10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the fiscal quarter ended June 30, 2008

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

Commission file number 000-53202

HOMELAND ENERGY SOLUTIONS, LLC

(Name of small business issuer in its charter)

Iowa	20-3919356
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
106 W. Main Street, Riceville, IA	50466
(Address of principal executive offices)	(Zip Code)

(641) 985-4025
(Issuer’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

o Yes þ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes þ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of August 1, 2008 there were 91,445 membership units outstanding.

INDEX

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

2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

Homeland Energy Solutions, LLC
(A Development Stage Company)

Balance Sheets
June 30, 2008 and December 31, 2007

	06/30/2008		12/31/2007
	Unaudited		Audited
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	13,803,254	$	64,986,226
Attorney escrow account		527		527
Prepaid expenses		233,791		277,746
Total current assets		14,037,572		65,264,499
PROPERTY AND EQUIPMENT
Land		3,556,482		3,556,482
Equipment		23,816		23,816
Construction in progress		86,435,505		40,044,456
		90,015,803		43,624,754
Less accumulated depreciation		5,988		4,089
		90,009,815		43,620,665
OTHER ASSETS
Loan fees, net of amortization 2008 $140,921; 2007 $52,459		1,032,051		1,120,513
Other assets		334,783		423,665
		1,366,834		1,544,178
	$	105,414,221	$	110,429,342

See Notes to Unaudited Financial Statements.

3

Homeland Energy Solutions, LLC
(A Development Stage Company)

Balance Sheets
June 30, 2008 and December 31, 2007

	06/30/2008		12/31/2007
	Unaudited		Audited
LIABILITIES AND MEMBERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	7,184,169	$	6,978,172
Accounts payable, related parties		—		66,400
Retainage payable		5,835,775		3,592,124
Rejected subscriptions payable		—		7,500,000
Accrued interest related to rejected subscriptions		—		217,164
Property tax payable		5,836		5,836
Payroll tax payable		12,199		2,458
Current portion of long term liabilities		20,000		15,000
Total current liabilities		13,057,979		18,377,154
COMMITMENTS AND CONTINGENCIES (NOTE 6)
LONG-TERM DEBT, less current maturities		175,000		185,000
MEMBERS’ EQUITY
Capital units, less syndication costs		89,572,744		89,558,501
Equity accumulated during development stage		2,608,498		2,308,687
		92,181,242		91,867,188
	$	105,414,221	$	110,429,342

See Notes to Unaudited Financial Statements.

4

Homeland Energy Solutions, LLC
(A Development Stage Company)

Statements of Operations

							Period From
	Three Months			Three Months			Inception
	Ended			Ended			(12/7/2005) to
	06/30/2008			06/30/2007			06/30/2008
	Unaudited			Unaudited			Unaudited
OPERATING REVENUE	$	—		$	—		$	—
OPERATING EXPENSES
Professional expenses		11,288			49,461			522,993
Engineering & design		—			—			18,652
Feasibility studies		—			—			84,750
Filings fees/permits		(9,192	)		1,676			23,075
Land options		—			—			1,650
Insurance		—			4,619			23,297
Office expense		3,217			710			20,399
Depreciation		950			950			5,988
Amortization		—			—			390
Rent		1,221			900			6,860
Utilities		1,673			898			10,239
Wages		12,139			—			20,020
Payroll taxes		1,265			—			1,532
Property tax		—			341			341
Miscellaneous expense		(2,087	)		4,758			13,936
Total operating expenses		20,474			64,313			754,122
OTHER INCOME
Interest income		155,349			10,306			3,334,947
Crop income		—			—			2,673
Grant income		—			—			25,000
		155,349			10,306			3,362,620
Net income (loss)	$	134,875		$	(54,007	)	$	2,608,498
Income (loss) per unit	$	1.47		$	(18.95	)
Weighted average of units outstanding		91,445			2,850

See Notes to Unaudited Financial Statements.

5

Homeland Energy Solutions, LLC
(A Development Stage Company)

Statements of Operations

	Six Months		Six Months
	Ended		Ended
	06/30/2008		06/30/2007
	Unaudited		Unaudited
OPERATING REVENUE	$	—	$	—
OPERATING EXPENSES
Professional expenses		155,243		100,622
Filings fees/permits		—		2,834
Insurance		—		9,239
Office expense		5,435		3,879
Depreciation		1,899		1,899
Amortization		—		390
Rent		2,635		2,100
Utilities		3,709		4,069
Crop input expense		—		4,552
Wages		20,020		—
Payroll taxes		1,532		—
Property tax		—		341
Miscellaneous expense		10,279		1,027
Total operating expenses		200,752		130,952
OTHER INCOME
Interest income		514,806		21,633
Grant income		—		14,125
		514,806		35,758
Net income (loss)	$	314,054	$	(95,194	)
Income (loss) per unit	$	3.43	$	(33.40	)
Weighted average of units outstanding		91,445		2,850

See Notes to Unaudited Financial Statements.

6

Homeland Energy Solutions, LLC
(A Development Stage Company)

Statement of Members’ Equity
For the Period from December 7, 2005 (Date of Inception) to June 30, 2008

	Unaudited
Balance, December 7, 2005	$	—
Capital contributions for 600 units at $333.33 per unit		200,000
Capital contributions for 2,250 units at $500 per unit		1,125,000
Syndication and offering costs		(19,107	)
Net (loss) from inception to December 31, 2006		(143,796	)
Balance, December 31, 2006		1,162,097
Capital contributions for 88,595 units at $1,000 per unit		88,595,000
Syndication and offering costs		(328,149	)
Net income for the year ended December 31, 2007		2,438,240
Balance, December 31, 2007		91,867,188
Net income for the six months ended June 30, 2008		314,054
Balance, June 30, 2008	$	92,181,242

See Notes to Unaudited Financial Statements.

7

Homeland Energy Solutions, LLC
(A Development Stage Company)

Statements of Cash Flows

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

(Continued)

8

Homeland Energy Solutions, LLC
(A Development Stage Company)

Statements of Cash Flows (continued)

						Period From
	Six Months			Six Months		Inception
	Ended			Ended		(12/7/2005) to
	06/30/2008			06/30/2007		06/30/2008
	Unaudited			Unaudited		Unaudited
Net increase (decrease) in cash	$	(51,182,972	)	$	53,237	$	13,803,254
CASH AND CASH EQUIVALENTS
Beginning		64,986,226			357,709		—
Ending	$	13,803,254		$	410,946	$	13,803,254
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION, cash payments for interest	$	217,164		$	—	$	427,586
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Accounts payable related to construction in progress		7,081,224			31,135		7,081,224
Retainage payable related to construction in progress		5,835,775			—		5,835,775
Interest capitalized		—			78,712		210,422
Insurance costs capitalized		141,309			—		141,309
Loan fee amortization capitalized		88,462			17,938		140,921
Loan fees related to short-term borrowings		—			17,572		17,572

See Notes to Unaudited Financial Statements.

9

HOMELAND ENERGY SOLUTIONS, LLC
(A Development Stage Company)
Notes to Unaudited Financial Statements

June 30, 2008

Note 1. Nature of Business and Significant Accounting Policies

Nature of business: Homeland Energy Solutions, LLC (an Iowa Limited Liability Company) to be located in Chickasaw County, was organized to pool investors for a 100 million gallon ethanol plant with distribution to upper Midwest and Eastern states. In addition, the company intends to produce and sell distillers dried grains as byproducts of ethanol production. Preliminary site preparation has been completed and construction began in November 2007. As of June 30, 2008, the Company is in the development stage with its efforts being principally devoted to organizational activities, construction activities and project feasibility activities.

Significant accounting policies:

The unaudited financial statements contained herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America.

In the opinion of management, all adjustments considered necessary for a fair presentation have been included in the accompanying financial statements. All such adjustments are of a normal, recurring nature. The results of operations for the three and six month periods ended June 30, 2008 and 2007 are not necessarily indicative of the results to be expected for a full year.

These financial statements should be read in conjunction with the financial statements and notes included in the Company’s financial statements and notes included in the Company’s Form 10-KSB for the year ended December 31, 2007.

Fiscal Reporting Period: The Company has a fiscal year ending on December 31.

Accounting Estimates: Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates.

Cash and Cash Equivalents: The Company maintains its accounts primarily at one financial institution. At various times, the Company’s cash balances may exceed amounts insured by the Federal Deposit Insurance Corporation. The Company has not experienced losses in such accounts.

For purposes of balance sheet presentation and reporting the statement of cash flows, the Company considers all cash deposits with an original maturity of three months or less to be cash equivalents.

Property and Plant: The Company incurred site selection and plan development costs on the proposed site that were capitalized. Significant additions, betterments and costs to acquire land options are capitalized, while expenditures for maintenance and repairs are charged to operations when incurred. Property and equipment are stated at cost. The Company uses the straight-line method of computing depreciation. Estimated useful lives range from 5 — 7 years.

The Company reviews its property and equipment for impairment whenever events indicate that the carrying amount of the assets may not be recoverable. An impairment loss is recorded when the sum of the future cash flows is less than the carrying amount of the asset. The amount of the loss will be determined by comparing the fair market values of the asset to the carrying amount of the asset.

Intangible Asset: Intangible assets consist of loan fees. The fees are amortized over the life of the loan utilizing the straight-line method. Amortization for the next five years is estimated to be approximately $177,000 annually.

10

HOMELAND ENERGY SOLUTIONS, LLC
(A Development Stage Company)
Notes to Unaudited Financial Statements

June 30, 2008

Cost of Raising Capital: The Company deferred the costs incurred to raise equity financing until that financing occurred. At that time the costs were deducted from the proceeds received.

Organizational and Start-up Costs: The Company expensed all organizational and start-up costs totaling $754,122 for the period from December 7, 2005 (date of inception) through June 30, 2008.

Revenue Recognition: Revenue from the production of ethanol and related products will be recorded upon transfer of title to customers, net of allowances for estimated returns on related products. Interest income is recognized as earned.

Fair Value: Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2008. The respective carrying value of all on-balance-sheet financial instruments approximated their fair values.

Grant Income: Revenue for grants awarded to the Company will be recognized upon meeting the requirements set forth in the grant documents.

The Company received a grant from the Iowa Corn Promotion Board for the purpose of a financial feasibility and legal fees for an equity drive. The grant stipulations were to pay up to 50% of the total cost of these fees not to exceed $25,000. The Iowa Corn Promotion Board has assumed a maximum of $25,000 toward payment to the Grantee (the Company). The Company received the entire $25,000 from the Iowa Corn Promotion Board in 2007.

Income Taxes: The Company is organized as a limited liability company under state law. Accordingly, the Company’s earnings pass through to the members and are taxed at the member level. No income tax provision has been included in these financial statements. Differences between the financial statement basis of assets and the tax basis of assets are related to capitalization and amortization of organization and start-up costs for tax purposes, whereas these costs are expensed for financial statement purposes.

Recently Issued Accounting Standards: In September 2006, the Financial Accounting Standards Board (FASB) issued Statement No. 157, “Fair Value Measurements”. This statement defines fair value, establishes a framework for measuring fair value, and expands disclosure requirements regarding fair value measurement. The Company partially adopted SFAS No. 157 as of January 1, 2008, pursuant to FASB Staff Position (“FSP”) No. FAS 157-2, Effective Date of FASB Statement No. 157, which delayed the effective date of SFAS No. 157 for all nonrecurring fair value measurements of nonfinancial assets and nonfinancial liabilities until fiscal years beginning after November 15, 2008. The Company has determined that FASB Statement No. 157 has no material effect on the financial statements as of June 30, 2008.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS No. 159 provides entities with an option to report certain financial assets and liabilities at fair value — with changes in fair value reported in earnings — and requires additional disclosures related to an entity’s election to use fair value reporting. It also requires entities to display the fair value of those assets and liabilities for which the entity has elected to use fair value on the face of the balance sheet. This statement became effective for the Company for the fiscal year starting January 1, 2008. The Company has determined that FASB Statement No. 159 has no material effect on the financial statements as of June 30, 2008.

In December 2007, the FASB issued SFAS 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51 (Consolidated Financial Statements).” SFAS 160 establishes accounting and reporting standards for a noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. In addition, SFAS 160 requires certain consolidation procedures for consistency with the requirements of SFAS 141, “Business Combinations.” SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008 with earlier adoption prohibited. The Company is evaluating the effect, if any, that the adoption of SFAS 160 will have on its results of operations, financial position, and the related disclosures.

11

HOMELAND ENERGY SOLUTIONS, LLC
(A Development Stage Company)
Notes to Unaudited Financial Statements

June 30, 2008

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities”. The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company is evaluating the effect, if any, that the adoption of SFAS 161 will have on its results of operations, financial position, and the related disclosures.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”. The new standard is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles (GAAP) for nongovernmental entities. Statement 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. The Company is evaluating the effect, if any, that the adoption of SFAS 161 will have on its results of operations, financial position, and the related disclosures.

Note 2. Development Stage Company

The Company was formed on December 7, 2005 to have a perpetual life. The Company was capitalized by contributions from eight founders who each contributed $25,000 for 75 units of membership interests.

Income and losses are allocated to all members based upon their respective percentage of membership units held. See Note 4 for further discussion of members’ equity.

Note 3. Debt

Master Loan Agreement with Home Federal Savings Bank

On November 30, 2007, the Company entered into a Master Loan Agreement with Home Federal Savings Bank (“Home Federal”) establishing a senior credit facility with Home Federal for the construction of a 100 million gallon per year natural gas powered dry mill ethanol plant. The Master Loan Agreement provides for (i) a construction loan in an amount not to exceed $94,000,000 (of which up to $20,000,000 may be converted to a term revolving loan upon start-up of operations), and (ii) a revolving line of credit loan in an amount not to exceed $6,000,000 (the foregoing collectively referred to as the “Loans”).

Construction Loan

Under the Master Loan Agreement and its first supplement, Home Federal agreed to lend the Company up to $94,000,000 for project costs. The Company must pay interest on the Construction Loan at an interest rate equal to the LIBOR Rate plus 350 basis points. Interest will be paid on the Construction Loan monthly in arrears on the first day of the month beginning following the date on which the first advance of funds is made on the Construction Loan, and continuing until the date of conversion as set forth below. On the date of conversion, the amount of the unpaid principal balance and any other amounts on the Construction Loan will be due and payable, except for the portion, if any, of the Construction Loan which is converted into a Term Loan and into a Term Revolving Loan. In the event that the amount of disbursements made pursuant to the Construction Loan exceed the amount of the maximum Term Loan to be made, including after conversion of those portions of the Construction Loan which are eligible for conversion into the Term Revolving Loan, the Company must immediately repay the amount of the Construction Loan that is not being converted into a Term Loan.

12

HOMELAND ENERGY SOLUTIONS, LLC
(A Development Stage Company)
Notes to Unaudited Financial Statements

June 30, 2008

Conversion to Term Loan and Term Revolving Loan

Home Federal has agreed to convert up to $74,000,000 of the Construction Loan into a Term Loan 60 days after the earlier of May 1, 2009 or the date that a completion certificate stating that the project is completed and that the processing equipment and fixtures are fully operational, provided that all of the terms, conditions, warranties, representations, and covenants by the company as set forth in the Master Loan Agreement and supplements thereto are satisfied. The Company will make monthly payments of accrued interest on the Term Loan from the date of conversion until seven months later. Beginning in the seventh month after conversion, equal monthly principal payments in the amount of $616,667 plus accrued interest will be made. All unpaid principal and accrued interest on the term loan that was so converted will be due on the fifth anniversary of such conversion. The Company will have the right to convert up to 50% of the term loan into a Fixed Rate Loan with the consent of Home Federal. The Fixed Rate Loan will bear interest at the five year LIBOR swap rate that is in effect on the date of conversion plus 325 basis points, or another rate mutually agreed upon by Homeland Energy and Home Federal. If the Company elects this fixed rate option, the interest rate will not be subject to any adjustments otherwise provided for in the Master Loan Agreement. The remaining converted portion will bear interest at a rate equal to the LIBOR Rate plus 325 basis points. If the Company fails to make a payment of principal or interest within 10 days of the due date, there will be a late charge equal to 5% of the amount of the payment.

Under the terms of the Master Loan Agreement and the second supplement thereto, the Company agreed to the terms of a Term Revolving Loan, consisting of a conversion of a maximum amount of $20,000,000 of the Construction Loan into a Term Revolving Loan. Home Federal agreed to make one or more advances under the Term Revolving Loan during the period beginning on the Conversion Date, which is 60 days after the earlier of May 1, 2009 or the date that a Completion Certificate stating that the Project is completed and executed by the appropriate parties as specified in the Master Loan Agreement, and the Maturity Date, which is the fifth anniversary of the Conversion Date. Each advance made under the Revolving Term Loan must be in a minimum amount of $50,000, and advances may be used for project costs and cash and inventory management. Interest on the Revolving Term Loan shall accrue at a rate equal to the LIBOR Rate plus 325 basis points. If the Company fails to make a payment of principal or interest within 10 days of the due date, there will be a late charge equal to 5% of the amount of the payment. The Company will be required to make monthly payments of interest until the Maturity Date, which is the fifth anniversary of the Conversion Date, on which date the unpaid principal amount of the Revolving Term Loan will become due and payable.

As a condition precedent to the conversion of any portion of the Construction Loan into the Term Loan and Revolving Term Loan, the Company must have executed marketing agreements for all ethanol and distillers grains and provided Home Federal with collateral assignments of all such agreements. In addition, the Company must obtain Home Federal’s approval in the event the Company becomes aware of any change in the approved project costs that will increase the total cost in excess of $50,000. Home Federal has the right to order that work on the project be stopped and may withhold disbursements if construction departs from the approved plans and specifications or sound building practices.

Revolving Line of Credit Loan

Under the terms of the Master Loan Agreement and the third supplement thereto, the Company agreed to the terms of a Revolving Line of Credit Loan consisting of a maximum $6,000,000 revolving line of credit. The Revolving Line of Credit Loan will not be available until all conditions precedent to the Revolving Line of Credit Loan are met, including the completion of the Project and either full repayment of the Construction Loan or its conversion into a Term Loan or Revolving Term Loan with Home Federal. The aggregate principal amount of the Revolving Line of Credit Loan may not exceed the lesser of $6,000,000 or the Borrowing Base. The Borrowing Base means, at any time, the lesser of: (a) $6,000,000; or (b) the sum of (i) 75% of the eligible accounts receivable, plus (iii) 75% of the eligible inventory. Interest on the Revolving Line of Credit Loan shall accrue at a rate equal to the LIBOR Rate plus 325 basis points. If the Company fails to make a payment of principal or interest within 10 days of the due date, there will be a late charge equal to 5% of the amount of the payment. Each advance made under the Revolving Line of Credit must be in a minimum amount of $50,000, and advances may be used for general corporate and operating purposes. The Company will be required to make monthly payments of accrued interest until the Revolving Line of Credit Loan expires, on which date the unpaid principal amount will become due and payable. The Revolving Line of Credit Loan expires 364 days after the conversion date, which is 60 days after the earlier of May 1, 2009 or the date that a Completion Certificate stating that the Project is completed and executed by the appropriate parties as specified in the Master Loan Agreement.

13

HOMELAND ENERGY SOLUTIONS, LLC
(A Development Stage Company)
Notes to Unaudited Financial Statements

June 30, 2008

Letter of Credit

On May 6, 2008, the Company signed an irrevocable standby letter of credit with Home Federal for $782,000. The Company paid 1.50% origination fee of $11,730. If drawn on, the Company is to pay interest of the 30-day LIBOR rate plus 350 basis points. The irrevocable standby letter of credit expires May 5, 2009.

Security Interests and Mortgages

In connection with the Master Loan Agreement and all supplements thereto, the Company executed a mortgage in favor of Home Federal creating a senior lien on the real estate and plant and a security interest in all personal property located on Company property. In addition, the Company assigned all rents and leases to Company property in favor of Home Federal. As additional security for the performance of the obligations under the Master Loan Agreement and its supplements, a security interest was granted in the government permits for the construction of the project and all reserves, deferred payments, deposits, refunds, cost savings and payments of any kind relating to the construction of the project. If the Company attempts to change any plans and specifications for the project from those that were approved by Home Federal that might adversely affect the value of Home Federal’s security interest and have a cost of $25,000 or greater, the Company must obtain Home Federal’s prior approval.

In addition, during the term of the loans, the Company will be subject to certain financial covenants. Failure to comply with the protective loan covenants or maintain the required financial ratios may cause acceleration of the outstanding principal balances on the loans and/or the imposition of fees, charges or penalties. Any acceleration of the debt financing or imposition of the significant fees, charges or penalties may restrict or limit the access to the capital resources necessary to continue plant construction or operations.

Upon an occurrence of an event of default or an event which will lead to the default, Home Federal may upon notice terminate its commitment to loan funds and declare the entire unpaid principal balance of the loans, plus accrued interest, immediately due and payable. Events of default include, but are not limited to, the failure to make payments when due, insolvency, any material adverse change in the financial condition or the breach of any of the covenants, representations or warranties the Company has given in connection with the transaction.

