##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-K
 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
 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: 000-1359687
 RED TRAIL ENERGY, LLC
  NORTH DAKOTA
    
    76-0742311(State or other jurisdiction
    
    (IRS Employerof incorporation or organization)
    
    Identification No.)
 
 (701) 974-3308
 None
 None
 o þ
 o þ
 þ o
 þ
  o o þ
 o þ




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##### Table of Contents



PagePART I
    
    
    1ITEM 1. BUSINESS
    
    
    1ITEM 1A. RISK FACTORS
    
    
    16ITEM 2. PROPERTIES
    
    
    24ITEM 3. LEGAL PROCEEDINGS
    
    
    24ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    25PART II
    
    
    25ITEM 5. MARKET FOR REGISTRANTS MEMBER UNITS, RELATED MEMBER
MATTERS AND ISSUER PURCHASED OF EQUITY SECURITIES
    
    
    25ITEM 6. SELECTED FINANCIAL DATA
    
    
    26ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
    
    
    26ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    36ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    38ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    38ITEM 9A. CONTROLS AND PROCEDURES.
    
    
    38ITEMS 9B. OTHER INFORMATION
    
    
    38PART III
    
    
    39PART IV
    
    
    40ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
    
    
    40Operating AgreementMembership Control AgreementFirst Amendment to Construction Loan AgreementRevolving Promissory NoteSecurity Agreement and Deposit Account Control AgreementEquity Grant AgreementOption to PurchaseAudit Committee CharterSenior Financial Officer Code of ConductCertificationCertificationCertificationCertification




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CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
  
    
    Projected growth, overcapacity or
contraction in the ethanol market in which we operate;
 
    
    Fluctuations in the price and market for
ethanol and distillers grains;
 
    
    Changes in plant production capacity,
variations in actual ethanol and distillers grains production from expectations or technical
difficulties in operating the plant;
 
    
    Availability and costs of products and
raw materials, particularly corn and coal;
 
    
    Changes in our business strategy, capital
improvements or development plans for expanding, maintaining or contracting our presence in
the market in which we operate;
 
    
    Costs of equipment;
 
    
    Changes in interest rates and the
availability of credit to support capital improvements, development, expansion and operations;
 
    
    Our ability to market and our reliance on
third parties to market our products;
 
    
    Our ability to distinguish ourselves from
our current and future competition;
 
    
    Changes to infrastructure, including
 -
    
    expansion of rail capacity,-
    
    possible future use of ethanol
dedicated pipelines for transportation-
    
    increases in truck fleets
capable of transporting ethanol within localized markets,-
    
    additional storage facilities
for ethanol, 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 capable of using E85 fuel;
 
    
    Changes in or elimination of governmental
laws, tariffs, trade or other controls or enforcement practices such as:
 -
    
    national, state or local
energy policy;-
    
    federal ethanol tax
incentives;-
    
    legislation mandating the use
of ethanol or other oxygenate additives;-
    
    state and federal regulation
restricting or banning the use of MTBE;-
    
    environmental laws and
regulations that apply to our plant operations and their enforcement; or-
    
    reduction or elimination of
tariffs on foreign ethanol.
 
    
    Increased competition in the ethanol and
oil industries;
 
    
    Fluctuations in US oil consumption and
petroleum prices;
 
    
    Changes in general economic conditions or
the occurrence of certain events causing an economic impact in the agriculture, oil or
automobile industries;
 
    
    Anticipated trends in our financial
condition and results of operations;
 
    
    The availability and adequacy of our cash
flow to meet our requirements, including the repayment of debt;
 
    
    Our liability resulting from litigation;
 
    
    Our ability to retain key employees and
maintain labor relations;
 
    
    Changes and advances in ethanol
production technology; and
 
    
    Competition from alternative fuels and
alternative fuel additives.




