##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-K/A
 Amendment No. 2
 
 (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, 2006
 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
    
    33-0986282(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)4100 Spring Valley, Suite 1002Dallas, Texas
    
    75244(Address of principal executive offices)
    
    (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
  o o þ
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE:
 None




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##### 



PANDA ETHANOL, INC.
 FORM 10-K/A
 AMENDMENT NO. 2
 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006
 INDEX
 PagePART IIItem 7.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    1Item 8.
    
    Financial Statements and Supplementary Data
    
    
    5Item 9A.
    
    Controls and Procedures
    
    
    5PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    6Consent 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
  EXPLANATORY NOTE
     In this Amendment No. 2, 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 Amendment No. 2, 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.




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##### Table of Contents



PART II
 
 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 Amendment No. 2. 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 16 and the factors listed under
Item 1BusinessForward-Looking Statements on page 14 of our annual report on Form 10-K filed
on April 2, 2007.
 Restatement 
As discussed in the Explanatory Note, the Company has restated
certain previously reported financial statements to reflect the
correction of errors regarding
the balance sheet classification of certain assets and the related presentation in the
consolidated statements of cash flows. The amounts under Liquidity and Capital Resources below
reflect such restatement.
 Overview
        1




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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, 2005 as compared to the year ended December 31, 2006
     2




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##### Table of Contents



For the two months ended December 31, 2004 as compared to the year ended December 31, 2005
    Liquidity and Capital Resources
       3




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##### Table of Contents



Hereford Facility Project Financing
  Contractual Obligations
  4




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##### Table of Contents



Payments due by periodLess
    
    
    
    
    
    
    
    
    
    
    Morethan
    
    
    1-3
    
    
    3-5
    
    
    thanContractual obligations
    
    Total
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 yearsLong-Term Debt Obligations (1)
    
    $
    217.3
    
    
    $
    7.4
    
    
    $
    49.0
    
    
    $
    51.1
    
    
    $
    109.8Construction-Related Obligations (2)
    
    
    135.1
    
    
    
    135.1
    
    
    
    
    
    
    
    
    
    
    
    Total (3)
    
    $
    352.4
    
    
    $
    142.5
    
    
    $
    49.0
    
    
    $
    51.1
    
    
    $
    109.8
 
 (1)
    
    The table includes scheduled interest, principal and fee payments related to the our
long-term debt outstanding as of December 31, 2006. 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 Amendment No. 2, 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
debt facilities beyond those outstanding at December 31, 2006, 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 Amendment No. 2. The total obligations at
inception of these contracts was $188.6 million. Payments on these contracts through December
31, 2006 totaled $53.5 million, resulting in future obligations totaling $135.1 million.
Payments generally become due under the contracts based on achievement of specified
construction milestones. At December 31, 2006, $5.9 million of the future obligations were
included on the balance sheet in accounts payable and accrued liabilitiesproperty, plant
and equipment.(3)
    
    The Company has financial derivative obligations consisting of a royalty interest embedded in
the subordinated debt obligation which is valued at $7.1 million, and an interest rate swap
agreement which is valued at $0.5 million. These obligations are more fully discussed in Notes
2 and 5 to our audited financial statements included in this Amendment No. 2. 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
timing of the derivative payments on a year-by-year basis and, accordingly, the derivative
obligations are not included in the table above. Off-balance sheet arrangements
  
 Item 8. Financial Statements and Supplementary Data
  
 Item 9A. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   5




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##### Table of Contents



Changes in Internal Control over Financial Reporting
   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, 2005 and 2006 (Restated)Consolidated Statements of Operations for the period from inception (November 1, 2004)
through December 31, 2004, for the years ended December 31, 2005 and 2006 and for the
period from inception through December 31, 2006Consolidated Statements of Shareholders Equity for the period from inception (November 1,
2004) through December 31, 2004, for the years ended December 31, 2005 and 2006 and for
the period from inception through December 31, 2006Consolidated Statements of Cash Flows for the period from inception (November 1, 2004)
through December 31, 2004, for the years ended December 31, 2005 and 2006 (Restated) and
for the period from inception through December 31, 2006 (Restated)Notes to Consolidated Financial Statements2.
    
    Financial Statement Schedule: Schedule I, Condensed Financial Information of
Registrant (Restated)3.
    
