prices. If a period
of high corn prices were to be sustained for some time, such pricing may have a
material adverse effect on our operations, cash flows and financial performance.

There are also risks associated with possible droughts. If there were
to be an extended period of drought throughout the Midwest, there is a
possibility that there would not be enough corn to operate our ethanol plants.
If such an extended drought were to occur prior to us paying off our anticipated
debt, we may have to discontinue operations entirely, our lenders could take
over our assets, and you could loose your entire investment.

Our revenues will also be dependent on the market prices for ethanol
and DDGS. These prices can be volatile as a result of a number of factors. These
factors include the overall supply and demand, the price of gasoline, level of
government support, and the availability and price of competing products. For
instance, the price of ethanol tends to increase as the price of gasoline
increases, and the price of ethanol tends to decrease as the price of gasoline
decreases. Any lowering of gasoline prices will likely also lead to lower prices
for ethanol and adversely affect our operating results

Increased ethanol productions may negatively affect ethanol prices and
materially reduce our ability to operation successfully.

We believe that ethanol production is expanding rapidly at this time.
There are numerous new plants under construction or planned for construction,
both inside and outside the State of Iowa. We also expect existing ethanol
plants to expand their present capacity which will further increase the supply
of ethanol.

We cannot provide any assurance or guarantee that there will be any
material or significant increases in the demand for ethanol. Increased
production of ethanol may lead to lower prices. The increased production of
ethanol could have other adverse effects as well. For example, the increased
production could lead to increased supplies of co-products from the production
of ethanol, such as DDGS. Those increased supplies could lead to lower prices
for those co-products. Also, the increased production of ethanol could result in
increased demand for corn. This could result in higher prices for corn and corn
production creating lower profits. There can be no assurance as to the price of
ethanol or DDGS in the future. Any material adverse change affecting the price
of ethanol and/or DDGS may have a material adverse effect on our operations,
cash flows and financial performance.

We expect to compete with existing and future ethanol plants and oil companies,
which may result in diminished returns on your investment.

We will operate in a very competitive environment. We will compete with
large, multi-product companies that have much greater resources than we
presently have, and plants with a capacity greater than, equal to or less than
our plant(s). We will face competition for capital, labor, management, corn and
other resources. Many of our competitors have greater resources than we
currently have or may have in the future.

We anticipate that as additional ethanol plants are constructed and
brought on line, the supply of ethanol will increase. The absence of increased
demand may result in lower prices for ethanol. There is no assurance that we
will be able to compete successfully or that such competition will not have a
material adverse effect on our operations, cash flows and financial performance.

We will also compete with producers of other gasoline additives having
similar octane and oxygenate values as ethanol. An example of such other
additives is MTBE, a petrochemical derived from methanol. MTBE costs less to
produce than ethanol. Many major oil companies produce MTBE and because it is
petroleum-based, historically its use has been strongly supported by major oil
companies. However, with the passage of the Federal Energy Bill in 2005, the
protection against lawsuits that producers of MTBE had prior to its passage were
removed. Therefore, most producers and blenders of MTBE are now unwilling to
blend MTBE with gasoline to be sold in the United States. MTBE is considered a
pollutant of ground water and its use has already been banned by several states
and may eventually be banned by all states. Despite this, alternative fuels,
gasoline oxygenates and alternative ethanol production methods are also
continually under development. The major oil companies have significantly
greater resources than we have to develop alternative products, and to influence
legislation and public perception. Competition from these companies may have a
material adverse effect on our operations, cash flows and financial performance.

We are dependent on third-party brokers or others to sell our products which may
result in diminished returns.

