**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**WASHINGTON, D.C. 20549

** **

**FORM10-QSB/A****(AMENDMENTNO. 1)**

**QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(****d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED:**   **JUNE 30,2006**

**Commission File Number:  333-125335**

**ADVANCED BIOENERGY, LLC**

(Exact name of Small Business Issuer as Specified inits Charter)

** **

| **Delaware**                     |   | **10251  Wayzata Boulevard, Suite 250** |   | **20-2281511**       |
|----------------------------------|--------|-----------------------------------------|--------|----------------------|
| (State or Other  Jurisdiction of |   | **Minneapolis,  Minnesota 55305**       |   | (I.R.S. Employer     |
| Incorporation or  Organization)  |   | **(877)  651-1166**                     |   | Identification  No.) |

    (Address,including zip code, and telephone number, including area code,

of Principal ExecutiveOffices)

 

Checkwhether the issuer (1) has filed all reports required to be filed by Section 13or 15(d) of the Exchange Act during the preceding 12 months (or for suchshorter period that the registrant was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days.  Yes xNo o

Indicateby check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).  Yes oNo x

Indicatethe number of units outstanding of each of the issuer’s classes of commonstock, as of the latest practicable date:  7,165,600 membership units outstanding as ofAugust 14, 2006.

TraditionalSmall Business Disclosure Format (check one): Yes o No x

 

 

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**ADVANCED BIOENERGY, LLC**

**QUARTERLY PERIOD ENDED JUNE 30,2006**

**Index**

 
|                                | ** ** | ** ** | ** **           | ** **                                                 | ** ** | ** ** |
|--------------------------------|------------|------------|----------------------|------------------------------------------------------------|------------|------------|
| EXPLANATORY  NOTE              |       |       |
| PART I. FINANCIAL  INFORMATION |       |       |
|                           | Item 1.    |       | Financial Statements |                                                       |       |
|                           |       |       |                 | Consolidated Balance  Sheets                               |       |       |
|                           |       |       |                 | Consolidated  Statements of Operations                     |       |       |
|                           |       |       |                 | Consolidated  Statement of Changes in Members’ Equity |       |       |
|                           |       |       |                 | Consolidated  Statements of Cash Flows                     |       |       |
|                           |       |       |                 | Notes to  Consolidated Unaudited Financial Statements      |       |       |
|                           |       |       |                 |                                                       |       |       |
| PART II. OTHER  INFORMATION    |       |       |
|                           | Item  6.   |       | Exhibits             |                                                       |       |       |
|                           |       |       |                 |                                                       |       |       |
|  SIGNATURES               |       |       |
|                                |            |            |                      |                                                            |            |            |  |  |  |  |

 

 

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**EXPLANATORYNOTE**

In accordance withExchange Act Rule 12b-15, this Amendment No. 1 on Form 10-QSB/A amends certainitems of the Quarterly Report on Form 10-QSB of Advanced BioEnergy, LLC for thequarter ended June 30, 2006, originally filed with the Securities and ExchangeCommission on August 14, 2006, and presents the full text of the items amended.The purpose of this amendment is to reflect changes in the statements of cashflows that we believe provide a better understanding of our business toinvestors. This Form 10-QSB/A does not reflect events occurring after thefiling of the original Form 10-QSB or modify or update those disclosures in theoriginal Form 10-QSB that are not modified by this Form 10-QSB/A.

**PART I. FINANCIALINFORMATION**

**ITEM 1. FINANCIAL STATEMENTS**

**ADVANCED BIOENERGY, LLC &SUBSIDIARY(A DEVELOPMENT STAGE COMPANY)CONSOLIDATED BALANCE SHEETS (UNAUDITED)**
| ** **                                                  | ** ** | **June 30,** | ** ** | **September 30,** | ** ** |
|-------------------------------------------------------------|------------|-------------------|------------|------------------------|------------|
| ** **                                                  | ** ** | **2006**          | ** ** | **2005**               | ** ** |
| **ASSETS**                                                  | ** ** | ** **        |       | ** **             | ** ** |
|                                                        |       |              |       |                   |       |
| **CURRENT ASSETS**                                          |       |              |       |                   |       |
| Cash and cash  equivalents                                  |       | $                 | 14,420,730 |                   | $          | 893,587 |   |
| Prepaid expenses                                            |       | 28,333            |       | 58,230                 |       |
| Other receivable                                            |       | 46,522            |       | 2,358                  |       |
|                                                        |       |              |       |                   |       |
| **TOTAL  CURRENT ASSETS**                                   |       | 14,495,585        |       | 954,175                |       |
| ** **                                                  |       |              |       |                   |       |
| **PROPERTY AND EQUIPMENT**                                  |       |              |       |                   |       |
| Land                                                        |       | 1,420,847         |       | —                 |       |
| Office equipment                                            |       | 200,217           |       | 38,685                 |       |
| Leasehold  improvement                                      |       | 8,513             |       | 8,513                  |       |
| Construction in  process                                    |       | 12,771,411        |       | —                 |       |
|                                                        |       | 14,400,988        |       | 47,198                 |       |
| Less accumulated  depreciation                              |       | (17,667           | )          | (2,275                 | )          |
|                                                        |       | 14,383,321        |       | 44,923                 |       |
|                                                        |       |              |       |                   |       |
| **OTHER ASSETS**                                            |       |              |       |                   |       |
| Cash for plant  construction                                |       | 43,000,000        |       | -                      |       |
| Land option  deposits                                       |       | 55,000            |       | 30,000                 |       |
| Other assets                                                |       | 58,400            |       | 26,400                 |       |
| Financing costs                                             |       | 825,004           |       | 354,013                |       |
| Intangible                                                  |       | 2,811,531         |       | —                 |       |
|                                                        |       | 46,749,935        |       | 410,413                |       |
|                                                        |       |              |       |                   |       |
| **TOTAL ASSETS**                                            |       | $                 | 75,628,841 |                   | $          | 1,409,511 |   |
| ** **                                                  |       |              |       |                   |       |
|                                                        |       |              |       |                   |       |
| **LIABILITIES AND MEMBERS’ EQUITY**                    |       |              |       |                   |       |
|                                                        |       |              |       |                   |       |
| **CURRENT LIABILITIES**                                     |       |              |       |                   |       |
| Accounts payable                                            |       | $                 | 3,512,103  |                   | $          | 193,673 |   |
| Accrued expenses                                            |       | 204,269           |       | 5,972                  |       |
|                                                        |       |              |       |                   |       |
| **TOTAL  CURRENT LIABILITIES**                              |       | 3,716,372         |       | 199,645                |       |
| ** **                                                  |       |              |       |                   |       |
| **LONG-TERM DEBT**                                          |       | 7,000,000         |       | —                 |       |
| ** **                                                  |       |              |       |                   |       |
| **MEMBERS’ EQUITY**                                    |       |              |       |                   |       |
| Members’  capital, no par value, authorized 20,000,000 |       |              |       |                   |       |