The Company also entered into two unsecured loan agreements with the Iowa Department of Economic Development (IDED); one for a $100,000 loan to be repaid over 60 months starting April 2008 at a 0% interest rate and one for a $100,000 forgivable loan. The forgivable loan is subject to meeting terms of the agreement, including the fulfillment of Job Obligations. If the Job Obligations are not met, the IDED may require full repayment of the loan. The IDED may also elect to allow the repayment on a pro rata basis, based on the number of jobs attained compared to the number of jobs pledged.

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HOMELAND ENERGY SOLUTIONS, LLC
(A Development Stage Company)
Notes to Unaudited Financial Statements

June 30, 2008

Maturities of long-term debt, with the exception of the $100,000 forgivable loan, as of June 30, 2008, are due in future years as follows:

Twelve months ending June 30,
2009	$	20,000
2010		20,000
2011		20,000
2012		20,000
2013		15,000
	$	95,000

Note 4. Members’ Equity

The Company has raised a total of $89,920,000 in membership units. By a motion of the board on May 10, 2006 the total seed stock issued was capped at $1,325,000. This total consists of the initial $200,000 (600 units at $333.33 per unit) issued on January 11, 2006 to the founding members. It also consists of $1,125,000 (2,250 units at $500 per unit) which was raised from other seed stock investors on May 10, 2006. On October 29, 2007 $88,595,000 (88,595 units at $1,000 per unit) in membership units were issued and $7,500,000 (7,500 units at $1,000 per unit) of the subscription units were rejected. All of the rejected subscription units were paid in 2008.

All membership units have equal voting rights.

Each member who holds five thousand or more units, all of which were purchased by such member from the Company during its initial public offering of equity securities filed with the Securities and Exchange Commission, shall be deemed an “Appointing Member” and shall be entitled to appoint one Director for each block of five thousand units; provided, however, that no “Appointing Member” shall be entitled to appoint more than two Directors regardless of the total number of units owned and purchased in the initial public offering.

Note 5. Related Party Transactions

The Company has engaged one of their board members as Vice President of Project Development. The Vice President of Project Development will serve as an independent contractor to provide project development and consulting services through construction and initial start-up of the project. The Company expects the aggregate fee for those services to approximate $40,000. Costs incurred for these services were none, none, and $20,000 for the six months ended June 30, 2008, the six months ended June 30, 2007, and the period from December 7, 2005 (date of inception) to June 30, 2008, respectively, with the remainder to be paid at the first grind of corn.

The Company has engaged the spouse of the President of the board to serve as an independent contractor to provide various duties. These duties primarily include administration of project development. Costs incurred under this agreement were none and $46,400 for the six months ended June 30, 2007 and the period from December 7, 2005 (date of inception) to December 31, 2007, respectively. Starting January 1, 2008 this person was hired as an employee, and as of June 30, 2008 the Company has incurred approximately $22,000 in payroll costs related to this agreement.

Note 6. Commitments and Contingencies

On July 18, 2007, the Company entered into a Lump Sum Design-Build Agreement with Fagen, Inc. for the design and construction of a one hundred (100) million gallon per year dry grind ethanol production facility (the “Design-Build Agreement”) on the Company’s plant site located near the City of New Hampton, Iowa. Pursuant to the Lump Sum Design-Build Agreement, the effective date is July 6, 2007. Under the Design-Build Agreement, the Company will pay Fagen, Inc. a total contract price of $109,706,788, subject to any mutually agreed-upon adjustments and previously paid amounts that may be treated as credits. Fagen, Inc, will design and build the plant using ICM, Inc., technology. As part of the total contract price, the Company paid Fagen, Inc. a mobilization fee of $20,000,000. The Company currently expects the construction to be completed in the first quarter of 2009, however, there is no assurance or guarantee that construction will stay on schedule or that the company will be able to commence operations at the plant by the first quarter of 2009.

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HOMELAND ENERGY SOLUTIONS, LLC
(A Development Stage Company)
Notes to Unaudited Financial Statements

June 30, 2008

On July 18, 2007, the Company also entered into a First Amendment to the Design-Build Agreement. Pursuant to the Amendment, Fagen, Inc. will accept Notice to Proceed on an earlier date than that set forth in the Design-Build Agreement. In exchange for beginning work on an earlier date, the Company has agreed to pay Fagen, Inc. an increased contract price of $120,587,000. There will be no adjustment of the Contract Price based on an increase in the Construction Cost Index (“CCI”) published by Engineering News-Record Magazine, as was set forth in the Design-Build Agreement. However, due to subsequent change orders, the contract price at June 30, 2008 was $120,459,611.

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

On December 3, 2007, Homeland Energy Solutions, LLC entered into a Coal to Fuel Gas Conversion Agreement with Homeland Gasification, LLC (Homeland Gas), an entity to be formed by Econo Power International Corporation (“EPIC”). The Company expects to be joint owners with EPIC of Homeland Gas. Pursuant to the agreement, Homeland Gas would construct a coal gasification facility that will utilize EPIC technology to convert coal to fuel gas to provide process energy for the ethanol plant. The agreement has an effective date of November 14, 2007, and the term will end on the last day of the 15th operating year of the facility, unless terminated earlier by the terms of the agreement. Currently, Homeland Gasification, LLC has not been formed and the Company is in negotiations with EPIC regarding the use of coal gasification technology.

On November 29, 2007 the Company was awarded a USDA loan guarantee which is subject to using coal gasification technology. This award will guarantee 60% of a $40,000,000 loan from Home Federal Savings Bank. The USDA reserves the right to terminate its commitment if certain conditions set forth in the agreement are not met by November 2008. This loan is not included in the master loan agreement with Home Federal (see note 3).

The Company has entered into an engineering services agreement for Phase I and Phase II with Fagen Engineering, LLC. Phase I consists of the design package for the grading and drainage of the plant site. Phase II consists of the design package for the site work and utilities for the plant. For the six month period ended June 30, 2008 and 2007, the Company has incurred $40,000 and $50,875, respectively, of costs year-to-date with Fagen Engineering, LLC. Since inception the Company has incurred costs of $104,750 with Fagen Engineering, LLC.

As of June 30, 2008 five land options have been exercised, one land option has been extended to April 12, 2009, and one land option was allowed to expire. In the event of the exercise of these options the purchase price will be two and one half (2 1/2) times the value of the premises based on a real estate appraisal. An additional payment of $5,000 was required for the option extension.

The Company has entered into an agreement with Air Resource Specialists, Inc. to provide consulting services to obtain State of Iowa air quality and storm water permits prior to the commencement of construction activities. The initial work authorization is on a time and materials basis for the air quality permit application. Due to applying for a Title 5 air permit the cost will be higher than the initial authorization. For the six month period ended June 30, 2008 and 2007, the Company has incurred $11,916 and $18,610, respectively, of costs year-to-date with Air Resource Specialists, Inc. Since inception the Company has incurred costs of $66,682 with Air Resource Specialists, Inc.

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HOMELAND ENERGY SOLUTIONS, LLC
(A Development Stage Company)
Notes to Unaudited Financial Statements

June 30, 2008

The Company has entered into an agreement with PlanScape Partners to provide consulting services in negotiating local incentives, assisting with property rezoning, and preparation of State and Federal program applications. The company also has hired PlanScape Partners to assist in grant application and other various program applications, the cost of these services are based on the time to complete each individual application. For the six month period ended June 30, 2008 and 2007, the Company has incurred $1,767 and $22,723, respectively, of costs with PlanScape Partners. Since inception the Company has incurred costs of $35,043 with PlanScape Partners.

The Company has entered into an agreement with Burns & McDonnell to provide project development assistance regarding the use of coal gasification as an alternative energy source for the plant once the Company has reached substantial operations. Project assistance will consist of design and FEL II level cost estimates for the balance of plant items outside the gasifier, refinement of coal transportation and supply options, and development of plant performance guarantees. In exchange for their services, the Company has agreed to pay Burns & McDonnell $461,750. For the six month period ended June 30, 2008 and 2007, the Company has incurred none and $100,000, respectively, of costs related to this agreement. Since inception, the Company has incurred all $461,750 of costs with Burns & McDonnell.

The Company has entered into an agreement with Terracon Consultants Inc. to complete subsurface exploration and geotechnical engineering services. The majority of the services consist of taking soil borings and testing the samples. Terracon’s estimated fees for the borings and testing are $66,700 to $72,000. Terracon has also been hired to perform an environmental study and provide project oversight of the dirt work. The fees for these services are paid based on the time and any materials needed. For the six month period ended June 30, 2008 and 2007, the Company has incurred $65,854 and $68,509, respectively, of costs year-to-date with Terracon Consultants Inc. Since inception the Company has incurred costs of $205,755 with Terracon Consultants Inc.

The Company has entered into an agreement with JB Holland Construction, Inc. to perform Phase I and Phase II dirt work preparation and stabilization of the plant site. The base fees for these services are $7,011,606 and change orders through June 30, 2008 have totaled $425,635. For the six month period ended June 30, 2008 and 2007, the Company has incurred 1,500,367 and none, respectively, of costs year-to-date with JB Holland Construction, Inc. Since inception the Company has incurred costs of $6,048,408 with JB Holland Construction, Inc.

In December 2007 the Company entered into an agreement with Cornerstone Energy, LLC d/b/a Constellation New Energy to construct approximately 7.25 miles of pipeline connecting the Company to the interstate pipeline for a contract price of approximately $4,000,000. The agreement also states that the Company will purchase 100% of the Company’s natural gas requirements for a five year term beginning on the date of plant start-up. As of June 30, 2008, the Company had incurred $1,186,400 related to this agreement.

In February 2008, the Company entered into an agreement with Denver Underground & Grading, Inc. for Phase II piping and underground excavation for a contract price of $449,191. Subsequent change orders have increased the contract price to $486,552. As of June 30, 2008, the Company had incurred costs of $468,776 related to this agreement.

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HOMELAND ENERGY SOLUTIONS, LLC
(A Development Stage Company)
Notes to Unaudited Financial Statements

June 30, 2008

On December 19, 2007, the Iowa Department of Economic Development approved the Company for a package of benefits, provided the Company meets and maintains certain requirements. The package provides for the following benefits: (1) a $100,000 forgivable loan and a $100,000 interest-free loan under the Iowa Value-Added Agricultural Products and Processes Financial Assistance Program; (2) a grant of $240,000 under the Revitalize Iowa’s Sound Economy program for the construction of a turning land off of Iowa Highway 24 to the plant; and (3) the following tax incentives under the High Quality Jobs Program from the state of Iowa:

1. Refund of sales, service or use taxes paid to contractors and subcontractors during construction work (estimated at $4,289,600).

2.

Investment tax credit (limited to $10,000,000. To be amortized over 5 years). This Iowa tax credit may be claimed for qualifying expenditures, not to exceed $10,000,000, directly related to new jobs created by the start-up, location, expansion or modernization of the company under the program. This credit is to be taken in the year the qualify asset is placed into service and is amortized over a 5 year period.

3.

Local Value-added Property Tax Exemption (estimated at $10,350,000). The Community has approved an exemption from taxation on all or a portion of the value added by improvements to real property directly related to new jobs created by location or expansion of the company and used in the operations of the company.

In July 2007 the Company entered into an agreement with a union that covers the employment of a construction manager. This agreement is effective from August 2007 to May 2009. The agreement sets the base wage rate at $6,668 per month and additional fringe benefits of $2,374 per month.

In February 2008, the Company entered into an agreement with A & B Welding for the construction of a water storage tank for a contract price of $180,000. As of June 30, 2008, the Company has incurred costs of $45,000 related to this agreement.

In March 2008, the Company entered into an agreement with Ace Steel Construction for the construction of a metal building to be used for water treatment for a contract price of $107,832. As of June 30, 2008, the Company has incurred costs of $67,641 related to this agreement.

In May 2008, the Company entered into an agreement with Brennan Construction Company for construction of a bridge over the railroad tracks for a contract amount of $876,033. As of June 30, 2008, the Company had incurred costs of $139,661 related to this agreement.

Note 7. Subsequent Event

On July 7, 2008, the Company entered into an agreement with Iowa, Chicago, & Eastern Railroad for the installation of two new mainline switches and the re-alignment of the main line at a cost of $239,764. As of June 30, 2008, the Company has incurred no costs related to this agreement.

On July 24, 2008, the Company entered into an agreement with R&R Contracting for ethanol plant rail work between New Hampton, Iowa and Lawler, Iowa for an estimated cost of $5,756,535. The project shall commence on August 15, 2008 and has a completion date of December 31, 2008. As of June 30, 2008, the Company has incurred no costs related to this agreement.

On August 5, 2008, the Company entered into an agreement to pave the plant for an estimated cost of $1,556,106. The project is to be substantially complete by December 30, 2008. As of June 30, 2008, the Company has incurred no costs related to this agreement.

In August 2008, the Company entered into an Ethanol Marketing Agreement with a company to sell all of the Company’s ethanol produced at their plant to this company, who will market all of the ethanol produced at the Company’s plant and be responsible for all transportation of the ethanol including, without limitation, the scheduling all shipments of ethanol with the Company.

In August 2008, the Company entered into a Distiller’s Grains Marketing Agreement (DG Marketing Agreement) with a company, wherein the company will purchase the distillers grains produced at the Company’s plant.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Statements Regarding Forward-Looking Statements

This report contains forward-looking statements that involve future events, our future performance and our expected future operations and actions. In some cases, you can identify forward-looking statements by the use of words such as “may,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “future,” “intend,” “could,” “hope,” “predict,” “target,” “potential,” or “continue” or the negative of these terms or other similar expressions.

These forward-looking statements are only our predictions and involve numerous assumptions, risks and uncertainties, including, but not limited to those listed below and those business risks and factors described elsewhere in this report and our other filings with the Securities and Exchange Commission.

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

• Increases in construction costs or delays or difficulties in the construction of the plant, resulting in a delay of start-up of plant operations;

• Changes in the availability and price of corn;

• Our inelastic demand for corn, as it is the only available feedstock for our plant;

• Lack of transport, storage and blending infrastructure preventing ethanol from reaching available markets;

• Fluctuation in U.S. petroleum prices and corresponding oil consumption;

• Ethanol supply exceeding demand and corresponding ethanol price reductions;

• Changes in the environmental regulations or in our ability to comply with the environmental regulations that apply to our plant site and our anticipated operations;

• Changes in general economic conditions or the occurrence of certain events causing an economic impact in the agriculture or automobile industries;

• Changes in the availability and price of natural gas, corn, and/or coal and the market for ethanol and distillers grains;

• Changes in federal and/or state laws (including the elimination of any federal and/or state ethanol tax incentives);

• Changes and advances in ethanol production technology;

• Additional ethanol plants or expansions of ethanol plants existing or being constructed in close proximity to our ethanol facility in north eastern Iowa;

• Competition from alternative fuel additives; and

• Our ability to hire management personnel, as well as administrative and operational personnel.

Our actual results or actions could and likely will differ materially from those anticipated in the forward-looking statements for many reasons, including but not limited to the reasons described in this report. We are no under any duty to update the forward-looking statements contained in this report. We cannot guarantee future results, levels of activity, performance or achievements. We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this report. You should read this report and the documents that we reference in this report and have filed as exhibits completely and with the understanding that our actual future results may be materially different from what we currently expect. We qualify all of our forward-looking statements by these cautionary statements.

Available Information

Information about us is also available at our website at www.homelandenergysolutions.com, under “Investor Relations — SEC Filings,” which includes links to reports we have filed with the Securities and Exchange Commission. The contents of our website are not incorporated by reference in this Quarterly Report on Form 10-Q.

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Overview

Homeland Energy Solutions, LLC was formed as an Iowa limited liability company on December 7, 2005 for the purpose of constructing, owning and operating a 100 million gallon per year (MGY) fuel-grade ethanol plant to be located in north eastern Iowa. References to “we,” “us,” “our” and the “Company” refer to Homeland Energy Solutions, LLC. We are in the development stage and have not begun production of ethanol and distillers grains at the plant.

Our total project cost is approximately $173,860,000, which we are financing with a combination of equity and debt. We previously issued and sold 2,850 membership units in two private placement offerings for a total of $1,325,000 in offering proceeds. We issued and sold an additional 88,595 membership units in an offering registered with the Securities and Exchange Commission (SEC) for a total of $88,595,000 in offering proceeds. The remaining project costs are being financed through our senior debt financing package with Home Federal Savings Bank which includes a Construction Loan for our project for up to $94,000,000 and a revolving line of credit of up to $6,000,000 of which we expect to be available to us once we are operational. Our loan obligations are secured by all of our real and personal property, and we have also assigned all rents and leases of our property to Home Federal.

Our plant is located near New Hampton, Iowa, in Chickasaw County. Construction of our ethanol plant by our Design-Builder, Fagen, Inc., began in November 2007. As of August 1, 2008, we estimate that total construction of the plant is 42% complete. We experienced minor delays in construction due to the high amounts of rain Iowa received in May and June 2008. However, we expect any delays to be mitigated by the additional workforce placed at the site, working extended work hours into the weekends. Management expects that the plant will be operational by April 2009. The plant will feature updates that are expected to conserve energy and water, which we expect will allow us to operate our plant with greater efficiency. These efficiencies should improve our results of operations once the plant is operational. Benefits of our plant site include close proximity to State and Interstate Highways, as well as rail transportation. These routes will give us access to major population and distribution centers, such as Minneapolis, Chicago, Omaha and Kansas City.

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

Plan of Operations for the Next 12 Months

We expect to spend the next 12 months focused on (1) plant construction and start-up of our operations; (2) exploration of coal gasification technologies; and (3) exploration of additional opportunities in the renewable fuels industry to maximize our results of operations once the plant is operational. We expect that the proceeds of our equity offerings in combination with available debt facilities will provide us with sufficient cash on hand to cover the costs associated with construction of the project with natural gas as our energy source. However, in the event that we suffer a shortfall, we may seek additional equity and/or debt financing to complete project capitalization. We estimate that the total project cost to construct the plant utilizing natural gas as an energy source will be approximately $173,860,000.

As construction of our ethanol plant progresses, we plan to continue to explore technologies and our options for incorporating a coal gasification energy center into our plant, which would give us an alternative to natural gas for our energy source. In the event that we determine to install a coal gasification energy center, we will have to seek significant additional equity and/or debt financing to fund its construction. We estimate that the cost of the energy center would be approximately $64,500,000, which could change due to the cost of coal, construction costs, and our financing structure or other market conditions. We have not yet determined to proceed with a coal gasification energy center. If we decide to proceed, we do not have any agreements in place for the financing of a coal gasification energy center and there is no guarantee that we will be able to enter into any such agreements in the future.

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Site Development and Construction Activities and Agreements

As of August 1, 2008, we estimate that overall plant construction is 42% complete. While we experienced minor delays due to the heavy amounts of rainfall Iowa received in May and June 2008, Fagen has increased the number of employees and contractors on site from 80 to 150, and the workforce has been working into the weekends. Therefore, we expect construction to be completed on schedule by April 2009. All road ways into and internally in the plant have been completed to grade with the sub overlay complete. We expect the paving of our roads to begin in our next fiscal quarter. As of August 1, 2008, we estimate that the civil work on the process area is approximately 95% complete and installation of the evaporators and other equipment is approximately 70% complete. The distillers grain building is approximately 90% complete, and the interior lighting and equipment installation in the building is approximately 80% complete. The construction of our corn and distillers grain storage silos is underway and they are anticipated to be completed this fall.

We expect our rail facilities to be completed by December 2008. We also expect our water treatment building to be completed in August 2008, and all of the internal equipment for the water treatment building will be completed shortly thereafter. As of August 1, all of our internal plant electrical underground facilities are in place, and our fire, water, septic, process wells and waste blowdown systems are collectively approximately 90% complete.

We have secured a majority of our key agreements for the construction and development of our project. For example, we have entered into a Lump Sum Design-Build Agreement with Fagen, Inc. for the design and construction of our ethanol plant, for a contract price of $120,459,611. In addition, we have entered into a license agreement with ICM, Inc. for limited use of ICM, Inc’s proprietary technology and information for the technology used in our ethanol plant. In addition to these key agreements, we have retained JB Holland for the completion of the majority of our site development work, and we have entered into an agreement for the concrete pavement of the roads within the our plant site. The cost of this work is approximately $1.600,000, and we anticipate completion of this work by December 30, 2008.

We entered into an agreement with R & R Contracting (“R & R”) dated July 24, 2008 for the construction of our rail facilities within our anticipated ethanol plant. Under the agreement, R & R will commence work on the rail facilities by August 15, 2008, and will complete the work by December 31, 2008, unless an extension of time is agreed to in writing by both Homeland Energy and R & R. As consideration for the construction of our rail facilities, we have agreed to pay R & R approximately $5,700,000. This payment is subject to any changes to the scope of the work agreed to by Homeland Energy and R & R.

Utilities

Our plant site does not have an existing gas line to supply natural gas to our plant. To access sufficient supplies of natural gas to operate the plant, a dedicated lateral pipeline from an interstate pipeline is necessary. We entered into an agreement with Northern Natural Gas in April 2008 for connection to its interstate pipeline and for transportation services for our natural gas supply.

We also have agreements with Cornerstone Energy, LLC d/b/a/ Constellation NewEnergy — Gas Division CEI, LLC (Cornerstone) for construction of our natural gas pipeline and for procurement of our required natural gas. The cost of this pipeline is expected to be approximately $4,000,000, which we have included in our estimated budget. The contract price of the natural gas has not been set, but will be based on current market prices for natural gas plus a likely surcharge per MMBtu. We will also have the option to participate in Cornerstone’s natural gas hedging program. We are currently negotiating easements with the landowners whose land the pipeline must cross. The Iowa Utilities Board is currently reviewing our application for our pipeline permit, and we hope to begin construction of the pipeline this August with completion anticipated by December 2008.

