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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-K
 
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the Fiscal Year Ended December 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                    to
 Commission File Number 000-50282
 
 PANDA ETHANOL, INC.
 (Exact name of registrant as specified in its charter)
 
 Nevada
    
    20-4799979(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)4100 Spring Valley, Suite 1002
Dallas, Texas
(Address of principal executive offices)
    
    75244
(Zip Code)
 Registrants telephone number, including area code: (972) 361-1200
 
 Securities registered pursuant to Section 12(b) of the Act: None
 Securities registered pursuant to Section 12(g) of the Act:
 Common Stock, $.001 par value
(Title of Class)
 
 o þ
 o þ
 þ o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE:




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PANDA ETHANOL, INC.
 FORM 10-K
 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007
 INDEX
 PagePART IItem 1.
    
    Business
    
    
    1Item 1A.
    
    Risk Factors
    
    
    15Item 2.
    
    Properties
    
    
    31Item 3.
    
    Legal Proceedings
    
    
    32Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    33PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
    
    
    34Item 6.
    
    Selected Financial Data
    
    
    35Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    36Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    44Item 8.
    
    Financial Statements and Supplementary Data
    
    
    45Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    45Item 9A(T).
    
    Controls and Procedures
    
    
    46Item 9B.
    
    Other Information
    
    
    46PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    47Item 11.
    
    Executive Compensation
    
    
    47Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    47Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    47Item 14.
    
    Principal Accountant Fees and Services
    
    
    47PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    48SubsidiariesConsent of Deloitte & Touche LLPCertification of Principal Executive OfficerCertification of Principal Financial OfficerCertification of Chief Executive Officer Pursuant to Section 906Certification of Chief Financial Officer Pursuant to Section 906




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PART I
 
 Item 1. Business
 In this annual report on Form 10-K , the words Panda Ethanol refer to Panda Ethanol, Inc. and
its subsidiaries, unless otherwise stated or the context otherwise requires. Panda Ethanol is a
Nevada corporation. On November 6, 2006, Panda Ethanol, Inc. (a Delaware corporation), which is
referred to in this annual report as Panda Ethanol Delaware, merged with and into Cirracor, Inc.,
which we refer to as Cirracor, a Nevada corporation. The surviving Nevada corporation after the
merger changed its name to Panda Ethanol, Inc. In this annual report on Form 10-K , the words
Company, we, our, ours and us refer to the surviving company after the merger and its
subsidiaries, unless otherwise stated or the context otherwise requires.
 Overview
  Destination Plant Advantages
  Biomass Gasification Advantages
  Summary of Projects
 Hereford Facility
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
    
    An ample supply of low-cost biomass for our facility. The local feedlots within 50
miles of our Hereford facility generate approximately 4.2 billion pounds of manure
annually, over four times the amount needed to fuel our facility. We have secured over
two times our annual manure need, or approximately 2 billion pounds, pursuant to long-term
supply contracts with 21 feedlots in the region.
    
    Access to a large, local market for our WDGS. Our facility is expected to produce
312,000 tons per year (on a dry matter basis) of WDGS, which we estimate represents less
than 20 percent of the local markets potential annual demand.
    
    Due to the high demand for feed, the Hereford area is one of the most liquid corn
trading markets in the United States. This allows us to originate feedstock from multiple
origins throughout the major corn growing regions, thereby mitigating our exposure to
adverse local or regional growing conditions. Furthermore, our substantial 45-day grain
storage capacity, about four times the amount of storage capacity of a typical Midwest
facility, allows us to adequately supply not only our own feedstock needs but also enjoy
potential trading opportunities in this liquid corn-trading market.
    
    Access to existing rail infrastructure, especially the BNSF Railway main line that runs
adjacent to our facility, which enables us to efficiently and economically transport
approximately 440,000 bushels of corn into our facility via 110-car unit trains and 2.8
million gallons of denatured ethanol out to blenders via 95-car unit trains.
    2




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Other Projects
   3




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History of Panda Ethanol
     History of Panda Energy
  
    
    Partnered with leading industry and financial participants in domestic and
international project financing, construction, ownership and operation of independent
power projects.
    
    Managed the construction of projects with multi-national contractors including
Duke-Fluor Daniel, Raytheon, Hawker-Siddley, Harbin Power Engineering, China Gezhouba
Construction and SNC Lavalin.
    
    Designed, sited, financed and concurrently constructed two gas-fueled merchant electric
generation facilities, which, at the time of construction, were the largest such
facilities in the United States, totaling 4,400 megawatts, with $2.8 billion financing and
more than 4,000 workers onsite at peak construction.
  4




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Industry Background
    
    
    The Price of Gasoline. Because ethanol is sold in both discretionary markets and is
used as both an additive to, and substitute for, gasoline, the price of ethanol over the
long term has been highly correlated to the price of gasoline, which closely follows the
price of oil;
    
    Federal Ethanol Tax Incentives. The Volumetric Ethanol Excise Tax Credit, or VEETC,
provides a $0.51 per gallon payment and incentive to refiners who blend ethanol with
gasoline. This federal tax incentive enables blenders to pay a premium for ethanol
relative to the price of gasoline since the higher price for the ethanol is offset by the
amount of the tax credit. As a result, the per gallon price for ethanol has generally
traded around the price of wholesale gasoline plus the value of the VEETC; and
    
    Ethanol Industry Fundamentals (i.e. capacity and demand). The ethanol industry has
experienced significant growth in recent years, both in terms of supply capacity and
demand. In periods when supply has exceeded demand, the price of ethanol has tended to
fall below the cost of wholesale gasoline plus the value of the VEETC. In periods when
demand outpaced supply, the price of ethanol tended to be at or above the cost of
wholesale gasoline plus the value of the VEETC.
   
    
    Mandated Renewable Fuel Usage. The growth in ethanol usage has been supported by
regulatory requirements dictating the use of renewable fuels, including ethanol. The
Energy Independence and Security Act of 2007, enacted in December 2007, increased the
federally-mandated usage of renewable fuels by petroleum refiners from 5.4 billion gallons
to 9 billion gallons for 2008. The mandated usage of renewable biofuels increases to 15
billion gallons of corn-based ethanol per year in 2015.
    
    Energy Independence. The percentage of oil imported from outside the United States has
doubled over the past 21 years from 33% in 1986 to 66% in 2007. In addition, the United
States imports approximately 10% of the refined product required to fuel the nations
transportation needs. Political instability and attacks on oil infrastructure in the major
oil producing nations periodically disrupt the flow of oil and have added a risk premium
to world oil prices. At the same time, demand for oil has increased as developing nations
such as China and India continue to industrialize. As a result, world crude oil prices
recently topped $110 per barrel. Ethanol is a domestically-produced, renewable source of
energy that increases the availability of domestic fuel supplies and helps to reduce the
United States dependence on foreign oil.
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
    
    Octane Enhancer. Ethanol, with an octane rating of 113, is used to increase the octane
value of gasoline with which it is blended, thereby improving engine performance. It is
used as an octane enhancer both for producing regular grade gasoline from lower octane blending stocks  including both reformulated gasoline
blendstock for oxygenate blending and conventional gasoline blendstock for oxygenate
blending  and for upgrading regular gasoline to premium grades.
    
    Fuel Stock Extender. According to the Energy Information Administration, while domestic
petroleum refinery output has increased by approximately 28% from 1980 to 2006, domestic
gasoline product supplied has increased 40% over the same period. By blending ethanol with
gasoline, refiners are able to expand the volume of the gasoline they are able to sell.
    
    Growth in E85 Usage. E85 is a blended motor fuel containing 85% ethanol and 15%
gasoline. According to the RFA, there were approximately 1,440 stations selling E85 and
approximately 6 million vehicles capable of using the fuel in the United States as of
December 31, 2007. While E85 currently represents less than 1% of the ethanol market,
certain factors indicate the potential for future growth of E85 consumption. The Energy
Independence and Security Act of 2007 increased the incentives available to stations that
install E85 capable equipment. The major US automakers have announced initiatives to
increase significantly production of flexible fuel vehicles. Additionally, several states,
such as New York, Pennsylvania, Michigan and Missouri, have launched Ethanol Corridor
initiatives which call for availability of E85 fuel at every service station along a major
interstate.
 Ethanol Production Process
  Dry Milling
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Corn to Ethanol Conversion Process
  
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Biomass Gasification Process
  
   Ethanol Co-Products
 Distillers Grain with Solubles
   8




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Overview of Raw Material Supply, Pricing and Hedging
  Corn Procurement and Hedging Strategy
 
    
    we will purchase corn through spot cash, fixed-price forward and delayed pricing
contracts; and
    
    we will utilize hedging positions in the corn futures and options markets on the
Chicago Board of Trade, or CBOT, to manage the risk of excessive corn price fluctuations
or to lock in specific crush margins for a portion of our corn requirements. The crush
is generally defined as the net profit or loss of fixed and variable cost associated
with producing a specific amount of ethanol in a specific time frame netted against the
value of proceeds of ethanol and all co-products for that same time frame.
  Natural Gas Procurement and Hedging Strategy
 Unleaded Gasoline Hedging Strategy
 Marketing Arrangements
 Ethanol Marketing
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Distillers Grains Marketing
 Competition
  
    
    price;
    
    reliability of our production processes and delivery schedule;
    
    volume of ethanol produced and sold;
    
    proximity to ethanol and WDGS markets;
    
    proximity to feedstock;
    
    management team;
    
    facility size-economies of scale;
    
    facility design efficiencies, such as double-loop railroad track and 45-day corn
storage capacity at certain facilities whether currently under construction or as planned;
    
    biomass application for process steam at certain facilities whether currently under
construction or as planned;
    
    price of raw materials, including corn, natural gas and steel;
    
    EPC contractor availability; and
    
    price and availability of labor.
  Legislation
  The Energy Policy Act of 2005
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The Energy Independence and Security Act of 2007.
  The Volumetric Ethanol Excise Tax Credit
 Federal Tariff on Imported Ethanol
    11




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Environmental Matters
        12




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Employees
  Forward-Looking Statements
   
    
    the effectiveness of the new organizational plan;
    
    the availability of and necessity for continued access to former management;
    
    our ability to obtain additional capital to finance our initiatives;
    
    the time, cost and ability to construct or complete construction of our Hereford
and other ethanol plants;
    
    issues arising in connection with the development and construction of our projects,
including those relating to permits, easements, site conditions, workmanship, process
engineering, and conflicts of interest;
    
    the projected growth or contraction of the ethanol market in which we will operate;
    
    fluctuations in the market price of ethanol;
    
    our business strategy for expanding, maintaining or contracting our presence in
this market and related markets;
    
    our ability to obtain the necessary capital to finance our initiatives;
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
    
    the sale of interests in, or entry into, partnerships or joint ventures with respect to specific projects;
    
    anticipated trends in our financial condition and results of operations;
    
    our ability to distinguish ourselves from our current and future competitors;
    
    changes in or elimination of laws, tariffs, trade or other controls or enforcement practices such as:
 
    
    national, state or local energy policy;
    
    federal ethanol tax incentives;
    
    the renewable fuel standard and other legislation mandating the usage of ethanol
or other oxygenate additives;
    
    state and federal regulation restricting or banning the use
of methyl tertiary butyl ether, or MTBE;
    
    environmental laws and regulations applicable to our
operations and the enforcement thereof; and
    
    regulations related to homeland security;
 
    
    changes in weather and general economic conditions;
    
    overcapacity within the ethanol and petroleum production and refining industries;
    
    total United States consumption of gasoline;
    
    availability and costs of products and raw materials, particularly corn, natural
gas, stainless steel and carbon steel;
    
    labor costs;
    
    labor relations;
    
    fluctuations in petroleum prices;
    
    our or our employees failure to comply with applicable laws and regulations;
    
    our ability to generate free cash flow to invest in our business and service our
indebtedness;
    
    limitations and restrictions contained in the instruments and agreements governing
our and our subsidiaries indebtedness;
    
    changes in interest rates;
    
    our ability to retain key employees;
    
    liability resulting from actual or potential future litigation;
    
    competition with respect to any of our products;
    
    consolidation in the industry;
    
    plant shutdowns or disruptions at our planned plant;
    
    availability of shuttle trains, rail cars, trucks and barges;
    
    risks regarding a loss of or substantial decrease in purchases by our major ethanol
customers or any customer of our by-products;
    
    risks related to hedging decisions, including whether or not to enter into hedging
arrangements and the possibility of financial losses related to hedging arrangements;
and
    
    risks related to diverting managements attention from ongoing business operations.
 
