##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
 þ
    
    Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the fiscal quarter ended June 30, 2007
 OR
 o
    
    Transition report under Section 13 or 15(d) of the Exchange Act.
 For the transition period from       to       .
 Commission file number 000-52426
 E ENERGY ADAMS, LLC
  Nebraska
    
    20-2627531(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 
 (402) 988-4655
 days.   þ
Yes   o No
 Act).   o Yes   þ No
   (Check one):   o Yes   þ No




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##### 



INDEX
 Page No.PART I. FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements.
    
    
    3Item 2. Managements Discussion and Analysis and Plan of Operations
    
    
    14Item 3. Controls and Procedures
    
    
    27PART II. OTHER INFORMATION
    
    
    27Item 1. Legal Proceeding
    
    
    27Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    27Item 3. Defaults Upon Senior Securities
    
    
    28Item 4. Submission of Matters to a Vote of Security Holders
    
    
    28Item 5. Other Information
    
    
    28Item 6. Exhibits
    
    
    29SIGNATURES
    
    
    29Exhibit 10.25Exhibit 10.26Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



PART I.
    
    FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements.
 E ENERGY ADAMS, LLC
  June 30,2007(Unaudited)ASSETSCurrent AssetsCash and equivalents
    
    $
    4,131,118Restricted cash
    
    
    2,709,532Prepaid and other
    
    
    89,928Total current assets
    
    
    6,930,578Property and EquipmentLand
    
    
    1,438,162Computers and office equipment
    
    
    122,693Leasehold improvements
    
    
    4,408Construction in progress
    
    
    67,174,675Total property and equipment
    
    
    68,739,938Less accumulated depreciation
    
    
    13,735Net property and equipment
    
    
    68,726,203Other AssetsRestricted cash
    
    
    592,499Investments
    
    
    93,436Debt issuance costs, net of amortization
    
    
    574,437Total other assets
    
    
    1,260,372Total Assets
    
    $
    76,917,153LIABILITIES AND MEMBERS EQUITYCurrent LiabilitiesCurrent maturities of long-term debt
    
    $
    1,237,500Derivative instruments
    
    
    1,682,512Accounts payable
    
    
    45,785Accrued expenses
    
    
    93,778Construction and retainage payable
    
    
    2,509,027Construction and retainage payable  related party
    
    
    8,465,826Line of credit
    
    
    2,129,000Total current liabilities
    
    
    16,163,428Long-Term Debt, less current maturities
    
    
    13,397,500Commitments and ContingenciesMembers EquityMember
contributions, net of issuance costs related to capital contributions,
5,133 units outstanding
    
    
    49,957,383Deficit accumulated during development stage
    
    
    (2,601,158
    )Total members equity
    
    
    47,356,225Total Liabilities and Members Equity
    
    $
    76,917,153
   3




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E ENERGY ADAMS, LLC
  Quarter
    
    
    QuarterEnded
    
    
    EndedJune 30,
    
    
    June 30,2007
    
    
    2006(Unaudited)
    
    
    (Unaudited)Revenues
    
    $
    
    
    
    $
    Operating ExpensesProfessional and consulting fees
    
    
    53,900
    
    
    
    180,687Project coordinator
    
    
    
    
    
    
    24,585General and administrative
    
    
    359,993
    
    
    
    96,894Total operating expenses
    
    
    413,893
    
    
    
    302,166Operating Loss
    
    
    (413,893
    )
    
    
    (302,166
    )Other Income (Expense)Other income
    
    
    1,600
    
    
    
    Loss on derivative instruments
    
    
    (287,404
    )
    
    
    Interest income
    
    
    55,287
    
    
    
    2,998Interest expense
    
    
    
    
    
    
    (30,082
    )Total other expense
    
    
    (230,517
    )
    
    
    (27,084
    )Net Loss
    
    $
    (644,410
    )
    