We currently have no sales force of our own to market ethanol and DDGS
and do not intend to establish such a sales force. We intend to sell all of our
ethanol to a third-party broker pursuant to an output contract, such as the one
we have with RPMG at the Shenandoah site. We also intend to contract with
third-party brokers to market and sell our DDGS feed products. As a result, we
will be dependent on the ethanol brokers and the feed brokers. There is no
assurance that we will be able to enter into contracts with any ethanol broker
or feed product broker on acceptable terms. If the ethanol broker breaches the
contract or does not have the ability (for financial or other reasons) to
purchase all of the ethanol we produce, we will not have any readily available
means to sell our ethanol. Our lack of a sales force and reliance on third
parties to sell and market our products may place us at a competitive
disadvantage. Our failure to sell all of our ethanol and DDGS feed products may
have a material adverse effect on our operations, cash flows and financial
performance.

Engaging in hedging activities to minimize the potential volatility of corn
prices could result in substantial costs and expenses.

In an attempt to minimize the effects of the volatility of corn costs
on operating profits, we will likely take hedging positions in corn futures
markets and in the natural gas markets. Hedging means protecting the price at
which we buy corn and the price at which we will sell our products in the
future. It is a way to attempt to reduce the risk caused by price fluctuation.
The effectiveness of such hedging activities is dependent upon, among other
things, the cost of corn and natural gas and our ability to sell sufficient
amounts of ethanol and DDGS. Although we will attempt to link hedging activities
to sales plans and pricing activities, such hedging activities can themselves
result in costs because price movements in corn contracts and natural gas are
highly volatile and are influenced by many factors that are beyond our control.

Our ability to successfully operate is dependent on the availability of energy
and water at anticipated prices.

The proposed plants will require a significant and uninterrupted supply
of electricity, natural gas and water to operate. We plan to enter into
agreements with local gas, electric, and water utilities to provide our needed
energy and water. There can be no assurance that those utilities will be able to
reliably supply the gas, electricity, and water that we need.

If there is an interruption in the supply of energy or water for any
reason, such as supply, delivery or mechanical problems, we may be required to
halt production. If production is halted for an extended period of time, it may
have a material adverse effect on our operations, cash flows and financial
performance.

With respect to the Shenandoah site, we believe that sufficient gas can
be supplied to the Shenandoah plant by upgrading an existing line running from
Red Oak to Shenandoah. The cost to do this will be significantly less than the
estimated $3,510,000 that it would cost to construct a new gas pipeline to this
plant. However, no assurance can be given at this time that the pipeline can be
upgraded in a timely manner. If it were not completed by the time that plant was
ready to commence operations, we would be in default with our lenders, and we
would not be able to commence operations in a timely manner, which would have an
extremely negative effect on our cash flows and financial performance. Further,
even if the pipeline were to be completed on time, at the present time we have
no contracts, commitments or understandings with any natural gas supplier to
supply gas to the plant. We have entered into an agreement with U.S. Energy
Services, Inc. of Wayzata, Minnesota to negotiate and purchase natural gas for
the plant from third party providers of natural gas for up to six months after
the Plant becomes operational. However, there can be no assurance given at this
time that we or U.S. Energy Services will be able to obtain a sufficient supply
of natural gas or that we will be able to procure alternative sources of natural
gas on acceptable terms, even with the assistance of U.S. Energy Services. In
addition, natural gas prices have historically been extremely volatile.
Presently, prices are significantly higher than the historical average price -
approximately $6.75 mcf. Higher natural gas prices may have a material adverse
effect on our operations, cash flows and financial performance. Therefore, we
urge investors to carefully consider the significant risks involved concerning
the potential of higher natural gas prices in the future in making a decision
about investing in our securities.

The site in Superior, Iowa is located within 1.5 miles of a large
interstate natural gas line owned by Northern Natural Gas. The anticipated cost
to run a line to the plant is approximately $1.65 million and we believe
Northern Natural will absorb a large percentage of those upfront costs. The
Atlantic site is within 3 to 3.5 miles of a large interstate pipeline owned by
Northern Natural Gas. There can be no assurance, however, that we will secure
adequate supplies of natural gas for these plants.