We expect to purchase our electricity from Hawkeye REC, the local utility who holds the service franchise for our potential plant location in Chickasaw County, Iowa. Hawkeye REC is a distribution cooperative distributing excess operating margins back to its member owners on a yearly basis. One of our directors and officers, Pat Boyle, is also the Business Development and Member Services Manager for Hawkeye REC.

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Engineering specifications show our plant water requirements to be approximately 1,000 gallons per minute. That is approximately 1,440,000 gallons per day. While it is possible that our water supply will be strained from nearby residents, business and farms, we expect our production wells to supply us with the water that we will need.

Ethanol and Distillers Grain Marketing Agreements

On August 14, 2008, we entered into an Ethanol Marketing Agreement with VBV, LLC (VBV). Pursuant to the Ethanol Marketing Agreement, we will sell all of our ethanol produced at our plant to VBV, who will market all of the ethanol produced at our plant and be responsible for all transportation of the ethanol including, without limitation, the scheduling all shipments of ethanol with us. The ethanol sold must meet or exceed the quality specifications set forth in ASTM 4806 for Fuel Grade ethanol or standards promulgated in the industry. Under the Ethanol Marketing Agreement, we will provide VBV with annual production forecasts and monthly updates, as well as daily plant inventory balances. We will also be responsible for compliance with all federal, state and local rules relating to the shipment of ethanol from our plant.

The price per gallon that we will receive for our ethanol will be based on the contract selling price less all direct costs (on a per gallon basis) incurred by VBV in conjunction with the handling, movement and sale of the ethanol. VBV and Homeland Energy will determine together the estimated monthly netback (on a per gallon basis) for each month. The establishment of the estimated monthly netback will be on the first business day of the month with the intention being to establish the estimated monthly netback to be within $.05 of the final actual netback (on a per gallon basis) for the month. In addition, we will pay VBV a commission for each gallon of ethanol sold to VBV under the Ethanol Marketing Agreement. The Ethanol Marketing Agreement may be terminated upon a material breach of any material obligation under the agreement by either party or upon willful misconduct by either party.

On August 8, 2008, we entered into a Distiller’s Grains Marketing Agreement (DG Marketing Agreement) with CHS, Inc. (CHS), wherein CHS will purchase the distillers grains produced at our plant. The initial term of the DG Marketing Agreement will be for one year, beginning with start-up of operations and production at the plant. After the initial one-year term, it will be automatically renewed for successive one year terms unless either we or CHS give 120 day prior written notice before the current term expires.

The DG Marketing Agreement may be terminated by either party in the event of default, which include: (a) failure of either party to make payment to the other when due; (b) default by either party in the performance of the their respective obligations; and (c) upon the insolvency of either CHS or Homeland Energy or upon the assignment to creditors in connection with bankruptcy. If an event of default occurs, the parties will have certain remedies available to them in addition to any remedy at law, such as all amounts owed being immediately payable or immediate termination of the DG Marketing Agreement.

CHS will pay us 98% of the actual sale price received by CHS from its customers, less all of the customary freight costs incurred by CHS in delivering the distillers grains to the customer. CHS will retain the balance of the FOB plant price received by CHS from its customers as its fee for services provided under this agreement.

Commodities Account

In order to reduce risk caused by market fluctuations, we have opened a commodities trading account with ADM Investor Services, Inc. (ADMIS). We plan to begin trading on the account during the fourth quarter of 2008 to prepare for start-up of operations. This activity is intended to fix the purchase price of our anticipated requirements of corn in production activities. Under the Customer Agreement governing the account, ADMIS will serve as our broker for the purchase and sale of commodity futures contracts for corn, and will enter into transactions and exercise commodity options for our account in accordance with our written or oral instructions. We will be required to maintain adequate margins in our account to continue to meet the margin requirements established by ADMIS, which may exceed the margin requirements by any commodity exchange or other regulatory authority. If we do not maintain adequate margins, ADMIS may close out on any of our positions or to transfer funds from other accounts of ours to cover the margin. In addition, if we are unable to deliver any security or commodity bought or sold, ADMIS has authority to borrow or buy any security, commodity or other property to meet the delivery requirement. Any dispute or controversy arising out of our account with ADMIS will be settled by arbitration.

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The effectiveness of our strategies through our commodities account is dependent upon the cost of corn and our ability to sell sufficient products to use all of the corn for which we have futures contracts. There is no assurance that our activities will successfully reduce the risk caused by price fluctuation, which may leave us vulnerable to high corn prices.

Management and Employees

As of January 1, 2008, Deanna Eastman, the spouse of our director and President, Stephen K. Eastman, became an employee of Homeland, where previously she was retained as an independent contractor providing various project administration and development duties. We continue to retain our construction manager, Mark W. Zuehlke, through a local union, to oversee construction at our plant site. Mr. Zuehlke’s contract extends until May 2009.

We are currently seeking a Chief Executive Officer/Plant Manager and other key employees as construction progresses and we get closer to plant start-up.

Permitting and Regulatory Activities

We are subject to extensive air, water and other environmental regulation and we have obtained the required environmental permits to commence construction of the plant. We will be required to obtain additional permits and have various plans in place prior to the start-up of operations. Currently, we do not anticipate a problem receiving our remaining required environmental permits. However, if for any reason any of these permits are not granted, production at our plant may be delayed or discontinued and you may lose some or all of the value of your investment. The following is a summary of the permits that we have received as of the date of this report and those permits and plans that will be required prior to start-up of operations:

Environmental Permits Obtained as of the Date of this Report:

• Title V Construction Air Permit

• Construction Site Storm Water Discharge Permit

• Potable Water Well Usage Permit

Environmental Permits and Plans yet to be Obtained or Developed that must be in Place Prior to the Start of Operations:

• NPDES (National Pollutant Discharge Elimination System) Wastewater Discharge Permit: We have submitted our application for this permit with the Iowa Department of Natural Resources (IDNR) and are currently working with the IDNR to finalize the conditions of the permit.

• Title V Operating Air Permit: We will apply for this permit after we have been operational for one year. Our Title V Construction Permit covers our operations for the first year. Our emissions during the first year will be utilized to determine the conditions that will be placed in the Title V Operating Air Permit. While we do not anticipate any problems with obtaining our Title V Operating Air Permit, there is a risk that the IDNR would reject our Title V air permit application and request additional information, which could delay or stall our operations.

• New Source Performance Standards: By applying for and obtaining our Title V Construction Air Permit, we are currently in compliance with these standards.

• Storm Water Discharge Permit and Storm Water Pollution Prevention Plan (SWPPP Permits): We anticipate that these permits and plans will be applied for and completed as we get closer to completion of construction and start-up of operations. We do not anticipate any problems with obtaining and completing these permits and plans.

• Spill Prevention, Control and Countermeasures Plan: We anticipate that this plan will be completed as we get closer to completion of construction and start-up of operations. We do not anticipate any problems with obtaining this permit.

• High Capacity Well Permit: We have submitted our application for our permits for our production wells and expect them to be granted when the plant nears completion and we are ready for start-up of operations.

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• Alcohol Fuel Producer’s Permit: This will be applied for prior to start-up of operations. We do not anticipate any problems with obtaining this permit.

• Risk Management Plan: We plan to complete our Risk Management Plan as we get closer to start-up of operations.

Plan of Operations Regarding Coal Gasification

As construction of our ethanol plant progresses, we plan to continue to explore our options for incorporating a coal gasification energy center into our plant as an alternative to natural gas as our energy source. Management believes it may be in our best interests to install a coal gasification energy system to power the plant. This option would allow us to operate on both natural gas and coal gasification. We may decide to postpone implementation until we have a history of operations and can use earnings from plant operations to help finance the cost; however, there is no assurance or guarantee that we will generate sufficient earnings to undertake this project.

We have been in negotiations with various companies regarding the development and construction of a coal gasification energy center, including Econo Power International Corporation (“EPIC”) with whom we have discussed a possible joint venture for the construction/operation of a coal gasification energy center. On December 3, 2007, we entered into a Coal to Fuel Conversion Agreement with Homeland Gasification, LLC (“Homeland Gas”), which would be a joint venture with EPIC. Under the anticipated joint venture, Homeland Gas would construct a coal gasification facility that would utilize EPIC technology to convert coal to fuel gas to provide process energy for our plant. Both EPIC and Homeland Energy would contribute funds to finance the construction of the energy center.

However, there are a number of contingencies in place which must be satisfied before Homeland Gas’s obligations arise under the Coal to Fuel Gas Conversion Agreement, including but not limited to the receipt of all of the necessary licenses, permits and other approvals required for the facility, funding of the facility, and approval of our Board of Directors. Under the terms of the agreement, if all of the conditions were not met by March 31, 2008, then either we or Homeland Gas has the power to terminate the Coal Conversion Agreement upon 10 days written notice. As of the date of this report, the agreement has not been terminated, but we do not have any agreements in place for the financing or construction of a coal gasification energy center and there is no guarantee that we will be able to enter into any such agreements in the future. However, if the agreement is terminated, we would be obligated to pay $10,000 to Homeland Gas for engineering and project development costs.

Coal fueled facilities of this scale would require a continuous and large supply of coal. The transportation, handling and storage costs of such material may not be cost-effective. We have given COALTRADE, LLC authority to negotiate on our behalf the delivery of coal into our facility and to use a potential coal distribution center at the plant should we determine to install a coal gasification energy center. However, we do not have a definitive agreement with any supplier of coal and we do not know if it is possible to use coal without incurring significant operational and regulatory costs. If we decide to use coal, there may be significant environmental risks that may require us to install additional safety precautions.

Results of Operations for the Three Months Ended June 30, 2008

We are not yet operational and therefore have no revenue from operations. We anticipate that we will be operational by April, 2009; however, there is no guarantee or assurance that we will not encounter additional delays in construction. We will not have revenue to report until our plant is operational.

Trends and Uncertainties Impacting our Future Operations

Upon the successful completion and start-up of operations of our ethanol plant, we expect our future revenues will consist primarily of proceeds from the sale of ethanol and distillers grains, with ethanol sales constituting the bulk of our revenues. Historically, the demand for ethanol increased relative to supply, which caused ethanol market prices to increase. Increased demand, firm crude oil and gas markets, public acceptance and positive political signals contributed to those strong ethanol prices. However, the year 2007 marked a significant increase in the number of ethanol plants entering production and the industry experienced transportation and logistics problems, causing downward pressure on the industry.

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To date, ethanol production continues to rapidly grow as additional plants and expansions become operational. According to the Renewable Fuels Association, as of July 24, 2008, 162 ethanol plants were producing ethanol with the capacity to produce more than 9.4 billion gallons annually. Additionally, approximately 41 ethanol plants are under construction, along with 7 existing plants undergoing expansions. The plants under construction and expansion are expected to increase total ethanol production capacity by more than 4.2 billion gallons. Accordingly, if demand for ethanol does not grow in relation to the increase in supply, the price of ethanol may trend lower which would negatively impact our earnings. With the increase in the price of crude oil during the first part of calendar year 2008, ethanol prices experienced a corresponding increase beginning in the latter part of calendar year 2007 through the first half of 2008. However, in early August, 2008, ethanol futures and spot prices fell along with a drop in crude oil prices. Ethanol prices could be pressured further due to increased ethanol availability along with lower gasoline prices and a reduction in the price of corn from its record highs shortly after the severe flooding experienced in the corn-producing Midwestern region. Management believes the industry will need to continue to grow demand to meet the increased supply and have governmental support in order for the industry to continue to realize higher ethanol prices.

According to the Renewable Fuels Association, ethanol demand during 2007 reached more than 6.8 billion gallons, an increase from the nearly 5.4 billion gallons of demand in 2006. However, the current production capacity of the ethanol industry surpasses the 2007 ethanol demand significantly. The ethanol industry must continue to grow demand and expand ethanol blending facilities in order to increase demand for ethanol at a similar rate to the increase in ethanol supply.

We expect to benefit from federal ethanol supports and federal tax incentives. Changes to these supports or incentives could significantly impact the demand for ethanol and could negatively impact our business. The RFS is a national flexible program that mandates a certain amount of renewable fuels be utilized, but does not mandate a specific blending formula in any particular area or state, allowing refiners to use renewable fuel blends in those areas where it is most cost-effective. The RFS has led to significant new investment in ethanol production across the country. The Energy Independence and Security Act of 2007 set the RFS requirement for 2008 at 9 billion gallons. The RFS will progressively increase to a 36 billion gallon requirement by 2022. The RFS caps grain-based ethanol, such as the ethanol we produce, at 15 billion gallons per year starting in 2015. In addition, the RFS requires that a significant portion of these 36 billion gallons come from “advanced” renewable fuels, such as cellulosic ethanol.

There has been some pressure to reduce the RFS as some members of the public believe the increased demand for ethanol due to the RFS requirements is raising corn prices for livestock producers. Governor Rick Perry of Texas recently requested that the United States Environmental Protection Agency (EPA) reduce the RFS requirement for September 1, 2008 — August 31, 2009 from 9 billion gallons to 4.5 billion gallons. However, on August 7, 2008, the EPA announced that it denied Governor Perry’s waiver request. As a result, the RFS for that time period will remain at 9 billion gallons. However, there could be similar requests in the future and we cannot guarantee the EPA will deny any such request.

On June 18, 2008, the United States Congress overrode a presidential veto to approve the Food, Conservation and Energy Act of 2008 (the “2008 Farm Bill”) and to ensure that all parts of the 2008 Farm Bill are enacted into law. Passage of the 2008 Farm Bill reauthorizes the 2002 farm bill and adds new provisions regarding energy, conservation, rural development, crop insurance as well as other subjects. The energy title continues the energy programs contained in the 2002 farm bill but refocuses certain provisions on the development of cellulosic ethanol technology. The new legislation provides assistance for the production, storage and transport of cellulosic feedstocks and provides support for ethanol production from such feedstocks in the form of grants, loans and loan guarantees. The 2008 Farm Bill also modifies the ethanol fuels credit from 51 cents per gallon to 45 cents per gallon beginning in 2009. The bill also extends the 54 cent per gallon ethanol tariff on imported ethanol for two years, to January 2011.

However, there is currently some debate in the U.S. Senate about whether to repeal the 54 cent per gallon tariff on imported ethanol. If the 54 cent per gallon tariff is repealed, the demand for domestically produced ethanol may be offset by the supply of ethanol imported from Brazil or other foreign countries. In addition, a Brazilian trade group has announced its intent to ask the World Trade Organization (WTO) to initiate proceedings and discussions with the United States regarding the 54 cent per gallon tariff on imported ethanol. If either of these debates results in a reduction or elimination of the tariff, the supply of ethanol available to U.S. refiners would likely increase as a result of increased imports of ethanol. Such an increase in supply could have a negative impact on the price of ethanol and our expected revenues.

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In 2006, Iowa passed legislation promoting the use of renewable fuels in Iowa. One of the most significant provisions of the Iowa renewable fuels legislation is a renewable fuels standard encouraging 10% of the gasoline sold in Iowa to be from renewable fuels by 2009, increasing incrementally to 25% by 2019. This could increase local demand for ethanol significantly and may increase the local price for ethanol. However, these incentives will also likely lead to additional ethanol production in Iowa and to a corresponding increase in competition for raw materials in Iowa.

Consumer resistance to the use of ethanol may affect the demand for ethanol which could affect our ability to market our product and which could have a negative impact on our future revenues. According to media reports in the popular press, some consumers believe the use of ethanol will have a negative impact on retail gasoline prices. Many also believe that ethanol adds to air pollution and harms car and truck engines, and that the process of producing ethanol actually uses more fossil energy than is produced. In addition, recent high corn prices have added to consumer backlash against ethanol, as many blame ethanol for high food prices. These consumer beliefs could potentially be wide-spread. If consumers choose not to buy ethanol, it could negatively affect our ability to sell our product and may negatively impact our profitability.

Increased ethanol production has led to increased availability of distillers grains. Further increases in the supply of distillers grains could reduce the price we will be able to charge for our distillers grains. This could have a negative impact on our revenues.

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

We expect our future cost of goods sold will consist primarily of the costs relating to the corn and natural gas supplies necessary to produce ethanol and distillers grains for sale. Due to heavy rainfall and flooding that occurred in May and June in the Midwest, analysts were predicting a low corn crop due to the devastation of many acres of planted corn, which caused corn futures prices to increase significantly. However, on August 12, 2008, the United States Department of Agriculture (USDA) released its World Agriculture Supply and Demand Estimates, and the report predicts the second-highest corn yield on record with production of about 12.3 billion bushels. This estimate is about 600 million bushels more than it had expected earlier this summer. The higher corn yield has been attributed to favorable weather conditions later in the summer for the corn crop. Prices on corn futures have also decreased in recent weeks.

While the total production of corn may be higher than expected after the flooding damage, it is possible that local corn production will continue to be impacted by the flooding in the area, which could drive up the price for our corn. In addition, according to a July 11, 2008 report from the USDA, the 2008 corn acres planted is down 6.7% from 2007, when corn acreage planted was the highest since 1944. The USDA attributes the decrease in expected acreage to favorable prices for other crops, high input costs for corn and crop rotations. Although we do not expect to begin operations until the second quarter of 2009, with less acreage anticipated, we expect we expect continued volatility in the price of corn, which could significantly impact our cost of goods sold. The growing number of operating ethanol plants nationwide will also likely increase the demand for corn, which will likely drive the price of corn upwards. This would impact our ability to operate profitably.

Natural gas will also be an important commodity to our production process. Recently, natural gas prices have been higher than in recent periods as energy prices in general have increased this summer. Any sustained increase in the price level of natural gas will increase our cost of production and will negatively impact our future profit margins.

Technology Developments

Due to the current high corn prices, discussion of cellulose based ethanol has recently increased. Public criticism of the ethanol industry may lead to more pressure to produce ethanol from sources other than corn due to this negative public sentiment regarding the use of corn for ethanol production. Cellulosic ethanol is ethanol that is produced using cellulose as the feedstock instead of corn. Cellulose is the main component of plant cell walls and is the most common organic compound on earth. Cellulose is found in wood chips, corn stalks, rice straw, amongst other common plants. Currently, technology for the production of cellulosic ethanol is in its infancy.

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However, the Energy Independence and Security Act of 2007 provides for significant investment in the production of advanced biofuels, as well as for the research and development of cellulosic ethanol production technologies. Several companies and researchers have commenced pilot projects to study the feasibility of commercially producing cellulosic ethanol. If this technology can be profitably employed on a commercial scale, it could potentially lead to ethanol that is less expensive to produce than corn based ethanol, especially if corn prices remain high. Cellulosic ethanol may also capture more government subsidies and assistance than corn based ethanol. This could decrease demand for our product or result in competitive disadvantages for our ethanol production process as our plant is not designed to produce cellulosic ethanol. Our plant would likely not be easily converted to producing ethanol from cellulose.

Liquidity and Capital Resources

We expect to be able to satisfy our cash requirements for the next 12 months using our equity financing, senior credit facility, and grant funds. We are exploring our options for incorporating a coal gasification energy center. If we decide to proceed with a coal gasification energy center, we may conduct an offering of our units in the future for the purpose of funding the center. However, we do not expect to have to raise additional funds within the next 12 months to complete construction of our plant utilizing natural gas as our energy source.

Financial Results for our Fiscal Quarter Ended June 30, 2008

As of our fiscal quarter ended June 30, 2008, we have total assets of approximately $105,414,000 consisting primarily of cash and cash equivalents, construction in progress and land. We have current liabilities of approximately $13,058,000 consisting primarily of accounts payable and retainage payable. Total members’ equity as of June 30, 2008, was approximately $92,181,000. Since our inception through our fiscal quarter ended June 30, 2008, we have generated no revenue from operations. For the fiscal quarter ended June 30, 2008, we had net income of approximately $135,000 from interest earned on our equity proceeds.

Estimated Sources of Funds

We have issued 2,850 membership units in two private placement offerings for a total of $1,325,000 in offering proceeds. We have also issued 88,595 units in our SEC registered offering for an aggregate amount of $88,595,000 in offering proceeds. The registered offering proceeds are available to us for construction and other development expenses, as well as the interest earned on those proceeds. The following schedule sets forth our estimated sources of funds to build and fund the start up of operations of our proposed ethanol plant to be located near New Hampton, Iowa. This schedule could change in the future depending on whether we receive additional grants or debt financing.

Sources of Funds			Percent
Seed Capital Proceeds (1)	$	1,325,000		0.71	%
Registered Unit Proceeds (2)	$	88,595,000		47.32	%
Senior Debt Financing (3)	$	94,000,000		50.20	%
Interest on Registered Unit Proceeds (4)	$	3,315,000		1.77	%
Total Sources of Funds (5)	$	187,235,000		100.00	%

(1)	We have issued a total of 2,850 units to our founders and seed capital investors in previous private placement offerings in exchange for proceeds of $1,325,000.
(2)	As of the close of our registered offering on November 30, 2007, we issued 88,595 membership units in exchange for proceeds of $88,595,000.