    $
    (329,250
    )Weighted Average Units Outstanding
    
    
    5,133
    
    
    
    194Net Loss Per Unit
    
    $
    (126
    )
    
    $
    (1,697
    )
   4




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##### Table of Contents



E ENERGY ADAMS, LLC
  Nine Months
    
    
    Nine Months
    
    
    From InceptionEnded
    
    
    Ended
    
    
    (March 25, 2005)June 30,
    
    
    June 30,
    
    
    to June 30,2007
    
    
    2006
    
    
    2007(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Revenues
    
    $
    
    
    
    $
    
    
    
    $
    Operating ExpensesProfessional and consulting fees
    
    
    345,628
    
    
    
    383,358
    
    
    
    1,026,240Project coordinator
    
    
    
    
    
    
    76,585
    
    
    
    231,789General and administrative
    
    
    695,412
    
    
    
    247,955
    
    
    
    1,141,527Total operating expenses
    
    
    1,041,040
    
    
    
    707,898
    
    
    
    2,399,556Operating Loss
    
    
    (1,041,040
    )
    
    
    (707,898
    )
    
    
    (2,399,556
    )Other Income (Expense)Other income
    
    
    146,876
    
    
    
    
    
    
    
    151,876Loss on derivative instruments
    
    
    (1,546,528
    )
    
    
    
    
    
    
    (1,546,528
    )Interest income
    
    
    662,257
    
    
    
    9,924
    
    
    
    1,235,816Interest expense
    
    
    (6,725
    )
    
    
    (30,082
    )
    
    
    (42,766
    )Total other expense
    
    
    (744,120
    )
    
    
    (20,158
    )
    
    
    (201,602
    )Net Loss
    
    $
    (1,785,160
    )
    
    $
    (728,056
    )
    
    $
    (2,601,158
    )Weighted Average Units Outstanding
    
    
    5,133
    
    
    
    194
    
    
    
    2,114Net Loss Per Unit
    
    $
    (348
    )
    
    $
    (3,753
    )
    
    $
    (1,230
    )
   5




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E ENERGY ADAMS, LLC
  Nine Months
    
    
    Nine Months
    
    
    From InceptionEnded
    
    
    Ended
    
    
    (March 25, 2005)June 30,
    
    
    June 30,
    
    
    to June 30,2007
    
    
    2006
    
    
    2007(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Cash Flows from Operating ActivitiesNet loss
    
    $
    (1,785,160
    )
    
    $
    (728,056
    )
    
    $
    (2,601,158
    )Adjustments to reconcile net loss to net cash
used in operating activities:Depreciation
    
    
    10,360
    
    
    
    1,898
    
    
    
    13,735Gain on investment
    
    
    (92,436
    )
    
    
    
    
    
    
    (92,436
    )Changes in assets and liabilitiesRestricted cash
    
    
    (3,302,031
    )
    
    
    
    
    
    
    (3,302,031
    )Derivative instruments
    
    
    1,682,512
    
    
    
    
    
    
    
    1,682,512Prepaid and other
    
    
    142,700
    
    
    
    (14,292
    )
    
    
    (89,928
    )Accounts payable
    
    
    (60,394
    )
    
    
    3,945
    
    
    
    45,785Accrued expenses
    
    
    90,808
    
    
    
    19,803
    
    
    
    93,778Net cash used in operating activities
    
    
    (3,313,641
    )
    
    
    (716,702
    )
    
    
    (4,249,743
    )Cash Flows from Investing ActivitiesPayments for investment
    
    
    (1,000
    )
    
    
    
    
    
    
    (1,000
    )Capital expenditures
    
    
    (50,033,590
    )
    
    
    (1,057,404
    )
    
    
    (57,765,085
    )Net cash used in investing activities
    
    
    (50,034,590
    )
    
    
    (1,057,404
    )
    
    
    (57,766,085
    )Cash Flows from Financing ActivitiesDebt issuance costs
    
    
    (200,687
    )
    