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PART I
 
 ITEM 1. BUSINESS.
 Overview
   General Development of Business since January 1, 2006
   Available Information
 www.sec.gov
 www.redtrailenergyllc.com.
 Financial Information
 Item 7  Managements Discussion and Analysis of Financial Condition and
Results of Operations
 Principal Products and Their Markets
  Ethanol
  1




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Distillers Grains
   Marketing and Distribution of Principal Products
   Ethanol
  2




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Distillers Grains
  Dependence on One or a Few Major Customers
   Seasonal Factors in Business
  Financial Information about Geographic Areas
  Sources and Availability of Raw Materials
 Corn Feedstock Supply
   3




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Coal
       4




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Electricity
  Water
   Federal Ethanol Supports
   5




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6




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Other Factors Affecting Demand and Supply
   7




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Our Competition
    Current
    
    
    Under Construction/Capacity
    
    
    ExpansionsCompany
    
    Location
    
    Feedstock
    
    (mgy)
    
    
    (mgy)Abengoa Bioenergy Corp.
    
    York, NE
    
    Corn/milo
    
    
    55Colwich, KS
    
    
    
    
    25Portales, NM
    
    
    
    
    30Ravenna, NE
    
    
    
    
    
    
    
    
    88Aberdeen Energy*
    
    Mina, SD
    
    Corn
    
    
    
    
    
    
    100Absolute Energy, LLC*
    
    St. Ansgar, IA
    
    Corn
    
    
    
    
    
    
    100ACE Ethanol, LLC
    
    Stanley, WI
    
    Corn
    
    
    41Adkins Energy, LLC*
    
    Lena, IL
    
    Corn
    
    
    40Advanced Bioenergy
    
    Fairmont, NE
    
    Corn
    
    
    
    
    
    
    100AGP*
    
    Hastings, NE
    
    Corn
    
    
    52Agra Resources Coop. d.b.a. EXOL*
    
    Albert Lea, MN
    
    Corn
    
    
    40
    
    
    
    8Agri-Energy, LLC*
    
    Luverne, MN
    
    Corn
    
    
    21Alchem Ltd. LLLP
    
    Grafton, ND
    
    Corn
    
    
    10.5Al-Corn Clean Fuel*
    
    Claremont, MN
    
    Corn
    
    
    35
    
    
    
    15
 8




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Current
    
    
    Under Construction/Capacity
    
    
    ExpansionsCompany
    
    Location
    
    Feedstock
    
    (mgy)
    
    
    (mgy)Amaizing Energy, LLC*
    
    Denison, IA
    
    Corn
    
    
    40Archer Daniels Midland
    
    Decatur, IL
    
    Corn
    
    
    1,070
    
    
    
    275Cedar Rapids, IA
    
    CornClinton, IA
    
    CornColumbus, NE
    
    CornMarshall, MN
    
    CornPeoria, IL
    
    CornWallhalla, ND
    
    Corn/barleyArkalon Energy, LLC
    
    Liberal, KS
    
    Corn
    
    
    
    
    
    
    110ASAlliances Biofuels, LLC
    
    Albion, NE
    
    Corn
    
    
    
    
    
    
    100Linden, IN
    
    Corn
    
    
    
    
    
    
    100Bloomingburg, OH
    
    Corn
    
    
    
    
    
    
    100Aventine Renewable Energy, LLC
    
    Pekin, IL
    
    Corn
    
    
    207Aurora, NE
    
    CornBadger State Ethanol, LLC*
    
    Monroe, WI
    
    Corn
    
    
    48Big River Resources, LLC*
    
    West Burlington, IA
    
    Corn
    
    
    52
    
    
    
    50Big River Resources Grinnell, LLC (joint
venture with US Bio)
    
    Grinnell, IA
    
    CornBlue Flint Ethanol
    
    Underwood, ND
    
    Corn
    
    
    50Bonanza Energy, LLC
    
    Garden City, KS
    
    Corn/milo
    
    
    
    
    
    
    55Bushmills Ethanol, Inc.*
    
    Atwater, MN
    
    Corn
    
    
    40Cardinal Ethanol
    
    Harrisville, IN
    
    Corn
    
    
    
    
    
    
    100Cargill, Inc.
    