We will also need to purchase significant amounts of electricity to
operate the proposed plants. We have negotiated an agreement with Mid American
Energy to supply electricity to the Shenandoah plant for a period of five years.
No definitive agreements have been made with respect to the Superior and
Atlantic sites. We believe that our agreement with Mid American in Shenandoah
will be beneficial to the Company. However, no assurance can be given that we
will be able to negotiate such favorable rates after the five year period is
over or that we will be able to negotiate favorable rates for the Superior or
Atlantic plants. Electricity prices have historically fluctuated significantly.
Sustained increases in the price of electricity would increase our cost of
production. As a result, these issues may have a material adverse effect on our
operations, cash flows and financial performance.

Sufficient availability and quality of water are important requirements
to produce ethanol. We anticipate that our water requirements for the Superior
Plant to be approximately 400 to 600 gallons per minute, depending on the
quality of the water. We believe we will be able to drill our own wells at the
Superior site and that these wells will be able to supply the proposed plant at
that site with sufficient water to operate the plant. However, no assurance can
be given that they will.

The City of Shenandoah has sufficient capacities of water to meet our
needs and we have negotiated a contract with the city to supply water to the
plant at a price that we believe will be favorable to our operations. However,
no assurance can be given that a prolonged drought could not diminish the water
supplies and our ability to obtain water from the town or that we would continue
to have sufficient water supplies in the future. Shenandoah is in the
southwestern part of the State of Iowa and has a history of water shortages.
Historically, this area of the State has experienced periods of drought. We are
exploring the possibility of drilling wells in the area of the Shenandoah site
to use as back up for the plant. However, no assurance can be given at this time
that we will be able to drill wells at the site or in another location near this
site. The inability to drill such wells, and the possibility of drought, may
have a material adverse effect on our operation.

We anticipate that we will be able to drill our own wells at both the
Superior and Atlantic sites and these wells will be able to supply sufficient
water to operate both of the plants at their respective locations. However, we
will probably have to install reverse osmosis filtration systems and/or a
precipitating cold lime softener at both sites to filter the water to remove
minerals that could cause damage to the fermentation system, the heat exchange
plates in the cooling towers, and the pipes at the plants. Such systems can be
built for between $600,000 to $2,500,000 depending on the concentration of such
minerals. Test wells will be drilled at each site and that water will be tested
so we will know the precise types of filtration we will need before construction
commences at either or both sites. However, there can be no assurance that we
will obtain sufficient amounts of water to operate the plants from the wells.

Risk of foreign competition from producers who can produce ethanol at less
expensive prices than it can be produced using corn.

According to information obtained from the website of the Iowa Farm
Bureau there are large international companies that have much greater resources
than we do, including Cargill, developing foreign ethanol production capacity.
Cargill is currently developing ethanol production capacity in El Salvador to
process Brazilian ethanol for export to the U.S. Long-standing U.S. trade
preferences for Caribbean and Central American countries allow them to ship
ethanol to the U.S. duty-free, avoiding a 54 cent per gallon import tariff that
would otherwise apply. The fact that such ethanol can be produced for less than
ethanol made from corn creates a risk to our ability to compete successfully
against such lower cost ethanol. However, because Brazil uses so much of their
own ethanol and because countries like China and India are consuming more and
more oil and ethanol, we believe such risks are being minimized by the world's
greater demand for energy. However, such risks from foreign producers of less
expensive ethanol do exist and should be considered before making any investment
in our securities.

Further, if the import duty on foreign ethanol were to ever be lifted
for any reason, our ability to compete with such foreign companies would be
drastically reduced. The Bush Administration is presently considering removing
this tariff. Although, at this time, such risks cannot be precisely quantified,
we believe that such risks exist, and could increase in the future. Therefore,
anyone contemplating a purchase of the securities being offered herewith should
be aware of them and consider them in making their investment decision.

Risks Related to Regulation and Governmental Action

The loss of favorable tax benefits for ethanol production could hinder our
ability to successfully operate.