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Item 1A. Risk Factors
 Risks Related to our Company as a Development-Stage Company
 We have no prior operating history of ethanol production, which could result in errors in
management and operations, causing a material adverse effect on our financial condition and results
of operations.
    We may never become profitable.
  Our current liquidity and anticipated cash flows raise substantial doubt about our ability to
continue as a going concern.
  We may be unable to implement our expansion strategy as planned or at all.
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We may be unable to meet the administrative and operational needs of our growth strategy
effectively, which could result in our inability to adequately increase our sales or to efficiently
operate our business.
  Certain individuals who perform services for us may have other business and management
responsibilities which may cause conflicts of interest in the allocation of their time and services
to our Company.
  We are dependent upon our officers and directors, and the loss of any of these persons could
adversely affect our operations and results.
  Conflicts of interest may arise because Mr. Robert Carter, our Chairman, is also the Chairman and
Chief Executive Officer and a significant stockholder of Panda Energy, our founder and largest
stockholder, and Todd Carter, a member of our Board of Directors, is also the President of Panda
Energy.
  Panda Energy, our largest stockholder, may have the ability to exert significant influence over us
and their interests may not coincide with the interest of other stockholders.
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Our managements time and attention will be divided among our ethanol plants and other related
ethanol activities such as possible acquisitions and fund raising efforts, and each of our ethanol
plants will be managed under a similar management model, which may prevent us from achieving a
maximum return from any one plant.
  If our principal agreements are terminated or become unfavorable, our projects may fail or be
harmed in ways that significantly reduce our production and revenues and the value of our common
stock.
  Given that all of our revenue will be primarily derived from the production and marketing of
ethanol and its co-products, any disruption in our operations could have a material adverse effect
on us.
  Our financial statements include costs allocated from our former parent company, which may not be
representative of the costs we would have incurred as a stand-alone company.
  Risks Related to our Indebtedness
 Through our project subsidiaries, we will have a substantial amount of indebtedness, which may
adversely affect our cash flow and our ability to operate our business.
  
    
    limiting our ability to obtain additional financing if necessary or desirable;
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
    
    placing us at a competitive disadvantage because we may be
substantially more leveraged than many of our competitors, thus
reducing funds available for operations;
    
    making us vulnerable to increases in interest rates;
    
    reducing funds available for operations because a substantial portion
of our project subsidiaries cash flow will be used to pay interest
and principal on their respective debt;
    
    subjecting all or substantially all of our project subsidiaries
assets to liens, potentially leaving no assets for stockholders in the
event of a liquidation; and
    
    limiting our ability to adjust to changing market conditions, which
could make us more vulnerable to a downturn in the economy, the
ethanol industry or our business.
 Our project subsidiaries may be unable to service, repay or refinance their debt and remain in
compliance with their debt covenants, which would have a material adverse effect on our business.
  Our inability to obtain the equity and debt financing necessary to construct and operate our
planned ethanol production facilities and other acquisition and/or business development
opportunities, could result in the failure of those projects and perhaps our Company.
  Our ability to draw additional funds under the Hereford senior credit facility is subject to
various conditions which we may be unable to satisfy.
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Restrictive loan covenants in our current and future debt and/or equity financing agreements may
hinder our ability to operate our business and delay or prohibit us from paying cash dividends to
our stockholders.
  
    
    incur additional indebtedness;
    
    make capital expenditures or enter into lease arrangements in excess of prescribed thresholds;
    
    make distributions to stockholders, or redeem or repurchase shares;
    
    make certain types of investments or acquisitions;
    
    create liens on our assets;
    
    utilize the proceeds of asset sales; and
    
    merge or consolidate or dispose of assets.
   Risks Related to the Development and Construction of our Ethanol Plants
 Our dependency on key suppliers to design and build our facilities and supply necessary equipment
may have a material adverse effect on our business.
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Our general contractors, suppliers and vendors may have conflicting interests that could cause them
to put their financial interests ahead of ours, which may have a material adverse effect on our
business.
  We may experience shortages of materials and labor and adverse weather conditions during the
construction of our facilities, which could increase construction costs or extend the construction
schedule of such facilities.
   We may sell interests in or form partnerships or joint ventures to develop specific projects, which
could result in a material decrease in our interest in, and control over, such projects, may affect
the consolidation of these projects in our financial statements, and will subject us to risks
related to attracting and maintaining relationships with co-partners and co-venturers.
  
    
    we may be unable to maintain productive relationships with our co-partners or co-venturers;
    
    we may be unable to locate appropriate parties willing to buy
interests or participate in partnerships or joint ventures on a timely
and economic basis, if at all;
    
    our co-partner or co-venturer in a project might become bankrupt;
    
    our co-partner or co-venturer may have economic or business interests
or goals that are, or that become, inconsistent with our business
interests or goals;
    
    we may incur liabilities as the result of the action taken by our co-partner or co-investor;
    
    our co-partner or co-venturer may be in a position to take action
contrary to our instructions or requests or contrary to our policies
or objectives;
    
    we may have a right of first refusal to buy out other co-partners or
co-venturers, but may be unable to finance such buy-out at the
appropriate time; and
    
    we may be unable to sell our interest in a partnership or joint
venture if we desire to exit the venture for any reason or if our
interest is likewise subject to a right of first refusal of our
co-partner or co-venturer.
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We may encounter defective material and workmanship or process engineering that could cause
significant delays in the commencement of our operations.
   The condition or availability of our construction sites may differ from what we expect.
  We are subject to environmental laws and permitting rules that may delay or prevent construction or
operation or increase our costs.
  We may be required to obtain easements from third parties, and our inability to obtain certain
easements could have a material adverse effect on our financial condition and results of
operations.
  Risks Related to Our Ethanol Production
 The market price of ethanol is volatile and subject to significant fluctuations, which may cause
our profitability to fluctuate significantly.
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Current commodity prices are unfavorable and may negatively impact our projected results from the
Hereford facility.
   Our business is dependent upon the availability and price of corn. Significant disruptions in the
supply of corn would materially affect our operating results. In addition, since we generally
cannot pass on increases in corn prices to our customers, continued periods of historically high
corn prices may also materially adversely affect our operating results.
  The spread between ethanol and corn prices can vary significantly which could materially adversely
impact our gross margins.
  Our plan to use cattle manure and cotton gin waste as fuel to generate steam for the ethanol
production process at certain of our facilities, including our Hereford facility, is unique to the
industry and has not been utilized to date in commercial quantities and may not be as successful as
we expect.
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The availability of and cost of loading and transporting cattle manure may affect our business.
  We may engage in hedging transactions which involve risks that can harm our business.
  Increases in natural gas prices or changes in our natural gas costs relative to natural gas costs
paid by competitors may adversely affect our results of operations and financial position.
  Because the production of ethanol requires a significant supply of water and electricity, our
business will be materially harmed if we are unable to obtain an adequate quality and quantity of
water and electricity.
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The transportation of feedstock to us and of ethanol and distillers grains to our customers will be
affected by business risks that are largely out of our control, any of which could significantly
reduce our revenues and operating margins.
  Our dependency on the marketing efforts of Aventine for substantially all of the ethanol produced
at our Hereford facility and our potential Haskell and Yuma facilities in accordance with certain
marketing arrangements could have a material adverse effect on our business.
   Limitations on our ability to sell wet distillers grains locally could have a material adverse
effect on our business.
  We have based our business model on the presumption that we will be able to produce WDGS in
accordance with certain specifications and have represented to WDGS buyers in marketing our product
that we will meet these specifications on an on-going and consistent basis. If we are unable to
produce WDGS that conforms to such specifications, it could have a material adverse effect on our
business.
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Work stoppages and other labor relations issues could result in decreased sales or increased costs,
either of which would negatively impact our financial condition and results of operations.
  Natural disasters, such as fires, hurricanes, floods, unusually heavy or prolonged rain, and
droughts may cause fluctuations in the price, availability and quality of supplies, labor, and raw
materials which could result in production delays and increased costs causing a material adverse
effect on our business.
  Our business will be subject to seasonal fluctuations, which could adversely affect our results of
operations and financial position.
  Risks Related to the Ethanol Industry
 We operate in a highly competitive industry with low barriers to entry. In addition, if the
expected increase in ethanol demand does not occur, or if the demand for ethanol otherwise
decreases, there may be excess capacity in our industry.
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The expansion of domestic ethanol production in combination with state bans on MTBE and/or state
renewable fuels standards may burden rail and terminal infrastructure, raising the cost of our
shipment to blending terminals.
   
    
    additional rail capacity;
    
    additional storage facilities for ethanol;
    
    increases in truck fleets capable of transporting ethanol within localized markets;
    
    expansion of refining and blending facilities to handle ethanol;
    
    growth in service stations equipped to handle ethanol fuels; and
    
    growth in the fleet of flexible fuel vehicles, or FFVs, capable of using E85 fuel.
  Ethanol can be imported duty free from certain countries into the United States, which may
undermine the ethanol industry in the United States.
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Competition for qualified personnel in the ethanol industry is intense and may prevent us from
hiring and retaining qualified personnel to operate our ethanol plants and our home office.
  Consolidation or downturns in the ethanol industry may affect demand for our products and the
pricing of our products, which could limit our growth and may harm our business.
  Development of alternative fuels or alternative ethanol production systems could affect our results
of operations.
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Corn-based ethanol may compete with cellulose-based ethanol in the future, which could make it more
difficult for us to produce ethanol on a cost-effective basis and could reduce the value of your
investment.
  Consumer resistance to the use of ethanol based on the belief that ethanol is expensive, adds to
air pollution, harms engines or takes more energy to produce than it contributes may affect the
demand for ethanol.
  Risks Related to Government Regulation
 The U.S. ethanol industry is highly dependent upon a myriad of federal and state legislation and
regulation, and any changes in legislation or regulation could
materially adversely affect our results of operations and financial condition.
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We are subject to extensive environmental laws and regulations and the cost of compliance and/or
non-compliance with these laws and regulations could have a material adverse effect on our
business.
  We may be subject to legal actions brought by third parties for property damage or personal injury
or for the remediation of contamination.
   Risks Relating to our Common Stock
 There is no long-term material active public trading market for our common stock and we do not know
if one will develop.
  Our common stock price may be volatile.
  
    
    our operating performance and the performance of our competitors;
    
    the publics reaction to our press releases, our other public
announcements and our filings with the Securities and Exchange
Commission (the SEC);
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
    
    changes in earnings estimates or recommendations by research analysts
who might follow us or other companies in our industry;
    
    variations in general economic conditions;
    
    the number of shares available to be publicly traded;
    
    actions of our existing stockholders;
    
    the arrival or departure of key personnel; and
    
    other developments affecting us, our industry or our competitors.
  Our ability to issue additional shares may dilute or otherwise limit stockholders voting or
economic rights.
  Sales of our common stock may cause our stock price to decline.
   We have not paid dividends in the past and do not expect to pay dividends in the future.
  There can be no assurance that we are not or will not become a U.S. real property holding
corporation, in which case non-U.S. holders may be subject to U.S. federal income tax (including
withholding tax) in connection with the disposition of our shares, and U.S. holders selling our
shares may be required to certify as to their status in order to avoid withholding.
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Item 2. Properties
  Site Selection Criteria
  Hereford Facility
  Transportation and logistics
 Energy agreements
 Additional Sites
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Item 3. Legal Proceedings
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Item 4. Submission of Matters to a Vote of Security Holders
  1.
    
    to elect five (5) directors to serve for a term of one year or until their
respective successors are elected and qualified;2.
    
    to consider and vote upon a proposal to approve the Panda Ethanol, Inc. 2006
Amended and Restated Long-Term Incentive Plan (the Incentive Plan); and3.
    
    to ratify the appointment of Deloitte & Touche LLP as the Companys independent
registered public accounting firm for 2007.
   Number of
    
    Number ofName
    
    Votes Cast For
    

Votes WithheldRobert W. Carter
    
    
    19,790,997
    
    
    
    0Todd W. Carter
    
    
    19,790,997
    
    
    
    0G. Michael Boswell
    
    
    19,790,997
    
    
    
    0Donnell Brown
    
    
    19,790,997
    
    
    
    0Philip D. English
    
    
    19,790,997
    
    
    
    0Proposal 2. Approval of Incentive Plan:For
    
    
    18,955,627Against
    
    
    835,370Abstain
    
    
    0Broker Non-Vote
    
    
    0Proposal 3. Ratification of Deloitte & Touche LLP:For
    
    
    19,790,997Against
    
    
    0Abstain
    
    
    0Broker Non-Vote
    
    
    0
 33




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##### Table of Contents



PART II
 
 Item 5.
    