    Exhibits required to be filed by Item 601 of Regulation S-K
 6




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description23.1(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. 7




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##### Table of Contents



SIGNATURES
   PANDA ETHANOL, INC./s/ Darol LindloffDarol Lindloff,Chief Executive Officer and President 8




---



##### 



PANDA
    ETHANOL, INC.
    AND SUBSIDIARIES
    (A Development Stage Enterprise)
    INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
   
 PageReport of Independent Registered Public
    Accounting Firm


F-2Consolidated Balance Sheets as of
    December 31, 2005 and 2006 (Restated)


F-3Consolidated Statements of Operations for the
    period from inception (November 1, 2004) through
    December 31, 2004, for the years ended December 31,
    2005 and 2006 and for the period from inception through
    December 31, 2006


F-4Consolidated Statements of Shareholders
    Equity for the period from inception (November 1,
    2004) through December 31, 2004, for the years ended
    December 31, 2005 and 2006 and for the period from
    inception through December 31, 2006


F-5Consolidated Statements of Cash Flows for the
    period from inception (November 1, 2004) through
    December 31, 2004, for the years ended December 31,
    2005 and 2006 (Restated) and for the period from inception
    through December 31, 2006 (Restated)


F-6Notes to Consolidated Financial Statements


F-7   F-1




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##### Table of Contents



REPORT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                DELOITTE &
    TOUCHE LLP
     F-2




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##### Table of Contents



PANDA
    ETHANOL, INC.
    AND SUBSIDIARIES
    (A Development Stage Enterprise)
    CONSOLIDATED BALANCE SHEETS
    December 31, 2005 and 2006
  2005


2006As Restated See Note 8ASSETSCurrent assets:Cash and cash equivalents

$
25,043


$
713,529Restricted cash


247,000



Accounts receivable from former parent






32,265Investments available for sale






14,700,000Prepaid expenses and other assets






932,214Total current assets


272,043



16,378,008Restricted cash and cash equivalents






135,607,427Restricted short-term investments






12,495,335Property, plant and equipment:Construction in progress






66,087,367Development costs


4,587,921



2,084,463Furniture and fixtures






76,693Accumulated depreciation






(3,079
)Total property, plant and equipment, net


4,587,921



68,245,444Debt issuance costs, net of accumulated amortization of $520,393
    at December 31, 2006






8,902,699Total assets

$
4,859,964


$
241,628,913LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued liabilities  property,
    plant and equipment

$
1,986,508


$
6,309,361Accounts payable and accrued liabilities  operating
    expenses


56,465



1,051,919Accrued interest






491,497Total current liabilities


2,042,973



7,852,777Financial derivatives






7,659,400Long-term debt, net






136,369,890Commitments and contingencies (Notes 3 and 5)Temporary equity  payable to former parent






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; 13,817,341 and 31,066,667 shares issued and
    outstanding at December 31, 2005 and 2006, respectively


13,817



31,067Additional contributed capital


9,694,675



104,405,191Accumulated other comprehensive losses






(513,400
)Deficit accumulated during the development stage


(6,891,501
)


(18,477,570
)Total shareholders equity


2,816,991



85,445,288Total liabilities and shareholders equity

$
4,859,964


$
241,628,913    F-3




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##### Table of Contents



PANDA
    ETHANOL, INC.
    AND SUBSIDIARIES
    (A Development Stage Enterprise)
    CONSOLIDATED STATEMENTS OF OPERATIONS
    For the period from inception (November 1, 2004) through
    December 31, 2004,
    for the years ended December 31, 2005 and 2006, and for the
    period
    from inception through December 31, 2006
  Inception








Inceptionthrough


Year Ended December 31,


throughDecember 31, 2004


2005


2006


December 31, 2006Development and administrative expenses:Development and administrative expenses allocated from former
    parent

$
269,775


$
5,488,683


$
6,411,285


$
12,169,743Other development and administrative expenses


22,635



1,110,408



7,014,657



8,147,700Total development and administrative expenses


292,410



6,599,091



13,425,942



20,317,443Other expense (income):Interest income










(3,730,833
)


(3,730,833
)Interest expense and letter of credit fees










3,137,889



3,137,889Amortization of debt issuance costs










271,992



271,992Depreciation










3,079



3,079Decrease in fair value of financial derivative










(1,522,000
)


(1,522,000
)Total other expense (income)










(1,839,873
)