 

3

----

 
| units, issued 7,165,600 and 625,000 units,  respectively |   | 66,771,932 |       | 3,174,098  |   |
|----------------------------------------------------------|--------|------------|------------|------------|--------|
| Deficit accumulated during development stage             |   | (1,561,844 | )          | (914,232   | )      |
| Unearned compensation                                    |   | (297,619   | )          | (1,050,000 | )      |
|                                                     |   | 64,912,469 |       | 1,209,866  |   |
|                                                     |   |       |       |       |   |
| **TOTAL LIABILITIES AND MEMBERS’  EQUITY**          |   | $          | 75,628,841 |       | $      | 1,409,511 |   |
|                                                          |        |            |            |            |        |  |  |

See notes to unaudited consolidated financial statements.

4

----

 

**ADVANCED BIOENERGY, LLC &SUBSIDIARY(A DEVELOPMENT STAGE COMPANY)CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)**
| ** **                                     | ** ** | ** **                  | ** ** | ** **                  | ** ** | **Period From**                    | ** ** | ** **                  | ** ** | **Period From**                    | ** ** |
|------------------------------------------------|------------|-----------------------------|------------|-----------------------------|------------|-----------------------------------------|------------|-----------------------------|------------|-----------------------------------------|------------|
| ** **                                     | ** ** | **Three Months**       | ** ** | **Three Months**       | ** ** | **Inception**                           | ** ** | **Nine Months**        | ** ** | **Inception**                           | ** ** |
| ** **                                     | ** ** | **Ended**                   | ** ** | **Ended**                   | ** ** | **(January 4, 2005) to** | ** ** | **Ended**                   | ** ** | **(January 4, 2005) to** | ** ** |
| ** **                                     | ** ** | **June 30, 2005** | ** ** | **June 30, 2006** | ** ** | **June 30, 2005**             | ** ** | **June 30, 2006** | ** ** | **June 30, 2006**             | ** ** |
|                                           |       |                        |       |                        |       |                                    |       |                        |       |                                    |       |
| **REVENUES**                                   |       | $                           | —     |                        | $          | —                                  |       | $                           | —     |                                    | $          | — |   | $ | — |   |
| ** **                                     | ** ** | ** **                  | ** ** | ** **                  | ** ** | ** **                              | ** ** | ** **                  | ** ** | ** **                              | ** ** |
| **OPERATING  EXPENSES**                        | ** ** | ** **                  | ** ** | ** **                  | ** ** | ** **                              | ** ** | ** **                  | ** ** | ** **                              | ** ** |
| Start-up expenses                              |       | 428,795                     |       | 64,729                      |       | 501,275                                 |       | 350,521                     |       | 1,074,272                               |       |
| Accounting                                     |       | 580                         |       | 41,297                      |       | 2,260                                   |       | 101,366                     |       | 105,131                                 |       |
| Consulting fees                                |       | 47,071                      |       | 22,640                      |       | 57,754                                  |       | 88,834                      |       | 162,500                                 |       |
| Legal                                          |       | 9,438                       |       | 181,096                     |       | 28,957                                  |       | 279,443                     |       | 314,233                                 |       |
| Directors’ meetings and expenses          |       | 7,517                       |       | 64,036                      |       | 19,738                                  |       | 127,428                     |       | 167,657                                 |       |
| Meetings and travel expenses                   |       | —                      |       | 19,676                      |       | —                                  |       | 21,654                      |       | 21,654                                  |       |
| Office expenses                                |       | 704                         |       | 15,854                      |       | 2,510                                   |       | 32,026                      |       | 38,988                                  |       |
| Office labor                                   |       | —                      |       | 226,403                     |       | —                                  |       | 311,764                     |       | 322,145                                 |       |
| Payroll tax expense                            |       | —                      |       | 14,305                      |       | —                                  |       | 19,121                      |       | 19,842                                  |       |
| Insurance                                      |       | 22                          |       | 16,688                      |       | 22                                      |       | 48,227                      |       | 55,568                                  |       |
| Utilities                                      |       | 912                         |       | 3,648                       |       | 2,093                                   |       | 10,463                      |       | 14,653                                  |       |
| Rent                                           |       | —                      |       | 2,100                       |       | —                                  |       | 6,300                       |       | 8,400                                   |       |
| Advertising and promotion                      |       | 770                         |       | —                      |       | 770                                     |       | 1,028                       |       | 4,220                                   |       |
| Licenses and fees                              |       | 44                          |       | 200                         |       | 44                                      |       | 6,850                       |       | 7,657                                   |       |
| Depreciation                                   |       | —                      |       | 6,405                       |       | —                                  |       | 12,859                      |       | 15,134                                  |       |
| Bank charges                                   |       | —                      |       | 4,360                       |       | —                                  |       | 19,593                      |       | 19,634                                  |       |
| Crop expense                                   |       | —                      |       | 7,653                       |       | —                                  |       | 7,653                       |       | 7,653                                   |       |
| Miscellaneous                                  |       | —                      |       | 4,105                       |       | 22                                      |       | 7,748                       |       | 7,769                                   |       |
|                                           |       | 495,853                     |       | 695,195                     |       | 615,445                                 |       | 1,452,878                   |       | 2,367,110                               |       |
|                                           |       |                        |       |                        |       |                                    |       |                        |       |                                    |       |
| **LOSS  FROM OPERATIONS**                      |       | (495,853                    | )          | (695,195                    | )          | (615,445                                | )          | (1,452,878                  | )          | (2,367,110                              | )          |
| ** **                                     | ** ** | ** **                  | ** ** | ** **                  | ** ** | ** **                              | ** ** | ** **                  | ** ** | ** **                              | ** ** |
| **OTHER  INCOME (EXPENSE)**                    | ** ** | ** **                  | ** ** | ** **                  | ** ** | ** **                              | ** ** | ** **                  | ** ** | ** **                              | ** ** |
| Other income                                   |       | —                      |       | —                      |       | —                                  |       | 12,000                      |       | 12,000                                  |       |
| Rent income                                    |       | —                      |       | 750                         |       | —                                  |       | 2,000                       |       | 2,000                                   |       |
| Interest income                                |       | —                      |       | 668,620                     |       | —                                  |       | 840,417                     |       | 840,417                                 |       |
| Interest expense                               |       | —                      |       | —                      |       | —                                  |       | (49,151                     | )          | (49,151                                 | )          |
|                                           |       |                        |       |                        |       |                                    |       |                        |       |                                    |       |
| **LOSS  ACCUMULATED DURING DEVELOPMENT STAGE** |       | $                           | (495,853   | )                           | $          | (25,825                                 | )          | $                           | (615,445   | )                                       | $          | (647,612 | ) | $ | (1,561,844 | ) |
|                                           |       |                        |       |                        |       |                                    |       |                        |       |                                    |       |
| **Weighted  Average Units**