    Market for the Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
   High
    
    LowFiscal year beginning January 1, 2006:Fourth Quarter
    
    
    11.000
    
    
    
    5.000Fiscal year beginning January 1, 2007:First Quarter
    
    
    12.000
    
    
    
    8.750Second Quarter
    
    
    12.000
    
    
    
    4.200Third Quarter
    
    
    4.950
    
    
    
    2.800Fourth Quarter
    
    
    4.000
    
    
    
    3.000
   34




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##### Table of Contents



Item 6. Selected Financial Data
   December 31,
    
    December 31,
    
    December 31,
    
    December 31,2004
    
    2005
    
    2006
    
    2007Period/Year ended (1):Net loss
    
    $
    292,410
    
    
    $
    6,599,091
    
    
    $
    11,586,069
    
    
    $
    17,116,054Loss per common share
    
    
    0.02
    
    
    
    0.48
    
    
    
    0.51
    
    
    
    0.55As of:Total assets
    
    
    
    
    
    
    4,859,964
    
    
    
    241,628,913
    
    
    
    236,875,992Long-term obligations
    
    
    
    
    
    
    
    
    
    
    148,330,848
    
    
    
    151,392,933Book value per common share
    
    
    
    
    
    
    0.20
    
    
    
    2.75
    
    
    
    2.17
 
 (1)
    
    Inception through December 31, 2004 and years ended December 31, 2005, 2006 and 2007. 35




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##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion and analysis of our financial condition and results of operations
should be read in conjunction with our financial statements and the related notes to those
statements included elsewhere in this annual report on Form 10-K . In addition to historical
financial information, the following discussion and analysis contains forward-looking statements
that reflect our plans, estimates and beliefs. Our actual results and timing of selected events
could differ materially from those anticipated in these forward-looking statements as a result of
many factors, including those discussed under
Item 1ARisk Factors on page 15 and the factors
listed under Item 1BusinessForward-Looking
Statements on page 13.
 Overview
       36




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##### Table of Contents



37




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##### Table of Contents



Summary of Critical Accounting Policies and Estimates
  Allocation of Expenses from the Former Parent
   Results of Operations
 For the year ended December 31, 2006 as compared to the year ended December 31, 2007
    38




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##### Table of Contents



For the year ended December 31, 2005 as compared to the year ended December 31, 2006
    39




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Liquidity and Capital Resources
       40




---



##### Table of Contents



41




---



##### Table of Contents



Hereford Facility Project Financing
   42




---



##### Table of Contents



Contractual Obligations
  Payments due by periodLess
    
    
    
    
    
    
    
    
    
    
    Morethan
    
    
    1-3
    
    
    3-5
    
    
    thanContractual obligations
    
    Total
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 yearsLong-Term Debt Obligations (1)
    
    $
    214.7
    
    
    $
    7.1
    
    
    $
    55.0
    
    
    $
    51.0
    
    
    $
    101.6Capital Lease Obligations
    
    
    1.4
    
    
    
    0.3
    
    
    
    0.6
    
    
    
    0.5
    
    
    
    Construction-Related Purchase Obligations (2)
    
    
    38.2
    
    
    
    38.2
    
    
    
    
    
    
    
    
    
    
    
    Other Purchase Obligations (3)
    
    
    16.6
    
    
    
    4.5
    
    
    
    9.4
    
    
    
    2.7
    
    
    
    Other Long-Term Liabilities (4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total (4)
    
    $
    270.9
    
    
    $
    50.1
    
    
    $
    65.0
    
    
    $
    54.2
    
    
    $
    101.6
 
 (1)
    
    The table includes scheduled principal, interest and fee payments related to our long-term
debt outstanding as of December 31, 2007. Our long-term debt obligations are all related to
the construction financing for the Hereford facility. As more fully discussed in Note 5 to our
audited financial statements included in this annual report on Form 10-K, the amount and
timing of payments may be affected by cash sweep provisions in the debt agreements which are
based on the future operating cash flow of the Hereford facility. These cash sweep provisions,
if applicable, would generally have the effect of accelerating principal payments on the debt
as operating cash flow increases. Acceleration of principal payments under these provisions
would generally reduce future interest cost since the amount of principal outstanding in
future periods would be reduced. Also, we anticipate additional future borrowings under our
construction debt facilities beyond the amounts outstanding at December 31, 2007, which will
increase the future payment obligations accordingly.(2)
    
    We are obligated under construction-related contracts as more fully discussed in Note 3 to
our audited financial statements included in this annual report on Form 10-K. The total
obligations under these contracts were originally $190.7 million. Payments on these contracts
through December 31, 2007 totaled $152.5 million, resulting in future obligations totaling
$38.2 million. Payments generally become due 43




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##### Table of Contents



under the contracts based on achievement of specified construction milestones. At December 31, 2007, $10.3 million of the future
obligations under these contracts were included on the balance sheet in accounts payable and
accrued liabilitiesproperty, plant and equipment.(3)
    
    We have entered into agreements with two trucking firms to provide transportation of manure,
ash and wet distillers grain for the Hereford facility. Under the agreements, we will pay
for the services on a per-load basis; however, we are committed to pay for a specified minimum
number of loads under each agreement, the estimated cost of which is reflected in the table
above. Additionally, we have entered into purchase contracts to acquire certain quantities of
corn and denaturant in 2008. As of December 31, 2007, we had purchase contracts for 6,020,000
bushels of corn and 30,000 barrels of denaturant pursuant to which the purchase price will be
determined by the market price at the transaction date. Because the prices for these purchase
commitments have not yet been determined, such commitments are not reflected in the table
above. These obligations are more fully discussed in Note 7 to our audited financial
statements included in this annual report on Form 10-K.(4)
    
    We have financial derivative obligations consisting of a royalty interest embedded in the
subordinated debt obligation which is valued at $2.9 million and an interest rate swap
agreement which is valued at $2.1 million. These obligations are more fully discussed in Notes
2 and 5 to our audited financial statements included in this annual report on Form 10-K. The
value of the royalty interest is based on expected future operating cash flow of the Hereford
facility. If the Hereford facilitys expected future operating cash flow increases, the value
of the royalty interest liability would also increase. The value of the interest rate swap is
based on expectations of future interest rates. If expectations of future interest rates
increase, the value of the interest rate swap liability would decrease. We cannot reliably
predict the amounts or timing of the derivative payments on a year-by-year basis and,
accordingly, the derivative obligations are not included in the table above. Additionally, we
have accrued an estimated liability of $0.5 million for unrecognized tax benefits under
Financial Interpretation 48. The timing of the assertion of such liability by the taxing
authorities, if any, cannot be determined and are not included in the
table above. We believe the liability, if asserted by the
taxing authorities, would be settled by carryback of anticipated losses from 2008 and 2009. Off-balance sheet arrangements
  
 Item 7A. Quantitative and Qualitative Disclosures about Market Risk
   Interest Rate Risk
   44




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Commodity Price Risk
     
 Item 8. Financial Statements and Supplementary Data
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  45




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##### Table of Contents



Item 9A(T). Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
    Managements Report on Internal Control Over Financial Reporting
     Changes in Internal Control over Financial Reporting
  
 Item 9B. Other Information
  46




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##### Table of Contents



PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
  
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  
 Item 14. Principal Accountant Fees and Services
  47




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##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
 (a)
    
    Documents filed as part of Report.
 1.
    
    Report of Independent Registered Public Accounting FirmConsolidated Balance Sheets as of December 31, 2006 and 2007Consolidated Statements of Operations for the years ended December 31, 2005, 2006 and 2007
and for the period from inception (November 1, 2004) through December 31, 2007Consolidated Statements of Shareholders Equity for the years ended December 31, 2005,
2006 and 2007 and for the period from inception (November 1, 2004) through December 31,
2007Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2006 and 2007
and for the period from inception (November 1, 2004) through December 31, 2007Notes to Consolidated Financial Statements2.
    
    Financial Statement Schedule: Schedule I, Condensed Financial Information of
Registrant3.
    
    Exhibits required to be filed by Item 601 of Regulation S-K
 48




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description2.1
    
    Agreement and Plan of Merger dated May 18, 2006, by
and among Cirracor, Panda Ethanol, Inc., and Grove
Panda Investments, LLC, filed as Exhibit 2.1 to our
Current Report on Form 8-K, filed on November 13, 2006
and incorporated by reference herein.2.2
    
    First Amendment to Agreement and Plan of Merger dated
June 7, 2006, by and among Cirracor, Panda Ethanol,
Inc., and Grove Panda Investments, LLC, filed as
Exhibit 2.2 to our Current Report on Form 8-K, filed
on November 13, 2006 and incorporated by reference
herein.3.1
    
    Amended and Restated Articles of Incorporation, filed
as Exhibit 3.1 to our Current Report on Form 8-K,
filed on November 13, 2006 and incorporated by
reference herein.3.2
    
    Amended and Restated Bylaws of Panda Ethanol, Inc.,
filed as Exhibit 3.2 to our Current Report on Form
8-K, filed on November 13, 2006 and incorporated by
reference herein.4.1
    
    Amended and Restated Articles of Incorporation, filed
as Exhibit 3.1 to our Current Report on Form 8-K,
filed on November 13, 2006 and incorporated by
reference herein.4.2
    
    Amended and Restated Bylaws of Panda Ethanol, Inc.,
filed as Exhibit 3.2 to our Current Report on Form
8-K, filed on November 13, 2006 and incorporated by
reference herein.4.3
    
    Registration Rights Agreement, dated as of June 7,
2006, by and among Panda Ethanol, Inc., Panda Energy
International, Inc. and the purchasers named therein,
filed as Exhibit 4.3 to our Current Report on Form
8-K, filed on November 13, 2006 and incorporated by
reference herein.4.4
    
    Registration Rights Agreement, dated as of November 6,
2006, by and among Panda Ethanol, Inc. and Grove Panda
Investments, LLC, filed as Exhibit 4.4 to our Current
Report on Form 8-K, filed on November 13, 2006 and
incorporated by reference herein.4.5
    
    First Amendment to Registration Rights Agreement as of
November 13, 2006, among Panda Ethanol, Inc., Panda
Energy International, Inc. and the several purchasers
signatory therein, filed as Exhibit 10.1 to our
Current Report on Form 8-K, filed on November 17, 2006
and incorporated by reference herein.4.6
    
    Registration Rights Agreement, dated as of December 1,
2006, by and among Panda Ethanol, Inc., Panda Energy
International, Inc. and the several purchasers
signatory thereto, filed as Exhibit 4.1 to our Current
Report on Form 8-K, filed on December 4, 2006 and
incorporated by reference herein.4.7
    
    Registration Rights Agreement, dated as of November 9,
2007, by and between Panda Ethanol, Inc. and Panda
Energy International, Inc., filed as Exhibit 10.2 to
our Current Report on Form 8-K, filed on November 15,
2007 and incorporated by reference herein.10.1
    
    Financing Agreement, dated as of July 28, 2006 by and
among Panda Hereford Ethanol, L.P., Société Générale
and the lenders named therein, filed as Exhibit 10.1
to our Current Report on Form 8-K, filed on November
13, 2006 and incorporated by reference herein.10.2
    