(1,839,873
)Net loss

$
292,410


$
6,599,091


$
11,586,069


$
18,477,570Net loss per common share  basic and dilutive:Net loss per common share

$
0.02


$
0.48


$
0.51Weighted average common shares outstanding  basic and
    dilutive


13,817,341



13,817,341



22,630,107    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,
    for the years ended December 31, 2005 and 2006, and for the
    period
    from inception through December 31, 2006
  DeficitAccumulated


AccumulatedCommon Stock


Additional


Other


During the


TotalAmount





Total Par


Contributed


Comprehensive


Development


ShareholdersDate


per Share


Shares


Value


Capital


Losses


Stage


EquityBalance 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
)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
)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
)Reclassification adjustments for earnings realized in net loss






















(30,272
)






(30,272
)Net loss


























(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    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 period from inception (November 1, 2004) through
    December 31, 2004,
    for the years ended December 31, 2005 and 2006, and for the
    period
    from inception through December 31, 2006
  Inception through


Year Ended December 31,


Inception throughDecember 31, 2004


2005


2006


December 31, 2006As Restated 


As Restated See Note 8


See Note 8Operating activities:Net loss

$
(292,410
)

$
(6,599,091
)

$
(11,586,069
)

$
(18,477,570
)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



271,992Decrease 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










(932,214
)


(932,214
)Increase in accounts payable and accrued liabilities 
    operating expenses






56,465



995,454



1,051,919Increase in accrued interest










491,497



491,497Net cash used in operating activities


(292,410
)


(6,542,626
)


(10,375,715
)


(17,210,751
)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






(247,000
)


(135,360,427
)


(135,607,427
)Increase in restricted short-term investments










(12,495,335
)


(12,495,335
)Additions to property, plant and equipment






(2,601,413
)


(59,086,269
)


(61,687,682
)Net cash used in investing activities






(2,848,413
)


(221,642,031
)


(224,490,444
)Financing activities:Capital contributions from former parent


292,410



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



90,924,152Issuance 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


292,410



9,416,082



232,706,232



242,414,724Increase in cash and cash equivalents






25,043



688,486



713,529Cash and cash equivalents, beginning of period










25,043



Cash and cash equivalents, end of period

$



$
25,043


$
713,529


$
713,529Noncash investing and financing activities:Property, plant and equipment costs accrued

$



$
1,986,508


$
6,309,361


$
6,309,361Interest cost accrued to long-term debt

$



$



$
1,937,890


$
1,937,890Supplemental cash flow information:Interest paid, net of amounts capitalized

$



$



$
708,502


$
708,502    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, 2005 and 2006
    And For the Period from Inception (November 1,
    2004) through December 31, 2004,
    For The Years Ended December 31, 2005 and 2006,
    And For the Period from Inception through December 31,
    2006
  1.
    ORGANIZATION
    AND BASIS OF PRESENTATION      Development Stage Enterprise 
  Liquidity and Going Concern Considerations 
   F-7




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##### Table of Contents



PANDA
    ETHANOL, INC. AND SUBSIDIARIES
    (A Development Stage Enterprise)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      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 
 F-8




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##### Table of Contents



PANDA
    ETHANOL, INC. AND SUBSIDIARIES
    (A Development Stage Enterprise)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  98-5, Start-up start-up
  Capitalization of interest  Capitalization of Interest
    Cost Capitalization of
    Interest Cost in Situations Involving Certain Tax-Exempt
    Borrowings and Certain Gifts and Grants.
  Environmental Matters 
  and/or
  Income Taxes 
    Asset Impairment 
  Derivative Financial Instruments and Hedging
    Activities 
 F-9




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##### Table of Contents



PANDA
    ETHANOL, INC. AND SUBSIDIARIES
    (A Development Stage Enterprise)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Allocation of Administrative Costs 
  Net loss per share 
  Financial instruments 
  Share-Based Payment 
  Recent Accounting Pronouncements  Accounting for
    Certain Hybrid Financial Instruments,
 F-10




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##### Table of Contents



PANDA
    ETHANOL, INC. AND SUBSIDIARIES
    (A Development Stage Enterprise)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Accounting for Uncertainty in Income Taxes
  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
  3.
    ETHANOL
    PROJECTS   F-11