    Blair, NE
    
    Corn
    
    
    85Eddyville, IA
    
    Corn
    
    
    35Cascade Grain
    
    Clatskanie, OR
    
    Corn
    
    
    
    
    
    
    108CassCo Amaizing Energy, LLC
    
    Atlantic, IA
    
    Corn
    
    
    
    
    
    
    110Castle Rock Renewable Fuels, LLC
    
    Necedah, WI
    
    Corn
    
    
    
    
    
    
    50Center Ethanol Company
    
    Sauget, IL
    
    Corn
    
    
    
    
    
    
    54Central Indiana Ethanol, LLC
    
    Marion, IN
    
    Corn
    
    
    
    
    
    
    40Central Illinois Energy, LLC
    
    Canton, IL
    
    Corn
    
    
    
    
    
    
    37Central MN Ethanol Coop*
    
    Little Falls, MN
    
    Corn
    
    
    21.5Central Wisconsin Alcohol
    
    Plover, WI
    
    Seed corn
    
    
    4Chief Ethanol
    
    Hastings, NE
    
    Corn
    
    
    62Chippewa Valley Ethanol Co.*
    
    Benson, MN
    
    Corn
    
    
    45Commonwealth Agri-Energy, LLC*
    
    Hopkinsville, KY
    
    Corn
    
    
    33Corn, LP*
    
    Goldfield, IA
    
    Corn
    
    
    50Cornhusker Energy Lexington, LLC
    
    Lexington, NE
    
    Corn
    
    
    40Corn Plus, LLP*
    
    Winnebago, MN
    
    Corn
    
    
    44Coshoctan Ethanol, OH
    
    Coshoctan, OH
    
    Corn
    
    
    
    
    
    
    60Dakota Ethanol, LLC*
    
    Wentworth, SD
    
    Corn
    
    
    50DENCO, LLC
    
    Morris, MN
    
    Corn
    
    
    21.5Dexter Ethanol, LLC
    
    Dexter, IA
    
    Corn
    
    
    
    
    
    
    100E Energy Adams, LLC
    
    Adams, NE
    
    Corn
    
    
    
    
    
    
    50E3 Biofuels
    
    Mead, NE
    
    Corn
    
    
    
    
    
    
    24E Caruso (Goodland Energy Center)
    
    Goodland, KS
    
    Corn
    
    
    
    
    
    
    20
 9




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Current
    
    
    Under Construction/Capacity
    
    
    ExpansionsCompany
    
    Location
    
    Feedstock
    
    (mgy)
    
    
    (mgy)East Kansas Agri-Energy, LLC*
    
    Garnett, KS
    
    Corn
    
    
    35Elkhorn Valley Ethanol, LLC
    
    Norfolk, NE
    
    Corn
    
    
    
    
    
    
    40ESE Alcohol Inc.
    
    Leoti, KS
    
    Seed corn
    
    
    1.5Ethanol2000, LLP*
    
    Bingham Lake, MN
    
    Corn
    
    
    32Ethanol Grain Processors, LLC
    
    Obion, TN
    
    Corn
    
    
    
    
    
    
    100First United Ethanol, LLC (FUEL)
    
    Mitchell Co., GA
    
    Corn
    
    
    
    
    
    
    100Frontier Ethanol, LLC
    
    Gowrie, IA
    
    Corn
    
    
    60Front Range Energy, LLC
    
    Windsor, CO
    
    Corn
    
    
    40Gateway Ethanol
    
    Pratt, KS
    
    Corn
    
    
    
    
    
    
    55Glacial Lakes Energy, LLC*
    
    Watertown, SD
    
    Corn
    
    
    50
    
    
    
    50Global Ethanol/Midwest Grain Processors
    
    Lakota, IA
    
    Corn
    
    
    95Riga, MI
    
    Corn
    
    
    
    
    
    
    57Golden Cheese Company of California*
    
    Corona, CA
    
    Cheese whey
    
    
    5Golden Grain Energy, LLC*
    
    Mason City, IA
    
    Corn
    
    
    60
    
    
    
    50Golden Triangle Energy, LLC*
    
    Craig, MO
    
    Corn
    
    
    20Grand River Distribution
    
    Cambria, WI
    
    Corn
    
    
    
    
    
    
    40Grain Processing Corp.
    