    Indenture of Trust, dated as of as of July 1, 2006, by
and between Red River Authority of Texas and The Bank
of New York Trust Company, filed as Exhibit 10.2 to
our Current Report on Form 8-K, filed on November 13,
2006 and incorporated by reference herein.10.3
    
    Transition Services Agreement dated as of June 7, 2006
between Panda Energy Management, L.P. and Panda
Ethanol, Inc. , filed as Exhibit 10.3 to our Current
Report on Form 8-K, filed on November 13, 2006 and
incorporated by reference herein.10.4
    
    First Amendment to Transition Services Agreement,
dated as of October 7, 2006 between Panda Energy
Management, L.P. and Panda Ethanol Management, LLC,
filed as Exhibit 10.4 to our Current Report on Form
8-K, filed on November 13, 2006 and incorporated by
reference herein.10.5
    
    Letter Agreement for Reimbursement dated June 7, 2006,
by and between Panda Ethanol, Inc. and Panda Energy
International, Inc., filed as Exhibit 10.5 to our
Current Report on Form 8-K, filed on November 13, 2006
and incorporated by reference herein.
 49




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##### Table of Contents



ExhibitNumber
    
    Description10.6(2)
    
    The Panda Ethanol, Inc. 2006 Amended and Restated
Long-Term Incentive Plan, dated as of June 7, 2006,
filed as Exhibit 10.6 to our Current Report on Form
8-K, filed on November 13, 2006 and incorporated by
reference herein.10.7
    
    Registration Rights Agreement, dated as of June 7,
2006, by and among Panda Ethanol, Inc. and the
purchasers named therein, filed as Exhibit 4.3 to our
Current Report on Form 8-K, filed on November 13, 2006
and incorporated by reference herein.10.8
    
    Registration Rights Agreement, dated as of November 6,
2006, by and among Panda Ethanol, Inc. and Grove Panda
Investments, LLC, filed as Exhibit 4.3 to our Current
Report on Form 8-K, filed on November 13, 2006 and
incorporated by reference herein.10.9
    
    Industry Track Agreement, dated as of June 6, 2006 by
and between BNSF Railway Company and Panda Hereford
Ethanol, L.P, filed as Exhibit 10.9 to our Current
Report on Form 8-K, filed on November 13, 2006 and
incorporated by reference herein.10.10
    
    Turnkey Engineering, Procurement and Construction
Agreement for Ethanol Production Facility dated as of
October 15, 2005, by and between Panda Hereford
Ethanol, LP and Lurgi PSI, Inc., filed as Exhibit
10.10 to our Current Report on Form 8-K, filed on
November 13, 2006 and incorporated by reference herein10.11
    
    Ethanol Marketing Agreement dated as of October 13,
2005, by and between Aventine Renewable Energy, Inc.
and Panda Hereford Ethanol, L.P., filed as Exhibit
10.11 to our Current Report on Form 8-K, filed on
November 13, 2006 and incorporated by reference
herein.10.12
    
    Subordinated Debt Financing Agreement, dated as of
July 28, 2006 by and between Panda Hereford Ethanol,
L.P. and *****, filed as Exhibit 10.12 to our Current
Report on Form 8-K, filed on November 13, 2006 and
incorporated by reference herein.10.13
    
    Second Amendment to Transition Services Agreement,
dated as of March 30, 2007 between Panda Energy
Management, L.P. and Panda Ethanol Management, LLC,
filed as Exhibit 10.1 to our Current Report on Form
8-K, filed on March 30, 2007 and incorporated by
reference herein.10.14
    
    Turnkey Engineering Procurement and Construction
Contract for Ethanol Production Facility dated as of
March 1, 2007, by and between Panda Yuma Ethanol, LP
and Lurgi, Inc., filed as Exhibit 10.14 to our Annual
Report on Form 10-K for the year ended December 31,
2006 and incorporated by reference herein.10.15(2)
    
    Description of Director Compensation, filed as Exhibit
10.15 to our Annual Report on Form 10-K for the year
ended December 31, 2006 and incorporated by reference
herein.10.16(2)
    
    Letter From Panda Energy International, Inc. to Mr.
Michael Trentel dated November 14, 2005 and relating
to an agreement regarding options to purchase common
stock of Panda Energy International, Inc., filed as
Exhibit 10.16 to our Annual Report on Form 10-K for
the year ended December 31, 2006 and incorporated by
reference herein.10.17(2)
    
    Form of Nonstatutory Stock Option Agreement under the
2000 Stock Option Plan of Panda Energy International,
Inc. Dated August 23, 2000, filed as Exhibit 10.17 to
our Annual Report on Form 10-K for the year ended
December 31, 2006 and incorporated by reference
herein.10.18
    
    Letter Agreement, dated as of May 29, 2007, by and
between Panda Hereford Ethanol, L.P. and Société
Générale, filed as Exhibit 10.1 to our Current Report
on Form 8-K, filed on June 4, 2007 and incorporated by
reference herein.10.19
    
    First Change Order to Turnkey Engineering, Procurement
and Construction Agreement for Ethanol Production
Facility, filed as Exhibit 10.1 to our Current Report
on Form 8-K, filed on June 6, 2007 and incorporated by
reference herein.10.20
    
    First Amendment to Financing Agreement and Depositary
and Disbursement Agreement, dated as of June 15, 2007,
by and among Panda Hereford Ethanol, L.P., Société
Générale and the lenders named therein, filed as
Exhibit 10.1 to our Current Report on Form 8-K, filed
on June 19, 2007 and incorporated by reference herein.10.21
    
    Services Agreement, effective as of September 1, 2007,
by and between Panda Energy Management, LP and Panda
Ethanol, Inc., filed as Exhibit 10.1 to our Current
Report on Form 8-K, filed on November 15, 2007 and
incorporated by reference herein.10.22
    
    Registration Rights Agreement, dated as of November 9,
2007, by and between Panda Ethanol, Inc. and Panda
Energy International, Inc., filed as Exhibit 10.2 to
our Current Report on Form 8-K, filed on November 15,
2007 and incorporated by reference herein.
 50




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##### Table of Contents



ExhibitNumber
    
    Description10.23
    
    Loan Agreement, dated as of November 9, 2007, by and
between Panda Ethanol, Inc. and Panda Energy
International, Inc., filed as Exhibit 10.3 to our
Current Report on Form 8-K, filed on November 15, 2007
and incorporated by reference herein.10.24
    
    Pledge, Assignment and Security Agreement, dated as of
November 9, 2007, by and between Panda Ethanol, Inc.
and Panda Energy International, Inc., filed as Exhibit
10.4 to our Current Report on Form 8-K, filed on
November 15, 2007 and incorporated by reference
herein.10.25
    
    Pledge, Assignment and Security Agreement, dated as of
November 9, 2007, by and between Panda Ethanol
Holdings, LLC and Panda Energy International, Inc.,
filed as Exhibit 10.5 to our Current Report on Form
8-K, filed on November 15, 2007 and incorporated by
reference herein.21.1(1)
    
    Subsidiaries of Panda Ethanol, Inc.23.1(1)
    
    Consent of Deloitte & Touche LLP.31.1(1)
    
    Certification of Principal Executive Officer.31.2(1)
    
    Certification of Principal Financial Officer.32.1(1)
    
    Certification of Chief Executive Officer Pursuant to
Section 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.32.2(1)
    
    Certification of Chief Financial Officer Pursuant to
Section 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
 
 (1)
    
    Filed herewith.(2)
    
    Management contract or compensatory plan or arrangement. 51




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SIGNATURES
   PANDA ETHANOL, INC./s/    Darol LindloffDarol Lindloff,Chief Executive Officer and President  Signature
    
    Capacity
    
    Date/s/ Darol LindloffDarol Lindloff
    
    Chief Executive Officer
and President(Principal
Executive Officer)
    
    April 15, 2008/s/ Natasha RayNatasha Ray
    
    Chief Financial Officer
and Treasurer(Principal
Financial Officer and
Principal Accounting
Officer)
    
    April 15, 2008/s/ Robert W. Carter
Robert W. Carter
    
    Director
    
    April 15, 2008/s/
Todd W. CarterTodd W. Carter
    
    Director
    
    April 15, 2008/s/ G. Michael BoswellG. Michael Boswell
    
    Director
    
    April 15, 2008/s/ Donnell Brown
Donnell Brown
    
    Director
    
    April 15, 2008/s/ Philip D. EnglishPhilip D. English
    
    Director
    
    April 15, 2008




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##### Table of Contents



PANDA ETHANOL, INC.
AND SUBSIDIARIES
(A Development Stage Enterprise)
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets as of December 31, 2006 and 2007
    
    
    F-3Consolidated Statements of Operations for the years ended December 31, 2005, 2006 and 2007 and for
the period from inception (November 1, 2004) through December 31, 2007
    
    
    F-4Consolidated Statements of Shareholders Equity for the years ended December 31, 2005, 2006 and
2007 and for the period from inception (November 1, 2004) through December 31, 2007
    
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2006 and 2007 and for
the period from inception (November 1, 2004) through December 31, 2007
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7
 F-1




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.
   DELOITTE & TOUCHE LLP
 
 F-2




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PANDA ETHANOL, INC.
AND SUBSIDIARIES
(A Development Stage Enterprise)
 CONSOLIDATED BALANCE SHEETS
 DECEMBER 31, 2006 AND 2007
 2006
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    713,529
    
    
    $
    1,127,913Accounts receivable
    
    
    
    
    
    
    353,516Accounts receivable from former parent
    
    
    32,265
    
    
    
    4,754Inventories
    
    
    
    
    
    
    58,719Investments available for sale
    
    
    14,700,000
    
    
    
    Prepaid expenses
    
    
    932,214
    
    
    
    660,054Financial derivatives
    
    
    
    
    
    
    611,450Total current assets
    
    
    16,378,008
    
    
    
    2,816,406Restricted cash and cash equivalents
    
    
    135,607,427
    
    
    
    37,464,207Restricted short-term investments
    
    
    12,495,335
    
    
    
    Property, plant and equipment:Construction in progress
    
    
    66,087,367
    
    
    
    184,494,094Land
    
    
    
    
    
    
    650,000Development costs
    
    
    2,084,463
    
    
    
    Furniture, fixtures and equipment
    
    
    76,693
    
    
    
    2,464,045Accumulated depreciation
    
    
    (3,079
    )
    
    
    (87,562
    )Total property, plant and equipment, net
    
    
    68,245,444
    
    
    
    187,520,577Deposits
    
    
    
    
    
    
    965,575Deferred income taxes
    
    
    
    
    
    
    486,000Debt issuance costs, net of accumulated amortization
of $520,393 and $1,799,865 at December 31, 2006
and 2007, respectively
    
    
    8,902,699
    
    
    
    7,623,227Total assets
    
    $
    241,628,913
    
    
    $
    236,875,992LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts
payable and accrued liabilities 
property, plant and equipment
    
    $
    6,309,361
    
    
    $
    10,669,525Accounts payable and accrued liabilities  operating expenses
    
    
    1,051,919
    
    
    
    4,664,110Accounts payable to former parent  operating expenses
    
    
    
    
    
    
    802,401Current portion of financial derivatives
    
    
    
    
    
    
    820,177Current portion of capital lease obligations
    
    
    
    
    
    
    197,499Accrued interest and letter of credit fees
    
    
    491,497
    
    
    
    989,883Total current liabilities
    
    
    7,852,777
    
    
    
    18,143,595Financial derivatives
    
    
    7,659,400
    
    
    
    4,134,969Long-term debt
    
    
    136,369,890
    
    
    
    141,596,623Capital lease obligations
    
    
    
    
    
    
    873,783Other noncurrent liabilities
    
    
    
    
    
    
    486,000Commitments and contingencies (Notes 3, 5 and 7)Temporary equity  payable to former parent
    
    
    4,301,558
    
    
    
    4,301,558Shareholders equity:Preferred stock, par value $.001; 100,000,000 shares
authorized; none issued and outstanding
    
    
    
    
    
    
    Common stock, par value $.001; 250,000,000 shares authorized;
31,066,667 and 31,066,659 shares issued and outstanding
at December 31, 2006 and 2007, respectively
    
    
    31,067
    
    
    
    31,067Additional contributed capital
    
    
    104,405,191
    
    
    
