##### 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 December 31, 2006
 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
(State or other jurisdiction of 
incorporation or organization)
    
    20-2627531
(I.R.S. Employer Identification No.)
 
 (402) 988-4655
 þ o
 o þ
   o þ




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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
    
    
    12Item 3. Controls and Procedures
    
    
    25PART II. OTHER INFORMATION
    
    
    26Item 1. Legal Proceeding
    
    
    26Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26Item 3. Defaults Upon Senior Securities
    
    
    27Item 4. Submission of Matters to a Vote of Security Holders
    
    
    27Item 5. Other Information
    
    
    27Item 6. Exhibits
    
    
    27SIGNATURES
    
    
    29Natural Gas Firm Transportation Rate Discount AgreementSection 302 CertificationSection 302 CertificationSection 1350 CertificationSection 1350 Certification
  2




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PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 E ENERGY ADAMS, LLC
  December 31,2006(Unaudited)ASSETSCurrent AssetsCash and equivalents
    
    $
    24,643,658Prepaid and other
    
    
    189,284Total current assets
    
    
    24,832,942Property and EquipmentLand
    
    
    1,438,162Computers and office equipment
    
    
    55,983Leasehold improvements
    
    
    4,408Construction in progress
    
    
    28,420,183Total property and equipment
    
    
    29,918,736Less accumulated depreciation
    
    
    5,109Net property and equipment
    
    
    29,913,627Other AssetsDebt issuance costs
    
    
    373,750Total other assets
    
    
    373,750Total Assets
    
    $
    55,120,319LIABILITIES AND MEMBERS EQUITYCurrent LiabilitiesAccounts payable
    
    $
    104,546Accrued expenses and other
    
    
    6,307Construction and retainage payable
    
    
    5,751,546Total current liabilities
    
    
    5,862,399Commitments and ContingenciesMembers EquityMember contributions, net of costs related to capital contributions,
5,133 units outstanding at December 31, 2006
    
    
    49,957,383Deficit accumulated during development stage
    
    
    (699,463
    )Total members equity
    
    
    49,257,920Total Liabilities and Members Equity
    
    $
    55,120,319
  3




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##### Table of Contents



E ENERGY ADAMS, LLC
  Three Months
    
    
    Three Months
    
    
    From InceptionEnded
    
    
    Ended
    
    
    (March 25, 2005) toDecember 31, 2006
    
    
    December 31, 2005
    
    
    December 31, 2006(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Revenues
    
    $
    
    
    
    $
    
    
    
    $
    Operating ExpensesProfessional and consulting fees
    
    
    151,057
    
    
    
    104,056
    
    
    
    831,669Project coordinator
    
    
    
    
    
    
    
    
    
    
    231,789General and administrative
    
    
    115,720
    
    
    
    74,106
    
    
    
    561,835Total operating expenses
    
    
    266,777
    
    
    
    178,162
    
    
    
    1,625,293Operating Loss
    
    
    (266,777
    )
    
    
    (178,162
    )
    
    
    (1,625,293
    )Other Income (Expense)Other income
    
    
    
    
    
    
    
    
    
    
    5,000Interest income
    
    
    383,312
    
    
    
    4,228
    
    
    
    956,871Interest expense
    
    
    
    
    
    
    
    
    
    
    (36,041
    )Total other income (expense)
    
    
    383,312
    
    
    
    4,228
    
    
    
    925,830Net Income (Loss)
    
    $
    116,535
    
    
    $
    (173,934
    )
    
    $
    (699,463
    )Weighted Average Units Outstanding
    
    
    5,133
    
    
    
    194
    
    
    
    1,269Net Income (Loss) Per Unit
    
    $
    23
    
    
    $
    (897
    )
    
    $
    (551
    )
  4




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E ENERGY ADAMS, LLC
  Three Months
    
    
    Three Months
    
    
    From InceptionEnded
    
    
    Ended
    
    
    (March 25, 2005) toDecember 31, 2006
    
    
    December 31, 2005
    
    
    December 31, 2006(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Cash Flows from Operating ActivitiesNet income (loss)
    
    $
    116,535
    
    
    $
    (173,934
    )
    
    $
    (699,463
    )Adjustments to reconcile net loss to net cash
used in operating activities:Depreciation
    
    
    1,734
    
    
    
    565
    
    
    
    5,109Changes in assets and liabilitiesPrepaid and other
    
    
    43,344
    
    
    
    (24,624
    )
    
    
    (189,284
    )Accounts payable
    
    
    (1,633
    )
    
    
    (17,286
    )
    
    
    104,546Accrued expenses and other
    
    
    3,337
    
    
    
    
    
    
    
    6,307Net cash provided by (used in)
operating activities
    
    
    163,317
    
    
    
    (215,279
    )
    
    
    (772,785
    )Cash Flows from Investing ActivitiesPayment for land options
    
    
    
    
    
    
    (1,000
    )
    
    
    Capital expenditures
    
    
    (16,435,695
    )
    
    
    (798
    )
    
