##### 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 March 31, 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
 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
    
    
    13Item 3. Controls and Procedures
    
    
    24PART II. OTHER INFORMATION
    
    
    25Item 1. Legal Proceeding
    
    
    25Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    25Item 3. Defaults Upon Senior Securities
    
    
    26Item 4. Submission of Matters to a Vote of Security Holders
    
    
    26Item 5. Other Information
    
    
    26Item 6. Exhibits
    
    
    26SIGNATURES
    
    
    27Exhibit 10.20Exhibit 10.24Exhibit 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
  March 31,2007(Unaudited)ASSETSCurrent AssetsCash and equivalents
    
    $
    9,315,326Restricted cash
    
    
    1,258,457Prepaid and other
    
    
    135,952Total current assets
    
    
    10,709,735Property and EquipmentLand
    
    
    1,438,162Computers and office equipment
    
    
    80,531Leasehold improvements
    
    
    4,408Construction in progress
    
    
    45,935,255Total property and equipment
    
    
    47,458,356Less accumulated depreciation
    
    
    9,084Net property and equipment
    
    
    47,449,272Other AssetsInvestments
    
    
    93,436Debt issuance costs
    
    
    373,750Total other assets
    
    
    467,186Total Assets
    
    $
    58,626,193LIABILITIES AND MEMBERS EQUITYCurrent LiabilitiesDerivative instruments
    
    $
    1,441,581Accounts payable
    
    
    71,220Accrued expenses
    
    
    30,835Construction payable
    
    
    8,005,922Line of credit
    
    
    1,076,000Total current liabilities
    
    
    10,625,558Commitments and ContingenciesMembers EquityMember contributions, net of costs related to capital
contributions,
5,133 units outstanding at March 31, 2007
    
    
    49,957,383Deficit accumulated during development stage
    
    
    (1,956,748
    )Total members equity
    
    
    48,000,635Total Liabilities and Members Equity
    
    $
    58,626,193
   3




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##### Table of Contents



E ENERGY ADAMS, LLC
  Quarter
    
    
    Quarter
    
    
    From InceptionEnded
    
    
    Ended
    
    
    (March 25, 2005)March 31,
    
    
    March 31,
    
    
    to March 31,2007
    
    
    2006
    
    
    2007(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Revenues
    
    $
    
    
    
    $
    
    
    
    $
    Operating ExpensesProfessional and consulting fees
    
    
    140,671
    
    
    
    124,936
    
    
    
    970,862Project coordinator
    
    
    
    
    
    
    44,500
    
    
    
    231,789General and administrative
    
    
    219,699
    
    
    
    58,135
    
    
    
    783,012Total operating expenses
    
    
    360,370
    
    
    
    227,571
    
    
    
    1,985,663Operating Loss
    
    
    (360,370
    )
    
    
    (227,571
    )
    
    
    (1,985,663
    )Other Income (Expense)Other income
    
    
    
    
    
    
    
    
    
    
    5,000Loss on derivative instruments
    
    
    (1,259,124
    )
    
    
    
    
    
    
    (1,259,124
    )Interest and dividend income
    
    
    368,934
    
    
    
    2,698
    
    
    
    1,325,805Interest expense
    
    
    (6,725
    )
    
    
    
    
    
    
    (42,766
    )Total other income (expense)
    
    
    (896,915
    )
    
    
    2,698
    
    
    
    28,915Net Loss
    
    $
    (1,257,285
    )
    
    $
    (224,873
    )
    
    $
    (1,956,748
    )Weighted Average Units Outstanding
    
    
    5,133
    
    
    
    194
    
    
    
    1,741Net Loss Per Unit
    
    $
    (244.94
    )
    
    $
    (1,159.14
    )
    
    $
    (1,123.92
    )
   4




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##### Table of Contents



E ENERGY ADAMS, LLC
  Six Months
    
    
    Six MonthsEnded
    
    
    EndedMarch 31,
    
    
    March 31,2007
    
    
    2006(Unaudited)
    
    
    (Unaudited)Revenues
    
    $
    
    
    
    $
    Operating ExpensesProfessional and consulting fees
    
    
    291,728
    
    
    
    202,671Project coordinator
    
    
    
    
    
    
    52,000General and administrative
    
    
    335,419
    
    
    
    151,061Total operating expenses
    
    
    627,147
    
    
    