    104,777,406Accumulated other comprehensive loss
    
    
    (513,400
    )
    
    
    (1,875,385
    )Deficit accumulated during the development stage
    
    
    (18,477,570
    )
    
    
    (35,593,624
    )Total shareholders equity
    
    
    85,445,288
    
    
    
    67,339,464Total liabilities and shareholders equity
    
    $
    241,628,913
    
    
    $
    236,875,992
  F-3




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PANDA ETHANOL, INC.
AND SUBSIDIARIES
(A Development Stage Enterprise)
 CONSOLIDATED STATEMENTS OF OPERATIONS
 FOR THE YEARS ENDED DECEMBER 30, 2005, 2006 AND 2007,
AND FOR THE PERIOD FROM INCEPTION THROUGH DECEMBER 31, 2007
 InceptionYear Ended December 31,
    
    
    Through2005
    
    
    2006
    
    
    2007
    
    
    December 31, 2007Development and administrative expenses:Development and administrative expenses allocated from
former parent
    
    $
    5,488,683
    
    
    $
    6,411,285
    
    
    $
    1,386,096
    
    
    $
    13,555,839Other development and administrative expenses
    
    
    1,110,408
    
    
    
    7,014,657
    
    
    
    18,700,500
    
    
    
    26,848,200Provision for impairment of development projects
    
    
    
    
    
    
    
    
    
    
    3,074,842
    
    
    
    3,074,842Total development and administrative expenses
    
    
    6,599,091
    
    
    
    13,425,942
    
    
    
    23,161,438
    
    
    
    43,478,881Other expense (income):Interest income
    
    
    
    
    
    
    (3,730,833
    )
    
    
    (4,821,992
    )
    
    
    (8,552,825
    )Interest expense and letter of credit fees
    
    
    
    
    
    
    3,137,889
    
    
    
    2,597,636
    
    
    
    5,735,525Amortization of debt issuance costs
    
    
    
    
    
    
    271,992
    
    
    
    206,779
    
    
    
    478,771Depreciation
    
    
    
    
    
    
    3,079
    
    
    
    84,482
    
    
    
    87,561Provision for impairment of investments available for sale
    
    
    
    
    
    
    
    
    
    
    875,000
    
    
    
    875,000Gain on settlement of forward contracts
    
    
    
    
    
    
    
    
    
    
    (309,600
    )
    
    
    (309,600
    )Change in fair value of financial derivatives
    
    
    
    
    
    
    (1,522,000
    )
    
    
    (4,677,689
    )
    
    
    (6,199,689
    )Total other expense (income)
    
    
    
    
    
    
    (1,839,873
    )
    
    
    (6,045,384
    )
    
    
    (7,885,257
    )Net loss
    
    $
    6,599,091
    
    
    $
    11,586,069
    
    
    $
    17,116,054
    
    
    $
    35,593,624Net loss
per common share basic and dilutive:Net loss per common share
    
    $
    0.48
    
    
    $
    0.51
    
    
    $
    0.55Weighted average common shares outstanding  basic and dilutive
    
    
    13,817,341
    
    
    
    22,630,107
    
    
    
    31,066,659
  F-4




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##### Table of Contents



PANDA ETHANOL, INC.
AND SUBSIDIARIES
(A Development Stage Enterprise)
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 FOR THE PERIOD FROM INCEPTION (NOVEMBER 1, 2004) THROUGH DECEMBER 31, 2004,
AND FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
 DeficitAccumulated
    
    
    Accumulated
    
    
    
    

    TotalCommon Stock
    
    
    Additional
    
    
    Other
    
    
    During The
    
    
    Total
    

    ComprehensiveAmount
    
    
    
    
    
    
    Total Par
    
    
    Contributed
    
    
    Comprehensive
    
    
    Development
    
    
    Shareholders
    

    IncomeDate
    
    
    Per Share
    
    
    Shares
    
    
    Value
    
    
    Capital
    
    
    Losses
    
    
    Stage
    
    
    Equity
    


(Loss)Balance at inception
    
    
    11/1/2004
    
    
    $
    
    
    
    
    13,817,341
    
    
    $
    13,817
    
    
    $
    (13,817
    )
    
    $
    
    
    
    $
    
    
    
    $
    Capital contributions from former parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    292,410
    
    
    
    
    
    
    
    
    
    
    
    292,410Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (292,410
    )
    
    
    (292,410
    )

    $
    (292,410
    )Balance, December 31, 2004
    
    
    
    
    
    
    
    
    
    
    13,817,341
    
    
    
    13,817
    
    
    
    278,593
    
    
    
    
    
    
    
    (292,410
    )
    
    
    Capital contributions from former parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,416,082
    
    
    
    
    
    
    
    
    
    
    
    9,416,082Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,599,091
    )
    
    
    (6,599,091
    )

    $
    (6,599,091
    )Balance, December 31, 2005
    
    
    
    
    
    
    
    
    
    
    13,817,341
    
    
    
    13,817
    
    
    
    9,694,675
    
    
    
    
    
    
    
    (6,891,501
    )
    
    
    2,816,991Capital contributions from former parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,424,972
    
    
    
    
    
    
    
    
    
    
    
    6,424,972Capital distributions to former parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,480,712
    )
    
    
    
    
    
    
    
    
    
    
    (5,480,712
    )Issuance of common stock to non-affiliates
    
    
    6/7/2006
    
    
    $
    6.01
    
    
    
    14,982,659
    
    
    
    14,983
    
    
    
    86,143,580
    
    
    
    
    
    
    
    
    
    
    
    86,158,563Issuance of common stock in reverse
merger transaction
    
    
    11/6/2006
    
    
    $
    
    
    
    
    1,200,000
    
    
    
    1,200
    
    
    
    (1,200
    )
    
    
    
    
    
    
    
    
    
    
    Issuance of common stock to former parent
    
    
    12/1/2006
    
    
    $
    7.50
    
    
    
    400,000
    
    
    
    400
    
    
    
    2,858,954
    
    
    
    
    
    
    
    
    
    
    
    2,859,354Issuance of common stock to non-affiliates
    
    
    12/1/2006
    
    
    $
    7.50
    
    
    
    666,667
    
    
    
    667
    
    
    
    4,764,922
    
    
    
    
    
    
    
    
    
    
    
    4,765,589Unrealized loss on interest rate swap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (483,128
    )
    
    
    
    
    
    
    (483,128
    )

    $
    (483,128
    )Reclassification adjustments for earnings
realized in net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30,272
    )
    
    
    
    
    
    
    (30,272
    )

    
    (30,272
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,586,069
    )
    
    
    (11,586,069
    )

    
    (11,586,069
    )Balance, December 31, 2006
    
    
    
    
    
    
    
    
    
    
    31,066,667
    
    
    
    31,067
    
    
    
    104,405,191
    
    
    
    (513,400
    )
    
    
    (18,477,570
    )
    
    
    85,445,288
    

    $
    (12,099,469
    )Fractional shares cancelled
    
    
    
    
    
    
    
    
    
    
    (8
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Capital contributions from former parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    372,215
    
    
    
    
    
    
    
    
    
    
    
    372,215Unrealized loss on interest rate swap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,503,445
    )
    
    
    
    
    
    
    (1,503,445
    )

    $
    (1,503,445
    )Reclassification adjustments for earnings
realized in net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    141,460
    
    
    
    
    
    
    
    141,460
    

    
    141,460Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,116,054
    )
    
    
    (17,116,054
    )

    
    (17,116,054
    )Balance, December 31, 2007
    
    
    
    
    
    
    
    
    
    
    31,066,659
    
    
    $
    31,067
    
    
    $
    104,777,406
    
    
    $
    (1,875,385
    )
    
    $
    (35,593,624
    )
    
    $
    67,339,464
    

    $
    (18,478,039
    )
  F-5




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##### Table of Contents



PANDA ETHANOL, INC.
AND SUBSIDIARIES
(A Development Stage Enterprise)
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR THE YEARS ENDED DECEMBER 30, 2005, 2006 AND 2007,
AND FOR THE PERIOD FROM INCEPTION THROUGH DECEMBER 31, 2007
 Year Ended December 31,
    
    
    Inception Through2005
    
    
    2006
    
    
    2007
    
    
    December 31, 2007Operating activities:Net loss
    
    $
    (6,599,091
    )
    
    $
    (11,586,069
    )
    
    $
    (17,116,054
    )
    
    $
    (35,593,624
    )Adjustments to reconcile net loss to
net cash used in operating activities:Operating expenses contributed by former parent
    
    
    
    
    
    
    
    
    
    
    103,993
    
    
    
    103,993Provision for impairment of development projects
    
    
    
    
    
    
    
    
    
    
    3,074,842
    
    
    
    3,074,842Provision for impairment of investments available for sale
    
    
    
    
    
    
    
    
    
    
    875,000
    
    
    
    875,000Interest expense added to debt principal
    
    
    
    
    
    
    1,937,890
    
    
    
    5,226,733
    
    
    
    7,164,623Amortization of debt issuance costs
    
    
    
    
    
    
    271,992
    
    
    
    206,779
    
    
    
    478,771Depreciation
    
    
    
    
    
    
    
    
    
    
    84,482
    
    
    
    87,561Change in fair value of financial derivatives
    
    
    
    
    
    
    (1,522,000
    )
    
    
    (4,677,689
    )
    
    
    (6,199,689
    )Deferred tax benefit
    
    
    
    
    
    
    
    
    
    
    (486,000
    )
    
    
    (486,000
    )Increase in accounts receivable
    
    
    
    
    
    
    
    
    
    
    (353,516
    )
    
    
    (353,516
    )(Increase) decrease in accounts receivable from former parent
    
    
    
    
    
    
    (32,265
    )
    
    
    27,511
    
    
    
    (4,754
    )Increase in inventories
    
    
    
    
    
    
    
    
    
    
    (58,719
    )
    
    
    (58,719
    )(Increase) decrease in prepaid expenses
    
    
    
    
    
    
    (932,214
    )
    
    
    272,160
    
    
    
    (660,054
    )Increase in accounts payable and
accrued liabilities  operating expenses
    
    
    56,465
    
    
    
    995,454
    
    
    
    3,612,191
    
    
    
    4,664,110Increase in
accounts payable to former parent 
operating expenses
    
    
    
    
    
    
    
    
    
    
    1,070,623
    
    
    
    1,070,623Increase in accrued interest and letter of credit fees
    
    
    
    
    
    
    491,497
    
    
    
    498,386
    
    
    
    989,883Increase in other noncurrent liabilities
    
    
    
    
    
    
    
    
    
    
    486,000
    
    
    
    486,000Net cash used in operating activities
    
    
    (6,542,626
    )
    
    
    (10,375,715
    )
    
    
    (7,153,278
    )
    
    
    (24,360,950
    )Investing activities:Purchases of investments available for sale
    
    
    
    
    
    
    (83,025,000
    )
    
    
    (11,000,000
    )
    
    
    (94,025,000
    )Sales of investments available for sale
    
    
    
    
    
    
    68,325,000
    
    
    
    24,825,000
    
    
    
    93,150,000(Increase) decrease in restricted cash and cash equivalents
    
    
    (247,000
    )
    
    
    (135,360,427
    )
    
    
    98,143,220
    
    
    
    (37,464,207
    )(Increase) decrease in restricted short-term investments
    
    
    
    
    
    
    (12,495,335
    )
    
    
    12,495,335
    
    
    
    Additions to property, plant and equipment
    
    
    (2,601,413
    )
    
    
    (59,086,269
    )
    
    
    (115,440,486
    )
    
    
    (177,131,247
    )Increase in deposits
    
    
    
    
    
    
    
    
    
    
    (965,575
    )
    
    
    (965,575
    )Net cash provided by (used in) investing activities
    
    
    (2,848,413
    )
    
    
    (221,642,031
    )
    
    
    8,057,494
    
    
    
    (216,436,029
    )Financing activities:Capital contributions from former parent
    
    
    9,416,082
    
    
    
    6,424,972
    
    
    
    
    
    
    
    16,133,464Capital distributions to former parent
    
    
    
    
    
    
    (5,480,712
    )
    
    
    