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(3)	We have entered into a definitive agreement with Home Federal Savings Bank for a Construction Loan of up to $94,000,000 (of which $20,000,000 may be converted into a Term Revolving Loan upon start-up of operations). In addition, we will have available to us a Revolving Line of Credit Loan in an amount not to exceed $6,000,000, which will be available upon start-up of operations.
(4)	As of June 30, 2008, we had earned approximately $3,315,000 in interest on our equity proceeds.
(5)	Our total sources of funds is expected to be sufficient to cover our estimated project cost of $173,860,000 as well as to cover the $10,000,000 debt service reserve that we are required to maintain under our senior debt financing with Home Federal Savings Bank.

Estimated Use of Proceeds

We expect the project to cost approximately $173,860,000 to complete. In addition, we are required to maintain a $10,000,000 debt service reserve that will serve as part of the collateral for our senior debt financing loans. The following table reflects our estimate of costs and expenditures, as of the date of this report, for the ethanol plant we are building near New Hampton, Iowa. These estimates are based on discussions with our design-builder, Fagen, Inc., our technology provider, ICM Inc., our lenders and management research. The following figures are intended to be estimates only, and the actual use of funds may vary significantly from the descriptions given below due to a variety of factors described elsewhere in this report. As the project progresses, any material changes will be reflected in our budget.

			Percent of
Use of Proceeds	Amount		Total
Plant construction (1)	$	120,460,000		69.29	%
Land cost		3,500,000		2.01	%
Site development costs		5,670,000		3.26	%
Pipeline costs		4,000,000		2.30	%
Construction contingency(2)		1,985,000		1.14	%
Construction insurance costs		380,000		0.22	%
Construction manager fees		125,000		0.07	%
Administrative building		1,020,000		0.59	%
Office equipment		85,000		0.04	%
Computers, Software, Network		175,000		0.10	%
Rail Infrastructure		11,000,000		6.33	%
Rolling stock		500,000		0.29	%
Fire Protection, water supply and water treatment		3,500,000		2.01	%
Capitalized interest		4,000,000		2.30	%
Start up costs:
Financing costs		1,200,000		0.69	%
Organization costs (3)		1,400,000		0.80	%
Pre production period costs		950,000		0.56	%
Working capital		7,000,000		4.03	%
Inventory — corn		2,660,000		1.53	%
Inventory — chemicals and ingredients		500,000		0.29	%
Inventory — Ethanol		2,500,000		1.43	%
Inventory — DDGS		500,000		0.29	%
Spare parts — process equipment		750,000		0.43	%
Total	$	173,860,000		100.00	%

(1)	On March 26, 2008, we entered into a change order with our design-builder, Fagen, Inc., for additional work, design and materials required to provide and install larger heat recovery steam generator units, resulting in an increase in plant construction costs of approximately $587,000. However, due to subsequent change orders, the contract price at June 30, 2008 was reduced to approximately $120,460,000.
(2)	Our construction contingency has been adjusted to reflect the changes to our Contract Price with Fagen, Inc.
(3)	Includes estimated offering expenses of $347,000.

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Short-Term and Long-Term Debt Sources

On November 30, 2007, we entered into a Master Loan Agreement with Home Federal Savings Bank (“Home Federal”) establishing a senior credit facility for the construction of our plant. The Master Loan Agreement provides for (i) a Construction Loan in an amount not to exceed $94,000,000; and (ii) a Revolving Line of Credit Loan in an amount not to exceed $6,000,000 (the foregoing collectively referred to as the “Loans”). Our loan obligations are secured by all of our real and personal property, and we have also assigned all rents and leases of our property to Home Federal.

Under the terms of the Construction Loan, Home Federal agreed to lend us up to $94,000,000 for our project costs at an interest rate equal to the LIBOR rate plus 350 basis points. We also agreed to the terms of a Revolving Line of Credit Loan consisting of a maximum $6,000,000 revolving line of credit, which will be subject to certain conditions including completion of the project. Interest on the Revolving Line of Credit Loan will accrue at a rate equal to the LIBOR rate plus 325 basis points.

During the terms of the Loans, we will be subject to certain financial covenants including requirements regarding working capital, minimum tangible net worth and maximum debt coverage ratios. Failure to comply with protective loan covenants or maintain the required financial ratios may cause acceleration of the outstanding principal balances on the loans and/or imposition of fees, charges or penalties. Upon the occurrence of an event of default or an event which will lead to our default under the Loans, Home Federal may, upon notice, terminate its commitment to loan funds and declare the entire unpaid principal balance of the Loans, plus accrued interest, immediately due and payable.

Grants and Government Programs

We have received a grant from the Iowa Corn Promotion Board in the amount of $25,000 for the preparation of our feasibility study and legal fees during our equity drive.

In addition, on December 19, 2007, the Iowa Department of Economic Development has approved us for a package of benefits, provided we meet and maintain certain requirements. The package provides for the following benefits: (1) a $100,000 forgivable loan and a $100,000 interest-free loan under the Iowa Value-Added Agricultural Products and Processes Financial Assistance Program; (2) a grant of $240,000 under the Revitalize Iowa’s Sound Economy program for the construction of a turning lane off of Iowa Highway 24 to the plant; and (3) the following tax incentives under the High Quality Jobs Program from the State of Iowa:

• Refund of the sales, service and use taxes paid to contractors and subcontractors during the construction phase of the plant (estimated at $4,289,600);

• Investment tax credit up to $10,000,000 for qualifying expenditures directly related to new jobs created by the plant; and

• Local value-added property tax exemption for all or a portion of the value added by improvements to real property directly related to new jobs created by the plant (estimated at $10,350,000).

In order to receive these benefits, we will be required to create at least 40 full-time employee positions meeting certain minimum wage and benefit criteria and these jobs must be maintained for at least two years following project completion. In addition, we may be ineligible for some or all of these benefits if we do not install a coal gasification energy center at our plant. We have until May 17, 2010 to satisfy these and other requirements. If we fail to meet the participation requirements of the HQJ Program, we may have to repay to the local taxing authority and the Iowa Department of Revenue and Finance a portion of or the total value of any incentives received.

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Grants and Government Programs for Coal Gasification

We have received a $40,000,000 loan guarantee from the United States Department of Agriculture (“USDA”) under the Rural Energy Program. This guarantee is contingent upon the construction of a coal gasification energy center at our plant. If we determine to install a coal gasification energy center, we plan to use the guarantee to attract additional debt financing to help fund the energy system. However, the conditional guarantee will expire on November 29, 2008, unless it is further extended by the USDA.

We have also applied to the Iowa Power Fund for approximately $8,000,000 in funds to help finance the construction of a coal gasification energy center. The Iowa Power Fund is a $100,000,000 state fund with the purpose of expanding Iowa’s renewable energy industry and research and development of new technologies around the renewable fuels industry. The fund created an Office of Energy Independence governed by a board, which will evaluate applications and award funds to renewable energy projects in the state of Iowa. The Iowa Power Fund will distribute $25,000,000 to projects in 2008 and an additional $75,000,000 over the next three years. There is no guarantee that we will receive all $8,000,000 in funds that we have applied for and it is possible that we will not receive any award from the Iowa Power Fund.

Critical Accounting Estimates

Management uses estimates and assumptions in preparing our financial statements in accordance with generally accepted accounting principles, such as estimates related to construction in progress. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures about Market Risks

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

Item 4. Controls and Procedures.

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

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

At the end of the period covered by this report, an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”) was carried out under the supervision and with the participation of our Principal Executive Officer, Stephen Eastman, and our Principal Financial and Accounting Officer, Bernard Retterath. Based on their evaluation of our disclosure controls and procedures, they have concluded that during the period covered by this report, such disclosure controls and procedures were not operating effectively during the period covered by this report. Specifically, the controls and procedures were not effective to detect the inappropriate application of US GAAP standards, and the flow of information and documentation among management was not sufficient to ensure reportable developments are timely reported and included in the footnotes to the financial statements. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our disclosure controls and that may be considered to be “material weaknesses.”

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Homeland Energy Solutions has formed an audit committee and that committee will increase its review of our disclosure controls and procedures. In the future, we intend to hire personnel qualified in the areas of accounting and financial management. We have also engaged an external accounting firm to assist us with our review of financial information relative to our financing arrangements. Finally, we have designated individuals responsible for identifying reportable developments. We believe these actions will remediate the material weakness by focusing additional attention and resources in our internal accounting functions. However, the material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Except as set forth above, there have been no changes in our internal control over financial reporting that occurred during our fiscal quarter ended June 30, 2008 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

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

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

The following is a breakdown of units registered and units sold in our registered offering:

Amount		Aggregate price of the		Amount		Aggregate price of the
Registered		amount registered		Sold		amount sold
	110,000	$	110,000,000		88,595	$	88,595,000

Our total expense related to the registration and issuance of these units was approximately $347,000, which was netted against the offering proceeds when the units were issued and the offering proceeds were released from escrow in November 2007. All of these expenses were direct or indirect payments to unrelated parties. Our net offering proceeds, after deduction of expenses were approximately $88,248,000. The following table describes our approximate use of net offering proceeds from the date of effectiveness of our registration statement (November 30, 2006, commission file no. 333-135967) through our quarter ended June 30, 2008:

Plant Construction(1)	$	67,975,000
Financing Costs(2)	$	1,173,000
Real Estate Purchases and Land Improvements(3)	$	9,100,000
Repayment of Indebtedness(4)	$	4,900,000
Other Expenses(5)	$	575,000
Total	$	83,723,000

(1)	This includes approximate expenses incurred as of June 30, 2008 for plant construction, road construction and other miscellaneous equipment and construction costs.
(2)	We incurred approximately $1,173,000 in bank origination/loan fees for our senior debt financing and bridge loan.

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(3)	We have paid approximately $3,600,000 to purchase the land and to extend land options for our plant site and approximately $5,500,000 to improve the land as of June 30, 2008.
(4)	We incurred approximately $4,900,000 for the repayment of our bridge loan.
(5)	This includes payments to director Pat Boyle under his Project Development Agreement, as well as our employee, Deanna Eastman, and our Construction Manager, Mark W. Zeuhlke.

All of the foregoing payments were direct or indirect payments to persons or entities other than our directors, officers, or unit holders owning 10% or more of our units, except for payment to Pat Boyle of approximately $20,000 under the project development agreement between Mr. Boyle and the Company.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

We did not submit any matter to a vote of our unit holders through the solicitation of proxies or otherwise during the second fiscal quarter of 2008.

Item 5. Other Information.

None.

Item 6. Exhibits.

The following exhibits are included herein:

Exhibit No.	Description
10.1	Ethanol Marketing Agreement with VBV, Inc. dated August 14, 2008+
10.2	Distiller’s Grain Marketing Agreement with CHS, Inc. dated August 8, 2008
10.3	Rail Facilities Agreement with R & R Contracting dated July 24, 2008
10.4	Customer Agreement with ADM Investor Services, Inc. dated July 29, 2008.
31.1	Certificate Pursuant to 17 CFR 240.15d-14(a).
31.2	Certificate Pursuant to 17 CFR 240.15d-14(a).
32.1	Certificate Pursuant to 18 U.S.C. § 1350.
32.2	Certificate Pursuant to 18 U.S.C. § 1350.

(+) Material has been omitted pursuant to a request for confidential treatment and such materials have been filed separately with the Securities and Exchange Commission.

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SIGNATURES

In accordance with the requirements of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	HOMELAND ENERGY SOLUTIONS, LLC
August 14, 2008	/s/ Stephen K. Eastman
	Stephen K. Eastman, Principal Executive Officer
August 14, 2008	/s/ Bernard Retterath
	Bernard Retterath , Principal Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description
10.1	Ethanol Marketing Agreement with VBV, Inc. dated August 14, 2008+
10.2	Distiller’s Grain Marketing Agreement with CHS, Inc. dated August 8, 2008
10.3	Rail Facilities Agreement with R & R Contracting dated July 24, 2008
10.4	Customer Agreement with ADM Investor Services, Inc. dated July 29, 2008.
31.1	Certificate Pursuant to 17 CFR 240.15d-14(a).
31.2	Certificate Pursuant to 17 CFR 240.15d-14(a).
32.1	Certificate Pursuant to 18 U.S.C. § 1350.
32.2	Certificate Pursuant to 18 U.S.C. § 1350.

(+) Material has been omitted pursuant to a request for confidential treatment and such materials have been filed separately with the Securities and Exchange Commission.

34

EX-10.1

Exhibit 10.1

***Portions omitted pursuant to a request for confidential treatment and filed separately with the
Securities and Exchange Commission.***

VBV ETHANOL MARKETING AGREEMENT

This Ethanol Marketing Agreement (“Agreement”) is made and entered into as of this 14th day of August, 2008 by and between Homeland Energy Solutions, LLC (“HES”), an Iowa Limited Liability Company, and VBV, LLC., a Delaware Limited Liability Company (“VBV”) (each a “Party”, and collectively the “Parties”).

In consideration of the mutual terms and conditions contained herein, the Parties agree as follows:

1. Term and Termination: The initial term of this Agreement (the “Initial Term”) shall commence on the date hereof and shall continue for [*] from the first day of the first month commencing after the date of the first Bill of Lading delivered hereunder and thereafter. Following the Initial Term, this Agreement shall automatically renew for successive [*] terms (each a “Renewal Term”), unless terminated on the expiration date of the Initial Term or any Renewal Term, in each case by either Party with at least [*] days written notice prior to such expiration date.

Notwithstanding the foregoing, in the event either Party is in material breach of any material obligation under this Agreement (the “Breaching Party”), the other Party (the “Non-Breaching Party”) shall have the right to terminate this Agreement by proceeding as follows: The Non-Breaching Party shall provide written notice to the Breaching Party of such breach of such obligation, which notice shall include a reasonable detailed description of such breach of such obligation. The Breaching Party shall have thirty (30) days from receipt of such notice to remedy such breach, or in the case of a breach involving a failure to make any payments which are required by this Agreement by the due date, then the Breaching Party will have three (3) days after receiving the written notice to cure the breach (in either case, the “Cure Period”). If the Breaching Party remedies such breach within the applicable Cure Period, this Agreement shall not terminate but rather shall continue in full force and effect. If the Breaching Party does not remedy such breach within the applicable Cure Period, this Agreement may, at the option of the Non-Breaching Party, be immediately terminated at any time within the sixty (60) days following the end of the applicable Cure Period, upon prior written notice from the Non-Breaching Party to the Breaching Party. The failure of the Non-Breaching Party to so terminate this Agreement within such sixty (60) day period shall be deemed a waiver of such termination option with respect to the breach in question.

* Portion omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission.

In addition to the foregoing, this Agreement may be terminated under the following circumstances: (a) if either party engages in willful misconduct reasonably likely to resulting significant adverse consequences to the other party, the party harmed or likely to be harmed by the misconduct may immediately terminate this Agreement upon written notice to the party engaging in the misconduct; [*].

2. Quantity and Quality:

A. HES shall sell exclusively to VBV and VBV shall purchase from HES the total output of fuel grade ethanol (“Ethanol”) produced at HES’s New Hampton, Iowa facility (“Plant”), currently anticipated being one-hundred and ten (110) million gallons per year. Ethanol shall be delivered FOB the Plant, and title shall pass at the Title Transfer Point (as defined in Section 5.C.). Ethanol produced for the intended use as an alternative or racing fuel shall not be excluded from this Agreement.

B. Such Ethanol shall meet or exceed the quality specifications set forth in ASTM 4806 for Fuel Grade ethanol or changes as promulgated on the industry. The ASTM 4806 specifications are attached hereto and made a part hereof as Exhibit “A”. VBV shall have the right to change such quality specifications from time to time in order to meet industry standards. VBV shall have the right to reject any Ethanol which does not meet such specifications.

3. VBV shall:

A. Market all of the Ethanol produced by HES at the Plant, at the price outlined in Section 5;

B. Remit payment to HES for the Ethanol as provided in Section 5; and

C. Be responsible for all transportation of the Ethanol including, without limitation, the scheduling all shipments of Ethanol with HES.

4. HES shall:

A. Provide to VBV on a timely basis annual production forecasts, monthly updates to the rolling twelve month production forecasts, monthly updates, daily plant inventory balances and shipment information, and other information reasonably requested by VBV; HES shall use its commercially reasonable efforts to meet the monthly production targets reflected in the then-current annual production forecast;

B. Notify VBV promptly of any material unscheduled shut-down, suspension or significant decrease in production at the Plant that was not reported in the rolling twelve month production forecasts or monthly updates provided under Section 4.A. above;

* Portion omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission.

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C. Provide to VBV specifications and certificates of analysis of the Ethanol sold to VBV that are consistent with the specifications referred to in Section 2.B. above; HES shall, at its expense, provide or cause to be provided all testing and related test equipment at or in the vicinity of the Plant to determine compliance with such specifications and VBV or its representative shall, at VBV’S expense, have the right to perform periodic tests to determine compliance with such specifications.

D. Be responsible for compliance with all federal, state and local rules, regulations and requirements regarding the shipment of Ethanol from the Plant, including but not limited to, all U.S. Department of Transportation (“DOT”) requirements relating to shipment of hazardous materials (e.g. proper paperwork, railcars meeting DOT requirements, etc.).

E. Provide for a minimum of [*] days storage based on nameplate capacity of 110 MGPY on HES’s premises;

F. For all gallons sold to VBV, use certified meters or weight-scales that provide both gross and net 60° Fahrenheit temperature compensated gallons; and

G. Provide any of the information to be provided by HES pursuant to this Section 4 to VBV electronically in data form, if such information is available in such form.

5. Marketing/Pricing/Risk of loss/Payment

A. Marketing: Since VBV shall have the exclusive rights to market all of the fuel grade Ethanol produced by HES, VBV agrees to use its commercially reasonable efforts to market all such fuel grade Ethanol and be totally responsible for the marketing, sale and delivery of all the production from HES’s facility during the term of this agreement, including, but not limited to:

• Obtaining and scheduling sufficient railcar, tank trucks and other transport as may be needed to handle said production;

• Negotiating the rates and tariffs to be charged for delivery of such production to the customer;

• Promoting and advertising the sale of fuel grade ethanol as appropriate;

• Ascertaining that such production is delivered where contracted and intended;

• Handling all purchase agreements with consumers and any complaints in connection therewith; and

• Collecting all accounts and undertaking any legal collection procedures as may be necessary.

* Portion omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission.

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B. Sales Price: VBV will use its commercially reasonable efforts to obtain the best price for all fuel grade ethanol offered to be bought and reported to the designated person within HES in a timely manner such intent to buy. VBV agrees to use its commercially reasonable efforts to communicate with HES the terms and conditions of all bids for the ethanol associated with this production facility prior to the entering of any contracts obligating HES to such contract, provided that HES has given its consent, written or verbal, to enter into such contract. To the extent HES does not agree to any bids presented by VBV, VBV shall be relieved of any obligations hereunder to market such Ethanol. The per gallon price HES shall receive for the Ethanol sold to VBV under this Agreement shall be based on the Net Selling Price. Net Selling Price for each gallon sold is (the “Netback”): the contract selling price less all direct costs (on a per gallon basis) incurred by VBV in conjunction with the handling, movement and sale of such ethanol, including but not limited to terminal lease charges, throughput charges, terminal shrinkage costs, freight charges, tariffs, costs of leasing railcars, trucks, river barges and ocean going vessels (all at cost), government taxes and assessments, insurance, inspection fees, and working capital carrying costs (to be shown as a separate line item on the end of month calculation for the Equalized Netback), costs of purchasing and delivering replacement ethanol due to lost or interrupted ethanol production and other costs. VBV and HES shall jointly determine the estimated monthly Netback (on a per gallon basis) (the “Estimated Monthly Netback”) for each month. The establishment of the Estimated Monthly Netback will be on the first business day of the month with the intention being to establish the Estimated Monthly Netback to be within $.05 of the final actual Netback (on a per gallon basis) for the Month (the “Equalized Netback”). This value will enable the payment of HES prior to the final Equalized Netback value determined at the end of the month.

C. Risk of loss: Except as otherwise provided in this Agreement, VBV will bear all sales, marketing, logistics services/management costs and collection costs after the Ethanol produced at the Facility passes across the inlet flange into rail cars or tank trucks at the Facility (“Title Transfer Point”). Title and Risk of loss to the Ethanol shall transfer from HES to VBV at the Title Transfer Point. Until such time, Producer shall be deemed to be in control of and in possession of and shall have title to and risk in the Ethanol. VBV is responsible for (i) all billing in regard to the sale of Ethanol from the Plant, (ii) collection of all account receivables, and (iii) all bad accounts. All risks associated with account receivables shall be borne by VBV.

D. Commission: For each gallon of Ethanol sold to VBV under this Agreement in any month, VBV shall invoice HES separately $[*] per gallon delivered in any calendar month. Invoice will be due by the [*] business day of the following month. If VBV markets in excess of 130 million gallons in a calendar year for HES the commission rate will revert to $[*]/gallon back to gallon one in the calendar year, with rebate for the excess commission payment to be payable to HES on the next payment schedule to HES.

* Portion omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission.