**Outstanding**   |       | 467,810                     |       | 6,700,502                   |       | 291,911                                 |       | 2,595,319                   |       | 1,487,134                               |       |
|                                           |       |                        |       |                        |       |                                    |       |                        |       |                                    |       |
| **Net Loss Per Unit - Basic and**

**Diluted** |       | $                           | (1.06      | )                           | $          | (0.00                                   | )          | $                           | (2.11      | )                                       | $          | (0.25 | ) | $ | (1.05 | ) |

 

Seenotes to unaudited consolidated financial statements.

5

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**ADVANCED BIOENERGY, LLC &SUBSIDIARY(A DEVELOPMENT STAGE COMPANY)CONSOLIDATED STATEMENT OF CHANGES IN MEMBERS’ EQUITY (UNAUDITED)Period from January 4, 2005 (Date of Inception)to June 30, 2006**
| ** **                                                                               | ** ** | ** **        | ** **     | **Deficit**     | ** ** | ** **       | ** ** | ** ** | ** **     |
|------------------------------------------------------------------------------------------|------------|-------------------|----------------|-----------------|------------|------------------|------------|------------|----------------|
| ** **                                                                               | ** ** | ** **        | ** **     | **Accumulated** | ** ** | ** **       | ** ** | ** ** | ** **     |
| ** **                                                                               | ** ** | ** **        | ** **     | **During**      | ** ** | ** **       | ** ** | ** ** | ** **     |
| ** **                                                                               | ** ** | **Members’** | ** **     | **Development** | ** ** | **Unearned**     | ** ** | ** ** | ** **     |
| ** **                                                                               | ** ** | **Capital**       | ** **     | **Stage**       | ** ** | **Compensation** | ** ** | **Total**  | ** **     |
|                                                                                     |       |              |           |            |       |             |       |       |           |
| **MEMBERS’  EQUITY - January 4, 2005**                                              | ** ** | **$**             | **—**     | ** **      | **$**      | **—**       | ** ** | **$**      | **—**     | ** ** | **$** | **—** | ** ** |
| ** **                                                                               | ** ** | ** **        | ** **     | ** **      | ** ** | ** **       | ** ** | ** ** | ** **     |
| Issuance of 450,000 membership units                                                     |       | 1,500,000         |           | —          |       | —           |       | 1,500,000  |           |
| Issuance of 7,500 membership units                                                       |       | 25,000            |           | —          |       | —           |       | 25,000     |           |
| Issuance of 125,000 restricted

membership units                                         |       | 1,250,000         |           | —          |       | (1,250,000       | )          | —     |           |
| Issuance of 42,500 restricted

membership units                                          |       | 425,000           |           | —          |       | (425,000         | )          | —     |           |
| Amortization of unearned compensation                                                    |       | —            |           | —          |       | 625,000          |       | 625,000    |           |
| Costs of raising capital incurred in