    
    (27,500
    )
    
    
    (574,437
    )Proceeds from bridge loan
    
    
    
    
    
    
    2,000,000
    
    
    
    Proceeds from line of credit
    
    
    2,129,000
    
    
    
    
    
    
    
    2,129,000Proceeds from TIF financing
    
    
    5,035,000
    
    
    
    
    
    
    
    5,035,000Proceeds from construction loan
    
    
    9,600,000
    
    
    
    
    
    
    
    9,600,000Member contributions
    
    
    
    
    
    
    
    
    
    
    50,360,000Costs related to capital contributions
    
    
    
    
    
    
    (261,107
    )
    
    
    (402,617
    )Net cash provided by financing activities
    
    
    16,563,313
    
    
    
    1,711,393
    
    
    
    66,146,946Net Increase (Decrease) in Cash and Equivalents
    
    
    (36,784,918
    )
    
    
    (62,713
    )
    
    
    4,131,118Cash and Equivalents  Beginning of Period
    
    
    40,916,036
    
    
    
    737,053
    
    
    
    Cash and Equivalents  End of Period
    
    $
    4,131,118
    
    
    $
    674,340
    
    
    $
    4,131,118Supplemental Cash Flow InformationCash paid during the period for:Interest
    
    $
    
    
    
    $
    15,288
    
    
    $
    36,041Capitalized interest
    
    
    31,560
    
    
    
    
    
    
    
    31,560Total
    
    $
    31,560
    
    
    $
    15,288
    
    
    $
    67,601Supplemental Disclosure of Noncash Investing and Financing ActivitiesLand options exercised for land purchased
    
    $
    
    
    
    $
    7,000
    
    
    $
    7,000Deferred offering costs in accounts payable
    
    $
    
    
    
    $
    39,377
    
    
    $
    Construction in progress in construction payable
    
    $
    10,974,853
    
    
    $
    
    
    
    $
    10,974,853Deferred offering costs offset against equity
    
    $
    
    
    
    $
    
    
    
    $
    402,617
   6




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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
   Nature of Business
  Fiscal Reporting Period
  Accounting Estimates
  Cash and Equivalents
  Derivative Instruments
 Accounting for Derivative Instruments and Hedging
Activities
   7




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Property and Equipment
   Debt Issuance Costs
  Fair Value of Financial Instruments
  Recently Issued Accounting Pronouncements
  2. MEMBERS EQUITY
    8




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3. DERIVATIVE INSTRUMENTS
   4. BANK FINANCING
     9




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Term note payable to lending institution, see terms below
    
    $
    9,600,000Tax increment financing, see terms below
    
    
    5,035,000Totals
    
    
    14,635,000Less amounts due within one year
    
    
    (1,237,500
    )Net long-term debt
    
    $
    13,397,500
  2008
    
    $
    1,237,5002009
    
    
    5,045,0002010
    
    
    3,617,5002011
    
    
    225,0002012
    
    
    245,000After 2013
    
    
    4,265,000Total long-term debt
    
    $
    14,635,000
 Construction Term Loan
  Construction Revolving Loan
  Additional Revolving Loan
    10




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Covenants
  Tax Increment Financing (TIF)
       11




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5. COMMITMENTS AND CONTINGENCIES
 Design build agreement
  Construction contracts
   Grants
  1.
    
    The Company must create at least 26 new permanent jobs on a full-time basis at our
facility in Adams, Nebraska within 18 months from September 1, 2006, and 51% or more of all
these jobs must be held by or at least made available to low-to-moderate income persons;2.
    
    The Company must maintain the 26 jobs for 12 months from the date of hire for each
respective job; and3.
    
    The Company must pay all of our employees a minimum hourly rate of $9.50 per hour, and
provide all employees with an appropriate employee benefits package.
 Utility Contracts
   12




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Marketing Agreement
  Corn Contracts
  Safety Services Agreement
    13




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Item 2.
    