Congress currently provides federal tax incentives for oxygenated fuel
producers and marketers. Ethanol blended with gasoline is one of the oxygenated
fuels that qualify for federal tax incentives. These tax incentives allow a
lower federal excise tax rate for gasoline blended with at least 10%, 7.7%, or
5.7% ethanol. Additionally, income tax credits are available for blenders of
ethanol mixtures and small ethanol producers. Gasoline marketers pay a reduced
tax on gasoline sold that contains ethanol. The current credit for gasoline
blended with 10% ethanol is 5.1(cent) per gallon. Currently, a gasoline marketer
that sells gas without ethanol must pay a federal tax of 18.4(cent) per gallon
compared to 13(cent) per gallon for gas with 10% ethanol. The tax on gasoline

blended with 10% ethanol gradually increased to 13.3(cent) per gallon in 2005.
Smaller credits are available for gasoline blended with 7.7 percent and 5.7
percent ethanol. The ethanol industry and our business are dependent upon the
continuation of the federal ethanol credit. This credit has supported a market
for ethanol that may disappear without the credit.

The federal tax incentives were scheduled to expire on September 30,
2007, but have recently been replaced by legislation which has extended those
incentives to the year 2010. These tax incentives to the ethanol industry may
not continue beyond their scheduled expiration date or, if they continue, the
incentives may not be at the same level. The revocation or amendment of any one
or more of those laws, regulations or programs could adversely affect the future
use of ethanol in a material way. We cannot assure you that any of those laws,
regulations or programs will continue. The elimination or reduction of federal
tax incentives to the ethanol industry would have a material adverse impact on
our business by making it more costly or difficult for us to produce and sell
ethanol. If the federal ethanol tax incentives are eliminated or sharply
curtailed, we believe that a decreased demand for ethanol will result.

A change in environmental regulations or violations thereof could impede our
ability to successfully operate the plants.

We will be subject to extensive air, water and other environmental
regulation and we will need to obtain a number of environmental permits to
construct and operate the plants. In addition, it is likely that our senior debt
financing will be contingent on our ability to obtain the various environmental
permits that we will require. The Iowa Department of Natural Resources ("IDNR")
may also require us to conduct an environmental assessment prior to considering
any permits.

Ethanol production involves the emission of various airborne
pollutants, including particulate (PM10), carbon monoxide (CO), oxides of
nitrogen (N0x) and volatile organic compounds. As a result, we will need to
obtain an air quality permit from the IDNR. We have recently applied for this
permit for the Superior site and anticipate that we will apply for such a permit
at the Atlantic site once the plant has been sited by our anticipated builder in
Atlantic. We expect that we will be granted the permits at both sites prior to
the time that construction is anticipated to commence. We will also have to
apply to the IDNR for a storm-water discharge permit, a water withdrawal permit,
public water supply permit, and a water discharge permit for both the Superior
and the Atlantic sites. We anticipate obtaining these permits before the times
that they will be needed during the construction process. We do not anticipate a
problem receiving all required environmental permits. However, if for any reason
any of these permits are not granted, construction costs for the plants may
increase, or the plants may not be constructed at all. In addition, the IDNR
could impose conditions or other restrictions in the permits that are
detrimental to us or which increase costs to us above those assumed in this
project. Any such event would likely have a material adverse impact on our
operations, cash flows and financial performance.

Even if we receive all required permits from the IDNR, we may also be
subject to regulations on emissions from the Environmental Protection Agency
("EPA"). Currently the EPA's statutes and rules do not require us to obtain
separate EPA approval in connection with construction and operation of the
proposed Plant. Additionally, environmental laws and regulations, both at the
federal and state level, are subject to change and changes can be made
retroactively. Consequently, even if we have the proper permits at the present
time, we may be required to invest or spend considerable resources to comply
with future environmental regulations. If any of these events were to occur,
they may have a material adverse impact on our operations, cash flows and
financial performance.

Our inability to obtain required regulatory permits and/or approvals will impede
our ability and may prohibit completely our ability to successfully operate the
plants.