    
    (24,167,190
    )Net cash used in investing activities
    
    
    (16,435,695
    )
    
    
    (1,798
    )
    
    
    (24,167,190
    )Cash Flows from Financing ActivitiesDebt issuance costs
    
    
    
    
    
    
    
    
    
    
    (373,750
    )Member contributions
    
    
    
    
    
    
    
    
    
    
    50,360,000Costs related to capital contributions
    
    
    
    
    
    
    (68,222
    )
    
    
    (402,617
    )Net cash provided by (used in)
financing activities
    
    
    
    
    
    
    (68,222
    )
    
    
    49,583,633Net Increase (Decrease) in Cash and Equivalents
    
    
    (16,272,378
    )
    
    
    (285,299
    )
    
    
    24,643,658Cash and Equivalents  Beginning of Period
    
    
    40,916,036
    
    
    
    737,053
    
    
    
    Cash and Equivalents  End of Period
    
    $
    24,643,658
    
    
    $
    451,754
    
    
    $
    24,643,658Supplemental Cash Flow InformationCash paid during the period for:Interest
    
    $
    
    
    
    $
    
    
    
    $
    36,041Supplemental Disclosure of Noncash
Investing and Financing ActivitiesLand options exercised for land purchased
    
    $
    
    
    
    $
    
    
    
    $
    7,000Deferred offering costs in accounts payable
    
    $
    
    
    
    $
    4,752
    
    
    $
    Construction in progress in construction
and retainage payable
    
    $
    5,751,546
    
    
    $
    
    
    
    $
    5,751,546
  5




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E ENERGY ADAMS, LLC
   1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
   Nature of Business
  Fiscal Reporting Period
  Accounting Estimates
  Cash and Equivalents
  Property and Equipment
   Debt Issuance Costs
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E ENERGY ADAMS, LLC
    Income Taxes
  Fair Value of Financial Instruments
  Recently Issued Accounting Pronouncements
  2. DEVELOPMENT STAGE ENTERPRISE
   3. MEMBERS EQUITY
  4. BANK FINANCING
   7




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E ENERGY ADAMS, LLC
      5. COMMITMENTS AND CONTINGENCIES
 Design build agreement
  8




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E ENERGY ADAMS, LLC
   Construction contracts
     9




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E ENERGY ADAMS, LLC
   Consulting contracts
   Financing Contracts and 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 of 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.
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E ENERGY ADAMS, LLC
   Utility Contracts
   Marketing Agreement
  11




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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;
    
    Ability to secure all necessary licenses and permits;
    
    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 our business strategy, capital improvements or development plans;
    
    The loss of any license or permit;
    
    Changes in the environmental regulations that apply to our plant site and operations;
    
    Ability to secure marketing services;
    
    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 in federal and/or state laws (including the elimination of any federal and/or
state ethanol tax incentives);
    
    Changes and advances in ethanol production technology; and
    
    Competition in the ethanol industry and from other alternative fuel additives.
  12




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Overview
       Plan of Operations for the Next 12 Months
  13




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Plant Construction Activities
 Construction of the Plant
     Permitting and Regulatory Activities
  14




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Minor construction permit for air emissions
  Construction Storm Water Discharge Permit and Storm Water Pollution Prevention Program (General
NPDES Permits)
  State Archeological and Endangered Species Research
  Above Ground Storage Tank Permit
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Air pollution standard
  Waste Water National Pollutant Discharge Elimination System Permits (NPDES Permit)
   Industrial Storm Water Discharge Permit and Storm Water Pollution Prevention Program (General NPDES
Permits)
  New source performance standards
  Spill prevention, control, and countermeasures plan
  16




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Alcohol and Tobacco Tax and Trade Bureau,Requirements
  Risk management plan
  Environmental Protection Agency
  Key Operating Contracts Entered Into during our Fiscal Quarter Ended December 31, 2006
 Ethanol Marketing Agreement with Aventine Renewable Energy, Inc.
  Agreements with Natural Gas Pipeline Company of America
  17




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Agreements with BNSF Railway Company
    Agreement with McCormick Construction Company, Inc. for Auger Cast Piling
  Trends and Uncertainties Impacting the Ethanol Industry and Our Future Operations
  18




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19




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Trends and Uncertainties Impacting the Corn and Natural Gas Markets and Our Future Cost of Goods
Sold
     Operating Expenses
  20




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Liquidity and Capital Resources
 Estimated Sources of Funds
  Sources of Funds
    
    
    
    
    
    PercentOffering Proceeds (1)
    
    $
    49,390,000
    
    
    
    47.90
    %Seed Capital Proceeds (2)
    
    $
    970,000
    
    
    
    0.94
    %Senior Debt Financing (3)
    
    $
    49,500,000
    
    
    
    48.01
    %Tax Increment Financing (4)
    
    $
    3,000,000
    
    
    
    2.91
    %Interest on Escrow (5)
    
    
    244,000
    
    
    
    0.24
    %Total Sources of Funds
    
    $
    103,104,000
    
    
    