    Managements Discussion and Analysis and Plan of Operations.
 Forward Looking Statements
  
    
    Construction delays and technical difficulties in constructing the plant;
    
    Availability of sufficient capital to construct the plant and begin operations;
    
    Increases in the price of corn as the corn market becomes increasingly competitive;
    
    Our inelastic demand for corn, as it is the only available feedstock for our plant;
    
    Changes in federal and/or state laws (including the elimination of any federal and/or
state ethanol tax incentives);
    
    Changes in our business strategy, capital improvements or development plans;
    
    The loss of any license or permit;
    
    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, oil or automobile industries;
    
    Changes in the availability and price of natural gas and the market for distillers grains;
    
    Changes and advances in ethanol production technology; and
    
    Competition in the ethanol industry and from other alternative fuel additives.
   14




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Overview
     Plan of Operations for the Next 12 Months
    15




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Project Capitalization
 Seed Capital Offering
  Registered Offering
  Senior Debt Financing
      16




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Tax Increment Financing (TIF)
        Nebraska Department of Economic Development Community Development Block Grant
   17




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1.
    
    We must create at least 26 new permanent jobs on a full-time basis at our facility in Adams,
Nebraska within 18 months from September 1, 2006, and 51% or more of all of these jobs must
be held by or at least made available to low-to-moderate income persons;2.
    
    We must maintain the 26 jobs for 12 months from the date of hire for each respective job; and3.
    
    We must pay all of our employees a minimum hourly rate of $9.50 per hour, and provide all
employees with an appropriate employee benefits package.
  Plant Construction and Project Development Activities
     Marketing and Natural Gas Agreements
   18




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Permitting and Regulatory Activities
   Environmental Permits Obtained as of the Date of this Report
 
    
    Minor construction permit for air emissions
    
    State Archeological and Endangered Species Research and approval from the United States
Department of Interior, Fish and Wildlife Service
    
    Above Ground Storage Tank Permit
    
    Waste Water National Pollutant Discharge Elimination System Permits (NPDES Permit)
    
    Industrial Storm Water Discharge Permit and Storm Water Pollution Prevention Program
(General NPDES Permits)
 Environmental Permits and Plans to be in Place Prior to the Start of Operations
 
    
    Spill Prevention, Control, and Countermeasures Plan
    
    Risk Management Plan
  19




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
    
    Alcohol Fuel Producers Permit
    
    Hydrostatic Testing Water Discharge Permit
    
    Public Water Supply Permit
  Trends and Uncertainties Impacting the Ethanol Industry and Our Future Operations
      20




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21




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Massachusetts v. EPA
 Technology Developments
  Trends and Uncertainties Impacting the Corn and Natural Gas Markets and Our Future Cost of Goods
Sold
    22




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Operating Expenses
  Liquidity and Capital Resources
 Estimated Sources of Funds
 Project
Capitalization Managements Discussion and Analysis and Plan of
Operations
  23




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##### Table of Contents



PercentSources of Funds
    
    
    Amount
    
    of totalOffering Proceeds (1)
    
    $
    49,390,000
    
    
    
    43.34
    %Seed Capital Proceeds (2)
    
    $
    970,000
    
    
    
    0.85
    %Senior Debt Financing (3)
    
    $
    49,500,000
    
    
    
    43.43
    %Revolving Line of Credit (4)
    
    $
    10,000,000
    
    
    
    8.77
    %Estimated Tax Increment Financing (5)
    
    $
    3,865,000
    
    
    
    3.40
    %Interest on Escrow (6)
    
    
    244,000
    
    
    
    0.21
    %Total Sources of Funds
    
    $
    113,969,000
    
    
    
    100.00
    %
 (1)
    
    We received funds from investors for approximately $49,390,000.(2)
    