    Muscatine, IA
    
    Corn
    
    
    20Granite Falls Energy, LLC*
    
    Granite Falls, MN
    
    Corn
    
    
    52Great Plains Ethanol, LLC*
    
    Chancellor, SD
    
    Corn
    
    
    50Greater Ohio Ethanol, LLC
    
    Lima, OH
    
    Corn
    
    
    
    
    
    
    54Green Plains Renewable Energy
    
    Shenandoah, IA
    
    Corn
    
    
    
    
    
    
    50Superior, IA
    
    Corn
    
    
    
    
    
    
    50Hawkeye Renewables, LLC
    
    Iowa Falls, IA
    
    Corn
    
    
    105Fairbank, IA
    
    Corn
    
    
    115Menlo, IA
    
    Corn
    
    
    
    
    
    
    100Heartland Corn Products*
    
    Winthrop, MN
    
    Corn
    
    
    35Heartland Grain Fuels, LP*
    
    Aberdeen, SD
    
    Corn
    
    
    9Huron, SD
    
    Corn
    
    
    12
    
    
    
    18Heron Lake BioEnergy, LLC
    
    Heron Lake, MN
    
    Corn
    
    
    
    
    
    
    50Holt County Ethanol
    
    O'Neill, NE
    
    Corn
    
    
    
    
    
    
    100Horizon Ethanol, LLC
    
    Jewell, IA
    
    Corn
    
    
    60Husker Ag, LLC*
    
    Plainview, NE
    
    Corn
    
    
    26.5Illinois River Energy, LLC
    
    Rochelle, IL
    
    Corn
    
    
    50Indiana Bio-Energy
    
    Bluffton, IN
    
    Corn
    
    
    
    
    
    
    101Iowa Ethanol, LLC*
    
    Hanlontown, IA
    
    Corn
    
    
    50Iroquois Bio-Energy Company, LLC
    
    Rensselaer, IN
    
    Corn
    
    
    40James Valley Ethanol, LLC
    
    Groton, SD
    
    Corn
    
    
    50KAAPA Ethanol, LLC*
    
    Minden, NE
    
    Corn
    
    
    40Kansas Ethanol, LLC
    
    Lyons, KS
    
    Corn
    
    
    
    
    
    
    55Land O Lakes*
    
    Melrose, MN
    
    Cheese whey
    
    
    2.6Levelland/Hockley County Ethanol, LLC
    
    Levelland, TX
    
    Corn
    
    
    
    
    
    
    40Lincolnland Agri-Energy, LLC*
    
    Palestine, IL
    
    Corn
    
    
    48Lincolnway Energy, LLC*
    
    Nevada, IA
    
    Corn
    
    
    50Liquid Resources of Ohio
    
    Medina, OH
    
    Waste Beverage
    
    
    3Little Sioux Corn Processors, LP*
    
    Marcus, IA
    
    Corn
    
    
    52
 10




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Current
    
    
    Under Construction/Capacity
    
    
    ExpansionsCompany
    
    Location
    
    Feedstock
    
    (mgy)
    
    
    (mgy)Marquis Energy, LLC
    
    Hennepin, IL
    
    Corn
    
    
    
    
    
    
    100Marysville Ethanol, LLC
    
    Marysville, MI
    
    Corn
    
    
    
    
    
    
    50Merrick & Company
    
    Golden, CO
    
    Waste beer
    
    
    3MGP Ingredients, Inc.
    