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E. Payment: For all quantities of Ethanol purchased by VBV from HES and shipped from the Plant during a one-week period beginning on Monday and ending on the following Sunday, VBV shall pay the Estimated Monthly Netback referred to in this Section 5.B. by ACH or wire no later than [*] days following the end of said one-week period. If at calendar month’s end, the Equalized Netback exceeds the estimated Monthly Netback, VBV shall pay HES on or before the [*] day of the following calendar month an amount equal to the product of (x) the difference between the Estimated Monthly Netback and Equalized Netback, and (y) the aggregate quantity (on a gallon basis) of Ethanol purchased by VBV from HES during such month. If the Equalized Netback is less than the Monthly Estimated Netback, HES shall pay VBV on or before the [*] day of the following calendar month (and VBV shall have the right to withhold and set off from future payments to HES), an amount equal to the product of (x) the difference between the Equalized Netback and the Estimated Monthly Netback, and (y) the aggregate quantity (on a gallon basis) of Ethanol purchased by VBV from HES under this Agreement during such month. Within [*] days of the end of a month, VBV shall provide to HES all information necessary to calculate the Equalized Netback and determine the payment between the parties under this Section 5.E.

F. Supporting Records: VBV shall keep a set of books and records in accordance with generally accepting accounting principles with respect to all sales of Ethanol hereunder and all costs and commissions associated therewith, and shall make such books and records reasonably available to HES’s independent outside accounting representatives (upon execution by such independent outside accounting representative of a mutually agreeable confidentiality agreement) at VBV’s office at any time by appointment during normal business hours upon at least five (5) business days prior written notice; provided that HES shall be entitled to no more than two (2) such visit in any year and HES ‘s independent outside accounting representatives shall be permitted to disclose to HES only aggregate summary information of the results of its review, and not any contract or customer specific information. In addition, VBV shall provide HES by e-mail or fax with supporting documentation regarding the Equalized Netback value. If HES’ independent outside accounting representatives discover any discrepancy in VBV’s accounting records resulting in an underpayment or overpayment of the actual Equalized Netback to HES, VBV shall pay the underpayment to HES within five days of written notice to VBV, and HES shall pay the overpayment to VBV within five days of it learning of the overpayment from it independent outside accounting representative. In the event the underpayment is in excess of one percent (1%) of the Equalized Netback for the [*] month period ending on the last month of the period reviewed, VBV shall pay HES’s audit expenses. Any amount of underpayment or overpayment shall accrue interest at the verified cost of HES money for their revolving bank line of credit per annum from the date that the payment should have originally been made until the date payment in full has been received by the party entitled to such payment.

* Portion omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission.

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6. Responsibility for Dedicated Railcars: HES acknowledges that VBV will enter into leases or other arrangements intended to secure the availability of sufficient railcars to ship the Ethanol produced at the Plant as contemplated by this Agreement (“Dedicated Railcars”). VBV and HES shall agree to the number and term of such arrangements for rail cars prior to entering into said agreements. In the event HES or VBV terminates this Agreement and VBV’s commitments with respect to the Dedicated Railcars allocated to the HES New Hampton, IA plant which are the subject of such termination continue past the date of such termination, HES shall be responsible for all of VBV’s costs and expenses (including without limitation lease payments, carrying costs and finance charges) related to such Dedicated Railcars after the date of such termination. VBV and HES shall cooperate in good faith to minimize the amount of any such costs and expenses, including, using commercially reasonable efforts to assign VBV’s rights and obligations with respect to the Dedicated Railcars to HES. Subject to the foregoing, HES will have the right to receive an assignment of VBV’s rights and obligations with respect to the Dedicated Railcars so that HES may use such Dedicated Railcars, in the event this Agreement is terminated. In the event that the Plant does not start up or fails to provide substantially the contemplated volumes of Product, any costs incurred for such Dedicated Railcars not so utilized shall be incurred by HES.

7. Indemnity: VBV shall indemnify, defend, and hold HES and its affiliates, subsidiaries, parents, and its and their respective directors, officers, stockholders, employees, and agents (collectively, the HES Indemnified Persons) harmless from and against any and all claims, losses, awards, judgments, settlements, fines, penalties, liabilities, damages, costs or expenses (including reasonable out-of-pocket Attorney’s fees and expenses) (collectively, “Losses”) incurred on account of any injury or death of persons or damages to property to the extent caused by or arising out of the negligence or willful misconduct of VBV, its officers, employees, or agents in performing VBV’s obligations under this Agreement. In addition, VBV shall indemnify and hold the HES Indemnified Persons harmless from and against any and all Losses to the extent caused by or arising out of (i) any breach of any provision of this Agreement by VBV, (ii) any claims resulting from VBV’s marketing activities on behalf of HES, and (iii) noncompliance with applicable federal, state or local rules, regulations or requirements regarding shipment of Ethanol from the Plant (accept to the extent it is an obligation of HES as set forth in section 4D above).

HES shall indemnify, defend, and hold VBV and its affiliates, subsidiaries, parents, and its and their respective directors, officers, stockholders, employees, and agents (collectively, the “VBV Indemnified Persons”) harmless from and against any and all Losses incurred on account of any injury to or death of persons or damages to property to the extent caused by or arising out of the negligence or willful misconduct of HES, its officers, employees, or agents in performing HES’s obligations under this Agreement. In addition, HES shall indemnify and hold the VBV Indemnified Persons harmless from and against any and all Losses to the extent caused by or arising out of (i) any defects in, or otherwise relating to the quality or condition of, the Ethanol supplied by HES, (ii) any breach of any provision of this Agreement by HES, and (iii) noncompliance with applicable federal, state or local rules, regulations or requirements regarding shipment of Ethanol from the Plant as more fully set forth in Section 4.D above.

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8. Force Majeure:

A. In the event either Party is rendered unable, wholly or in part, by Force Majeure to carry out its obligations under this Agreement, it is agreed that on such Party’s giving notice in writing, or by telephone and confirmed in writing, to the other Party as soon as possible after the commencement of such Force Majeure event, the obligations of the Party giving such notice, so far as and to the extent they are affected by such Force Majeure, shall be suspended from the commencement of such Force Majeure and during the remaining period of such Force Majeure, but for no longer period, and such Force Majeure shall so far as possible remedied with all reasonable dispatch; provided, however, the obligation to make payments then accrued hereunder prior to the occurrence of such Force Majeure shall not be suspended.

B. The term “Force Majeure” as used in this Agreement shall mean strikes, lockouts or industrial disturbances; riots or civil disturbances; interference by civil or military authorities; wars, blockades, insurrection, or acts of other public enemy or acts of terrorism; epidemics, landslides, lightning, earthquakes, fires, storms, floods, washouts or other acts of God; arrests or restraints of governments and people; compliance with federal, state or local laws, rules or regulations, acts, orders, directives, requisitions or requests of any official or agency of federal, state or local governments; fires, explosions, freezing, failures, disruptions, breakdowns or accidents to transportation equipment or facilities; prorationing by transporters; the necessity of testing, making repairs, alterations or enlargements to transportation equipment or facilities; embargoes, priorities, expropriation or condemnation by government or governmental authorities; and any other cause which is not reasonably within the control of the Party claiming suspension.

9. Limitation of Damages: NEITHER PARTY SHALL BE LIABLE OR OTHERWISE RESPONSIBLE TO THE OTHER PARTY HEREUNDER FOR CONSEQUENTIAL, EXEMPLARY, SPECIAL, INCIDENTAL OR PUNITIVE DAMAGES AS TO ANY ACTION OR OMISSION, WHETHER CHARACTERIZED AS A CONTRACT BREACH OR TORT OR OTHERWISE THAT ARISES OUT OF OR RELATES TO THIS AGREEMENT OR ITS PERFORMANCE EXCEPT FOR ANY SUCH AMOUNTS PAID BY A PARTY TO A NON-AFFILIATE THIRD PARTY, WHICH WOULD THEREFORE BE CONSIDERED ACTUAL DAMAGES INCURRED BY SUCH PARTY.

10. Independent Contractor: It is expressly understood that the relationship of VBV to HES is that of an independent contractor and nothing contained herein shall be construed to create any partnership, agency, or employer/employee relationship. VBV may freely choose the customers from whom business shall be solicited and the time and place for solicitation.

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11. Notices: Any notices required to be given under this Agreement shall be in writing and be sufficiently given when delivered in person or deposited in the U.S. mail (registered or certified), postage prepaid, addressed as follows:

HES:	Homeland Energy Solutions, LLC
	106 West Main
	P.O. Box C
	Riceville, IA 50466
	Attn: Steve Eastman
VBV:	VBV LLC
	1 S. Dearborn Street, #800
	Chicago, IL 60603
	Attn: Todd Becker

12. Insurance: During the entire term of this agreement, HES will maintain insurance coverage that is customary for a company of its type and size that is engaged in the production and selling of ethanol. At a minimum, HES’s insurance coverage must include:

a. Comprehensive general product and public liability insurance, with liability limits of at least $5 million in the aggregate.

b. Property and casualty insurance adequately insuring its production facilities and its other assets against theft, damage and destruction on a replacement cost basis.

c. VBV shall be added as an additional insured under the comprehensive general product and public liability insurance policy and the property and casualty insurance policy.

d. Workers’ compensation insurance to the extent required by law.

HES will not change its insurance coverage during the term of this agreement, except to increase it or enhance it, without the prior written consent of VBV which consent will not be unreasonably withheld.

During the term of this agreement, VBV will maintain insurance coverage that is customary for a company marketing and handling the transportation of ethanol. At a minimum, VBV’s insurance coverage must include:

a. Comprehensive general product and public liability insurance, with liability limits of at least $5 million in the aggregate.

b. HES shall be added as an additional insured under the comprehensive general product and public liability insurance policy.

c. Workers’ compensation insurance to the extent required by law.

VBV will not change its insurance coverage during the term of this agreement, except to increase it or enhance it, without the prior written consent of HES which consent will not be unreasonably withheld

13. Entire Agreement: This Agreement contains the entire agreement between the Parties and supersedes all previous agreements, either oral or written, between the Parties. The language of this Agreement shall not be construed in favor of or against either Party, but shall be construed as if; the language was drafted mutually by both Parties. No modifications hereof shall be valid unless made in writing and signed by both Parties.

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14. Waiver: The failure of either Party to enforce any of its rights hereunder on any particular occasion shall not constitute a waiver of such rights on any subsequent occasion.

15. Assignment: This Agreement may not be assigned by either Party without the prior written consent of the other Party, which consent shall not be unreasonably withheld.

16. Headings: Any paragraph headings are used for convenience only and are not intended and shall not be used in interpreting any provisions of this Agreement.

17. No Third Party Beneficiary: Except as otherwise provided herein, nothing contained in this Agreement shall be considered or construed as conferring any right or benefit on a person not a Party to this Agreement and neither this Agreement nor the performance hereunder shall be deemed to have created a joint venture or partnership between the Parties.

18. Governing Law: This Agreement shall be governed by the laws of the State of Iowa without regard to the conflict of laws provisions thereof.

19. Arbitration: Any dispute arising out of or in connection with this Agreement shall be submitted to arbitration. The arbitration shall be conducted according to the Commercial Arbitration Rules of the American Arbitration Association. The place of arbitration shall be Des Moines, Iowa or such other place as may be agreed upon by the Parties. Both Parties shall attempt to agree upon one arbitrator, but if they are unable to agree, each shall appoint an arbitrator and these two shall appoint a third arbitrator. Expenses of the arbitrator(s) shall be divided equally between the Parties. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof, and shall be enforceable against the Parties.

20. Severability: If any term or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms and provisions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to a Party. Upon such determination, the Parties shall negotiate in good faith to modify this Agreement so as to affect the original intent of the Parties as closely as possible in an acceptable manner so that the transactions contemplated hereby are consummated as originally contemplated to the fullest extent possible.

21. Good and Marketable Title. HES represents that it will have good and marketable title to all of the ethanol marketed for it by VBV and that said ethanol will be free and clear of all liens and encumbrances.

22. Separate Entities. The parties hereto are separate entities and nothing in this agreement or otherwise shall be construed to create any rights or liabilities of either party to this agreement with regard to any rights, privileges, duties or liabilities of any other party to this agreement.

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23. No “Take or Pay.” The parties agree that this is not a “take or pay contract” and that VBV’s liability is limited to ethanol passing custody at HES’s facility; provided, however, VBV is obligated under this agreement to purchase all of the Ethanol output at the Plant pursuant to contracts it presents to and are accepted by HES pursuant to Section 5.B of this agreement.

24. Working Relationship. Because the parties hereto have not done business together in the past in the manner described in this agreement, they have not yet attempted to develop efficient and effective procedures related to ordering, delivering ethanol and shipping ethanol and, therefore, agree to work together promptly and in good faith to develop effective and efficient policies and procedures to cover these matters.

25. Survival of Terms/Dispute Resolution. All representations, warranties and agreements made in connection with this agreement will survive the termination of this agreement. The parties will, therefore, be able to pursue claims related to those representations, warranties and agreements after the termination of this agreement, unless those claims are barred by the applicable statute of limitations. Similarly, any claims that the parties have against each other that arise out of actions or omissions that take place while this agreement is in effect will survive the termination of this agreement. This means that the parties may pursue those claims even after the termination of this agreement, unless applicable statutes of limitation bar those claims.

26. Confidentiality: The parties acknowledge that they will be exchanging information about their businesses under this Agreement which is confidential and proprietary, and the parties agree to handle that confidential and proprietary information in the manner described in this Section 11.

(a) Definition of Confidential Information. For purposes of this Agreement, the term “Confidential Information” means information related to the business operations of HES or VBV that meets all of the following criteria:

(i) The information must not be generally known to the public, and must not be a part of the public domain.

(ii) The information must belong to the party claiming it is confidential, and must be in that party’s possession.

(iii) The information must have been protected and safeguarded by the party claiming it is confidential by measures that were reasonable under the circumstances before the information was disclosed to the other party.

(iv) Written information must be clearly designated in writing as “Confidential Information” by the party claiming it is confidential before it is disclosed to the other party, except that all information about parties’ production, costs and prices will always be considered Confidential Information under this Agreement, without the need for specifically designating it as such.

(v) Verbal Confidential Information which is disclosed to the other party must be summarized in writing, designated in writing as “Confidential Information,” and transmitted to the other party within ten (10) days of the verbal disclosure.

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(b) Limitations on the Use of Confidential Information. Each party agrees that it will not use any Confidential Information that it obtains about the other party for any purpose, other than to perform its obligations under this Agreement.

(c) The Duty not to Disclose Confidential Information. The parties agree that they will not disclose any Confidential information about each other to any person or organization, other than their respective legal counsel and accountants, without first getting written consent to do so from the other party. Notwithstanding the foregoing, if a party or anyone to whom such party transmits Confidential Information in accordance with this Agreement is requested or required (by deposition, interrogatories, requests for information or documents in legal proceedings, subpoenas, civil investigative demand or similar process, SEC filings or administrative proceedings) in connection with any proceeding, to disclose any Confidential Information, such party will give the disclosing party prompt written notice of such request or requirement so that the disclosing party may seek an appropriate protective order or other remedy and/or waive compliance with the provisions of this Agreement, and the receiving party will cooperate with the disclosing party to obtain such protective order. The fees and costs of obtaining such protective order, including payment of reasonable attorney’s fees, shall be paid for by the disclosing party. If such protective order or other remedy is not obtained or the disclosing party waives compliance with the relevant provisions of this Agreement, the receiving party (or such other persons to whom such request is directed) will furnish only that portion of the Confidential Information which, in the opinion of legal counsel, is legally required to be disclosed, and upon the disclosing party’s request, use commercially reasonable efforts to obtain assurances that the confidential treatment will be accorded to such information. This will be the case both while this Agreement is in effect and for a period of five (5) years after it has been terminated.

(d) The Duty to Notify the Other Party in Cases of Improper Use or Disclosure. Each party agrees to immediately notify the other party if either party becomes aware of any improper use of or any improper disclosure of the Confidential Information of the other party at any time while this Agreement is in effect, and for a period of five (5) years after it has been terminated.

(e) Protection of the Confidential Information. Each party agrees to develop effective procedures for protecting the Confidential Information that it obtains from the other party, and to implement those procedures with the same degree of care that it uses in protecting its own Confidential Information.

(f) Return of the Confidential Information. Immediately upon the termination of this Agreement, each party agrees to return to the other party all of the other party’s Confidential Information that is in its possession or under its control.”

(g) Disclosure in SEC Filings. Notwithstanding any other provision contained in this agreement, VBV acknowledges and agrees that the disclosure of this agreement and the transactions contemplated hereby by HES (i) on a Form 8-K or other report filed with the Securities and Exchange Commission at any time after the date hereof, or (ii) in a customary press release or on a customary analyst call, will not be violation of this Section 25. HES will cooperate with any reasonable requests of VBV to request confidential treatment concerning sensitive/confidential items.

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In WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed as of the date first written above.

VBV, LLC	Homeland Energy Solutions, LLC
By: /s/ Todd Becker	By: /s/ Steve Eastman
Todd Becker, CEO	Steve Eastman, President
Date: 8-14-08	Date: 8-8-08

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EXHIBIT A

VBV, LLC
FUEL-GRADE ETHANOL
SPECIFICATIONS
(DENATURED)

Ethanol shall meet or exceed all industry standards, including ASTM D.4806 specifications and Magellan Pipeline specifications for E-Grade Denatured Fuel Ethanol or customer’s specifications as required, as well as the following specifications.

	NON-DETERGENT
TEST	GRADE	METHOD OF TEST
Apparent Proof — 60°F	200 minimum 203 maximum	ASTM D-4052 / Conversion Table
Specific Gravity, 60/60°F	0.7870 - 0.7950	ASTM D-4052
Water, Mass Percent	0.50 nominal 0.82 maximum	ASTM E-203
Ethanol Content, Volume Percent	92.1 minimum	Gas Chromatography ASTM D-5501
Methanol, (vol. %)	0.50 maximum	ASTM D-5501
Non-Volatile Matter, mg/100 mL	5 maximum	ASTM D-1353
Sulfur, Mass Percent	0.0010 maximum	ASTM D-5453
Benzene, (vol. %)	0.06 maximum	ASTM D-3606
Olefins, (vol. %)	0.50 maximum	ASTM D-1319
Aromatics, (vol. %)	1.70 maximum	ASTM D-1319
Chloride Ion Content, mg/L	32 maximum	ASTM D-512, Meth. C Modified Note (1)
Copper Content, mg/kg	0.08 maximum	ASTM D-1688, Meth.D Modified Note (2)
Acidity (as acetic acid CH3C00H), mass %	0.0070 maximum 0.0042 maximum	ASTM D-1613 (Shipments to Canada)
Appearance	Clear and Bright, visibly free of suspended and/or settled contaminants.	Visual
Color, Platinum — Cobalt	50.0 maximum	ASTM D-1209
Hydrocarbon Denaturant gal/100 gal.	5.00 maximum 2.0 minimum	Gas Chromatography ASTM D-4806
pHe	6.5 minimum 9.0 maximum	ASTM D-6423 (3)
Sulfate-mg/kg	4.0 maximum	-No official ASTM Method

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(NOTES)

Note 1:	The modification of Test Method D-512, Procedure C, consists of using 5 mL of sample diluted with 20 mL of distilled water instead of the 25 mL sample specified in the standard procedure. The volume of the sample prepared by this modification will be slightly more than 25 mL. To allow for the dilution factor, report the chloride ion present in the fuel ethanol sample as 5 times that determined in the sample.
Note 2:	The modification of Test Method D-1688, Procedure D, consists of mixing reagent grade ethanol (which may be denatured according to BATF Formula 3A or 3O) in place of water as the solvent or diluent for the preparation of reagents and standard solutions. However, this must not be done to prepare the stock copper solution descr  _____  d in 39.1 of D-1688. Because a violent reaction may occur between the acid and the ethanol, use water as specified in the acid solution part of the procedure to prepare the stock copper solution. Use ethanol for the rinse and final dilution only.
Note 3:	The only denaturants shall be natural gasoline, gasoline components, or unleaded gasoline at a minimum concentration of 2 parts by volume per 100 parts by volume. Hydrocarbons, with an end boiling point higher than 437°F as determined by ASTM Method D-86, shall not be used.
Note 4:	All fuel ethanol will contain a minimum of one of the following corrosion inhibitors:

a) 20 pounds per 1,000 barrels of Octel Starreon DCI-11

b) 20 pounds per 1,000 barrels of Petrolite Tolad 3222

c) 13 pounds per 1,000 barrels of Petrolite Tolad 3224

d) 20 pounds per 1,000 barrels of Nalco 5403

e) 20 pounds per 1,000 barrels of Endcor FE-9730 ⁽¹⁾

f) 20 pounds per 1,000 barrels of MidContinental MCC5011E

g) 27 pounds per 1,000 barrels of MidContinental MCC5011EW

h) 13 pounds per 1,000 barrels of US Water Services Corrpro 654

⁽¹⁾ Formerly Betz CAN 13

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EX-10.2

Exhibit 10.2

DISTILLER’S GRAIN MARKETING AGREEMENT

THIS DISTILLER’S GRAIN MARKETING AGREEMENT (the “Agreement”), is entered into effective as of Aug 8 , 2008, by and between Homeland Energy Solutions, LLC an Iowa limited liability company (“Seller”) and CHS Inc., a Minnesota cooperative corporation (“Buyer”).

