August 22, 2008

We have looked into the future, and the future is ours.

- Cesar Chavez

Dear Investors:

Gary Schwendiman, Howard Schildhouse and I spent the past 10 days in the heartland of
America, meeting with the management teams for four ethanol producers in which we are
the largest investors and the entrepreneurs who are driving fundamental and critically
important technological improvements for the ethanol industry. We will prepare detailed
reports on the new technology, and distribute these reports to you within the next few
weeks. I did, however, want to provide a short summary to whet your appetite for the
information that will follow.

We Have Seen the Future, and it is Food AND Fuel

As you know, we only invest in ethanol plants designed, engineered and constructed by
industry leaders ICM, Inc. and Fagen, Inc. We spent two days at ICM’s state-of-the-art
research, scientific and application facilities, meeting with ICM founder and CEO David
Vander Griend and industry experts from his staff, many of whom are PhD scientists. The
focus of our meeting was Total Kernel Optimization (TKO), a new technology developed
by ICM that will enable ethanol plants to produce food products AND fuel, and do both
with greater efficiency. This technology effectively ends the myth of food vs. fuel.

The heart of this new technology is a process called Dry Corn Fractionation, which is a
mechanical separation of the corn kernel into purified fractions: endosperm, bran and
germ. Dry Corn Fractionation, coupled with ICM’s Solid Fuel Combustor, will increase
ethanol output on the same amount of corn, reduce production costs by providing an
alternative fuel to natural gas and provide a gateway to technological advances that will
provide food products for people, additional food products for animals and increased
operating efficiencies. ICM expects to complete its first installation of the fractionation
and combustor technology by early 2010, and to have the complete TKO technology
program in place by 2011.

We Have Seen the Future, and it is Direct Distribution and Blender Pumps

Today, most of the ethanol produced in the United States is sold to oil refiners and
blenders, who bid for ethanol based on the cost of corn rather than the price of gasoline.
This pricing strategy by the oil companies, which only started this year, has compressed
operating margins for ethanol producers, and allowed the oil companies to enjoy even
richer operating margins. The solution to this problem is for ethanol producers to market
their production directly to the retail fuel stations, thereby bypassing oil refiners.

We met with two entrepreneurs who are leading the effort towards direct marketing of
ethanol to fuel stations that have installed blender pumps. Blender pumps allow
consumers to purchase blended fuels ranging from E10 (10% ethanol) to E85 (85%
ethanol). Fuel prices will reflect the savings from ethanol blends. For example, at a
blender pump fuel station we visited in Lawrence, Kansas, E10 sold for $3.599, E20 and
E30 sold for $3.549 and $3.449, respectively, and E85 sold for $2.899, while regular
unleaded gas sold for 3.699 or more at other fuel stations in the area. And, by blending at
fuel stations rather than terminals, the federal blending subsidy goes to the retailer, and in
turn, the retailer is likely to share this subsidiary with consumers through lower prices at
the pump.

Recently, Senator Sam Brownback, R-KS, joined ICM CEO David Vander Griend in a
ribbon-cutting ceremony to celebrate the opening of a new blender pump fuel station in
Colwich, Kansas, and “to kick off a new initiative in Kansas that will help fuel station
retailers obtain funding and the equipment needed to sell higher blends of ethanol,” as
reported by Domestic Fuel. http://domesticfuel.com/2008/08/18/ethanol-branding-at-
the-pump/.

TKO, direct marketing and blender pumps are available to both existing and new ethanol
producers. We will be working with the management teams of all of the companies in
which we are invested to evaluate the integration of these new technologies with existing
operations. We will also continue to work with the entrepreneurs driving the new
technology in order to evaluate opportunities to incorporate the technologies within
future private equity funds.

Sincerely,

Scott Brittenham
Chairman, President and Chief Executive Officer