    We have issued a total of 194 units to our seed capital investors at a price of
$5,000 per unit in our private placement in exchange for proceeds of $970,000.(3)
    
    We currently have entered into a definitive loan agreement with a senior lender for
debt financing in the amount of $49,500,000.(4)
    
    In addition to our debt financing of $49,500,000, we also have a $10,000,000
revolving line of credit with our senior lender.(5)
    
    We have entered into a First Amended and Restated Redevelopment Contract with the
Village of Adams for the redevelopment of our plant site. The Village has issued TIF
indebtedness in the amount of $5,035,000 (of which $3,865,000 was received in proceeds)
to assist the Company in the costs of redeveloping the site.(6)
    
    We earned approximately $244,000 in interest on our escrow account containing the
offering proceeds prior to their release from escrow.
 Estimated Use of Proceeds
  PercentUse of Proceeds
    
    Amount
    
    
    of TotalPlant construction
    
    $
    65,900,000
    (1)
    
    
    63.92
    %Road and ditch construction costs
    
    
    750,000
    
    
    
    0.73
    %Land cost
    
    
    1,100,000
    
    
    
    1.06
    %Site development costs
    
    
    5,278,000
    
    
    
    5.12
    %Construction contingency
    
    
    3,600,000
    
    
    
    3.50
    %Construction performance bond
    
    
    500,000
    
    
    
    0.48
    %Construction insurance costs
    
    
    120,000
    
    
    
    0.12
    %Administrative building
    
    
    400,000
    
    
    
    0.39
    %Office equipment
    
    
    75,000
    
    
    
    0.07
    %Computers, Software, Network
    
    
    150,000
    
    
    
    0.15
    %Rail infrastructure
    
    
    3,594,750
    
    
    
    3.49
    %Rolling stock
    
    
    515,000
    
    
    
    0.50
    %Fire Protection / Water Supply
    
    
    3,180,000
    
    
    
    3.08
    %Water treatment system
    
    
    1,500,000
    
    
    
    1.45
    %Capitalized interest
    
    
    2,000,000
    
    
    
    1.94
    %Facility for Additional Grain Storage
    
    
    3,000,000
    
    
    
    2.91
    %
  24




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Start up costs:Financing costs
    
    
    506,250
    
    
    
    0.49
    %Organization costs
    
    
    1,300,000
    
    
    
    1.26
    %Pre production period costs
    
    
    1,345,000
    
    
    
    1.30
    %Inventory  working capital
    
    
    3,000,000
    
    
    
    2.91
    %Inventory  corn
    
    
    2,000,000
    
    
    
    1.94
    %Inventory  chemicals and ingredients
    
    
    150,000
    
    
    
    0.15
    %Inventory  work in process  Ethanol
    
    
    1,500,000
    
    
    
    1.45
    %Inventory  work in process  DDGS
    
    
    500,000
    
    
    
    0.48
    %Inventory spare parts  process
equipment
    
    
    750,000
    
    
    
    0.73
    %Operating costs:Office labor, expense and equipment
    
    
    165,000
    
    
    
    0.16
    %Telephone, Internet, Postage service
    
    
    25,500
    
    
    
    0.03
    %Directors Expense
    
    
    30,000
    
    
    
    0.03
    %Payroll Tax
    
    
    17,000
    
    
    
    0.02
    %Accounting and Legal Fees
    
    
    55,000
    
    
    
    0.05
    %Insurance D & O and Operations
    
    
    70,000
    
    
    
    0.07
    %Miscellaneous
    
    
    23,500
    
    
    
    0.02
    %Total
    
    $
    103,100,000
    
    
    
    100.00
    %
 (1)
    