connection with private placement

memorandum      |       | (25,902           | )              | —          |       | —           |       | (25,902    | )              |
|                                                                                     |       |              |           |            |       |             |       |       |           |
| Net loss                                                                                 |       | —            |           | (914,232        | )          | —           |       | (914,232   | )              |
|                                                                                     |       |              |           |            |       |             |       |       |           |
| **MEMBERS’  EQUITY -**                                                              | ** ** | ** **        | ** **     | ** **      | ** ** | ** **       | ** ** | ** ** | ** **     |
| **September 30, 2005**                                                                   | ** ** | **$**             | **3,174,098**  | ** **      | **$**      | **(914,232**     | **)**      | **$**      | **(1,050,000** | **)** | **$** | **1,209,866** | ** ** |
| ** **                                                                               | ** ** | ** **        | ** **     | ** **      | ** ** | ** **       | ** ** | ** ** | ** **     |
| Issuance of 6,048,400 membership units                                                   |       | 60,484,000        |           | —          |       | —           |       | 60,484,000 |           |
| ** **                                                                               | ** ** | ** **        | ** **     | ** **      | ** ** | ** **       | ** ** | ** ** | ** **     |
| Amortization of unearned compensation                                                    |       | —            |           | —          |       | 752,381          |       | 752,381    |           |
|                                                                                     |       |              |           |            |       |             |       |       |           |
| Cost of raising capital — incurred in connection

with private placement memorandum |       | (1,068,166        | )              | —          |       | —           |       | (1,068,166 | )              |
|                                                                                     |       |              |           |            |       |             |       |       |           |
| Issuance of 492,200 membership units, of

which 75,000 units are held in escrow          |       | 4,172,000         |           | —          |       | —           |       | 4,172,000  |           |
|                                                                                     |       |              |           |            |       |             |       |       |           |
| Unit compensation expense                                                                |       | 10,000            |           | —          |       | —           |       | 10,000     |           |
|                                                                                     |       |              |           |            |       |             |       |       |           |
| Net loss                                                                                 |       | —            |           | (647,612        | )          | —           |       | (647,612   | )              |
|                                                                                     |       |              |           |            |       |             |       |       |           |
| **MEMBERS’  EQUITY -**                                                              | ** ** | ** **        | ** **     | ** **      | ** ** | ** **       | ** ** | ** ** | ** **     |
| **June  30, 2006**                                                                       | ** ** | **$**             | **66,771,932** | ** **      | **$**      | **(1,561,844**   | **)**      | **$**      | **(297,619**   | **)** | **$** | **64,912,469** | ** ** |

 

Seenotes to unaudited consolidated financial statements.

6

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**ADVANCED BIOENERGY, LLC &SUBSIDIARY(A DEVELOPMENT STAGE COMPANY)CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)**
| ** **                                                                                         | ** ** | ** **                          | ** ** | ** **                  | ** ** | **Period From**                | ** ** |
|----------------------------------------------------------------------------------------------------|------------|-------------------------------------|------------|-----------------------------|------------|-------------------------------------|------------|
| ** **                                                                                         | ** ** | **Period From**                | ** ** | **Nine Months**        | ** ** | **Inception**                       | ** ** |
| ** **                                                                                         | ** ** | **Inception**                       | ** ** | **Ended**                   | ** ** | **(Jan 4, 2005) to** | ** ** |
| ** **                                                                                         | ** ** | **(Jan 4, 2005) to** | ** ** | **June 30, 2006** | ** ** | **June 30, 2006**         | ** ** |
| ** **                                                                                         | ** ** | **June 30, 2005**         | ** ** | **Note G**             | ** ** | **Note G**                     | ** ** |
| **OPERATING  ACTIVITIES**                                                                          | ** ** | ** **                          | ** ** | ** **                  | ** ** | ** **                          | ** ** |
| Net loss                                                                                           |       | $                                   | (615,445   | )                           | $          | (647,612                            | )          | $ | (1,561,844 | ) |
| Adjustments to reconcile net loss to net cash (used  in)

operating activities:                    |       |                                |       |                        |       |                                |       |
| Depreciation                                                                                       |       | —                              |       | 15,392                      |       | 17,667                              |       |
| Unit compensation expense                                                                          |       |                                |       | 10,000                      |       | 10,000                              |       |
| Consulting services exchanged for membership units                                                 |       | 416,666                             |       | 327,381                     |       | 952,381                             |       |
| Changes in assets and liabilities, net of effects  from

purchase of Indiana Renewable Fuels, LLC: |       |                                |       |                        |       |                                |       |
| Prepaid expenses and other current assets                                                          |       | —                              |       | 35,232                      |       | (22,998                             | )          |
| Other receivables                                                                                  |       |                                |       | (44,164                     | )          | (46,522                             | )          |
| Accounts payable                                                                                   |       | 35,587                              |       | 98,675                      |       | 291,985                             |       |
| Accrued expenses                                                                                   |       | —                              |       | 198,297                     |       | 204,269                             |       |
| **NET  CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES**                                           |       | (163,192                            | )          | (6,799                      | )          | (155,062                            | )          |
|                                                                                               |       |                                |       |                        |       |                                |       |
| **INVESTING  ACTIVITIES**                                                                          | ** ** | ** **                          | ** ** | ** **                  | ** ** | ** **                          | ** ** |
| Payment of deposit                                                                                 |       | (700                                | )          | —                      |       | (1,400                              | )          |
| Purchase of other assets                                                                           |       | —                              |       | (57,000                     | )          | (57,000                             | )          |
| Purchase of property and equipment                                                                 |       | —                              |       | (9,804,388                  | )          | (9,851,223                          | )          |
| Increase in cash, for plant construction                                                           |       | —                              |       | (43,000,000                 | )          | (43,000,000                         | )          |
| Net cash received from acquisition                                                                 |       | —                              |       | 1,306,287                   |       | 1,306,287                           |       |
| Payment of land option deposits                                                                    |       | (30,000                             | )          | (35,000                     | )          | (65,000                             | )          |
| **NET  CASH USED IN INVESTING ACTIVITIES**                                                         |       | (30,700                             | )          | (51,590,101                 | )          | (51,668,699                         | )          |
|                                                                                               |       |                                |       |                        |       |                                |       |
| **FINANCING  ACTIVITIES**                                                                          | ** ** | ** **                          | ** ** | ** **                  | ** ** | ** **                          | ** ** |
| Proceeds from sale of membership units                                                             |       | 1,500,000                           |       | 60,484,000                  |       | 61,984,000                          |       |
| Payments on short-term debt                                                                        |       | —                              |       | (1,270,800                  | )          | (1,270,800                          | )          |
| Proceeds from long-term debt                                                                       |       |                                |       | 7,000,000                   |       | 7,000,000                           |       |
| Payment of deferred offering and financing costs                                                   |       | (121,544                            | )          | (1,089,157                  | )          | (1,469,072                          | )          |
| **NET  CASH PROVIDED BY FINANCING ACTIVITIES**                                                     |       | 1,378,456                           |       | 65,124,043                  |       | 66,244,128                          |       |
| ** **                                                                                         | ** ** | ** **                          | ** ** | ** **                  | ** ** | ** **                          | ** ** |
| **NET  INCREASE IN CASH AND CASH EQUIVALENTS**                                                     |       | 1,184,564                           |       | 13,527,143                  |       | 14,420,730                          |       |
| ** **                                                                                         | ** ** | ** **                          | ** ** | ** **                  | ** ** | ** **                          | ** ** |
| **CASH  AND CASH EQUIVALENTS - beginning of period**                                               |       | —                              |       | 893,587                     |       | —                              |       |
| ** **                                                                                         | ** ** | ** **                          | ** ** | ** **                  | ** ** | ** **                          | ** ** |
| **CASH AND CASH EQUIVALENTS - end  of period**                                                     |       | $                                   | 1,184,564  |                        | $          | 14,420,730                          |       | $ | 14,420,730 |   |