    405,732Operating Loss
    
    
    (627,147
    )
    
    
    (405,732
    )Other Income (Expense)Loss on derivative instruments
    
    
    (1,259,124
    )
    
    
    Interest and dividend income
    
    
    752,246
    
    
    
    6,926Interest expense
    
    
    (6,725
    )
    
    
    Total other income (expense)
    
    
    (513,603
    )
    
    
    6,926Net Loss
    
    $
    (1,140,750
    )
    
    $
    (398,806
    )Weighted Average Units Outstanding
    
    
    5,133
    
    
    
    194Net Loss Per Unit
    
    $
    (222.24
    )
    
    $
    (2,055.70
    )
   5




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E ENERGY ADAMS, LLC
  Six Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    From InceptionMarch 31,
    
    
    March 31,
    
    
    (March 25, 2005) to2007
    
    
    2006
    
    
    March 31, 2007(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Cash Flows from Operating ActivitiesNet loss
    
    $
    (1,140,750
    )
    
    $
    (398,806
    )
    
    $
    (1,956,748
    )Adjustments to reconcile net loss to net cash
used in operating activities:Depreciation
    
    
    5,709
    
    
    
    1,119
    
    
    
    9,084Dividend income
    
    
    (145,276
    )
    
    
    
    
    
    
    (145,276
    )Changes in assets and liabilitiesRestricted cash
    
    
    (1,258,457
    )
    
    
    
    
    
    
    (1,258,457
    )Derivative instruments
    
    
    1,441,581
    
    
    
    
    
    
    
    1,441,581Prepaid and other
    
    
    96,676
    
    
    
    (16,830
    )
    
    
    (135,952
    )Accounts payable
    
    
    (34,959
    )
    
    
    21,249
    
    
    
    71,220Accrued expenses
    
    
    27,865
    
    
    
    
    
    
    
    30,835Net cash used in operating activities
    
    
    (1,007,611
    )
    
    
    (393,268
    )
    
    
    (1,943,713
    )Cash Flows from Investing ActivitiesProceeds from dividends
    
    
    52,840
    
    
    
    
    
    
    
    52,840Payments for investment
    
    
    (1,000
    )
    
    
    
    
    
    
    (1,000
    )Payment for land options
    
    
    
    
    
    
    (1,250
    )
    
    
    Capital expenditures
    
    
    (31,720,939
    )
    
    
    (798
    )
    
    
    (39,452,434
    )Net cash used in investing activities
    
    
    (31,669,099
    )
    
    
    (2,048
    )
    
    
    (39,400,594
    )Cash Flows from Financing ActivitiesDebt issuance costs
    
    
    
    
    
    
    (25,000
    )
    
    
    (373,750
    )Proceeds from line of credit
    
    
    1,076,000
    
    
    
    
    
    
    
    1,076,000Member contributions
    
    
    
    
    
    
    
    
    
    
    50,360,000Costs related to capital contributions
    
    
    
    
    
    
    (129,074
    )
    
    
    (402,617
    )Net cash provided by (used in) financing activities
    
    
    1,076,000
    
    
    
    (154,074
    )
    
    
    50,659,633Net Increase (Decrease) in Cash and Equivalents
    
    
    (31,600,710
    )
    
    
    (549,390
    )
    
    
    9,315,326Cash and Equivalents  Beginning of Period
    
    
    40,916,036
    
    
    
    737,053
    
    
    
    Cash and Equivalents  End of Period
    
    $
    9,315,326
    
    
    $
    187,663
    
    
    $
    9,315,326Supplemental 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
    
    $
    
    
    
    $
    44,701
    
    
    $
    Investment  dividend reinvestment
    
    $
    92,436
    
    
    $
    
    
    
    $
    92,436Construction in progress in construction payable
    
    $
    8,005,922
    
    
    $
    
    
    
    $
    8,005,922Deferred offering costs offset against equity
    
    $
    
    
    
    $
    
    
    
    $
    385,425
   6




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##### Table of Contents



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




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E ENERGY ADAMS, LLC
 
  3. DERIVATIVE INSTRUMENTS
   4. BANK FINANCING
    Construction Term Loan
   9




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##### Table of Contents



E ENERGY ADAMS, LLC
 
 Construction Revolving Loan
  Additional Revolving Loan
    5. COMMITMENTS AND CONTINGENCIES
 Design build agreement
  Construction contracts
   10




