Proposed Business and Implementation Strategy

In General. To achieve our goal of becoming a significant producer of ethanol in the U.S., that is, a producer of 500 million gallons per year of ethanol, we have developed a strategy that we intend to pursue. Our strategy, which is dependent on our ability to obtain significant additional capital, has the following important elements:

Low-cost production capacity. It is our intention to capitalize on the growing demand in the U.S. for ethanol by establishing increasing production capacity as quickly as possible over the next several years. In pursuing our expansion strategy, we will seek to build and/or acquire large-scale facilities with design elements that incorporate technology improvements and continue to build and/or acquire facilities in locations with access to multiple rail services. We believe that using similar facility designs will permit us to lower our costs relating to spare parts and to take advantage of our operations experience to be gained at other future facilities.

Focus on Cost Efficiency. Our corporate challenge will always be to seek greater economies of scale in our operations and to maximize energy efficiency and increase yield. Included in this challenge will be to purchase corn during peak supply periods to reduce our corn costs and to reduce our per-unit energy and transportation costs where possible.

Implement Risk Mitigation Strategies. Once we near completion of the Manchester production facility, our management will begin its efforts to mitigate our exposure to commodity price fluctuations by purchasing a portion of our corn requirements on a fixed price basis and purchasing corn and natural gas futures contracts. In addition, it is expect that, to mitigate our ethanol price risk, we will sell a portion of our future production under fixed price and indexed contracts. Should we be successful in managing our exposure to commodity price fluctuations, we expect that our operating results will be less volatile. There is no assurance that we will be successful in these efforts.

Seek Beneficial Alternative Technologies. Our management intends to investigate the feasibility of implementing, at some time in the future, new technologies that would serve to augment or replace natural gas usage. It is expected that these technologies would allow us to reduce our energy costs. Capital costs and engineering issues must be adequately addressed prior to any implementation of any such technology.

Seek to Expand Market Demand for Ethanol. As our rate of growth and our access to capital permit, our management intends to take actions it believes will create additional demand for ethanol, including, investing in new technologies that use ethanol and employing institutional advertising that focuses on, and promotes the use of, ethanol.

Pursue Potential Acquisition Opportunities. Assuming that we have capital available, we believe that, as the ethanol industry matures, opportunities for expansion of our business through acquisitions will be available. Such an acquisition could involve additional ethanol production, storage or distribution facilities and related infrastructure, as well as potential facility sites under development. Our current efforts in acquiring ACE Ethanol, LLC is an example of this plan.

In Particular. The ethanol produced by our first, the Manchester facility, and likely any future, ethanol production facility, will use corn feedstock. The distiller’s grains byproducts, which are the remnants of the corn after the ethanol-producing starch is removed, will be sold to dairies, cattle lots and hog operations as a valuable protein feed supplement.

We have entered into an engineering agreement with a project engineering firm to provide the ethanol process technology for five future ethanol production facilities proposed to be built by our company, including the Manchester facility. In addition, this project engineering firm is to provide training in plant start-up and operation. These plants’ designs will include the latest technology from the project engineering firm that fractionates the corn into more value-added products that allow the value of the Dried Distillers Grain with Solubles (DDGS) to increase significantly over the current value. Also, the project engineering firm, intends to integrate new technologies that allow for improved natural gas consumption into our plant designs. If beneficial, the project engineering firm intends to implement biomass boilers and/or anaerobic digestion to promote increased operating efficiency at a particular plant. Also, it is expected that each plant’s design will accommodate new ethanol feed stocks, as the economics change among the various feedstock commodities.