 

7

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| ** **                                                                       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
|----------------------------------------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|
| **SUPPLEMENTAL  DISCLOSURE OF NONCASH INVESTING AND**

**FINANCING  ACTIVITIES** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                                       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Accounts payable incurred for cost of raising  capital                           |       | $          | 85,872     |       | $          | —     |       | $ | — |   |
| ** **                                                                       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Membership units issued for acquisition                                          |       | $          | —     |       | $          | 4,172,000  |       | $ | 4,172,000 |   |
|                                                                             |       |       |       |       |       |       |       |
| Accounts payable incurred for construction in process

and office equipment      |       | $          | —     |       | $          | 3,214,372  |       | $ | 3,214,372 |   |
|                                                                             |       |       |       |       |       |       |       |
| Offering consulting services received in exchange  for

membership units         |       | $          | —     |       | $          | —     |       | $ | 25,000 |   |
|                                                                             |       |       |       |       |       |       |       |
| Consulting services received in exchange for  membership units                   |       | $          | —     |       | $          | —     |       | $ | 952,381 |   |
|                                                                             |       |       |       |       |       |       |       |
| Land option applied to land purchase                                             |       | $          | —     |       | $          | 20,000     |       | $ | 20,000 |   |
|                                                                             |       |       |       |       |       |       |       |
| Land acquired through issuance of note payable                                   |       | $          | —     |       | $          | —     |       | $ | 1,270,800 |   |
|                                                                             |       |       |       |       |       |       |       |
| Deposit transferred to financing costs                                           |       | $          | —     |       | $          | 25,000     |       | $ | 25,000 |   |
|                                                                             |       |       |       |       |       |       |       |
| Unearned compensation provided as

cost of raising capital                       |       | $          | —     |       | $          | 425,000    |       | $ | 425,000 |   |
|                                                                             |       |       |       |       |       |       |       |
| Deferred  offering cost transferred to cost of

raising capital                  |       | $          | —     |       | $          | 1,043,166  |       | $ | 1,043,166 |   |

 

Seenotes to unaudited consolidated financial statements.

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**ADVANCED BIOENERGY, LLC & SUBSIDIARY**

**(A DEVELOPMENT STAGE COMPANY)**

**NOTES TOUNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE A:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

The accompanying financial statements as of June 30,2006 and the three and nine months then ended and for the period from inception(January 4, 2005) to June 30, 2006 are unaudited and reflect all adjustments(consisting only of normal recurring adjustments) which are, in the opinion ofmanagement, necessary for a fair representation of the financial position andoperating results for the interim periods. The interim financial statements should be read in conjunction with theaudited financial statements and notes thereto, contained in the Company’sSpecial Report under section 15(d) of the Securities Exchange Act of 1934 forthe period ended September 30, 2005.  Theresults of operations for the three and nine months ended June 30, 2006 and theperiod from inception (January 4, 2005) to June 30, 2006 are not necessarilyindicative of the results for the fiscal year ending September 30, 2006.

**PRINCIPAL BUSINESS ACTIVITY**—Advanced BioEnergy, LLC (“ABE”) and its wholly owned subsidiary, IndianaRenewable Fuels, LLC (“IRF”), are a development stage limited liability company(collectively, the “Company”).  TheCompany was organized to build ethanol plants and undertake other biofuelprojects.  Construction on a 100 milliongallons per year ethanol plant near Fairmont, Nebraska is underway and isexpected to be completed in August 2007. A 100 million gallons per year ethanol plant to be located nearRochester, Indiana is in the design stage and a 100 million gallons per yearethanol plant to be located near Northfield, Minnesota is in the developmentstage.

**ACQUISITION** - On May 11, 2006,ABE entered into an Agreement and Plan of Merger that provides, among otherthings, for ABE’s wholly owned subsidiary to be merged with and into IRF.  As a result of the merger, which closed onJune 15, 2006, the outstanding membership units of IRF could be converted,at the election of each individual holder of IRF membership units, into theright to receive either:  (a) 500 ABEmembership units or (b) $5,000 in cash. As a result of the merger, the outstanding membership units of IRF wereconverted into an aggregate of 492,200 membership units of ABE, of which 75,000are held in escrow, and $25,000 in cash (see Note F).  The units held in escrow will be releasedupon successful completion of the following: the Company’s successfully raising adequate equity to fund constructionof the Indiana plant, execution of a written agreement between the Company andthe landfill located near the Indiana plant providing for the purchase anddelivery of methane to the Indiana plant and establishing terms on which railtransportation will be provided to the Indiana plant.