    
    
    
    (5,480,712
    )Temporary equity advanced from former parent
    
    
    
    
    
    
    4,301,558
    
    
    
    
    
    
    
    4,301,558Issuance of common stock to former parent
    
    
    
    
    
    
    2,859,354
    
    
    
    
    
    
    
    2,859,354Issuance of common stock to non-affiliates
    
    
    
    
    
    
    90,924,152
    
    
    
    
    
    
    
    90,924,152Repayment of capital lease obligations
    
    
    
    
    
    
    
    
    
    
    (489,832
    )
    
    
    (489,832
    )Issuance of long-term debt and financial derivative
    
    
    
    
    
    
    143,100,000
    
    
    
    
    
    
    
    143,100,000Debt issuance costs
    
    
    
    
    
    
    (9,423,092
    )
    
    
    
    
    
    
    (9,423,092
    )Net cash provided by (used in) financing activities
    
    
    9,416,082
    
    
    
    232,706,232
    
    
    
    (489,832
    )
    
    
    241,924,892Increase in cash and cash equivalents
    
    
    25,043
    
    
    
    688,486
    
    
    
    414,384
    
    
    
    1,127,913Cash and cash equivalents, beginning of period
    
    
    
    
    
    
    25,043
    
    
    
    713,529
    
    
    
    Cash and cash equivalents, end of period
    
    $
    25,043
    
    
    $
    713,529
    
    
    $
    1,127,913
    
    
    $
    1,127,913Noncash investing and financing activities:Property, plant and equipment costs accrued
    
    $
    1,986,508
    
    
    $
    6,309,361
    
    
    $
    10,669,525
    
    
    $
    10,669,525Property, plant and equipment acquired under capital leases
    
    
    
    
    
    
    
    
    
    
    1,561,114
    
    
    
    1,561,114Interest cost accrued to long-term debt principal
    
    
    
    
    
    
    1,937,890
    
    
    
    5,226,733
    
    
    
    7,164,623Capital contributions from former parent:By reduction of accounts payable
    
    
    
    
    
    
    
    
    
    
    268,222
    
    
    
    268,222For operating expenses
    
    
    
    
    
    
    
    
    
    
    103,993
    
    
    
    103,993Expenses financed under services agreement with former parent
    
    
    
    
    
    
    
    
    
    
    802,401
    
    
    
    802,401
  F-6




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##### Table of Contents



PANDA ETHANOL, INC. AND SUBSIDIARIES
(A Development Stage Enterprise)
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 As of December 31, 2006 and 2007,
For The Years Ended December 31, 2005, 2006 and 2007,
And For the Period from Inception (November 1, 2004) through December 31, 2007
 1. ORGANIZATION AND BASIS OF PRESENTATION
   Development Stage Enterprise 
 Liquidity and Going Concern Considerations 
  F-7




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##### Table of Contents



F-8




---



##### Table of Contents



2. SIGNIFICANT ACCOUNTING POLICIES
 Use of Estimates 
 Cash and Cash Equivalents 
 Restricted cash and cash equivalents 
 Investments available for sale 
 Restricted short-term investments 
 Property, Plant and Equipment 
 Development Costs 
 Capitalization of interest  Capitalization of Interest Cost Capitalization of Interest Cost in
Situations Involving Certain Tax-Exempt Borrowings and Certain Gifts and Grants.
 Asset Impairment 
 F-9




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##### Table of Contents



Environmental Matters 
  Income Taxes  Accounting for
Uncertainty in Income Taxes
  Derivative Financial Instruments and Hedging Activities 
  Allocation of Administrative Costs 
 F-10




---



##### Table of Contents



Net Loss Per Share 
 Financial Instruments 
 Share-Based Payment 
 Recent Accounting Pronouncements
 Fair Value Measurements
 Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements Materiality
 The Fair Value Option for
Financial Assets and Financial Liabilities
 F-11




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##### Table of Contents



Disclosures about Derivative
Instruments and Hedging Activities
 3. ETHANOL PROJECTS
    F-12




---



##### Table of Contents



2008
    
    $
    314,1782009
    
    
    291,7602010
    
    
    286,4272011
    
    
    280,2282012
    
    
    233,522Total minimum lease payments
    
    
    1,406,115Amounts representing interest
    
    
    (334,833
    )Net present value of minimum lease
payments
    
    $
    1,071,282
    F-13




---



##### Table of Contents



4. CAPITAL STRUCTURE AND EQUITY
 Capital Structure, Equity Contributions from Parent and Related Party Transactions
      F-14




---



##### Table of Contents



Merger Transaction
   F-15




---



##### Table of Contents



Equity Transactions
    Long Term Incentive Plan
  5. LONG-TERM DEBT
   F-16




---



##### Table of Contents



F-17




---



##### Table of Contents



:
 2008
    
    $
    2009
    
    
    11,228,8762010
    
    
    15,318,8762011
    
    
    15,413,8762012
    
    
    15,518,876Thereafter
    
    
    91,220,187Subtotal
    
    
    148,700,691Less unamortized
discount on
subordinated debt
    
    
    (7,104,068
    )Total
    
    $
    141,596,623
 F-18




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##### Table of Contents



6. INCOME TAXES
     F-19




---



##### Table of Contents



2006
    
    
    2007Net operating loss carry forward
    
    $
    1,809
    
    
    $
    5,246Start-up costs
    
    
    3,906
    
    
    
    3,628Property, plant and equipment
    
    
    1,013
    
    
    
    5,243Liabilities
    
    
    (785
    )
    
    
    (2,067
    )Accumulated other comprehensive losses
    
    
    179
    
    
    
    656Total deferred tax assets
    
    
    6,122
    
    
    
    12,706Valuation allowance
    
    
    (6,122
    )
    
    
    (12,220
    )Net deferred tax assets
    
    $
    
    
    
    $
    486
  2005
    
    
    2006
    
    
    2007Income tax expense (benefit) at U.S.
federal statutory rate
    
    $
    (2,310
    )
    
    $
    (4,055
    )
    
    $
    (5,991
    )FIN 48 provision
    
    
    
    
    
    
    
    
    
    
    486Permanent differences and other
    
    
    
    
    
    
    345
    
    
    
    (593
    )Change in valuation allowance
    
    
    2,310
    
    
    
    3,710
    
    
    
    6,098Income tax expense (benefit)
    
    $
    
    
    
    $
    
    
    
    $
    
   F-20




---



##### Table of Contents



Unrecognized tax benefits, January 1, 2007
    
    $
    1,569Gross increases  tax positions in prior period
    
    
    315Gross decreases  tax positions in prior period
    
    
    Gross increases  current period tax positions
    
    
    3,793Settlements
    
    
    Lapse of statute of limitations
    
    
    Unrecognized tax benefits, December 31, 2007
    
    $
    5,677
 7. PURCHASE AND SALES COMMITMENTS
   F-21




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##### Table of Contents



2008
    
    $
    4.52009
    
    
    4.72010
    
    
    4.72011
    
    
    2.7Total
    
    $
    16.6
  8. INVESTMENTS AVAILABLE FOR SALE
  9. FAIR VALUE OF FINANCIAL INSTRUMENTS
  F-22




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##### Table of Contents



10. QUARTERLY INFORMATION (UNAUDITED)
  2006
    
    2007Quarter ended March 31:Net loss
    
    $
    2,445,487
    
    
    $
    7,850,007Net loss per common share
    
    $
    .18
    
    
    $
    .25Quarter ended June 30:Net loss
    
    $
    2,726,963
    
    
    $
    4,709,799Net loss per common share
    
    $
    .15
    
    
    $
    .15Quarter ended September 30:Net loss
    
    $
    3,164,945
    
    
    $
    1,275,415Net loss per common share
    
    $
    .11
    
    
    $
    .04Quarter ended December 31:Net loss
    
    $
    3,248,674
    
    
    $
    3,280,833Net loss per common share
    
    $
    .11
    
    
    $
    .11
 F-23




---



##### Table of Contents



Schedule I  Condensed financial information of registrant.
  ConsolidatedRestricted
    
    
    Unrestricted
    
    
    TotalASSETSCurrent assets:Cash and cash equivalents
    
    $
    
    
    
    $
    1,127,913
    
    
    $
    1,127,913Accounts receivable
    
    
    353,516
    
    
    
    
    
    
    
    353,516Accounts receivable from former parent
    
    
    
    
    
    
    4,754
    
    
    
    4,754Inventories
    
    
    58,719
    
    
    
    
    
    
    
    58,719Prepaid expenses
    
    
    122,205
    
    
    
    537,849
    
    
    
    660,054Financial derivatives
    
    
    611,450
    
    
    
    
    
    
    
    611,450Total current assets
    
    
    1,145,890
    
    
    
    1,670,516
    
    
    
    2,816,406Restricted cash and cash equivalents
    
    
    37,464,207
    
    
    
    
    
    
    
    37,464,207Property, plant and equipment:Construction in progress
    
    
    184,494,094
    
    
    
    
    
    
    
    184,494,094Land
    
    
    
    
    
    
    650,000
    
    
    
    650,000Development costs
    
    
    
    
    
    
    
    
    
    
    Furniture and fixtures
    
    
    2,340,108
    
    
    
    123,937
    
    
    
    2,464,045Accumulated depreciation
    
    
    (52,070
    )
    
    
    (35,492
    )
    
    
    (87,562
    )Total property, plant and equipment, net
    
    
    186,782,132
    
    
    
    738,445
    
    
    
    187,520,577Deposits
    
    
    965,575
    
    
    
    
    
    
    
    965,575Deferred income taxes
    
    
    
    
    
    
    486,000
    
    
    
    486,000Debt issuance costs, net of accumulated amortization
of $1,799,865 at December 31, 2007
    
    
    7,623,227
    
    
    
    
    
    
    
    7,623,227Total assets
    
    $
    233,981,031
    
    
    $
    2,894,961
    
    
    $
    236,875,992LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts
payable and accrued liabilities 
property, plant and equipment
    
    $
    10,655,976
    
    
    $
    13,549
    
    
    
    10,669,525Accounts payable and accrued liabilities  operating
expenses
    
    
    3,323,840
    
    
    
    1,340,270
    
    
    
    4,664,110Accounts payable to former parent  operating expenses
    
    
    
    
    
    
    802,401
    
    
    
    802,401Current portion of financial derivatives
    
    
    820,177
    
    
    
    
    
    
    
    820,177Current portion of capital lease obligations
    
    
    197,499
    
    
    
    
    
    
    
    197,499Accrued interest and letter of credit fees
    
    
    989,883
    
    
    
    
    
    
    
    989,883Total current liabilities
    
    
    15,987,375
    
    
    
    2,156,220
    
    
    
    18,143,595Financial derivatives
    
    
    4,134,969
    
    
    
    
    
    
    
    4,134,969Long-term debt
    
    
    141,596,623
    
    
    
    
    
    
    
    141,596,623Capital lease obligations
    
    
    873,783
    
    
    
    
    
    
    
    873,783Other noncurrent liabilities
    
    
    
    
    
    
    486,000
    
    
    
    486,000Commitments and contingencies (Notes 3, 5 and 7)Temporary equity  payable to former parent
    
    
    
    
    
    
    4,301,558
    
    
    
    4,301,558Shareholders equity (deficit)
    
    
    71,388,281
    
    
    
    (4,048,817
    )
    
    
    67,339,464Total liabilities and shareholders equity
    
    $
    233,981,031
    
    
    $
    2,894,961
    
    
    $
    236,875,992
 S-1




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##### Table of Contents



Schedule I  Condensed financial information of registrant.
  Year ended December 31, 2007ConsolidatedRestricted
    
    
    Unrestricted
    
    
    TotalDevelopment and administrative expenses:Development and administrative expenses allocated
within consolidated group, net
    
    $
    3,056,927
    
    
    $
    (3,056,927
    )
    
    $
    Development and administrative expenses allocated from
former parent
    
    
    
    
    
    
    1,386,096
    
    
    
    1,386,096Other development and administrative expenses
    
    
    4,262,836
    
    
    
    14,437,664
    
    
    
    18,700,500Provision for impairment of development projects
    
    
    
    
    