We also intend to apply for and receive from the IDNR a storm-water
discharge permit, a water withdrawal permit, public water supply permit, and
possibly a waste water discharge permit at both the Superior and Atlantic sites.
We do not anticipate a problem receiving all required environmental permits.
However, if for any reason any of these permits are not granted at any of our

sites, construction costs for the plant may increase, or the plant may not be
constructed at all. In addition, the IDNR could impose conditions or other
restrictions in the permits that are detrimental to us or which increase costs
to us above those assumed in this project. The IDNR and the EPA could also
change their interpretation of applicable permit requirements or the testing
protocols and methods necessary to obtain a permit either before, during or
after the permitting process. The IDNR and the EPA could also modify the
requirements for obtaining a permit. Any such event would likely have a material
adverse impact on our operations, cash flows and financial performance.

Even if we receive all required permits from the IDNR, we may also be
subject to regulations on emissions from the United States Environmental
Protection Agency, "EPA". Currently the EPA's statutes and rules do not require
us to obtain separate EPA approval in connection with construction and operation
of the proposed plants. Additionally, environmental laws and regulations, both
at the federal and state level, are subject to change and changes can be made
retroactively. Consequently, even if we have the proper permits at the present
time, we may be required to invest or spend considerable resources to comply
with future environmental regulations or new or modified interpretations of
those regulations, to the detriment of our financial performance.

In the past, federal laws that required the use of oxygenated gasoline
encouraged ethanol production and use. Ethanol contains 35% oxygen by weight.
When combined with gasoline, ethanol acts as an oxygenate. As a result, the
gasoline burns cleaner, and releases less carbon monoxide and other exhaust
emissions into the atmosphere. The federal government encourages the use of
oxygenated gasoline as a measure to protect the environment. Oxygenated gasoline
is commonly referred to as reformulated gasoline or "RFG."

The government's regulation of the environment changes constantly. It
is possible that more stringent federal or state environmental rules or
regulations could be adopted, which could increase our operating costs and
expenses. It also is possible that federal or state environmental rules or
regulations could be adopted that could have an adverse effect on the use of
ethanol. For example, changes in the environmental regulations regarding the
required oxygen content of automobile emissions could have an adverse effect on
the ethanol industry. Furthermore, plant operations likely will be governed by
the Occupational Safety and Health Administration (OSHA). OSHA regulations may
change such that the costs of the operation of the plants may increase. Any of
these regulatory factors may result in higher costs or other materially adverse
conditions effecting our operations, cash flows and financial performance.

Unidentified Risks

The foregoing discussion is not a complete list or explanation of the
risks involved with an investment in this business. Additional risks will likely
be experienced that are not presently foreseen by us. Investors are not to
construe this prospectus as constituting legal or tax advice. Before making any
decision to invest in us, investors should read this entire prospectus,
including all of its exhibits, and consult with their own investment, legal, tax
and other professional advisors.

An investor should be aware that we will assert that the investor
consented to the risks or inherent in this prospectus if the investor brings a
claim against us or any of our directors, officers, managers, employee,
advisors, agents or representatives.

FORWARD-LOOKING STATEMENTS

Throughout this prospectus, we make "forward-looking statements."
Forward-looking statements include the words "may," "will," "estimate,"
"continue," "believe," "expect" or "anticipate" and other similar words. These
forward-looking statements generally relate to our plans and objectives for
future operations and are based upon management's reasonable estimates of future
results or trends. Although we believe that our plans and objectives reflected
in or suggested by such forward-looking statements are reasonable, we may not

achieve such plans or objectives. Actual results may differ from projected
results due, but not limited, to unforeseen developments, including developments
relating to the following:

o The availability and adequacy of our cash flow to meet its
requirements, including payment of loans;

o Economic, competitive, demographic, business and other conditions in
our local and regional markets;

o Changes or developments in laws, regulations or taxes in the ethanol,
agricultural or energy industries;

o Actions taken or omitted to be taken by third parties including our
suppliers and competitors, as well as legislative, regulatory,
judicial and other governmental authorities;

o Competition in the ethanol industry;

o The loss of any license or permit;

o The loss of our Plant due to casualty, weather, mechanical failure or
any extended or extraordinary maintenance or inspection that may be
required;

o Changes in our business strategy, capital improvements or development
plans;

o The availability of additional capital to support capital
improvements and development; and,

o Other factors discussed under "Risk Factors" or elsewhere in this
prospectus.