W I T N E S S E T H:

WHEREAS, Seller desires to sell and Buyer desires to purchase the distiller’s dried grains with solubles (“DDGS”), wet distillers grains (“WDG”) and solubles (“Solubles”) (hereinafter DDGS, WDG, and Solubles are referred to collectively as the “Products”) output from the ethanol production plant that Seller intends to build, own and operate, in New Hampton Iowa; and

WHEREAS, Seller and Buyer wish to agree in advance of the sale and purchase of the Products to the price formula, payment, delivery and other terms thereof in consideration of the mutually promised performance of the other.

NOW, THEREFORE, in consideration of the promises and the mutual covenants and conditions herein contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by both parties, it is hereby agreed:

1. BUYER PERFORMANCE. Buyer agrees to perform the services that it provides for Seller in a professional and competent manner.

2. PURCHASE AND SALE. Seller agrees to sell to Buyer and Buyer agrees to purchase from Seller the entire bulk feed grade DDGS, WDG and Solubles output from Seller’s plant located in New Hampton Iowa (the “Plant”), subject to all terms and conditions set forth in this Agreement. Buyer shall label all of Seller’s Products that are marketed or sold by Buyer hereunder, and shall register all labels with the states where such Products are sold.

3. TRADE RULES. All purchases and sales made hereunder shall be governed by the Feed Trade Rules of the National Grain and Feed Association unless otherwise specified in this Agreement. Said Feed Trade Rules, a copy of which are appended hereto as Exhibit A, shall, to the extent applicable and as amended from time to time, be a part of this Agreement as if fully set forth herein.

4. TERM. The initial term of this Agreement shall be for one (1) year commencing as of substantial completion and start-up of production of the Plant (the “Effective Date”). Unless earlier terminated in accordance with this Agreement, this Agreement shall be automatically renewed for successive one (1) year terms thereafter unless either party gives written notice to the other party of its election not to renew not later than ninety (90) days prior to the expiration of the then current term.

5. DELIVERY AND TITLE.

A. The place of delivery for all the Products sold pursuant to this Agreement shall be FOB Plant. Buyer and Buyer’s agents shall be given access to Seller’s Plant in a manner and at all times reasonably necessary and convenient for Seller and for Buyer to take delivery as provided herein. Buyer shall schedule the loading and shipping of all outbound Products purchased hereunder which are shipped by truck or rail. All labor and equipment necessary to load trucks or rail cars shall be supplied by Seller without charge to Buyer. Seller agrees to handle the Products in a good and workmanlike manner in accordance with Buyer’s reasonable requirements and in accordance with normal industry practice. Seller shall maintain the truck and rail loading facilities in safe operating condition and in accordance with normal industry standards.

B. Seller further warrants that storage space for not less than five (5) days production of DDGS shall be reserved for Buyer’s use at the Plant and shall be available for storage of DDGS purchased by Buyer hereunder at no charge to Buyer. Seller shall also make available the necessary storage for WDG and Solubles which is adequate for Buyer to market such products. Seller shall be responsible at all times for the quantity, quality and condition of any of the Products in storage at the Plant. Seller shall not be responsible for the quantity, quality and condition of any of the Products stored by Buyer at locations other than the Plant.

C. Buyer shall give to Seller a schedule of quantities of the Products to be removed by truck and rail with sufficient advance notice to reasonably allow Seller to provide the required services. Seller shall provide the labor, equipment and facilities necessary to meet Buyer’s loading schedule and, except for any consequential or indirect damages, shall be responsible for Buyer’s actual costs or damages resulting from Seller’s failure to do so. Except as otherwise set forth herein, Buyer shall order and supply trucks and rail cars as scheduled for truck and rail shipments. All freight charges shall be the responsibility of Buyer and shall be billed directly to Buyer.

D. Buyer shall provide loading orders as necessary to permit Seller to maintain Seller’s usual production schedule; provided, however, that Buyer shall not be responsible for failure to schedule removal of the Products unless Seller shall have provided to Buyer production schedules as follows: Five (5) days prior to the beginning of each calendar month during the term hereof, Seller shall provide to Buyer a tentative schedule for production in the next calendar month. Seller shall inform Buyer daily of inventory and production status. For purposes of this paragraph, notification will be sufficient if made by e-mail or facsimile as follows:

If to Buyer, to the attention of Steve Markham, Facsimile number                      or email to Steve.Markham@CHSInc.com, and

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If to Seller, to the attention of Homeland Energy Solutions, LLC, Attn: General Manager, Facsimile number                      or email to                     .

Or to such other representatives of Buyer and Seller as they may designate to the other in writing.

E. Title, risk of loss and full shipping responsibility shall pass to Buyer upon loading the Products into trucks or rail cars.

6. PRICE AND PAYMENT

A. Buyer agrees to pay Seller as follows: for all DDGS removed by Buyer from the Plant a price equal to ninety eight percent (98%) of the FOB Plant price (defined below) actually received by Buyer from its customers; for WDG removed by Buyer from the plant a price equal to ninety six percent (96%) of the FOB Plant price actually received by Buyer from its customers. Buyer shall retain the balance of the FOB Plant price received by Buyer from its customers (2% in the case of DDGS, and 4% in the case of WDG) as its fee for services provided under this Agreement. In no event shall the fee for DDGS or WDG be less than $1.50 per ton. Buyer shall also receive from Seller a fee for Solubles of $2.00 per ton. For purposes of this provision, the “FOB Plant price” shall be the actual sale price received by Buyer from its customers, less all customary freight costs incurred by Buyer in delivering the Product to its customer.

B. Buyer agrees that it shall not sell Product for delivery more than ninety (90) days from the date of entering into a sale without the prior consent of Seller. Buyer agrees to use commercially reasonable efforts to achieve the highest sale price available under prevailing market conditions. Seller’s sole and exclusive remedy for breach of Buyer’s obligations hereunder shall be to terminate this Agreement. Buyer shall collect all applicable state tonnage taxes on Products sold by Buyer and shall remit to the appropriate governmental agency.

C. Within five (5) days following receipt of certified weight certificates, which certificates shall be presented to Buyer each Thursday for all shipments during the preceding week, Buyer shall pay Seller the full price, determined pursuant to paragraph 6A above, for all properly documented shipments. Buyer shall submit to Seller a certificate with each such payment showing in reasonable detail the price invoiced by Buyer to the third-party buyer, freight and commission on all Products for which payment is being made. Buyer agrees to maintain accurate sales records and to provide such records to Seller upon request. Seller shall have the option to audit Buyer’s sales invoices at any time during normal business hours and during the term of this Agreement. Any discrepancy discovered will be paid by Buyer and shall be calculated with accrued interest from the original due date at a rate equal to two percent (2%) per annum above the Prime Commercial Lending Rate as reported in the Wall Street Journal. If the discrepancy discovered is greater than $5,000, Buyer shall pay and reimburse to Seller all audit costs of Seller.

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7. QUANTITY AND WEIGHTS.

A. It is understood that the output of the Products shall be determined by Seller’s production schedule and that no warranty or representation has been made by Seller as to the exact quantities of Products to be sold pursuant to this Agreement.

B. The quantity of Products delivered to Buyer from Seller’s Plant shall be established by weight certificates obtained from the scale at the Plant which is certified as of the time of weighing and which complies with all applicable laws, rules and regulations or in the event that the scale at the Plant is inoperable then at other scales which are certified as of the time of weighing and which comply with all applicable laws, rules and regulations. The outbound weight certificates shall be determinative of the quantity of the Products for which Buyer is obligated to pay pursuant to Section 6.

8. QUALITY.

A. Seller understands that Buyer intends to sell the Products purchased from Seller as a primary animal feed ingredient and that said Products are subject to minimum quality standards for such use. Seller agrees and warrants that the Products produced at its plant and delivered to Buyer shall be accepted in the feed trade under current industry standards.

B. Seller warrants that all Products, unless the parties agree otherwise, sold to Buyer hereunder shall, at the time of delivery to Buyer, conform to the following minimum quality standard:

Protein

Fat

Fiber

Moisture

Ash

Min

Max

Min

Max

Min

Max

Min

Max

Min

Max

DDGS

25

10

15

12

6

WDG

13

5

7

50

3

Solubles

The standard for DDGS and WDG will be determined on an as is basis rather than a dry weight basis. Minimum quality Standards for Solubles shall be agreed upon by the parties at a subsequent date.

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C. Payment of invoice does not waive Buyer’s rights if Products do not comply with terms or specifications of this Agreement. Subject to Section 8(E) and unless otherwise agreed between the parties to this Agreement, and in addition to other remedies permitted by law, the Buyer may, without obligation to pay, reject either before or within five (5) days of delivery, any of the Products which when inspected or used fail in a material way to conform to this Agreement at the time of delivery to Buyer. Should any of the Products be seized or condemned by any federal or state department or agency for any reason except noncompliance by Buyer with applicable federal or state requirements or as a result of any other action or misconduct by Buyer, such seizure or condemnation shall operate as a rejection by Buyer of the Products seized or condemned and Buyer shall not be obligated to offer any defense in connection with the seizure or condemnation. When rejection occurs before or within five (5) days of delivery, at its option, Buyer may:

(1) Dispose of the rejected Products after first offering Seller a reasonable opportunity of examining and taking possession thereof, if the condition of the Products reasonably appears to Buyer to permit such delay in making disposition; or

(2) Dispose of the rejected Products in any manner directed by Seller which Buyer can accomplish without violation of applicable laws, rules, regulations or property rights; or

(3) If Buyer has no available means of disposal of rejected Products and Seller fails to direct Buyer to dispose of it as provided herein, Buyer may return the rejected Products to Seller, upon which event Buyer’s obligations with respect to said rejected Products shall be deemed fulfilled. Title and risk of loss shall pass to Seller promptly upon rejection by Buyer.

Seller shall reimburse Buyer for all costs reasonably incurred by Buyer in storing, transporting, returning and disposing of the rejected Products. Buyer shall have no obligation to pay Seller for rejected Products and may deduct reasonable costs and expenses to be reimbursed by Seller from amounts otherwise owed by Buyer to Seller.

If Seller produces Products which comply with the warranty in Section C but which do not meet applicable industry standards, Buyer agrees to purchase such Products for resale but makes no representation or warranty as to the price at which such Products can be sold. If the Products deviate so severely from industry standards as to be unsellable, then it shall be disposed of in the manner provided for rejected Products in Section C.

D. If Seller knows or reasonably suspects that any of the Products produced at its Plant are adulterated or misbranded, or outside of industry quality standards, Seller shall promptly so notify Buyer so that such Products can be tested before entering interstate commerce. If Buyer knows or reasonably suspects that any of the Products produced by Seller at its Plant are adulterated, misbranded or outside of industry quality standards, then Buyer may obtain independent laboratory tests of the affected Products. If such Products are tested and found to comply with all warranties made by Seller herein, then Buyer shall pay all testing costs; and if the Products are found not to comply with such warranties, Seller will pay all testing costs.

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E. Notwithstanding anything in this Agreement to the contrary, Buyer acknowledges and agrees that Seller’s warranties set out in Section 8(A), (B) and (C) and Section 11 only apply to the Products at the time it is delivered to Buyer and Buyer agrees that Seller is not responsible to the extent the Products become adulterated or misbranded at some time after delivery and, as a result thereof, fails to conform with the standards set out in this Agreement.

9. RETENTION OF SAMPLES. Seller will take an origin sample of DDGS from each truck and rail car before it leaves the Plant using standard sampling methodology. Seller will label these samples to indicate the date of shipment and the truck or railcar number involved. Seller will retain the samples and labeling information for no less than one (1) year.

10. INSURANCE.

A. Seller warrants to Buyer that all employees engaged in the removal of the Products from Seller’s Plant shall be covered as required by law by worker’s compensation insurance.

B. Seller agrees to maintain throughout every term of this Agreement comprehensive general liability insurance, including product liability coverage, with combined single limits of not less than $2,000,000. These limits can also be attained through the use of an excess or umbrella policy. Seller’s policies of comprehensive general liability insurance shall be endorsed to require Seller’s insurer endeavor to provide at least thirty (30) days’ advance notice to Buyer prior to the effective date of any decrease in or cancellation of coverage. Seller shall cause Buyer to be named as an additional insured on Seller’s insurance policy and shall provide a certificate of insurance to Buyer to establish the coverage maintained by Seller not later than fourteen (14) days prior to completion and start-up of production of the Plant.

C. Buyer agrees to maintain throughout every term of this Agreement comprehensive general liability insurance with combined single limits of not less than $2,000,000. These limits can also be attained through the use of an excess or umbrella policy. Buyer’s policies of comprehensive general liability insurance shall be endorsed to require Buyer’s insurer to endeavor to provide at least thirty (30) days’ advance notice to Seller prior to the effective date of any decrease in or cancellation of coverage. Buyer shall cause Seller to be named as an additional insured on Buyer’s insurance policy and shall provide a certificate of insurance to Seller to establish the coverage maintained by Buyer not later than fourteen (14) days prior to completion and start-up of production of the Plant.

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D. Buyer agrees to carry automobile liability insurance on Buyer owned, non-owned and hired vehicles operating on Seller’s property with minimum limits of liability of $5,000,000 combined single limit for each occurrence, listing Seller, its employees, agents and representatives, as additional insureds, and providing them with a waiver of subrogation. These limits can also be attained through the use of an excess or umbrella policy. Upon request, Buyer shall provide certificates of insurance to Seller to establish the coverage maintained by Buyer. Buyer will monitor and require proper trucking authority and insurance certificates for freight contracted by Buyer.

E. Notwithstanding the foregoing, nothing herein shall be construed to constitute a waiver by either party of claims, causes of action or other rights which either party may have or hereafter acquire against the other for damage or injury to its agents, employees, invitees, property, equipment or inventory, or third party claims against the other for damage or injury to other persons or the property of others.

11. REPRESENTATIONS AND WARRANTIES.

A. Seller represents and warrants that all of the Products delivered to Buyer shall not be adulterated or misbranded within the meaning of the Federal Food, Drug and Cosmetic Act (the “Act”) and may lawfully be introduced into interstate commerce pursuant to the provisions of the Act. Seller further warrants that the Products shall fully comply with any applicable state laws governing quality, naming and labeling of product. Payment of invoice shall not constitute a waiver by Buyer of Buyer’s rights as to Products which do not comply with this Agreement or with applicable laws and regulations. Seller covenants that the Products will be merchantable as of the time they are loaded into railcars pursuant to this Agreement; provided, however, Seller makes no other representation or warranty, express or implied, including any warranty for a particular purpose, except as specifically stated in this Agreement.

B. Seller represents and warrants that the Products delivered to Buyer shall be free and clear of liens and encumbrances.

12. EVENTS OF DEFAULT. The occurrence of any of the following shall be an event of default (“Event of Default”) under this Agreement: (1) failure of either party to make payment to the other when due; (2) default by either party in the performance of the covenants and agreements set forth in this Agreement; and (3) if either party shall become insolvent, or make a general assignment for the benefit of creditors or to an agent authorized to liquidate any substantial amount of its assets, or be adjudicated bankrupt, or file a petition in bankruptcy, or apply to a court for the appointment of a receiver for any of its assets or properties with or without consent, and such receiver shall not be discharged within sixty (60) days following appointment.

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13. REMEDIES. Upon the happening of an Event of Default, the parties hereto shall have all remedies available under applicable law with respect to an Event of Default by the other party. Without limiting the foregoing, the parties shall have the following remedies whether in addition to or as one of the remedies otherwise available to them; (1) to declare all amounts owed immediately due and payable; and (2) immediately to terminate this Agreement effective upon receipt by the party in default of the notice of termination, provided, however, the parties shall be allowed ten (10) days from the date of receipt of notice of default to cure any default. Notwithstanding any other provision of this Agreement either party may offset against amounts otherwise owed to the other party.

14. FORCE MAJEURE. Neither Seller nor Buyer will be liable to the other for any failure or delay in the performance of any obligation under this Agreement due to events beyond its reasonable control, including, but not limited to, fire, storm, hurricane, tornado, flood, earthquake, explosion, act of the public enemy, riots, civil disorders, sabotage, strikes, lockouts, labor disputes, labor shortages, war stoppages (all strikes, lockouts, labor disputes, labor shortages, or shutdowns shall be of a regional or national character), or slowdowns initiated by labor, transportation embargoes, failure or shortage of materials, acts of God, or acts or regulations or priorities of the federal, state or local government or branches or agencies thereof. Notwithstanding the foregoing, a party shall not be entitled to claim relief under this Section 14, unless such party provides written notice of such force majeure event within five (5) days of the first occurrence. During periods when Buyer declares a force majeure event has occurred, Seller shall have the right to sell Products to third parties.

15. INDEMNIFICATION.

A. Seller shall indemnify, defend and hold Buyer and its officers, directors, employees and agents harmless, from any and all losses, liabilities, damages, expenses (including reasonable attorneys’ fees), costs, claims, demands, that Buyer or its officers, directors, employees or agents may suffer, sustain or become subject to, as a result of (i) any misrepresentation or breach of warranty, covenant or agreement of Seller contained herein, or (ii) the Seller’s negligence or willful misconduct.

B. Buyer shall indemnify, defend and hold Seller and its officer, directors, employees and agents harmless, from any and all losses, liabilities, damages, expenses (including reasonable attorneys’ fees), costs, claims, demands, that Seller or its officers, directors, employees or agents may suffer, sustain or become subject to, as a result of (i) any misrepresentation or breach of warranty, covenant or agreement of Buyer contained herein or (ii) the Buyer’s negligence or willful misconduct.

C. Where such personal injury, death or loss of or damage to property is the result of negligence on the part of both Seller and Buyer, each party’s duty of indemnification shall be in proportion to the percentage of that party’s negligence or fault.

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D. Seller acknowledges that in order to maximize the total revenue to be generated through the sale of the Products, Buyer may take positions (which if such positions relate to deliveries scheduled more than ninety (90) days after the date of sale, may only be taken upon receipt of Seller’s Consent), by selling the Products in anticipation of Seller providing the Products. Notwithstanding the fact that Seller’s obligation is to provide Buyer with the output of the Plant, the parties acknowledge that Buyer may suffer losses as a result of positions taken by Buyer if Seller discontinues operations for any reason whatsoever including Force Majeure. Therefore, Seller shall indemnify, defend and hold Buyer and its officers, directors, employees and agents harmless from any and all losses, liabilities, damages, expenses (including reasonable attorney’s fees), costs, claims, demands that Buyer or its officers, directors, employees, or agents may suffer, sustain or become subject to as a result of any sale or purchase of product taken by Buyer in anticipation of Seller delivering the Products hereunder resulting from Seller discontinuing operations related to a position taken by Buyer, provided Buyer has taken commercially reasonable steps to avoid the loss. Seller shall not be liable for any loss resulting from Seller discontinuing operations related to a position taken by Buyer for delivery more than ninety (90) days from the date of entering into a sale without the consent of Seller.

The indemnification in this Section 15 shall survive the termination of this Agreement.

16. GOVERNMENTAL ACTION. The parties recognize that the value of the Products could change as a result of various governmental programs, be they foreign or domestic. In the event that a significant value change of the Products as a result of any such governmental program, either party may request re-negotiation of the contract price for the Products by providing written notice to the other party. The party requesting re-negotiation shall be required to demonstrate that the value of the Products has significantly changed in the market. Should such a change take place, the parties agree to negotiate, in good faith, a revised sale price for the Products. If, after a good faith effort, the parties are unable to agree on a new price within the ninety (90) day period immediately following notice to the other party, then in such event and notwithstanding the other provisions hereof, either party may terminate this Agreement upon ninety (90) days’ prior written notice.

17. RELATIONSHIP OF PARTIES. This Agreement creates no relationship other than that of buyer and seller between the parties hereto. Specifically, there is no agency, partnership, joint venture or other joint or mutual enterprise or undertaking created hereby. Nothing contained in this Agreement authorizes one party to act for or on behalf of the other and neither party is entitled to commissions from the other.

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18. MISCELLANEOUS.

A. This writing is intended by the parties as a final expression of their agreement and a complete and exclusive statement of the terms thereof.

B. No course of prior dealings between the parties and no usage of trade, except where expressly incorporated by reference, shall be relevant or admissible to supplement, explain, or vary any of the terms of this Agreement.

C. Acceptance of, or acquiescence in, a course of performance rendered under this or any prior agreement shall not be relevant or admissible to determine the meaning of this Agreement even though the accepting or acquiescing party has knowledge of the nature or the performance and an opportunity to make objection.

D. No representations, understandings or agreements have been made or relied upon in the making of this Agreement other than as specifically set forth herein.

E. This Agreement can only be modified by a writing signed by all of the parties or their duly authorized agents.

F. The paragraph headings herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

G. This Agreement shall be construed and performed in accordance with the laws of the State of Iowa.

H. The respective rights, obligations and liabilities of the parties under this Agreement are not assignable or delegable without the prior written consent of the other party.

I. Notice shall be deemed to have been given to the party to whom it is addressed ninety-six (96) hours after it is deposited in certified U.S. mail, postage prepaid, return receipt requested, addressed as follows:

Buyer:	CHS Inc.
	5500 Cenex Drive
	Inver Grove Heights, MN. 55077
	ATTN: Steve J. Markham
Seller:	Homeland Energy Solutions, LLC
	ATTN:

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IN WITNESS THEREOF, the parties have caused this Agreement to be executed the day and year first above written.