    
    3,074,842
    
    
    
    3,074,842Total development and administrative expenses
    
    
    7,319,763
    
    
    
    15,841,675
    
    
    
    23,161,438Other expense (income):Interest income
    
    
    (4,326,377
    )
    
    
    (495,615
    )
    
    
    (4,821,992
    )Interest expense and letter of credit fees
    
    
    2,579,332
    
    
    
    18,304
    
    
    
    2,597,636Amortization of debt issuance costs
    
    
    206,779
    
    
    
    
    
    
    
    206,779Depreciation
    
    
    49,369
    
    
    
    35,113
    
    
    
    84,482Provision for impairment of investments available for sale
    
    
    
    
    
    
    875,000
    
    
    
    875,000Gain on settlement of forward contracts
    
    
    (309,600
    )
    
    
    
    
    
    
    (309,600
    )Change in fair value of financial derivatives
    
    
    (4,677,689
    )
    
    
    
    
    
    
    (4,677,689
    )Total other expense (income)
    
    
    (6,478,186
    )
    
    
    432,802
    
    
    
    (6,045,384
    )Net loss
    
    $
    841,577
    
    
    $
    16,274,477
    
    
    $
    17,116,054
 S-2




---



##### Table of Contents



Schedule I  Condensed financial information of registrant.
  Year ended December 31, 2007ConsolidatedRestricted
    
    
    Unrestricted
    
    
    TotalOperating activities:Net loss
    
    $
    (841,577
    )
    
    $
    (16,274,477
    )
    
    $
    (17,116,054
    )Adjustments to reconcile net loss to
net cash used by operating activities:Operating expenses contributed by former parent
    
    
    
    
    
    
    103,993
    
    
    
    103,993Provision for impairment of development projects
    
    
    
    
    
    
    3,074,842
    
    
    
    3,074,842Provision for impairment of investments available for sale
    
    
    
    
    
    
    875,000
    
    
    
    875,000Interest expense added to debt principal
    
    
    5,226,733
    
    
    
    
    
    
    
    5,226,733Amortization of debt issuance costs
    
    
    206,779
    
    
    
    
    
    
    
    206,779Depreciation
    
    
    49,369
    
    
    
    35,113
    
    
    
    84,482Change in fair value of financial derivatives
    
    
    (4,677,689
    )
    
    
    
    
    
    
    (4,677,689
    )Deferred tax benefit
    
    
    
    
    
    
    (486,000
    )
    
    
    (486,000
    )Increase in accounts receivable
    
    
    (353,516
    )
    
    
    
    
    
    
    (353,516
    )Decrease in accounts receivable from former parent
    
    
    
    
    
    
    27,511
    
    
    
    27,511Increase in inventories
    
    
    (58,719
    )
    
    
    
    
    
    
    (58,719
    )(Increase) decrease in prepaid expenses
    
    
    (70,065
    )
    
    
    342,225
    
    
    
    272,160Increase in
accounts payable and accrued liabilities 
operating expenses
    
    
    3,271,059
    
    
    
    341,132
    
    
    
    3,612,191Decrease in accounts payable to former parent -
operating expenses
    
    
    
    
    
    
    1,070,623
    
    
    
    1,070,623Increase in accrued interest and letter of credit fees
    
    
    498,386
    
    
    
    
    
    
    
    498,386Increase in other noncurrent liabilities
    
    
    
    
    
    
    486,000
    
    
    
    486,000Net cash provided by (used in) operating activities
    
    
    3,250,760
    
    
    
    (10,404,038
    )
    
    
    (7,153,278
    )Investing activities:Purchases of investments available for sale
    
    
    
    
    
    
    (11,000,000
    )
    
    
    (11,000,000
    )Sales of investments available for sale
    
    
    
    
    
    
    24,825,000
    
    
    
    24,825,000Decrease in restricted cash and cash equivalents
    
    
    98,143,220
    
    
    
    
    
    
    
    98,143,220Decrease in restricted short-term investments
    
    
    12,495,335
    
    
    
    
    
    
    
    12,495,335Additions to property, plant and equipment
    
    
    (113,395,639
    )
    
    
    (2,044,847
    )
    
    
    (115,440,486
    )Increase in deposits
    
    
    (965,575
    )
    
    
    
    
    
    
    (965,575
    )Net cash provided by (used in) investing activities
    
    
    (3,722,659
    )
    
    
    11,780,153
    
    
    
    8,057,494Financing activities:Capital contributions (investments) within consolidated group, net
    
    
    700,683
    
    
    
    (700,683
    )
    
    
    Repayment of capital lease obligations
    
    
    (489,832
    )
    
    
    
    
    
    
    (489,832
    )Net cash provided by (used in) financing activities
    
    
    210,851
    
    
    
    (700,683
    )
    
    
    (489,832
    )Increase (decrease) in cash and cash equivalents
    
    
    (261,048
    )
    
    
    675,432
    
    
    
    414,384Cash and cash equivalents, beginning of period
    
    
    261,048
    
    
    
    452,481
    
    
    
    713,529Cash and cash equivalents, end of period
    
    $
    
    
    
    $
    1,127,913
    
    
    $
    1,127,913Noncash investing and financing activities:Property, plant and equipment costs accrued
    
    $
    10,655,976
    
    
    $
    13,549
    
    
    $
    10,669,525Property, plant and equipment acquired under capital leases
    
    
    1,561,114
    
    
    
    
    
    
    
    1,561,114Interest cost accrued to long-term debt principal
    
    
    5,226,733
    
    
    
    
    
    
    
    5,226,733Capital contributions from former parent:By reduction of accounts payable
    
    
    
    
    
    
    268,222
    
    
    
    268,222For operating expenses
    
    
    
    
    
    
    103,993
    
    
    
    103,993Expenses financed under services agreement with former parent
    
    
    
    
    
    
    802,401
    
    
    
    802,401
 S-3




---



##### Table of Contents



Schedule I  Condensed financial information of registrant.
  ConsolidatedASSETS
    
    Restricted
    
    
    Unrestricted
    
    
    TotalCurrent assets:Cash and cash equivalents
    
    $
    261,048
    
    
    $
    452,481
    
    
    $
    713,529Accounts receivable from former parent
    
    
    
    
    
    
    32,265
    
    
    
    32,265Investments available for sale
    
    
    
    
    
    
    14,700,000
    
    
    
    14,700,000Prepaid expenses and other assets
    
    
    52,140
    
    
    
    880,074
    
    
    
    932,214Total current assets
    
    
    313,188
    
    
    
    16,064,820
    
    
    
    16,378,008Restricted cash and cash equivalents
    
    
    135,607,427
    
    
    
    
    
    
    
    135,607,427Restricted short-term investments
    
    
    12,495,335
    
    
    
    
    
    
    
    12,495,335Property, plant and equipment:Construction in progress
    
    
    66,087,367
    
    
    
    
    
    
    
    66,087,367Development costs
    
    
    
    
    
    
    2,084,463
    
    
    
    2,084,463Furniture and fixtures
    
    
    64,642
    
    
    
    12,051
    
    
    
    76,693Accumulated depreciation
    
    
    (2,701
    )
    
    
    (378
    )
    
    
    (3,079
    )Total property, plant and equipment, net
    
    
    66,149,308
    
    
    
    2,096,136
    
    
    
    68,245,444Debt issuance costs, net of accumulated amortization of $520,393 at December 31, 2006
    
    
    8,902,699
    
    
    
    
    
    
    
    8,902,699Total assets
    
    $
    223,467,957
    
    
    $
    18,160,956
    
    
    $
    241,628,913LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued liabilities  property, plant and equipment
    
    $
    6,003,229
    
    
    $
    306,132
    
    
    
    6,309,361Accounts payable and accrued liabilities  operating expenses
    
    
    52,781
    
    
    
    999,138
    
    
    
    1,051,919Accrued interest
    
    
    491,497
    
    
    
    
    
    
    
    491,497Total current liabilities
    
    
    6,547,507
    
    
    
    1,305,270
    
    
    
    7,852,777Financial derivatives
    
    
    7,659,400
    
    
    
    
    
    
    
    7,659,400Long-term debt, net
    
    
    136,369,890
    
    
    
    
    
    
    
    136,369,890Commitments and contingencies (Notes 3 and 5)Temporary equity  payable to former parent
    
    
    
    
    
    
    4,301,558
    
    
    
    4,301,558Shareholders equity
    
    
    72,891,160
    
    
    
    12,554,128
    
    
    
    85,445,288Total liabilities and shareholders equity
    
    $
    223,467,957
    
    
    $
    18,160,956
    
    
    $
    241,628,913
 S-4




---



##### Table of Contents



Schedule I  Condensed financial information of registrant.
  Year ended December 31, 2006ConsolidatedRestricted
    
    
    Unrestricted
    
    
    TotalDevelopment and administrative expenses:Development and administrative expenses allocated from former parent
    
    $
    3,388,590
    
    
    $
    3,022,695
    
    
    $
    6,411,285Other development and administrative expenses
    
    
    1,550,485
    
    
    
    5,464,172
    
    
    
    7,014,657Total development and administrative expenses
    
    
    4,939,075
    
    
    
    8,486,867
    
    
    
    13,425,942Other expense (income):Interest income
    
    
    (2,943,620
    )
    
    
    (787,213
    )
    
    
    (3,730,833
    )Interest expense and letter of credit fees
    
    
    3,130,681
    
    
    
    7,208
    
    
    
    3,137,889Amortization of debt issuance costs
    
    
    271,992
    
    
    
    
    
    
    
    271,992Depreciation
    
    
    2,701
    
    
    
    378
    
    
    
    3,079Change in fair value of financial derivative
    
    
    (1,522,000
    )
    
    
    
    
    
    
    (1,522,000
    )Total other expense (income)
    
    
    (1,060,246
    )
    
    
    (779,627
    )
    
    
    (1,839,873
    )Net loss
    
    $
    3,878,829
    
    
    $
    7,707,240
    
    
    $
    11,586,069
 S-5




---



##### Table of Contents



Schedule I  Condensed financial information of registrant.
  Year ended December 31, 2006ConsolidatedRestricted
    
    
    Unrestricted
    
    
    TotalOperating activities:Net loss
    
    $
    (3,878,829
    )
    
    $
    (7,707,240
    )
    
    $
    (11,586,069
    )Adjustments to reconcile net loss to net cash used by operating activities:Interest expense added to debt principal
    
    
    1,937,890
    
    
    
    
    
    
    
    1,937,890Amortization of debt issuance costs
    
    
    271,992
    
    
    
    
    
    
    
    271,992Change in fair value of financial derivative
    
    
    (1,522,000
    )
    
    
    
    
    
    
    (1,522,000
    )Increase in accounts receivable from former parent
    
    
    
    
    
    
    (32,265
    )
    
    
    (32,265
    )Increase in prepaid expenses
    
    
    (52,140
    )
    
    
    (880,074
    )
    
    
    (932,214
    )Increase (decrease) in accounts payable and accrued liabilities  operating expenses
    
    
    (3,684
    )
    
    
    999,138
    
    
    
    995,454Increase in accrued interest
    
    
    491,497
    
    
    
    
    
    
    
    491,497Net cash used in operating activities
    
    
    (2,755,274
    )
    
    
    (7,620,441
    )
    
    
    (10,375,715
    )Investing activities:Purchases of investments available for sale
    
    
    
    
    
    
    (83,025,000
    )
    
    
    (83,025,000
    )Sales of investments available for sale
    
    
    
    
    
    
    68,325,000
    
    
    
    68,325,000Increase in restricted cash and cash equivalents
    
    
    (135,360,427
    )
    
    
    
    
    
    
    (135,360,427
    )Increase in restricted short-term investments
    
    
    (12,495,335
    )
    
    
    
    
    
    
    (12,495,335
    )Additions to property, plant and equipment
    
    
    (57,562,462
    )
    
    
    (1,523,807
    )
    
    
    (59,086,269
    )Net cash used in investing activities
    
    
    (205,418,224
    )
    
    
    (16,223,807
    )
    
    
    (221,642,031
    )Financing activities:Capital contributions (investments) within consolidated group, net
    
    
    74,732,595
    
    
    