    Pekin, IL
    
    Corn/wheat starch
    
    
    78Atchison, KSMichigan Ethanol, LLC
    
    Caro, MI
    
    Corn
    
    
    50Mid America Agri Products/Wheatland
    
    Madrid, NE
    
    Corn
    
    
    
    
    
    
    44Mid-Missouri Energy, Inc.*
    
    Malta Bend, MO
    
    Corn
    
    
    45Midwest Renewable Energy, LLC
    
    Sutherland, NE
    
    Corn
    
    
    25Millennium Ethanol
    
    Marion, SD
    
    Corn
    
    
    
    
    
    
    100Minnesota Energy*
    
    Buffalo Lake, MN
    
    Corn
    
    
    18Missouri Ethanol
    
    Laddonia, MO
    
    Corn
    
    
    45Missouri Valley Renewable Energy, LLC*
    
    Meckling, SD
    
    Corn
    
    
    
    
    
    
    60NEDAK Ethanol
    
    Atkinson, NE
    
    Corn
    
    
    
    
    
    
    44New Energy Corp.
    
    South Bend, IN
    
    Corn
    
    
    102North Country Ethanol, LLC*
    
    Rosholt, SD
    
    Corn
    
    
    20Northeast Biofuels
    
    Volney, NY
    
    Corn
    
    
    
    
    
    
    114Northeast Missouri Grain, LLC*
    
    Macon, MO
    
    Corn
    
    
    45Northern Lights Ethanol, LLC*
    
    Big Stone City, SD
    
    Corn
    
    
    50Northstar Ethanol, LLC
    
    Lake Crystal, MN
    
    Corn
    
    
    52Northwest Renewable, LLC
    
    Longview, WA
    
    Corn
    
    
    
    
    
    
    55Otter Creek Ethanol, LLC*
    
    Ashton, IA
    
    Corn
    
    
    55Otter Tail Ag Enterprises
    
    Fergus Falls, MN
    
    Corn
    
    
    
    
    
    
    57.5Pacific Ethanol
    
    Madera, CA
    
    Corn
    
    
    35Boardman, OR
    
    Corn
    
    
    
    
    
    
    35Burley, ID
    
    Corn
    
    
    
    
    
    
    50Panda Energy
    
    Hereford, TX
    
    Corn/milo
    
    
    
    
    
    
    100Panhandle Energies of Dumas, LP
    
    Dumas, TX
    
    Corn/Grain Sorghum
    
    
    
    
    
    
    30Parallel Products
    
    Louisville, KY
    
    Beverage waste
    
    
    5.4R. Cucamonga, CAPatriot Renewable Fuels, LLC
    
    Annawan, IL
    
    Corn
    
    
    
    
    
    
    100Penford Products
    
    Ceder Rapids, IA
    
    Corn
    
    
    
    
    
    
    45Permeate Refining
    
    Hopkinton, IA
    
    Sugars & starches
    
    
    1.5Phoenix Biofuels
    
    Goshen, CA
    
    Corn
    
    
    25Pinal Energy, LLC
    
    Maricopa, AZ
    
    Corn
    
    
    
    
    
    
    55Pine Lake Corn Processors, LLC*
    
    Steamboat Rock, IA
    
    Corn
    
    
    20Pinnacle Ethanol, LLC
    
    Corning, IA
    
    Corn
    
    
    
    
    
    
    60Plainview BioEnergy, LLC
    
    Plainview, TX
    
    Corn
    
    
    
    
    
    
    100Platinum Ethanol, LLC*
    
    Arthur, IA
    
    Corn
    
    
    
    
    
    
    110Plymouth Ethanol, LLC*
    
    Merrill, IA
    
    Corn
    
    
    
    
    
    
    50Poet*
    
    Scotland, SD
    
    Corn
    
    
    11Prairie Ethanol, LLC
    
    Loomis, SD
    
    Corn
    
    
    60Prairie Horizon Agri-Energy, LLC
    
    Phillipsburg, KS
    
    Corn
    
    
    40
 11




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Current
    
    
    Under Construction/Capacity
    
    
    ExpansionsCompany
    
    Location
    
    Feedstock
    
    (mgy)
    