CHS Inc.
By:	/s/ Steve Markham
	Name:	Steve Markham
	Its: Merchant
Homeland Energy Solutions, LLC
By:	/s/ Stephen K. Eastman
	Name:	Stephen K. Eastman
	Its: President

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EX-10.3

Exhibit 10.3

GENERAL CONTRACT

THIS AGREEMENT, made this 24 day of July, 2008 by and between Homeland Energy Solutions, LLC a corporation organized and existing under the laws of the State of Iowa, hereinafter called Owner, party of the first part, and R&R Contracting, hereinafter called the Contractor, party of the second part.

WITNESSETH: That, in consideration of the covenants and agreements herein contained, to be performed by the parties hereto, and of the payments hereinafter provided, it is mutually agreed as follows:

1. DESCRIPTION OF WORK

The Contractor agrees to furnish all labor, services, appliances and material, except as may be hereinafter otherwise provided for, and to construct, install, complete and finish in the most thorough workmanlike and substantial manner in every respect, within the time hereinafter specified, and according to the specifications and drawings of this contract, Ethanol Plant Rail Work located between New Hampton and Lawler Iowa.

2. PERIOD FOR COMPLETION

The starting date of the Work shall be fixed in a written Notice to Proceed from Owner to the Contractor, which notice shall be mailed to or served upon the Contractor not less than five (5) calendar days before the date fixed herein. Time being of the essence, the Contractor shall commence the Work on or before the starting date August 15, 2008 and complete the Work as herein described within 139 calendar days, thereafter; completion date is December 31, 2008. Upon written application of the Contractor the Owner may, for reasons which in his opinion are beyond the Contractor’s control, consent, in writing, to an extension of said contract time.

If the Contractor fails to complete the Work within the period herein fixed or so extended, the Contractor shall pay, or the Owner may deduct from any sums due or to become due to the Contractor, the Owner’s expenses during the additional period required to complete the Work for engineering and supervision employed directly on the Work, which shall be in addition to any damages to the Owner because of such failure.

3. PRICES

In consideration of the completion of the Work described herein, the fulfillment of all stipulations of this contract, the specifications, the plans, and the drawings, to the satisfaction and acceptance of the Owner and Owners Engineer, the said Owner shall pay, or cause to be paid, to the Contractor, the lump sum amount of $5,756,534.56 Dollars. Unit pricing will apply to all additions or force work.

4. DEFINITIONS

Except where it is clear by the context that another meaning is intended, the following words and expressions shall be construed as follows:

The word “Owner” shall mean Homeland Energy Solutions, LLC or their appointed representative.

The word “Engineer” or “Chief Engineer” shall mean the TranSystems Appointed Engineer acting on behalf of the Owner to insure compliance with the plans and specifications.

The word “Railroad” or “Railway Company” shall mean the local residing Rail Carrier, in this case the DM&E.

The word “Work” shall mean all or any part of the matters covered by this Agreement or as described by Technical Specifications, Special Provisions, and other documents provided to Contractor.

The word “Project” shall mean the entire undertaking to any part of which this contract relates.

The word “Contractor” shall mean the party of the second part or his authorized representatives. If the Contractor is a corporation, the words “he”, “him”, “his” wherever they refer to the Contractor, shall be read as “it” or its.”

5. INDEPENDENT CONTRACTOR

The Owner reserves no control whatsoever over the employment, discharge, compensation of or services rendered by the Contractor’s employees, and it is the intention of the parties to this agreement that the Contractor shall be and remain as Independent Contractor, and that nothing in this agreement contained shall be construed as inconsistent with that status.

6. LAWS AND ORDINANCES

The Contractor shall comply with all laws, ordinances and regulations in any way pertaining to the Work.

7. UNEMPLOYMENT AND RETIREMENT LEGISLATION

The Contractor agrees to accept and hereby accepts, full and exclusive liability for the payment of any and all contributions or taxes for unemployment insurance or old age retirement benefits, pensions or annuities now or hereafter imposed by the Government of the United States or of any State thereof, which are measured by the wages, salaries, or other remuneration paid to persons employed by the Contractor on the Work, and further agrees to comply with all administrative regulations respecting the assumption of liability for the aforesaid contributions, and further agrees to reimburse the Railway Company for any of the aforesaid taxes or contributions, which, by law, the Railroad may be required to pay.

8. SALES AND USE TAXES

Unless otherwise provided in the Special Specifications, the Contractor shall be responsible for and pay all sales and use taxes properly assessed under all laws in effect at the time contract is awarded, against any materials, tools, supplies, services and equipment furnished directly by the contractor and used in the carrying out of the Work.

9. CONTRACTORS UNDERSTANDING

It is understood and agreed that the Contractor has, by careful examination, satisfied himself as to the nature and location of the Work, the character, quality and quantity of the materials to be encountered, the character of equipment, facilities, and special protection of building contents or functions needed preliminary to and during the prosecution of the Work, the general and local conditions, and all other matters which can in any way affect the Work. No oral agreement or conversation with any officer, agent, or employee of the Engineer, Owner or Railway Company, either before or after the execution of this contract shall affect or modify any of the terms or obligations herein contained.

10. USE OF COMPANY’S LAND

Owner shall provide the land upon which the Work under this contract is to be done, and will, so far as it can conveniently do so, permit the Contractor to use so much of its land as is required for the erection of temporary construction facilities and storage of materials, together with the right of access to same, but beyond this, the Contractor shall provide, at his cost and expense, any additional and required.

11. USE OF ADJOINING PROPERTY

Before entering upon or making use of any private property adjoining the work, the Contractor, at his expense, shall obtain and file with the Owner, the written permission of the Owner of such property, and subsequent to vacation of premises, shall furnish the Owner a properly executed release of both Owner, railroad and Contractor from all damages.

12. ASSIGNMENT OF CONTRACT

The Contractor shall not assign this contract or any part thereof without the written consent of the Owner. Such consent shall not release or relieve the Contractor from any of his obligations and liabilities under the contract.

13. SUBCONTRACTORS

The Contractor shall submit for written approval a list of Subcontractors showing the work assigned to each, and no subcontract for any part of the Work shall be awarded to any party not acceptable to the Owner and approved by him in writing. Such approvals shall not release or relieve the Contractor from any of his obligations and liabilities under this contract. Upon written request of the Owner, the Contractor shall terminate the employment on this Work of any Subcontractor who shall, in the opinion of Owner, fail to perform the work undertaken by him in a satisfactory manner and appropriate provisions to this effect shall be incorporated in all subcontracts. The provisions of this contract shall be incorporated, by reference, in all subcontracts and if so required by the Engineer, the Contractor shall furnish to the Engineer written statement, properly endorsed by the Subcontractor in question, that this has been done, before any Subcontractor shall begin work.

14. CONTRACTOR’S RISKS

The work covered by this contract shall be at the risk of the Contractor in every respect, and he shall be responsible therefore until it is completed and accepted by the Owner and the Owner. This responsibility shall include, but not be limited to, damage to and loss of any material furnished and delivered by the Contractor, Owner or railroad.

15. WAIVER

It is expressly understood and agreed that any waiver on the part of Owner, of any term, provision or covenant of this contract, shall not constitute a precedent, not bind Owner, to a waiver of any succeeding breach of the same or any other of the terms, provisions or covenants of this contract.

16. PERMITS

Unless otherwise provided in the Special Specifications, the Contractor shall procure at his own expense, and in due time, all permits and licenses, of any description, necessary for the construction and completion of the Work. The Contractor shall deliver to the Owner and Engineer all certificates of inspection for any part of the Work for which a certificate may be required.

17. INDEMNITY

The Contractor shall indemnify and save harmless Owner and railroad from and against all losses and all claims, demands, payments, suits, actions, recoveries, legal expenses, (including any attorney’s fees incurred by Owner and railroad), and judgments of every nature and description made, brought or recovered against it, by reason of or caused, in whole or in part, by any act or omission of the said Contractor, his agents or employees in the execution of the work or in guarding the same.

18. Lien Waivers

The Contractor, shall deliver to Owner satisfactory lien waivers for material uses on this contract before payment is made.

19. INSURANCE

The Contractor, at its own cost and expense, shall procure prior to commencement of any work under this Agreement and shall maintain in full force and effect until all work has been completed and accepted, insurance in such form and issued by such insurance companies as shall be satisfactory to railroad and Owner.

(a)

Workmen’s Compensation Insurance which fully meets the requirements of any Workmen’s Compensation Law in force at the place where the Work is to be performed covering all employees of said Contractor or of any subcontractor employed to perform Work under this contract. The workers Compensation and Employers Liability shall cover contractor or any subcontractor employed to perform work on this contract. The certificate must contain a specific waiver of the insurance company’s subrogation rights against the railroad, Owner and Engineer.

(b)

Public Liability Insurance providing for a limit of not less than 1,000,000 Dollars for all damages arising out of the bodily injuries to or death of one person, and, subject to that limit for each person, a total limit of 2,000,000 Dollars for all damages arising out of bodily injuries to or death of two or more persons, in any one accident, and regular Contractor’s Property Damage Liability Insurance providing for a limit of not less than 1,000,000 Dollars for all damages to or destruction of property in any one accident, and subject to that limit, a total (or aggregate) limit of 2,000,000 Dollars for all damages to or destruction of property during the policy period.

Prior to commencement of any work under this agreement, Contractor shall furnish to Owner the original of the Railroad Protective Liability Insurance policy specified in (c) above.

The Contractor shall also furnish to Engineer and Owner certificates of insurance as evidence of compliance with (a) and (b) above. All such insurance shall provide that same shall not be altered or cancelled without at least 30 days prior notice to Owner.

It is understood and agreed by the Contractor that the furnishing by it of the above insurance and the acceptance of same by Owner is not intended to and shall not limit, affect or modify the obligations of the Contractor under any provision of this agreement.

20. SUPERINTENDENCE

The Contractor shall give constant and efficient attention to the faithful and diligent prosecution of the Work and during its progress shall be represented at all times at the site of the Work by a competent superintendent acceptable to the Engineer.

21. ORDER AND DISCIPLINE

The Contractor shall at all times enforce strict discipline and good order among his employees. The Contractor, insofar as his authority extends, shall not permit the sale, distribution or use of any alcoholic beverages or intoxicating liquors upon or adjacent to the Work.

22. NOTICE — HOW SERVED

Any notice to be given by Engineer or Owner to the Contractor under this contract shall be deemed to be served if the same be delivered to the person in charge of the office used by the Contractor, or to his representative at or near the Work, or deposited in the post office, postpaid, addressed to the Contractor at his last known place of business.

23. SAFETY REQUIREMENTS

The Contractor shall furnish and maintain, at his own cost and expense and to the satisfaction of the Engineer, all requisite watchmen, lights, barricades, safeguards, fences, temporary waterproofing measures and other facilities for the protection of the Work and the safety of the general public and of employees of Owner, railroad and Engineer, of any other railroad whose tracks, facilities or operations will be affected by or are near the Work, and of the Contractor. Precaution shall be exercised at all times for the protection of persons and property. The safety provisions of applicable laws, building and construction codes shall be observed. Machinery and equipment and other hazards shall be guarded in accordance with the safety provisions of the Manual of Accident Prevention in Construction, published by the Associated General Contractors of America, to the extent that such provisions are not inconsistent with applicable law or regulation. Job briefings will be conducted prior to any work commencing. The job briefing will cover all tasks to be accomplished that day and the associated risks involved. All job briefings will be documented and signed by the job site foreman/superintendent. All personnel shall have current Railroad Contractor Orientation Course.

24. POSITION AND ELEVATONS

The Contractor will layout all of the Work and shall make all measurements and elevation determinations required for all work in this contract at his own expense.

25. PRESERVATION OF REFERENCE BENCH MARKS

The Contractor shall carefully preserve any existing benchmarks and reference points, and in case of willful or careless destruction, he will be charged with the resulting expense and shall be responsible for any mistakes that may be caused by their unnecessary loss or disturbance.

26. REPORT ERRORS AND DISCREPANCIES

Before starting the Work, the Contractor shall examine and compare the plans and specifications and shall report to the Engineer any errors or discrepancies found therein. If the Contractor, in the course of the Work, finds any discrepancy between the plans and the physical conditions of the locality or any applicable building code or ordinance, or any errors or omissions in plans or in the layout as given by said points and instructions, it shall be his duty to inform the Engineer immediately, and the Engineer shall promptly verify the same. Any work done after such discovery, until authorized by the Engineer, will be done at the Contractor’s risk.

27. AUTHORITY OF ENGINEER

The Engineer is authorized to reject or condemn all work or material, which does not conform to this Agreement. If any tools or equipment are unsafe, defective or inadequate for carrying out the Work, the Engineer may require the removal of such equipment and Contractor shall, without delay, substitute satisfactory equipment therefore.

28. INSPECTION

All work and material shall be at all times open to the inspection, acceptance or rejection of the Owner and Engineer or his authorized representative. The Contractor shall give the Owner and Engineer reasonable notice of starting any new work and shall provide reasonable and necessary facilities for inspection even to the extent of taking out portions of finished work; in case the work is found satisfactory, the cost of removal and replacement shall be paid by Owner. No work shall be done outside the agreed regular working hours without previous approval of the Engineer.

29. DEFECTIVE WORK OR MATERIAL

The Contractor shall remove, at his own expense, any work or material condemned by the Engineer, and shall rebuild or replace the same without extra charge.

Any omissions or failure on the part of the Engineer to disapprove or reject any work or material shall not be construed to be an acceptance of any defective work or material.

30. PATENTED DEVICES

In case the Contractor shall make use of or employ any patented devices or appliances either for carrying on the Work or in connection with the materials supplied, whether the terms of the specifications require such to be used or not, he shall satisfy all claims or charges for lease, privilege or royalty, and shall, at his expense, defend Owner against any and all claims or suits which may arise from any infringements of patent rights, and indemnify and save harmless Owner against any judgment of recovery as a result thereof, and notwithstanding any approval of such devices, appliances or materials under Sections 29 and 30 hereof.

31. PROTECTION OF RAILROAD SERVICES AND FACILITIES

The contractor shall use special care and vigilance to avoid damage to the trains, tracks, or other facilities of Owner and railroad and shall conduct his work so as not to interfere with the movement of trains or other operations of railroad. The Contractor shall not proceed with any work which might endanger or interfere with the movement of trains, operations or other facilities until protection satisfactory to the Engineer has been provided. If, in the opinion of the Engineer, trains, tracks, or other facilities are or may become endangered by the operations of the Contractor, he shall immediately do such work as may be ordered by the Engineer to restore safety and, upon failure of the Contractor to carry out such order immediately, railroad may take whatever steps are necessary to restore safe conditions. The cost and expense to railroad of restoring safe conditions or of any damages to the trains, tracks or other facilities caused by the Contractor’s operations shall be charged against the Contractor and paid by him or may be deducted from any amounts due, or which become due him under this contract. The cost of furnishing watchmen, flagmen, or other personnel required for the protection of the facilities or operations of railroad or any other railroad shall be borne as provided for in the General Conditions.

Contractor is aware of the special requirements and duties placed on Contractor by this Section 32 and Contractor hereby expressly acknowledges its duty to perform the Work in such a manner so as to allow the railroad’s continued uninterrupted use of and operations from the mainline tracks. Contractor acknowledges that should railroad’s use or operations from the mainline tracks be interrupted that railroad likely to experience substantial consequential and incidental damages as well as direct damages associated with this interrupted use of and operations from the mainline tracks and that Contractor all of railroad’s direct, consequential and incidental damages which railroad suffers as a result of the Contractor’s failure to fulfill the provisions of this Section 32.

32. CHANGE OF FACILITIES OF OTHERS

If in the conduct of the Work any temporary changes or alterations in water, oil or gas pipelines, sewers, drains, conduits, fences, electric line or power lines, telephone or telegraph or other wires, poles, etc., of others are necessary, either for the convenience of the Contractor or for the performance of the Work, the responsibility for making such changes will rest with the Contractor unless otherwise provided elsewhere in this agreement; and he shall arrange for such changes to be made at his own expense.

If such changes are of a permanent character and made necessary solely by the improvement itself and not incident to the performance of the Work, then, in that case, such changes will be arranged for by the Owner or others without cost to the Contractor.

33. RIGHTS OF VARIOUS INTERESTS

Wherever work being done by Owner or railroad forces or by other contractor is contiguous to work covered by this contract, the respective rights of the various interests involved shall be established by the Engineer, to secure the completion of the various portions of the project in general harmony.

34. ORDER OF COMPLETION; USE OF COMPLETED PORTIONS

The Contractor shall complete any portion or portions of the work in such order of time as the Engineer may require. Owner shall have the right to take possession of and use any completed or partially completed portions of the Work, notwithstanding the time for completing the entire Work or such portions thereof may not have expired; but such taking possession and use shall not be deemed an acceptance of the Work so taken or used or any part thereof. If such prior use increases the cost of or delays the Work, the Contractor shall be entitled to such extra compensation or extension of time, or both, as the Engineer may determine.

35. CHANGES

Owner shall have the right to make any changes that may be hereafter determined upon, in the nature or dimensions of the Work. If such changes appreciably affect the cost of the Work to the Contractor, he shall, before proceeding with the Work, so notify the Owner in writing, and the difference shall be equitably adjusted by the Owner.

If such changes so warrant, the Owner may, at his option, require an increase in the amount of coverage afforded by the Bond and Insurance under Sections 18 and 19 hereof, but such changes in the Work shall not affect the validity of such bonds or insurance and shall not serve to relieve or release any surety of said bonds. Owner agrees to reimburse the Contractor for any reasonable increase in Contractor’s Bond or Insurance premiums which result from any such ordered increase in coverage.

36. EXTRA WORK

If, in the opinion of the Owner, any work should be done or material furnished which is not included, contemplated or classified in this contract, the Contractor shall, upon written order of the Owner, do such extra work or furnish such extra material. Buy agreement between the Contractor and the Owner, such extra work or material may be paid for on a lump-sum basis or on the basis of unit prices, or other method as agreed upon by the Owner and Contractor. No bill or claim for extra work or material shall be allowed or paid unless done or furnished on written order from the Owner. Bills or claims for extra work shall be presented to the Owner at the time of making the first monthly estimate after such work or material has been done or furnished, and such bills or claims must be accompanied by a copy of the Owner’s order covering such work or material. Any such extra work done or material furnished under the provisions of this paragraph shall be covered, governed and controlled by all the terms and provisions of this contract, subject to such prices as may be agreed upon or fixed by the Owner. The Contractor shall furnish the Owner reports in the number, form and detail prescribed by the Owner of all extra work done or material furnished.

37. SUSPENSION OF WORK

Owner may at any time suspend the Work, or any part thereof, by giving not less than seven (7) calendar days’ written notice to the Contractor, and if such suspension appreciably affects the cost of the Work to the Contractor, the difference shall be equitably adjusted by the Owner. The Contractor shall not suspend the Work, nor any part thereof, without written authority of the Owner. The Work shall be resumed by the Contractor in seven (7) calendar days after written notice from Owner to the Contractor to do so and the date fixed for completion shall be extended by a period equal to the period of suspension. Owner shall not be held liable for any damages or loss of anticipated profits on account of the Work being suspended, or for any work done during the interval of suspension.

38. DELAYS IN PERFORMANCE

In the event that the Work to be performed by Contractor is delayed without Contractor’s fault or for causes beyond Contractor’s control, Contractor, will, within seven calendar days after commencement of any condition which is causing or may cause delay, notify Owner in writing of the nature and causes of such delay. Should contractor fail to so notify Owner, Contractor shall be deemed to have waived all rights Contractor may have for an extension in time in the performance of Work. Contractor agrees that Contractor’s only remedy for delays which notice has been given as provided above shall be for an extension of time by the number of days by which Contractor has been delayed as determined in the sole and absolute discretion of the Owner, and that Contractor shall not be entitled to any recovery for loss, expense or damage resulting from any such delay.

39. ANNULMENT WITHOUT FAULT OF CONTRACTOR

Owner shall have the right at any time, for reasons which appear good to it, to annul this contract upon giving written notice to the Contractor, in which event the Contractor shall be entitled to the full amount of the estimate for the work done by him under this contract up to the time of such annulment, including the retained percentage. The Contractor shall be reimbursed by Owner for such expenditures as in the judgment of the Owner are not otherwise compensated for, and as are required in preparing for and moving to and from the Work; the intent being that an equitable settlement shall be made with the Contractor.

40. REMOVAL OF EQUIPMENT

Upon completion of the Work, or in case of annulment of this contract before completion for any cause whatever, the Contractor, if notified to do so by Owner, shall promptly remove any part or all of his equipment, materials, tools and supplies from the property of Owner, failing which Owner shall have the right to move such equipment, material, tools and supplies at the expense of Contractor.

41. CHARGES AGAINST CONTRACTOR

Owner shall have the right to apply any sums due or to become due to the Contractor under this contract in payment of any liabilities of the Contractor, or of any Subcontractor, to railroad for freight charges, rental of equipment, furnishing labor, materials or supplies, or for any other charges originating from this contract.