    (74,732,595
    )
    
    
    Capital contributions from former parent
    
    
    
    
    
    
    6,424,972
    
    
    
    6,424,972Capital distributions to former parent
    
    
    
    
    
    
    (5,480,712
    )
    
    
    (5,480,712
    )Temporary equity advanced from former parent
    
    
    
    
    
    
    4,301,558
    
    
    
    4,301,558Issuance of common stock to former parent
    
    
    
    
    
    
    2,859,354
    
    
    
    2,859,354Issuance of common stock to non-affiliates
    
    
    
    
    
    
    90,924,152
    
    
    
    90,924,152Issuance of long-term debt and financial derivative
    
    
    143,100,000
    
    
    
    
    
    
    
    143,100,000Debt issuance costs
    
    
    (9,423,092
    )
    
    
    
    
    
    
    (9,423,092
    )Net cash provided by financing activities
    
    
    208,409,503
    
    
    
    24,296,729
    
    
    
    232,706,232Increase in cash and cash equivalents
    
    
    236,005
    
    
    
    452,481
    
    
    
    688,486Cash and cash equivalents, beginning of period
    
    
    25,043
    
    
    
    
    
    
    
    25,043Cash and cash equivalents, end of period
    
    $
    261,048
    
    
    $
    452,481
    
    
    $
    713,529Noncash investing and financing activities:Property, plant and equipment costs accrued
    
    $
    6,003,229
    
    
    $
    306,132
    
    
    $
    6,309,361Interest cost accrued to long-term debt
    
    $
    1,937,890
    
    
    $
    
    
    
    $
    1,937,890
 S-6




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description2.1
    
    Agreement and Plan of Merger dated May 18, 2006, by
and among Cirracor, Panda Ethanol, Inc., and Grove
Panda Investments, LLC, filed as Exhibit 2.1 to our
Current Report on Form 8-K, filed on November 13, 2006
and incorporated by reference herein.2.2
    
    First Amendment to Agreement and Plan of Merger dated
June 7, 2006, by and among Cirracor, Panda Ethanol,
Inc., and Grove Panda Investments, LLC, filed as
Exhibit 2.2 to our Current Report on Form 8-K, filed
on November 13, 2006 and incorporated by reference
herein.3.1
    
    Amended and Restated Articles of Incorporation, filed
as Exhibit 3.1 to our Current Report on Form 8-K,
filed on November 13, 2006 and incorporated by
reference herein.3.2
    
    Amended and Restated Bylaws of Panda Ethanol, Inc.,
filed as Exhibit 3.2 to our Current Report on Form
8-K, filed on November 13, 2006 and incorporated by
reference herein.4.1
    
    Amended and Restated Articles of Incorporation, filed
as Exhibit 3.1 to our Current Report on Form 8-K,
filed on November 13, 2006 and incorporated by
reference herein.4.2
    
    Amended and Restated Bylaws of Panda Ethanol, Inc.,
filed as Exhibit 3.2 to our Current Report on Form
8-K, filed on November 13, 2006 and incorporated by
reference herein.4.3
    
    Registration Rights Agreement, dated as of June 7,
2006, by and among Panda Ethanol, Inc., Panda Energy
International, Inc. and the purchasers named therein,
filed as Exhibit 4.3 to our Current Report on Form
8-K, filed on November 13, 2006 and incorporated by
reference herein.4.4
    
    Registration Rights Agreement, dated as of November 6,
2006, by and among Panda Ethanol, Inc. and Grove Panda
Investments, LLC, filed as Exhibit 4.4 to our Current
Report on Form 8-K, filed on November 13, 2006 and
incorporated by reference herein.4.5
    
    First Amendment to Registration Rights Agreement as of
November 13, 2006, among Panda Ethanol, Inc., Panda
Energy International, Inc. and the several purchasers
signatory therein, filed as Exhibit 10.1 to our
Current Report on Form 8-K, filed on November 17, 2006
and incorporated by reference herein.4.6
    
    Registration Rights Agreement, dated as of December 1,
2006, by and among Panda Ethanol, Inc., Panda Energy
International, Inc. and the several purchasers
signatory thereto, filed as Exhibit 4.1 to our Current
Report on Form 8-K, filed on December 4, 2006 and
incorporated by reference herein.4.7
    
    Registration Rights Agreement, dated as of November 9,
2007, by and between Panda Ethanol, Inc. and Panda
Energy International, Inc., filed as Exhibit 10.2 to
our Current Report on Form 8-K, filed on November 15,
2007 and incorporated by reference herein.10.1
    
    Financing Agreement, dated as of July 28, 2006 by and
among Panda Hereford Ethanol, L.P., Société Générale
and the lenders named therein, filed as Exhibit 10.1
to our Current Report on Form 8-K, filed on November
13, 2006 and incorporated by reference herein.10.2
    
    Indenture of Trust, dated as of as of July 1, 2006, by
and between Red River Authority of Texas and The Bank
of New York Trust Company, filed as Exhibit 10.2 to
our Current Report on Form 8-K, filed on November 13,
2006 and incorporated by reference herein.10.3
    
    Transition Services Agreement dated as of June 7, 2006
between Panda Energy Management, L.P. and Panda
Ethanol, Inc. , filed as Exhibit 10.3 to our Current
Report on Form 8-K, filed on November 13, 2006 and
incorporated by reference herein.10.4
    
    First Amendment to Transition Services Agreement,
dated as of October 7, 2006 between Panda Energy
Management, L.P. and Panda Ethanol Management, LLC,
filed as Exhibit 10.4 to our Current Report on Form
8-K, filed on November 13, 2006 and incorporated by
reference herein.10.5
    
    Letter Agreement for Reimbursement dated June 7, 2006,
by and between Panda Ethanol, Inc. and Panda Energy
International, Inc., filed as Exhibit 10.5 to our
Current Report on Form 8-K, filed on November 13, 2006
and incorporated by reference herein.




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##### Table of Contents



ExhibitNumber
    
    Description10.6(2)
    
    The Panda Ethanol, Inc. 2006 Amended and Restated
Long-Term Incentive Plan, dated as of June 7, 2006,
filed as Exhibit 10.6 to our Current Report on Form
8-K, filed on November 13, 2006 and incorporated by
reference herein.10.7
    
    Registration Rights Agreement, dated as of June 7,
2006, by and among Panda Ethanol, Inc. and the
purchasers named therein, filed as Exhibit 4.3 to our
Current Report on Form 8-K, filed on November 13, 2006
and incorporated by reference herein.10.8
    
    Registration Rights Agreement, dated as of November 6,
2006, by and among Panda Ethanol, Inc. and Grove Panda
Investments, LLC, filed as Exhibit 4.3 to our Current
Report on Form 8-K, filed on November 13, 2006 and
incorporated by reference herein.10.9
    
    Industry Track Agreement, dated as of June 6, 2006 by
and between BNSF Railway Company and Panda Hereford
Ethanol, L.P, filed as Exhibit 10.9 to our Current
Report on Form 8-K, filed on November 13, 2006 and
incorporated by reference herein.10.10
    
    Turnkey Engineering, Procurement and Construction
Agreement for Ethanol Production Facility dated as of
October 15, 2005, by and between Panda Hereford
Ethanol, LP and Lurgi PSI, Inc., filed as Exhibit
10.10 to our Current Report on Form 8-K, filed on
November 13, 2006 and incorporated by reference herein10.11
    
    Ethanol Marketing Agreement dated as of October 13,
2005, by and between Aventine Renewable Energy, Inc.
and Panda Hereford Ethanol, L.P., filed as Exhibit
10.11 to our Current Report on Form 8-K, filed on
November 13, 2006 and incorporated by reference
herein.10.12
    
    Subordinated Debt Financing Agreement, dated as of
July 28, 2006 by and between Panda Hereford Ethanol,
L.P. and *****, filed as Exhibit 10.12 to our Current
Report on Form 8-K, filed on November 13, 2006 and
incorporated by reference herein.10.13
    
    Second Amendment to Transition Services Agreement,
dated as of March 30, 2007 between Panda Energy
Management, L.P. and Panda Ethanol Management, LLC,
filed as Exhibit 10.1 to our Current Report on Form
8-K, filed on March 30, 2007 and incorporated by
reference herein.10.14
    
    Turnkey Engineering Procurement and Construction
Contract for Ethanol Production Facility dated as of
March 1, 2007, by and between Panda Yuma Ethanol, LP
and Lurgi, Inc., filed as Exhibit 10.14 to our Annual
Report on Form 10-K for the year ended December 31,
2006 and incorporated by reference herein.10.15(2)
    
    Description of Director Compensation, filed as Exhibit
10.15 to our Annual Report on Form 10-K for the year
ended December 31, 2006 and incorporated by reference
herein.10.16(2)
    
    Letter From Panda Energy International, Inc. to Mr.
Michael Trentel dated November 14, 2005 and relating
to an agreement regarding options to purchase common
stock of Panda Energy International, Inc., filed as
Exhibit 10.16 to our Annual Report on Form 10-K for
the year ended December 31, 2006 and incorporated by
reference herein.10.17(2)
    
    Form of Nonstatutory Stock Option Agreement under the
2000 Stock Option Plan of Panda Energy International,
Inc. Dated August 23, 2000, filed as Exhibit 10.17 to
our Annual Report on Form 10-K for the year ended
December 31, 2006 and incorporated by reference
herein.10.18
    
    Letter Agreement, dated as of May 29, 2007, by and
between Panda Hereford Ethanol, L.P. and Société
Générale, filed as Exhibit 10.1 to our Current Report
on Form 8-K, filed on June 4, 2007 and incorporated by
reference herein.10.19
    
    First Change Order to Turnkey Engineering, Procurement
and Construction Agreement for Ethanol Production
Facility, filed as Exhibit 10.1 to our Current Report
on Form 8-K, filed on June 6, 2007 and incorporated by
reference herein.10.20
    
    First Amendment to Financing Agreement and Depositary
and Disbursement Agreement, dated as of June 15, 2007,
by and among Panda Hereford Ethanol, L.P., Société
Générale and the lenders named therein, filed as
Exhibit 10.1 to our Current Report on Form 8-K, filed
on June 19, 2007 and incorporated by reference herein.10.21
    
    Services Agreement, effective as of September 1, 2007,
by and between Panda Energy Management, LP and Panda
Ethanol, Inc., filed as Exhibit 10.1 to our Current
Report on Form 8-K, filed on November 15, 2007 and
incorporated by reference herein.10.22
    
    Registration Rights Agreement, dated as of November 9,
2007, by and between Panda Ethanol, Inc. and Panda
Energy International, Inc., filed as Exhibit 10.2 to
our Current Report on Form 8-K, filed on November 15,
2007 and incorporated by reference herein.




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##### Table of Contents



ExhibitNumber
    
    Description10.23
    
    Loan Agreement, dated as of November 9, 2007, by and
between Panda Ethanol, Inc. and Panda Energy
International, Inc., filed as Exhibit 10.3 to our
Current Report on Form 8-K, filed on November 15, 2007
and incorporated by reference herein.10.24
    
    Pledge, Assignment and Security Agreement, dated as of
November 9, 2007, by and between Panda Ethanol, Inc.
and Panda Energy International, Inc., filed as Exhibit
10.4 to our Current Report on Form 8-K, filed on
November 15, 2007 and incorporated by reference
herein.10.25
    
    Pledge, Assignment and Security Agreement, dated as of
November 9, 2007, by and between Panda Ethanol
Holdings, LLC and Panda Energy International, Inc.,
filed as Exhibit 10.5 to our Current Report on Form
8-K, filed on November 15, 2007 and incorporated by
reference herein.21.1(1)
    
    Subsidiaries of Panda Ethanol, Inc.23.1(1)
    
    Consent of Deloitte & Touche LLP.31.1(1)
    
    Certification of Principal Executive Officer.31.2(1)
    
    Certification of Principal Financial Officer.32.1(1)
    
    Certification of Chief Executive Officer Pursuant to
Section 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.32.2(1)
    
    Certification of Chief Financial Officer Pursuant to
Section 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
 
 (1)
    
    Filed herewith.(2)
    
    Management contract or compensatory plan or arrangement.