    Our original Contract Price with Fagen, Inc. was approximately $65,900,000. This was
increased in October, 2006, to approximately $67,500,000, based on the increase in the
Construction Cost Index (CCI) as of October 2006 compared to our baseline index as of
April 2006. Subsequent to the increase based on the CCI, the Contract Price has been
increased to approximately $67,860,000 due to change orders agreed to by both Fagen, Inc.
and E Energy Adams. We anticipate that our Construction Contingency will cover the
increase to the Contract Price.
 Quarterly Financial Results for Fiscal Quarter Ended June 30, 2007
  Derivative Instruments
    25




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Employees
   # Full-TimeExpected
    
    
    # PositionsPosition
    
    Personnel
    
    
    FilledCEO
    
    
    1
    
    
    
    1CFO
    
    
    1Plant Manager
    
    
    1
    
    
    
    1Commodities Manager
    
    
    1
    
    
    
    1Production Manager
    
    
    1
    
    
    
    1EHS Manager
    
    
    1
    
    
    
    1Human Resource Manager
    
    
    1
    
    
    
    1Purchasing Agent/Planner Scheduler
    
    
    1Accounting/Clerical
    
    
    4
    
    
    
    3Lab Manager
    
    
    1
    
    
    
    1Lab Technician
    
    
    1Maintenance Manager
    
    
    1
    
    
    
    1Maintenance Technicians
    
    
    3Material Handlers
    
    
    2Commodity Department Staff
    
    
    4
    
    
    
    4Plant Operators/Shift Supervisors
    
    
    16TOTAL
    
    
    40
    
    
    
    15
   Off Balance Sheet Arrangements
   26




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##### Table of Contents



Item 3.
    
    Controls and Procedures
   
 PART II. OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
 None.
 
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
      27




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Aggregate price
    
    
    
    Aggregate priceAmount
    
    of the amount
    
    
    
    of the amountRegistered
    
    registered
    
    Amount Sold
    
    sold5,800
    
    $58,000,000
    
    4,939
    
    $49,390,000
 approximate
 Plant Construction(1)
    
    $
    45,279,000Financing Costs(2)
    
    $
    424,000Real Estate Purchases and Land Improvements(3)
    
    $
    1,438,000Repayment of Indebtedness(4)
    
    $
    2,000,000Other Expenses(5)
    
    $
    816,000Total
    
    $
    49,957,000
 (1)
    
    This includes approximate expenses incurred as of June 30, 2007 for plant construction,
rail infrastructure construction, and natural gas pipeline construction and maintenance and
other miscellaneous equipment and construction costs.(2)
    
    We incurred approximately $424,000 in a bank commitment fee for our senior debt
financing and TIF funds.(3)
    
    We have paid approximately $1,438,000 to purchase and improve the real estate for our
plant site.(4)
    
    We incurred approximately $2,000,000 for the repayment of our bridge loan.(5)
    
    This includes payments to directors Bill Riechers and Jack Alderman, and former
director Everett Larson pursuant to consulting agreements entered into between the forgoing
individuals and E Energy Adams.
  
 Item 3.
    
    Defaults Upon Senior Securities
  
 Item 4.
    
    Submission of Matters to a Vote of Security Holders
  
 Item 5.
    
    Other Information
   28




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##### Table of Contents



Item 6.
    
    Exhibits
  Exhibit
    
    
    
    Method ofNo.
    
    Description
    
    Filing10.25
    
    
    First Amended and Restated Redevelopment Agreement
between E Energy Adams, LLC and the Village of
Adams dated May 29, 2007
    
    *10.26
    
    
    Loan Agreement between E Energy Adams, LLC and
Security First Bank dated June 29, 2007
    
    *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. Section 1350
    
    *32.2
    
    
    Certificate pursuant to 18 U.S.C. Section 1350
    
    *
 
  
 SIGNATURES
  E ENERGY ADAMS, LLCDate: August 14, 2007
    /s/ Carl D. SitzmannCarl D. SitzmannChief Executive OfficerDate: August 14, 2007
    /s/ Nicholas J. CusickNicholas J. CusickTreasurer and Director(Principal Financial Officer)  29