    100.00
    %
 
 (1)
    
    We currently have 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)
    
    We have entered into a Redevelopment Contract with the Village of Adams for the
redevelopment of our plant site. The Village will issue some form of TIF indebtedness to
assist the Company in the costs of redeveloping the site. The maximum amount of TIF real
estate valuation will be $20,000,000 with interest to be determined by the Company (but
not to exceed ten percent).(5)
    
    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
  Use of Proceeds
    
    Amount
    
    Percent 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
    %
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Use of Proceeds
    
    Amount
    
    Percent of TotalAdministrative 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)
    
    
    2.91
    %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.(2)
    
    We may decide to defer the construction of the additional grain storage on our site
until after operations have begun in the event that construction costs are higher than the
amounts we have budgeted above, in an effort to keep our project costs within our
anticipated budget of $103,100,000. Quarterly Financial Results for Fiscal Quarter Ended December 31, 2006
  Project Capitalization
 Seed Capital Offering
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Registered Offering
  Bridge Loan
  Senior Debt Financing
      23




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Tax Increment Financing (TIF)
  Nebraska Department of Economic Development Community Development Block Grant
  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.
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Employees
    Position
    
    # Full-Time PersonnelCEO/General Manager
    
    
    1CFO
    
    
    1Plant Manager
    
    
    1Commodities Manager
    
    
    1Grain Handling
    
    
    3Product Manager
    
    
    1Office Manager/Human Resources Manager
    
    
    1Lab Manager
    
    
    1Lab Technician
    
    
    1Accounting/Clerical
    
    
    4Plant Operators/Shift Supervisors
    
    
    12Chief Mechanical Operator/Assistants
    
    
    5Maintenance Supervisor
    
    
    1Maintenance Craftsmen
    
    
    3TOTAL
    
    
    36
  Off Balance Sheet Arrangements
  
 Item 3. Controls and Procedures
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PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
 None.
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
      Aggregate price ofAmount
    
    the amount
    
    
    
    
    
    Aggregate price ofRegistered
    
    registered
    
    Amount Sold
    
    the amount sold5,800
    
    $
    58,000,000
    
    
    
    4,939
    
    
    $
    49,390,000
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approximate
 Plant Construction(1)
    
    $
    22,669,000Financing Costs(2)
    
    $
    374,000Real Estate Purchases and Land Improvements(3)
    
    $
    1,438,000Repayment of Indebtedness(4)
    
    $
    2,000,000Operating Expenses(5)
    
    $
    1,022,000Total
    
    $
    27,503,000
 
 (1)
    
    This includes approximate expenses incurred as of December 31, 2006 for plant
construction, rail infrastructure construction, and natural gas pipeline construction and
maintenance and other miscellaneous construction costs.(2)
    
    We incurred approximately $374,000 in a bank commitment fee for our senior debt
financing.(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)
    
    The Operating Expenses 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
  
 Item 6. Exhibits
  Exhibit No.
    
    Description
    
    Method of Filing10.6
    
    Pipeline Construction Agreement between Natural Gas Pipeline
Company of America and E Energy Adams, LLC, dated October 11, 2006
    
    
    110.7
    
    Design-Build Agreement between Fagen, Inc. and E Energy Adams, LLC,
dated August 1, 2006
    
    
    1 +10.8
    
    Ethanol Marketing Agreement between Aventine Renewable Energy, Inc.
and E Energy Adams, LLC, dated October 9, 2006
    
    
    1
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Exhibit No.
    
    Description
    
    Method of Filing10.9
    
    Auger Cast Piling Agreement between McCormick Construction Company,
Inc. and E Energy Adams, LLC, dated September 14, 2006
    
    
    110.10
    
    Pipeline Protection Agreement between Natural Gas Pipeline Company
of America and E Energy Adams, LLC, dated October 5, 2006
    
    
    110.13
    
    BNSF Railway Company Lease of Land for Construction/Rehabilitation
of Track, dated June 22, 2006
    
    
    110.14
    
    Employment Agreement  Commodities Manager, dated December 22, 2006
    
    
    110.15
    
    Employment Agreement  Plant Manager, dated December 22, 2006
    
    
    110.19
    
    Natural Gas Firm Transportation Rate Discount Agreement between
Natural Gas Pipeling Company of America and E Energy Adams, LLC,
dated November 20, 2006,
    
    
    *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
    
    
    *
 
 (1)
    
    Incorporated by reference to the exhibit of the same number on our Annual Report on Form
10-KSB, No. 333-128902, filed on December 31, 2006.(*)
    
    Filed herewith.(+)
    
    Material has been omitted pursuant to a request for confidential treatment and such materials
have been filed separately with the Securities and Exchange Commission. 
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SIGNATURES
  E ENERGY ADAMS, LLCDate: February 14, 2007
    /s/ Sam SaccoSam SaccoChief Executive Officer (Principal Executive Officer)Date: February 14 , 2007
    /s/ Nicholas J. CusickNicholas J. CusickTreasurer  (Principal Financial and Accounting Officer) 29