42. WITHHOLDING OF PAYMENT

If the Contractor fails to meet and pay all of his just obligations outstanding for labor, materials or supplies at the time when an estimate for payment is due him, or if any liens, claims or demands arising out of or in connection with the Work or its performance shall be outstanding at the time any payment may be due or is likely to be made thereafter, or if any claims arising out of or in connection with the Contractor’s operations under this contract are made against Owner by any other person than the Contractor, or, if in the opinion of the Owner, the Contractor is not proceeding with the Work in accordance with the provisions of this contract, Owner shall have the right to withhold out of any payments, final or otherwise, such sums as the Owner may deem ample to protect it against delay or loss or to assure the payment of just claims of third persons, and at its option, as agent for the Contractor, to apply such sums in such manner as the Owner may deem proper to secure such protection or to satisfy such claims. Such application shall be deemed payments for the Contractor’s account. The Owner may withhold payment to the Contractor on account of the failure of the Contractor to fully comply with any requirements of this contract.

43. QUANTITIES

Means of measurement and payment are outlined in the drawings and specification. All prices listed in the contract shall constitute full payment for all labor, tools, materials, equipment and other incidentals necessary to complete the work. Any adjustments in quantities must be handled as a change in accordance with paragraph 36 of this agreement.

44. MONTHLY ESTIMATE

A monthly pay estimate will be prepared using the bid tabs from the bid proposal. All the quantities will be measured and agreed upon by the field representatives for the Contractor and the Owner. The initial pay estimate will be prepared on an agreed upon date after mobilization and every 30 days thereafter, until completion of the project.

45. CLEANING UP

The Contractor shall, as directed by the Owner, remove from Owner’s property and from all public and private property, at his own expense, all temporary structures, rubbish and waste materials resulting from his operations. Floors and sidewalls or loading docks of structures shall be left broom clean. Prior to final acceptance, all work done by the Contractor shall be cleaned up and the premises occupied by the work left in a neat and orderly condition satisfactory to the Owner.

46. DAILY REPORTS AND ACCOUNTING INFORMATION

If required by the Owner, the Contractor shall furnish a daily statement of labor and equipment, distribution as to each item of work performed, showing hours worked and rates for the various classes of labor. At the completion of the Work, the Contractor shall furnish to the Owner, a complete list of unit quantities, unit costs and such other information as may be required by Owner to comply with the accounting requirements of the Interstate Commerce Commission. Contractor shall furnish Owner “as built” drawings of the Work.

47. ACCEPTANCE

The work shall be inspected for acceptance by the Railway Company promptly upon receipt of written notice that the Word is ready for inspection.

48. FINAL ESTIMATE

Upon the completion and acceptance of the Work, the Owner will make a final determination of the value of the Work completed to his satisfaction and shall determine the Final Payment due the Contractor. The amount so determined shall be paid to the contractor as soon thereafter as practicable, provided, however, before such final payment shall be made, the Contractor shall furnish, if requested by the Owner, satisfactory evidence that all payrolls, bills for material and other indebtedness in connection with the Work have been paid and that all liens, claims or suits for labor performed or material furnished in connection with the Work covered by this contract have been made. The Contractor expressly agrees to reimburse Owner for any amounts that the latter may be compelled to pay in satisfying such actions, including attorney’s fees incurred by the Owner in satisfying such claims or actions.

49. RELEASE

The Contractor at final payment will execute, acknowledge and deliver to Owner under his hand and seal a valid discharge from all claims and demands growing out of or connected with this contract.

THIS AGREEMENT shall inure to the benefit of and be binding upon the legal representatives and successors of the parties respectively.

IN WITNESS WHEREOF, The said Contractor and Owner, have executed this agreement as of the day and year first above written.

Homeland Energy Solutions
By:	/s/ Steven K. Eastman
	Steve Eastman
	President CEO
R&R Contracting
By:	/s/ Bruce Kopp
	Bruce Kopp
	Vice President and Chief Financial Officer

EX-10.4

Exhibit 10.4

CUSTOMER AGREEMENT

To: ADM Investor Services, Inc. 141 West Jackson Blvd. Chicago, IL 60604

Gentlemen:

In consideration of the acceptance by ADM Investor Services, Inc. (“ADMIS”) acting as broker, of one or more accounts of the undersigned (“Customer”) for the purchase or sale of commodity futures, commodity options, forward contracts, foreign exchange, physical or cash commodities, and exchange for physical (“EFP”) transactions (Collectively “contracts”) it is agreed as follows:

1. Customer acknowledges the following:

(a)	The purchase and sale of commodity futures contracts, exchange-traded and dealer options (commodity options) is speculative, involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of their margin deposits or of the entire option cost. Customer understands that because of the low margin normally required in commodity futures trading, price changes in commodity futures contracts may result in significant Customer losses, which losses may substantially exceed Customer’s margin deposits and any other deposits he may make. Customer also acknowledges that he has received, has read and understands this agreement.
(b)	Customer authorizes ADMIS to execute such transactions for the Customer’s account and exercise commodity options for Customer’s account in accordance with Customer’s oral or written instructions, ADMIS shall have the right to refuse to accept any orders. ADMIS shall also have the right to take record all telephone conversations with Customer.
(c)	Customer understands that ADMIS or its affiliates will at times act as principal in regard to cash, forward, or foreign exchange transactions.
(d)	ADMIS shall not be responsible to Customer in any case for a floor brokers’ inability to execute orders, or for error or negligence on the part of floor brokers who are not employees of ADMIS. Furthermore, ADMIS is not obligated to quote a price for any principal transaction.
(e)	The Customer acknowledges that the execution of a futures contract always anticipates making or accepting delivery. Customer hereby authorizes ADMIS to take all action deemed necessary by ADMIS in the event ADMIS takes physical delivery for customer and customer hereby agrees to indemnify ADMIS from all costs associated therewith. ADMIS may, in its sole discretion, liquidate any short position in Customer’s account if Customer has not delivered to ADMIS certificates, receipts, or other appropriate instruments of delivery at least seven days prior to the last trading day of the futures contract.
(f)	Customer acknowledges the right of ADMIS to limit, without notice to Customer, the number of open positions which Customer may maintain or acquire through ADMIS.

2.	Customer shall deposit with ADMIS (1) the applicable initial and maintenance requirements; pay interest, commission charges in effect from time to time, (which commissions may be shared by more than one of Customer’s agents) and other costs to ADMIS occasioned by carry8ng the account of the Customers; (2) deposit the amount of any deficit balance that may result from transactions executed by ADMIS for Customer’s account, and (3) pay the interest and service charges on any Customer deficit balances at the rates customarily charged by ADMIS together with ADMIS’s costs and attorney’s fees incurred in collecting any such deficit or defending claims brought by Customer in which ADMIS is the prevailing party.
3.	Customer understands and acknowledges that ADMIS acts as agent for all transactions which are executed on commodity futures exchanges and among other requirements, is financially liable to the exchange clearing houses of which it is a member and to the clearing members through which it clears transactions on exchanges of which it is not a clearing member, for deficit balances occurring in the Customer’s accounts; because of this, ADMIS is the guarantor of the financial responsibility of the Customer. Therefore, Customer agrees to hold ADMIS harmless with respect to any and all losses sustained by ADMIS resulting from deficit balances which may occur in the Customer’s account.
4.	Customer shall, without notice or demand from ADMIS, at all times, maintain adequate margins, so as continually to meet the margin requirements established by ADMIS. Such margin requirements established by ADMIS, in its sole and absolute discretion, may exceed the margin requirements set by any commodity exchange, or other regulatory authority. Customer agrees, when required, to wire transfer margins to ADMIS or any monies so required, and to furnish ADMIS with names of bank officers for immediate verification of such transfers.
5.	If, at any time, Customer’s account does not contain the amount of margin required by ADMIS, or by any exchange, clearing house or other regulatory authority, ADMIS may, at its sole and absolute discretion, at any time or from time to time, without notice to Customer, close out Customer’s open positions in whole or in part or take any other action it deems necessary to satisfy such requirements, including, but not necessarily limited to, transferring funds from other accounts of Customer including transfers between CFTC Segregated and other accounts. Failure of ADMIS to so act in such circumstances, in whole or in part, shall not constitute a waiver of its rights to do so any time or from time to time thereafter, nor shall ADMIS be subject to any liability to Customer for its failure so to act. In addition, ADMIS has the right, but not the obligation, to liquidate the account(s) upon receipt of notice of the death of Customer (if applicable).
6.	All monies, securities, negotiable instruments, forward contracts, foreign exchange contracts physical or cash contracts, commodity options, open positions in futures contracts and commodities, or other property now or at any future time in Customer’s account, or held by ADMIS or its affiliates for Customer, are hereby pledged with ADMIS, and shall be subject to a security interest in ADMIS’s favor to secure any indebtedness, at any time, owing from Customer to ADMIS without regard to whether or not ADMIS or its affiliates has made advances with respect to such property. Customer will not cause or allow any of the property held in his accounts to be subject to any other liens, security interests, mortgages or other encumbrances without the express written approval of ADMIS.

7.	Customer understands that obligations arising out of transactions denominated and/or paid for in currencies other than U.S. Dollars may be converted to U.S. Dollars at the discretion of AMIS at an exchange rate determined by ADMIS at its discretion based on prevailing market rates and Customer will be required to pay ADMIS in U.S. Dollars.
8.	Customer acknowledges that: (1) any market recommendations and information communicated to Customer by ADMIS do not constitute an offer to sell, or the solicitation of an offer to buy any commodity, or any commodity futures contract; (2) such recommendations and information, although based upon information obtained from sources believed by ADMIS to be reliable, may be incomplete and may not be verified; and (3) ADMIS makes no representation, warranty or guarantee as to, and shall not be responsible for, the accuracy or completeness of any information or trading recommendation furnished to Customer. Customer understands that ADMIS and/or its officers, directors, affiliates, stockholders or representatives may have a position or positions in and may intend to buy or sell commodities or commodity futures contracts, which are the subject of market recommendations furnished to Customer, and that the position or positions of ADMIS or any such officer, director, affiliate, stockholder, or representative may or may not be consistent with the recommendations furnished to Customer by ADMIS.
9.	All transactions by ADMIS on Customer’s behalf shall be subject to the applicable constitutions, rules, regulations, customs, usages, rulings, and interpretations of the exchange or markets on which such transactions are executed by ADMIS or its agents for Customer’s account (such as the Board of Trade of the City of Chicago, The Chicago Mercantile Exchange, and the MidAmerica Commodity Exchange and the clearing houses affiliated with each, if any) and to all applicable governmental acts and statutes (such as the Commodity Exchange Act or the Commodity Futures Trading Commission Act of 1974) and to rules and regulations made thereunder, ADMIS shall not be liable to Customer as a result of any action taken by ADMIS, or its agents, to comply with any such constitution, rule, regulation, custom, usage, ruling, interpretation, act or statue. If Customer is subject to regulation, Customer agrees that ADMIS has no duty to ascertain or ensure that Customer is in compliance with any governing statutes or rules.
10.	If, at any time, Customer shall be unable to delivery to ADMIS any security, commodity or other property previously bought or sold by ADMIS on Customer’s behalf, Customer authorized ADMIS, in its discretion, to borrow or to buy any security, commodity, or other property necessary to make delivery thereof, and Customer shall pay and MIS, in its discretion, to borrow or to buy any security, commodity, or other property necessary to make delivery thereof, and Customer shall pay and indemnify ADMIS for any costs, losses, and damages (including consequential costs, losses and damages) which ADM may sustain thereby and any premiums which ADMIS may be required to pay thereon, and for any costs, losses and damages (including consequential costs, losses, and damages) which ADMIS may sustain thereby and any premiums which ADMIS may be required to pay thereon, and for any costs, losses and damages (including consequential costs, losses and damages) which ADMIS may sustain from its inability to borrow or buy any such security, commodity or other property.

11.	Customer acknowledges and agrees that ADMIS shall not be responsible to Customer for any losses resulting from conduct or advice (including but not limited to errors and negligence) on the part of any broker/dealer, futures commission merchant, independent introducing broker, commodity trading advisor, or any other person or entity introducing Customer to ADMIS or having trading authority over the account of Customer at ADMIS. Customer specifically agrees that ADMIS shall have no obligation to supervise the activities of any such person or entity and Customer will indemnify ADMIS and hold ADMIS harmless from and against all losses, liabilities, and damages (including attorney’s fees) incurred by ADMIS as a result of any actions taken or not taken by such person or entity.
12.	Customer authorizes ADMIS to contact such banks, financial institutions, credit agencies, and other references as ADMIS shall deem appropriate from time to time verify the information regarding Customer which may be provided by Customer. Customer understands that an investigation may be made pertaining to his personal and business credit standing and that Customer may make a written request within a reasonable period of time for complete and accurate disclosure of its nature and scope.
13.	ADMIS shall not be responsible for delays in the execution of orders due to breakdown, or failure of transmission, or communication facilities, or to any other cause beyond ADMIS’s control.
14.	Confirmation of trades, contracts statements of account, margin calls, and any other notices sent by ADMIS to customer shall be sent to the address shown in and to the attention of the person(s) named in the “Customer Account Documentation” and they shall be conclusively deemed accurate and complete and customer waives and releases any claim relating thereto, if not objecting to, in writing, prior to the opening of trading on the contract market on which such transaction occurred on the next business day following the date on which such communication was first received. The price at which an order is executed shall be binding notwithstanding the fact an erroneous report is made. An order which was executed by in error reported not executed shall be binding. Customer shall direct all objections to ADM Investor Services, Inc., 141 West Jackson Boulevard, Suite #1600A, Chicago, Illinois 60604, (312) 242-7000.
15.	All transactions for or on Customer’s behalf shall be deemed to be included in a single account whether or not such transactions are segregated on ADMIS’s records into separate accounts, either severally or jointly with others, for purposes including reportable positions as required by regulatory authorities.

16.	The Agreement, including all authorizations, shall inure to the benefit of ADMIS, its successors and assigns and shall be binding upon Customer and Customer’s personal representatives, executors, trustees, administrators, agents, successors, and assigns. In the event that Customer’s financial condition becomes unsatisfactory to ADMIS, in its sole discretion, or that a petition, voluntary or involuntary, in bankruptcy to reorganize, or to effect a composition or extension, is filed by or against Customer, or in the event a receiver is appointed of Customer’s property or business in any proceeding whatsoever, state or federal, or in the event of Customer’s legal incapacity or death (and whenever the Customer consists of more than one person, then upon the occurrence of any of the aforementioned contingencies to any of them), ADMIS may, at its sole and absolute discretion, either continue to carry or close and liquidate the account of Customer, including the covering of short positions, exercise of options or offset of forward contracts and foreign exchange contracts subject to no liability to the personal representatives, executors, trustees, administrators, agents, successors or assigns of Customer for the use of such discretion.
17.	The rights and remedies conferred upon the parties hereto shall be cumulative, and the exercise or waiver of any thereof shall not preclude or inhibit the exercise of additional rights or remedies.
18.	Customer agrees that ADMIS may, from time to time, change the account number assigned to any account covered by this Agreement, and that this Agreement shall remain in full force and effect. Customer agrees further that this account, as well as all additional accounts opened by him at ADMIS, shall be covered by this same Agreement with the exception of any new account for which a new Customer Agreement is signed.
19.	Subject to the Arbitration Agreement between ADMIS and Customer, Customer agrees that any civil action or other legal proceeding between ADMIS or its employees, agents, representatives, affiliated brokers and/or associated persons, on the one hand, and Customer, on the other hand, arising out of or relating to this Agreement, transactions hereunder, or Customer’s account shall be brought, heard and resolved in the Cook County Circuit Court located in Chicago, Illinois and Customer waives the right to have such proceeding transferred to any other location. In addition, Customer waives the right to trial by jury in any such action or proceeding. Any such action or proceeding shall be governed by the law of the State of Illinois. No action, including arbitration, and regardless of form arising out of or relating to this Agreement, transactions hereunder, or Customer’s account may be brought by Customer more than one year after the cause of action arose (regardless of the date of discovery of the alleged injury), provided, however, that any action brought under the provisions of Section 14 of the Commodity Exchange Act may be brought at any time within two years after the cause of action accrues.
20.	Customer represents that (1) he/she is (or, if Customer is a corporation, that each officer and director is, if Customer is a partnership, that each partner is) an adult of sound mind and is under no legal disability which would prevent him/her from trading in commodities, commodity futures contracts, options contracts, forward contracts, foreign exchange or other physical or cash contracts therein or entering into this Agreement; (2) he/she is (or its officers and directors or its partners are) authorized to enter into this Agreement.

21. Customer warrants the accuracy of the information contained in the account application to be complete, true and correct and agrees that Customer will promptly notify ADMIS of any material change in the information. Customer further warrants that no one except Customer has an interest in the account and that Customer has full power and authority to enter into this Agreement and to engage in the transactions of the kind contemplated herein.

Name (Print)	Stephen K. Eastman	Name (Print)
Name (Signature)	/s/ Stephen K. Eastman Customer/Officer/Partner	Name (Print)	Customer/Officer/Partner
	Date 7-29-08		Date

ARBITRATION

Any controversy between ADM Investor Services, Inc. (“ADMSI”) or its employees, agents, representatives, affiliated brokers, or associated persons, on the one hand, and the Customer, on the other hand, arising out of or related to Customer’s account, or to this agreement or the breach thereof, shall be settled only by arbitration in accordance with the rules of National Futures Association, the Commodity Futures Trading Commission, or the exchange upon which the transaction complained of was executed, as Customer may elect. If Customer does not make such an election by registered mail addressed to ADMIS within 45 days of demand by ADMIS that Customer make such an election, then ADMIS may make such an election. Any proceeding must be commenced within one year after the transaction or occurrence complained of, regardless of the date of discovery of the alleged injury. In such proceeding both Customer and ADMIS waive any right to punitive damages. Judgment upon the arbitration award shall be final and may be entered in any court having jurisdiction thereof.

THREE FORUMS EXIST FOR THE RESOLUTION OF COMMODITY DISPUTES: CIVIL COURT LITIGATION, REPARATIONS AT THE COMMODITY FUTURES TRADING COMMISSION (CFTC) AND ARBITRATION CONDUCTED BY A SELF-REGULATORY OR OTHER PRIVATE ORGANIZATION.

THE CFTC RECOGNIZES THAT THE OPPORTUNITY TO SETTLE DISPUTES BY ARBITRATION MAY IN SOME CASES PROVIDE MANY BENEFITS TO CUSTOMERS, INCLUDING THE ABILITY TO OBTAIN AN EXPEDITIOUS AND FINAL RESOLUTION OF DISPUTES WITHOUT INCURRING SUBSTANTIAL COSTS. THE CFTC REQUIRES, HOWEVER, THAT EACH CUSTOMER INDIVIDUALLY EXAMINE THE RELATIVE MERITS OF ARBITRATION AND THAT YOUR CONSENT TO THIS ARBITRATION AGREEMENT BE VOLUNTARY.

BY SIGNING THIS AGREEMENT, YOU: (1) MAY BE WAIVING YOUR RIGHT TO SUE IN A COURT OF LAW; AND (2) ARE AGREEING TO BE BOUND BY ARBITRATION OF ANY CLAIMS OR COUNTERCLAIMS WHICH YOU AR ADMIS MAY SUBMIT TO ARBITRATION UNDER THIS AGREEMENT. YOU ARE NOT, HOWEVER, WAIVING YOUR RIGHT TO ELECT INSTEAD TO PETITION THE CFTC TO INSTITUTE REPARATIONS PROCEEDINGS UNDER SECTION 14 OF THE COMMODITY EXCHANGE ACT WITH RESPECT TO ANY DISPUTE WHICH MAY BE ARBITRATED PURSUANT TO THIS AGREEMENT. IN THE EVENT A DISPUTE ARISES, YOU WILL BE NOTIFIED IF ADMIS INTENDS TO SUBMIT THE DISPUTE TO ARBITRATION. IF YOU BELIEVE A VIOLATION OF THE COMMODITY EXCHANGE ACT IS INVOLVED AND IF YOU PREFER TO REQUEST A SECTION 14 “REPARATIONS” PROCEEDING BEFORE THE CFTC, YOU WILL HAVE 45 DAYS FROM THE DATE OF SUCH NOTICE IN WHICH TO MAKE THAT ELECTION.

YOU NEED NOT SIGN THIS AGREEMENT TO OPEN AN ACCOUNT WITH ADMIS. SEE 17 CFR 180.1-180.5.

Name (Signature)	/s/ Stephen K. Eastman	Name(Signature)
Date 7-29-08		Date

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO 17 CFR 240.15d-14(a)
(SECTION 302 CERTIFICATION)

I, Stephen Eastman, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Homeland Energy Solutions, LLC;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2008	/s/ Stephen Eastman
	Stephen Eastman,
	President (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO 17 CFR 240.15d-14(a)
(SECTION 302 CERTIFICATION)

I, Bernard Retterath, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Homeland Energy Solutions, LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2008	/s/ Bernard Retterath
	Bernard Retterath,
	Treasurer (Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this quarterly report on Form 10-Q of Homeland Energy Solutions, LLC (the “Company”) for the quarter ended June 30, 2008, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stephen Eastman, President and Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Stephen Eastman  

Stephen Eastman, 

President (Principal Executive Officer)
Dated: August 14, 2008 

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this annual report on Form 10-Q of Homeland Energy Solutions, LLC (the “Company”) for the quarter ended June 30, 2008, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Bernard Retterath, Treasurer and Principal Financial and Accounting Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Bernard Retterath  

Bernard Retterath, 

Treasurer (Principal Financial and Accounting Officer)
Dated: August 14, 2008