**UNEARNED UNIT COMPENSATION** —Subsequent to the Company’s seed capital offering, the original two membersreceived compensation in the form of restricted equity units valued at $1.25million (equivalent to $10 per unit) for their efforts in developing theCompany’s plant to be located near Fairmont, Nebraska.  The restriction will be removed as servicesare provided and selected milestones are achieved.  The earned portion of the $1.25 million isbeing expensed as start-up expenses.  Asof June 30, 2006, $952,381 had been earned and expensed with the remaining$297,619 included as unearned compensation.

**CASH AND CASH EQUIVALENTS**— TheCompany considers all highly liquid investments with a maturity of three monthsor less to be cash equivalents.  TheCompany’s cash balances are maintained in bank depositories and periodicallyexceed federally insured limits.  TheCompany has not experienced losses in these accounts.

**FAIR VALUE OF FINANCIAL INSTRUMENTS**— The carrying amounts for accounts payable and accrued expenses approximatefair value.

**FINANCING COSTS**—The financing costs will be amortized over the term of the debt.

**LOSS PER UNIT**— Basic and diluted loss per unit arecomputed using the weighted-average number of vested units outstanding duringthe period.  Unvested restricted unitsand units held in escrow are considered unit equivalents; however, they havenot been included in the computation of diluted loss per unit as their effectwould be anti-dilutive.

**RESTRICTED STOCK**— The Company has issued restricted units tocertain directors for services outside their role as directors at fair valueunder the Financial Accounting Standards Board (FASB) Statement No. 123.  All restricted units issued are subject tovarious restriction requirements.  Of the625,000 membership units 

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issued, 305,000 units aresubject to lock-up agreement between the two founding members and a relatedparty development company.  The lock-upagreement prohibits the transfer of the shares until May 2008.  Of the 625,000 units issued, 320,000 unitsare unrestricted, 263,333 are vested restricted and 41,667 are unvestedrestricted.

**PROPERTYAND EQUIPMENT** — Property and equipment is statedat the lower of cost or fair value. Maintenance and repairs are charged to expense as incurred; majorimprovements and betterments are capitalized. Depreciation is computed using the straight-line method over theestimated useful lives.

Construction in progress consists of expenditures forconstruction of the Nebraska ethanol plant. These expenditures will be depreciated using the straight-line methodover various estimated useful lives once construction is completed and theassets are placed into service.

**CASH, FOR PLANT CONSTRUCTION** —The cash that will be used for the construction of the ethanol plant has beenclassified as long-term according to its estimated use.

**NOTE B: RELATED PARTY TRANSACTIONS**

The Company paid a development consulting company owned by twoof its directors for assistance with negotiating contracts, planning the Spring2006 equity marketing effort and securing debt financing.  As of June 30, 2006, the Company had incurredconsulting charges of approximately $496,000.

A director of the Company is currently the president of one of the Company’sbank depositories.

**NOTE C: FINANCING**

On March 8, 2006, the Company entered into a $79.5 millionloan agreement with a lending institution consisting of a $58.5 million termloan and a $21.0 million revolving term loan. In addition, the Company also received a $5.0 million revolving creditfacility for financing eligible grain inventory and equity in Chicago Board ofTrade futures positions.

The term loan has interest rate options of a base rate plusone-half percent, a fixed rate quoted by the lender or LIBOR plus 3.4% perannum.  Advances are available until May1, 2007 with principal payments to commence on December 20, 2007 and quarterlythereafter with any remaining balance due on September 20, 2014 at the latest.

The revolving loan has interest rate options of a base rateplus one-half percent, a fixed rate quoted by the lender or LIBOR plus 3.4% perannum.  The Company is required to pay acommitment fee on the daily unused portion of the commitment at a rate of..0625% per annum.  The loan is effectivethrough March 1, 2017.

The revolving credit facility has interest rate options of abase rate, a fixed rate quoted by the lender or LIBOR plus 3.1% per annum.  The Company is required to pay a commitmentfee on the daily unused portion of the commitment at a rate of .25% perannum.  The loan is effective thru March1, 2008.

On April 27, 2006, the Company entered into a loan and trustagreement with the County of Fillmore, Nebraska and Wells Fargo, N.A. toreceive $7.0 million of Subordinate Exempt Facilities Revenue Bonds.

The Company has agreed to repay the loan by making loanpayments to the issuer in an amount equal to the aggregate principal amount ofthe bonds from time to time outstanding, and the premium, if any, and interestthereon at maturity, upon redemption, upon acceleration or when otherwisepayable.  The Company’s obligation tomake the loan payments under the loan and trust agreement is evidenced by itsexecution and delivery of a promissory note. The Company’s repayment of the bonds and the security for the bonds issubordinate to the Company’s senior loan and credit facility.  Principal payments are required starting inDecember 2009 through December 2017.

**NOTE D: COMMITMENTS AND CONTINGENCIES**

Constructioncontracts

The total cost of the Nebraska plant, including theconstruction of the ethanol plant and start-up expenses, is expected toapproximate $142.0 million.  The Companyhas a lump-sum design-build agreement with a related party general contractorfor $98.0 million, with the price to be adjusted based on changes agreed uponby the Company.  The design-buildagreement includes a provision whereby the general contractor receives an earlycompletion bonus for each day the construction is complete prior to theestimated completion date up to a 

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maximum amount.  Thecontract may be terminated by the Company upon a ten day written notice subjectto payment for work completed, termination fees and any applicable costs andretainage.  As of June 30, 2006, theCompany has incurred $9.0 million of these costs of which $1.8 million isincluded in accounts payable.