You should read this prospectus and any accompanying prospectus
supplements completely and with the understanding that actual future results may
be materially different from what we expect. The forward looking statements
specified in this prospectus have been compiled as of the date of this
prospectus and any accompanying prospectus supplement and should be evaluated
with consideration of any changes occurring after the date of this prospectus
and any accompanying prospectus supplement. We will not update forward-looking
statements even though our situation may change in the future.

ESTIMATED USE OF PROCEEDS

Except as described in any prospectus supplement, we currently intend
to use the net proceeds from the sale of our securities for construction of
ethanol plants at the Superior and Atlantic sites and general corporate
purposes. We may also use a portion of the net proceeds to acquire or invest in
businesses, products and technologies that are complementary to our own,
although we currently are not planning or negotiation any such transactions.
Pending these uses, the net proceeds will be invested in investment-grade,
interest-bearing securities.

DESCRIPTION OF SECURITIES TO BE REGISTERED

The following is a summary description of the material terms of our
common stock, as set forth in our articles of incorporation that governs the
rights of our common stock, and our warrants. While we believe that the
following description covers the material terms of these securities, the
description may not contain all of the information that is important to you. We
encourage you to read carefully this entire document, our articles of
incorporation and the other documents we refer to for a more complete
understanding of these securities.

General

As of May 8, 2006, we had 4,360,667 shares of our common stock issued
and outstanding, excluding outstanding warrants to purchase 832,721 shares of
common stock. Our articles of incorporation provides that we may issue up to
25,000,000 shares of our common stock, $0.001 par value per share.

Common Stock

The holders of outstanding shares of our common stock, par value
$0.001, are entitled to receive dividends out of assets legally available at
such time and in such amounts as the Board of Directors may from time to time
determine. Each shareholder is entitled to one vote for each share of common
stock held by any such shareholder on all matters submitted to a vote of
shareholders. Under our articles of incorporation and bylaws, shareholders are
not entitled to cumulate votes for directors, which means that the holders of
the majority of the shares voted can elect all of the directors then standing
for election. The common stock is not entitled to preemptive rights and is not
subject to conversion or redemption. Upon the occurrence of a liquidation,
dissolution or winding-up, the holders of shares of common stock would be
entitled to share ratably in the distribution of all of our assets remaining
available for distribution after satisfaction of all of our liabilities. There
are no restrictions on alienability of the common stock. Each outstanding share
of our common stock is duly authorized, validly issued, fully paid and
non-assessable. Upon receipt by us of payment therefor, and upon issuance of,
all shares of common stock offered hereby will be, duly authorized, validly
issued, fully paid and non-assessable.

Description Of Warrants

The following description, together with the additional information we
include in any applicable prospectus supplements, summarizes the material terms
and provisions of the warrants that we may offer under this prospectus, which
consist of warrants to purchase our common stock. We may issue warrants
independently or together with our common stock offered by any prospectus
supplement, and the warrants may be attached to or separate from those
securities. While the terms we have summarized below will generally apply to any
future warrants we may offer under this prospectus, we will describe the
particular terms of any warrants that we may offer in more detail in the
applicable prospectus supplement. The terms of any warrants we offer under a
prospectus supplement may differ from the terms we describe below.

The warrants will be evidenced by warrant agreements, which are
contracts between us and the holders of the warrants. The following summaries of
material provisions of the warrant agreements are subject to, and qualified in
their entirety by reference to, all the provisions of the warrant agreement
applicable to a particular offering of warrants. We urge you to read the
applicable prospectus supplements related to the warrants that we sell under
this prospectus, as well as the complete warrant agreements that contain the
terms of the warrants.