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E ENERGY ADAMS, LLC
 
  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
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
   11




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E ENERGY ADAMS, LLC
 
 Marketing Agreement
  Corn Contracts
    12




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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 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 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.
   13




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Overview
     Plan of Operations for the Next 12 Months
    14




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Project Capitalization
 Seed Capital Offering
  Registered Offering
  Bridge Loan
  Senior Debt Financing
     15




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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.
   16




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Plant Construction and Project Development Activities
     Marketing and Natural Gas Agreements
     17




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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)
 Environmental Permits and Plans to be in Place Prior to the Start of Operations
 
    
    Industrial Storm Water Discharge Permit and Storm Water Pollution Prevention Program
(General NPDES Permits)
 
    
    Spill Prevention, Control, and Countermeasures Plan
 
    
    Risk Management Plan
 
    
    Alcohol Fuel Producers Permit
 
  18




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Trends and Uncertainties Impacting the Ethanol Industry and Our Future Operations
        19




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th
  Technology Developments
  Trends and Uncertainties Impacting the Corn and Natural Gas Markets and Our Future Cost of Goods
Sold
    20




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Operating Expenses
  Liquidity and Capital Resources
 Estimated Sources of Funds
  Sources ofFunds
    
    
    
    
    PercentOffering Proceeds (1)
    
    $
    49,390,000
    
    
    
    43.67
    %Seed Capital Proceeds (2)
    
    $
    970,000
    
    
    
    0.86
    %Senior Debt Financing (3)
    
    $
    49,500,000
    
    
    
    43.76
    %Revolving Line of Credit (4)
    
    $
    10,000,000
    
    
    
    8.84
    %Estimated Tax Increment Financing (5)
    
    $
    3,000,000
    
    
    
    2.65
    %Interest on Escrow (6)
    
    
    244,000
    
    
    
    0.22
    %Total Sources of Funds
    
    $
    113,104,000
    
    
    
    100.00
    %
  21




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(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)
    
    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 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.(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
  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
    %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
    %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
    %
  22




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Use of Proceeds
    
    Amount
    
    
    Percent of TotalInventory  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 March 31, 2007
  Employees
   23




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# Full-TimePosition
    
    PersonnelCEO
    
    
    1CFO
    
    
    1Plant Manager
    
    
    1Commodities Manager
    
    
    1Production Manager
    
    
    1EHS Manager
    
    
    1Human Resource Manager
    
    
    1Purchasing Agent/Planner Scheduler
    
    
    1Accounting/Clerical
    
    
    4Lab Manager
    
    
    1Lab Technician
    
    
    1Maintenance Manager
    
    
    1Maintenance Technicians
    
    
    3Material Handlers
    
    
    3Commodity Department Staff
    
    
    3Plant Operators/Shift Supervisors
    
    
    16TOTAL
    
    
    40
  Off Balance Sheet Arrangements
  
 Item 3. Controls and Procedures
    24




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PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
 None.
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
      Amount
    
    Aggregate price of the amount
    
    
    
    
    
    
    Aggregate price of theRegistered
    
    registered
    
    
    Amount Sold
    
    
    amount sold5,800
    
    $
    58,000,000
    
    
    
    4,939
    
    
    $
    49,390,000
  25




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approximate
 Plant Construction(1)
    
    $
    36,014,000Financing Costs(2)
    
    $
    374,000Real Estate Purchases and Land Improvements(3)
    
    $
    1,438,000Repayment of Indebtedness(4)
    
    $
    2,000,000Other Expenses(5)
    
    $
    816,000Total
    
    $
    40,642,000
 (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 equipment and 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)
    
    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
  
 Item 6. Exhibits
  Exhibit
    
    
    
    Method ofNo.
    
    Description
    
    Filing10.20
    
    
    Spur Track Construction Agreement between Kelly
Hill and E Energy Adams, LLC, dated March 23, 2007
    
    *10.24
    
    
    Second Amendment to Credit Agreement between Farm
Credit Services of America and E Energy Adams, LLC,
dated March 8, 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
    
    *
 (*)
    
    Filed herewith.
  26




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SIGNATURES
  E ENERGY ADAMS, LLCDate: May 15, 2007
    /s/ Carl D. SitzmannCarl D. SitzmannChief Executive Officer Date: May 15, 2007
    /s/ Larry G. BreesLarry G. BreesChief Financial Officer  27