The total cost of the Indiana plant, including theconstruction of the ethanol plant and start-up expenses, is expected toapproximate $165.0 million for a natural gas powered ethanol plant.  Currently, the Company has signed a letter ofintent with a related contractor to design and build the ethanol plant, whichwill terminate on December 31, 2007 unless the basic size, design of the facilityand specific site have been determined. In addition, the letter of intent will terminate on December 31, 2008unless at least 10% of the necessary equity has been raised.

In March 2006, the Company entered into an agreement with acontractor for grading and draining services for its Nebraska plant.  The cost of the services will beapproximately $1.2 million.

The Company has an agreement with an electric company toprovide electrical service to its Nebraska plant.  The Company is required to make anon-refundable payment in aid of construction for the facilities the electricalcooperative will install for the benefit of the Company.  The amount of this payment will beapproximately $1.2 million.  The Companyis to pay $0.6 million prior to placing the order for the substation and thebalance of approximately $0.6 million upon the completion of the constructionof all facilities.  The agreement shallremain in effect for a term of five years from the initial billing period andwill be renewed automatically thereafter on an annual basis unless terminatedby either party giving 12 months written notice.

On May 5, 2006, the Company entered into a track materialpurchase agreement to purchase relay rail, joint bards, tie plates, cross tieand reconditioned turnouts.  The purchaseprice of this track material is approximately $1.6 million.

On May 5, 2006, the Company entered into a real estatepurchase agreement with Fillmore Western Railway Company (Fillmore) for thepurchase by the Company of certain property, including all real property andthe 100-foot railroad right of way, including any “extra width” railroad rightof way, and all other easements appurtenant to the use of the real estate,together with all track, ties, ballast, other track material and otherimprovements thereon owned, possessed, or claimed by Fillmore from milepost 1.7to milepost 3.7 on the Fillmore line.  Inaddition, pursuant to the real estate purchase agreement, Fillmore conveyed tothe Company an easement to use Fillmore’s right of way from milepost 3.7 toTurkey Creek for the purpose of underground pipeline and other utilities.  The purchase price for the property is$500,000 to be paid at closing.  Thepurchase price for the easement is $10,000.

Land

The Company has various options to purchase approximately 190acres in Nebraska, 375 acres in Indiana and 70 acres in Minnesota for a totalof approximately $1.0 million, $2.8 million and $2.9 million, respectively.

Consulting 

The Company has an agreement with a related party forassistance with negotiation of contracts, planning of the Company’s equitymarketing effort and securing debt financing. The agreement began upon execution and shall continue through theclosing date as defined in the agreement. The development consultant will receive compensation as follows: 7,500 unrestrictedmembership units at execution, $1,500 per week from execution through theclosing of the equity financing (which occurred in May 2006) and $375 per dayafter the closing of the equity financing, plus reimbursement of approvedexpenses up to a weekly maximum reimbursement of $750.  In addition, the development consultantreceived compensation of 42,500 restricted membership units subsequent to theclose of the Company’s seed capital offering. The Company may only terminate this agreement for cause as defined inthe consulting agreement.  The consultantmay terminate this agreement with 14 days’ written notice.

The Company has an agreement to compensate the original twomembers of the Company for development fees in a total sum of 1% of the total projectcost for the Company’s plant under construction near Fairmont, Nebraska to bepaid in membership units in exchange for their efforts to organize and developthis project.  These fees are currentlyestimated at $1,325,000 or 132,500 units of which 125,000 units were issued onMay 19, 2005 and any additional units will be issued and earned uponsubstantial completion of construction of the plant based on the actual projectcosts.  These membership units will be consideredrestricted until certain requirements within the agreement are reached.  If the Company files articles of dissolutionor another event 

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prevents successful ethanol production by the Company, thesemembers will be required to return the restricted units to the Company withoutpayment of consideration.

Employment agreements

In April 2006, the Company entered into an employmentagreement with a member who is Chairman and Chief Executive Officer of theCompany.  The employee is to receive anannual base salary of $300,000 plus benefits. In addition he is eligible to receive an annual performance bonus, astrategic bonus (payable in units) and the use of an automobile provided by theCompany.  The term of the agreement isfor a period of three years from the effective date of the agreement withsuccessive automatic one year extensions.

In April 2006, the Company entered into an employmentagreement with a member who is President and Chief Operating Officer of theCompany.  The employee is to receive anannual base salary of $250,000 plus benefits. In addition, he is eligible to receive an annual performance bonus, astrategic bonus (payable in units), the use of an automobile provided by theCompany and reimbursement for moving expenses up to $70,000.  As a signing bonus, the employee received theright to acquire 30,000 units.  Theseunits would be issued in an amount equal to 6,000 units on each anniversary ofthe effective date, with termination of employment resulting in forfeiture ofthe right to receive any units that remain unissued.  The term of the agreement is for a period ofthree years from the effective date of the agreement with successive automaticone year extensions.  The Company willrecognize $300,000 of unit compensation expense over the term of the agreement.

Marketing agreement

In May 2006, the Company entered into a marketing agreement topurchase distillers dried grains with solubles (DDGS) the Company is expectedto produce.  The buyer agrees to pay theCompany a percentage of the selling price minus an amount per ton.  The agreement commences when the Companybegins producing DDGS and continues for one year initially and thereafter maybe terminated by either party with 120 days written notice.

**NOTE E:  SUBSEQUENT EVENTS**

Constructioncontracts

On July 14, 2006, theCompany entered into an agreement for installation of the auger cast piling forits Fairmont, Nebraska ethanol plant for approximately $0.9 million. 