General

We will describe in the applicable prospectus supplement the terms
relating to the warrants. The prospectus supplement will describe the following
terms, to the extent applicable:

o the offering price and the aggregate number of warrants offered;

o the total number of shares of common stock that can be purchased if
a holder of the warrants exercises them;

o the number of warrants being offered with each share of our common
stock;

o the date on and after which the holder of the warrants can transfer
them separately from the related common stock;

o the number of shares of our common stock that can be purchased if a
holder exercises the warrant and the price at which such common
stock may be purchased upon exercise, including, if applicable, any
provisions for changes to or adjustments in the exercise price and
in the common stock receivable upon exercise;

o the terms of any rights to redeem or call, or accelerate the
expiration of, the warrants;

o the date on which the right to exercise the warrants begins and the
date on which that right expires; and

o any other specific terms, preferences, rights or limitations of, or
restrictions on, the warrants.

Until any warrants to purchase our common stock are exercised, holders
of the warrants will not have any rights of holders of the underlying common
stock, including any rights to receive dividends or to exercise any voting
rights.

Each holder of a warrant is entitled to purchase the number of shares
of our common stock at the exercise price described in the applicable prospectus
supplement. After the close of business on the day when the right to exercise
terminates (or a later date if we extend the time for exercise), unexercised
warrants will become void.

Unless the applicable prospectus supplement states otherwise, the
exercise price of, and the number of securities covered by, a warrant will be
adjusted proportionately if we subdivide or combine our common stock.

PLAN OF DISTRIBUTION

We may use this prospectus and any accompanying prospectus supplement
to sell shares of our common stock and warrants from time to time as follows:

o through agents;
o to dealers or underwriters for resale;
o directly to purchasers by one or more of our officers or directors;
or
o through a combination of any of these methods of sale.

In some cases, we, or dealers acting with us or on our behalf, may
also purchase shares of our common stock and warrants and reoffer them to the
public by one or more of the methods described above. This prospectus may be
used in connection with any offering of shares of our common stock and warrants
through any of these methods or other methods described in the applicable
prospectus supplement.

The shares distributed by any of these methods may be sold to the
public, in one or more transactions, at:

o a fixed price or prices, which may be changed;
o market prices prevailing at the time of sale;
o prices related to prevailing market prices at the time of sale;
o varying prices and terms determined at the time of sale; or
o negotiated prices.

We may solicit offers to purchase shares of our common stock and
warrants directly from the public from time to time. To the extent we sell our
shares directly to the public they will be sold by our officers and directors.
We will not pay commissions to our officers or directors for these sales. They
will be selling securities under the safe harbor provided by Rule 3a4-1
promulgated under the Securities Exchange Act of 1934. Our officers and

directors participating in the sale of our securities may be deemed to be
underwriters as that term is defined in Section 2(11) of the Securities Act of
1933.

We may also designate agents from time to time to solicit offers to
purchase shares of our common stock or warrants from the public on our behalf or
on behalf of the Company. If required, the prospectus supplement relating to any
particular offering will name any agents designated to solicit offers, and will
include information about any commissions that may be paid to those agents, in
that offering. Agents may be deemed to be "underwriters" as that term is defined
in the Securities Act.

From time to time, we may sell shares of our common stock or warrants
to one or more dealers acting as principals. The dealers, who may be deemed to
be "underwriters" as that term is defined in the Securities Act, may then resell
those shares to the public.

We may sell shares of our common stock or warrants from time to time
through or directly to one or more underwriters, who may place shares for us on
our behalf or who may purchase the shares as principal for resale to the public,
either on a firm-commitment or best-efforts basis. If we place through, or sell
shares directly to underwriters, we may execute an underwriting agreement with
them at the time of placement or sale and will name them in the applicable
prospectus supplement. In connection with those sales, underwriters may be
deemed to have received compensation from us in the form of underwriting
discounts or commissions and may also receive commissions from purchasers of the
shares for whom they may act as agents. Underwriters may resell the shares to or
through dealers, and those dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters and/or commissions
from purchasers for whom they may act as agents. The applicable prospectus
supplement will include any required information about underwriting compensation
we may pay to underwriters, and any discounts, concessions, or commissions such
underwriters may allow to participating dealers, in connection with an offering
of shares of our common stock or warrants using this prospectus.