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##### Table of Contents



PANDA
    ETHANOL, INC. AND SUBSIDIARIES
    (A Development Stage Enterprise)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          4.
    CAPITAL
    STRUCTURE AND EQUITY  Capital
    Structure and Equity Contributions from Parent
       F-12




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##### Table of Contents



PANDA
    ETHANOL, INC. AND SUBSIDIARIES
    (A Development Stage Enterprise)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Merger
    Transaction
      Equity
    Transactions
     F-13




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##### Table of Contents



PANDA
    ETHANOL, INC. AND SUBSIDIARIES
    (A Development Stage Enterprise)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    75-day
  Long
    Term Incentive Plan
    5.
    LONG-TERM
    DEBT         F-14




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##### Table of Contents



PANDA
    ETHANOL, INC. AND SUBSIDIARIES
    (A Development Stage Enterprise)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        pay-in-kind
       F-15




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##### Table of Contents



PANDA
    ETHANOL, INC. AND SUBSIDIARIES
    (A Development Stage Enterprise)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007

$
2008


8,414,1572009


14,293,8762010


15,388,8762011


15,493,876Thereafter


91,088,842Subtotal


144,679,627Less unamortized discount on subordinated debt


(8,309,737
)Total

$
136,369,890   6.
    INCOME
    TAXES         F-16




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##### Table of Contents



PANDA
    ETHANOL, INC. AND SUBSIDIARIES
    (A Development Stage Enterprise)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2005


2006Net operating loss carry forward

$



$
1,809Start-up
    costs


2,412



3,906Property, plant and equipment






1,013Long-term liabilities






(785
)Accumulated other comprehensive losses






179Total deferred tax assets


2,412



6,122Valuation allowance


(2,412
)


(6,122
)Net deferred tax assets

$



$
     2004


2005


2006Income tax expense (benefit) at U.S. federal statutory rate

$
(102
)

$
(2,310
)

$
(4,055
)Permanent differences and other










345Change in valuation allowance


102



2,310



3,710Income tax expense (benefit)

$



$



$
      F-17




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##### Table of Contents



PANDA
    ETHANOL, INC. AND SUBSIDIARIES
    (A Development Stage Enterprise)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  7.
    QUARTERLY
    INFORMATION (UNAUDITED)    2005


2006Quarter ended March 31:Net loss

$
1,179,310


$
2,445,487Net loss per common share

$
.09


$
.18Quarter ended June 30:Net loss

$
1,504,162


$
2,726,963Net loss per common share

$
.10


$
.15Quarter ended September 30:Net loss

$
1,919,920


$
3,164,945Net loss per common share

$
.14


$
.11Quarter ended December 31:Net loss

$
1,995,699


$
3,248,674Net loss per common share

$
.15


$
.11   8.
    RESTATEMENT
    OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS       F-18




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##### Table of Contents



PANDA
    ETHANOL, INC. AND SUBSIDIARIES
    (A Development Stage Enterprise)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    AsPreviouslyReported


As RestatedAs of December 31, 2006:Cash and cash equivalents

$
15,413,529


$
713,529Investments available for sale






14,700,000Total current assets


164,480,770



16,378,008     As PreviouslyReported


As RestatedFor the year ended December 31, 2006:Cash flows from investing activities:Purchases of investments available for sale

$



$
(83,025,000
)Sales of investments available for sale






68,325,000Net cash used in investing activities


(206,942,031
)


(221,642,031
)Increase in cash and cash equivalents


15,388,486



688,486Cash and cash equivalents, end of period


15,413,529



713,529From inception through December 31, 2006:Cash flows from investing activities:Purchases of investments available for sale

$



$
(83,025,000
)Sales of investments available for sale






68,325,000Net cash used in investing activities


(209,790,444
)


(224,490,444
)Increase in cash and cash equivalents


15,413,529



713,529Cash and cash equivalents, end of period


15,413,529



713,529  F-19




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##### Table of Contents



Schedule I 
    Condensed financial information of registrant.
    ConsolidatedRestricted


Unrestricted


TotalAs Restated 


As Restated 


As Restated See Note 8


See Note 8


See Note 8ASSETSCurrent 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-1




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##### 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



3,079Decrease 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-2




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##### 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







271,992Decrease 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


$



$
1,937,890Supplemental cash flow information:Interest paid, net of amounts capitalized

$
701,294


$
7,208


$
708,502  S-3




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description23.1(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.