Marketing agreement

In July 2006, the Company entered into a marketing agreementfor the sale of all of the ethanol that the Company’s Fairmont, Nebraska plantproduces.  The Company will receive aprice equal to the actual sale price less expenses and a marketing fee chargedper gallon.  The initial term of theagreement is for at least 12 months beginning on the first day of the month ofthe first shipment of ethanol and ending at the end of March or end ofSeptember, whichever occurs first, following the twelve month period.  After the initial term, it will automaticallyrenew for successive one year terms unless terminated by either party upon 90days’ written notice.  The agreement mayalso be terminated for an uncured breach, intentional misconduct or upon mutualagreement of the parties.

**NOTE F:  ACQUISITION**

Effective June 15, 2006, the Company acquired all of theoutstanding units of IRF.  The aggregatepurchase price was $4,197,000 of which $4,172,000 was paid by the issuance of417,200 ABE units and $25,000 was paid in cash. The purchase price was allocated based on the fair value of the netassets acquired as follows:

| Assets acquired:                  |   |      |      |
|----------------------------------------|--------|-----------|-----------|
| Cash                                   |   | $         | 1,331,287 |   |
| Prepaid expenses                       |   | 5,335     |      |
| Land options                           |   | 10,000    |      |
| Intangible assets                      |   | 2,811,531 |      |
| Property and equipment                 |   | 44,593    |      |
|                                   |   | 4,202,746 |      |
| Liabilities  assumed, accounts payable |   | (5,746    | )         |
| **Net  purchase price**                |   | $         | 4,197,000 |   |

 

**NOTE G. RESTATEMENT**

The unauditedconsolidated statements of cash flows for the nine months ended June 30, 2006and the period from inception (January 4, 2005) to June 30, 2006 have beenrestated to reflect the change for net cash received from acquisition of assetsof $1,306,287 to be shown as an investing activity rather than a financingactivity and to present the increase in cash for plant construction of$43,000,000 as an investing activity, rather than a component of cash and cashequivalents.

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As discussed in Note A, the Company also has 75,000 units valued at$750,000 that are held in escrow and being treated as contingent considerationthat will be recognized when released from escrow.

#### **PARTII.  OTHER INFORMATION**

**ITEM 6.  EXHIBITS**
| Exhibit No. | ** ** | **Description**                                                                                       | ** ** | **Method of Filing**          |
|-------------|------------|-------------------------------------------------------------------------------------------------------|------------|-------------------------------|
| 3.1         |       | Certificate of Formation                                                                              |       | Incorporated By Reference (1) |
|        |       |                                                                                                  |       |                          |
| 3.2         |       | Third Amended and Restated Operating Agreement of  the Registrant                                     |       | Incorporated By Reference (2) |
|        |       |                                                                                                  |       |                          |
| 10          |       | Ethanol Fuel Marketing Agreement with Renewable  Products Marketing Group, L.L.C. dated July 19, 2006 |       | Previously Filed              |
|        |       |                                                                                                  |       |                          |
| 31.1        |       | Rule 13a-14(a)/15d-14(a) Certification by Principal  Executive Officer                                |       | Filed Electronically          |
|        |       |                                                                                                  |       |                          |
| 31.2        |       | Rule 13a-14(a)/15d-14(a) Certification by Principal  Financial and Accounting Officer                 |       | Filed Electronically          |
|        |       |                                                                                                  |       |                          |
| 32          |       | Section 1350 Certifications                                                                           |       | Filed Electronically          |

----

(1)          Incorporated herein byreference to Exhibit 3.1 to the Registrant’s Registration Statement on FormSB-2 (Registration No. 333-125335), filed with the Commission on May 23, 2005.

(2)          Incorporatedherein by reference to Exhibit 3.2 to the Registrant’s Post-Effective AmendmentNo. 1 to Registration Statement on Form SB-2 (Registration No. 333-125335),filed with the Commission on February 10, 2006.

 

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**SIGNATURES**

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned, thereuntoduly authorized. 
|                          | **ADVANCED BIOENERGY, LLC** |
|--------------------------|-----------------------------|
|                     |                        | * * |
|                     |                        | * * |
| Date: September 13, 2006 | By:                         | */s/ Revis L Stephenson III* |
|                     | * *                    | Revis L. Stephenson III  Chairman and Chief Executive Officer  (Principal Executive Officer) |
|                     |                        |   |
|                     |                        |   |
| Date: September 13, 2006 | By:                         | */s/ Robert W. Holmes* |
|                     |                        | Robert W. Holmes  Treasurer  (Principal Financial and Accounting Officer) |

 

 

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**EXHIBITINDEX**
| Exhibit No. | ** ** | **Description**                                                                                       | ** ** | **Method of Filing**      |
|-------------|------------|-------------------------------------------------------------------------------------------------------|------------|---------------------------|
| 3.1         |       | Certificate of Formation                                                                              |       | Incorporated By Reference |
|        |       |                                                                                                  |       |                      |
| 3.2         |       | Third Amended and Restated Operating Agreement of  the Registrant                                     |       | Incorporated By Reference |
|        |       |                                                                                                  |       |                      |
| 10          |       | Ethanol Fuel Marketing Agreement with Renewable  Products Marketing Group, L.L.C. dated July 19, 2006 |       | Previously Filed          |
|        |       |                                                                                                  |       |                      |
| 31.1        |       | Rule 13a-14(a)/15d-14(a) Certification by Principal  Executive Officer                                |       | Filed Electronically      |
|        |       |                                                                                                  |       |                      |
| 31.2        |       | Rule 13a-14(a)/15d-14(a) Certification by Principal  Financial and Accounting Officer                 |       | Filed Electronically      |
|        |       |                                                                                                  |       |                      |
| 32          |       | Section 1350 Certifications                                                                           |       | Filed Electronically      |

 

 

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