In connection with an offering of shares of our common stock or
warrants using this prospectus, the underwriters may purchase and sell shares of
our common stock in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the underwriters of a greater number of
securities than they are required to purchase in an offering. Stabilizing
transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the applicable
securities while an offering is in progress.

The underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the underwriters have repurchased securities
sold by or for the account of that underwriter in stabilizing or short-covering
transactions.

These activities by the underwriters may stabilize, maintain or
otherwise affect the market price of our common stock. As a result, the price of
our common stock may be higher than the price that otherwise might exist in the
open market. If these activities are commenced, they may be discontinued by the
underwriters at any time. These transactions may be effected on an exchange or
automated quotation system, if the securities are listed on that exchange or
admitted for trading on that automated quotation system, or in the
over-the-counter market or otherwise.

We will bear all costs, expenses and fees associated with the
registration of the shares.

Underwriters, dealers, agents and other persons may be entitled, under
agreements that they may enter into with us, to indemnification by us against
specified liabilities, including liabilities under the Securities Act. The
underwriters, dealers and agents, as well as their affiliates or associates, may
be advisors or lenders to, and may engage in transactions with and perform
services for, us in the ordinary course of business.

LEGAL MATTERS

The validity of the securities offered by this prospectus will be
passed upon for us by Blackburn & Stoll, LC, Salt Lake City, Utah.

EXPERTS

The financial statements as of November 30, 2005 and 2004 and for the
year ended November 30, 2005 and for the periods from June 29, 2004 (inception)
through November 30, 2004 and 2005 included in this prospectus and registration
statement have been audited by L. L. Bradford & Company, LLC, independent
registered accountants, as indicated in their reports with respect thereto, and
are included herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said report.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission, and we have an
internet website address at http://www.gpreethanol.com. You may read and copy
any document we file at the Securities and Exchange Commission's public
reference room located at 100 F Street, N.E., Washington, D.C. 20549. Please
call the Securities and Exchange Commission at 1-800-732-0330 for further
information on the operation of such public reference room. You also can request
copies of such documents, upon payment of a duplicating fee, by writing to the
Securities and Exchange Commission at 100 F Street, N.E, Washington, D.C. 20549
or obtain copies of such documents from the Securities and Exchange Commission's
website at http://www.sec.gov.

DOCUMENTS INCORPORATED BY REFERENCE

The SEC allows us to "incorporate by reference" into this prospectus
the information we have filed with the SEC. This means that we can disclose
important information by referring you to those documents. All documents that we
subsequently file with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act, prior to the termination of this offering, will be deemed to
be incorporated by reference into this prospectus and to be a part hereof from
the date of filing of such documents. Unless expressly incorporated into this
prospectus, a Current Report (or portion thereof) furnished, but not filed, on
Form 8-K shall not be incorporated by reference into this prospectus. Any
statement contained in a document incorporated or deemed to be incorporated by
reference in this prospectus shall be deemed to be modified or superseded for
purposes of this prospectus to the extent that a statement contained herein or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus.

We incorporate by reference the following documents that we have filed
with the SEC and any filings that we will make with the SEC in the future under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until this offering is
terminated:

o Our Annual Report on Form 10-K for the fiscal year ended November
30, 2005;

o Amendment No. 1 to our Annual Report on Form 10-K/A for the fiscal
year ended November 30, 2005;

o Our Quarterly Report on Form 10-Q for the period ended February 28,
2006;
o Our Current Reports on Form 8-K dated January 23, 2006, January 26,
2006, February 6, 2006, March 14, 2006, and May 5, 2006; and
o A description of our common stock, par value $.001 per share,
contained in our Registration Statement on Form 8-A filed with the
SEC on December 16, 2005.

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