    
    (mgy)Premier Ethanol
    
    Portland, IN
    
    Corn
    
    
    
    
    
    
    60Pro-Corn, LLC*
    
    Preston, MN
    
    Corn
    
    
    42Quad-County Corn Processors*
    
    Galva, IA
    
    Corn
    
    
    27Red Trail Energy, LLC
    
    Richardton, ND
    
    Corn
    
    
    50Redfield Energy, LLC *
    
    Redfield, SD
    
    Corn
    
    
    
    
    
    
    50Reeve Agri-Energy
    
    Garden City, KS
    
    Corn/milo
    
    
    12Renew Energy
    
    Jefferson Junction, WI
    
    Corn
    
    
    
    
    
    
    130Siouxland Energy & Livestock Coop*
    
    Sioux Center, IA
    
    Corn
    
    
    25
    
    
    
    40Siouxland Ethanol, LLC
    
    Jackson, NE
    
    Corn
    
    
    
    
    
    
    50Sioux River Ethanol, LLC*
    
    Hudson, SD
    
    Corn
    
    
    50Southwest Iowa Renewable Energy, LLC *
    
    Council Bluffs, IA
    
    Corn
    
    
    
    
    
    
    110Sterling Ethanol, LLC
    
    Sterling, CO
    
    Corn
    
    
    42Summit Ethanol
    
    Leipsic, OH
    
    Corn
    
    
    
    
    
    
    60Tall Corn Ethanol, LLC*
    
    Coon Rapids, IA
    
    Corn
    
    
    49Tama Ethanol, LLC
    
    Tama, IA
    
    Corn
    
    
    
    
    
    
    100Tate & Lyle
    
    Loudon, TN
    
    Corn
    
    
    67
    
    
    
    38Ft. Dodge, IA
    
    Corn
    
    
    
    
    
    
    105The Andersons Albion Ethanol LLC
    
    Albion, MI
    
    Corn
    
    
    55The Andersons Clymers Ethanol, LLC
    
    Clymers, IN
    
    Corn
    
    
    
    
    
    
    110The Andersons Marathon Ethanol, LLC
    
    Greenville, OH
    
    Corn
    
    
    
    
    
    
    110Trenton Agri Products, LLC
    
    Trenton, NE
    
    Corn
    
    
    40United Ethanol
    
    Milton, WI
    
    Corn
    
    
    
    
    
    
    52United WI Grain Producers, LLC*
    
    Friesland, WI
    
    Corn
    
    
    49US BioEnergy Corp.
    
    Albert City, IA
    
    Corn
    
    
    250
    
    
    
    400Woodbury, MI
    
    CornHankinson, ND
    
    CornCentral City, NE
    
    CornOrd, NE
    
    CornDyersville, IA
    
    CornJanesville, MN
    
    CornU.S. Energy Partners, LLC (White Energy)
    
    Russell, KS
    
    Milo/wheat starch
    
    
    48Utica Energy, LLC
    
    Oshkosh, WI
    
    Corn
    
    
    48VeraSun Energy Corporation
    
    Aurora, SD
    
    Corn
    
    
    230
    
    
    
    330Ft. Dodge, IA
    
    CornCharles City, IA
    
    CornWelcome, MN
    
    CornHartely, IA
    
    CornVoyager Ethanol, LLC*
    
    Emmetsburg, IA
    
    Corn
    
    
    52Western New York Energy, LLC
    
    Shelby, NY
    
    Corn
    
    
    
    
    
    
    50Western Plains Energy, LLC*
    
    Campus, KS
    
    Corn
    
    
    45Western Wisconsin Renewable Energy, LLC*
    
    Boyceville, WI
    
    Corn
    
    
    40White Energy
    
    Hereford, TX
    
    Corn/Milo
    
    
    
    
    
    
    100
 12




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Current
    
    
    Under Construction/Capacity
    
    
    ExpansionsCompany
    
    Location
    
    Feedstock
    
    (mgy)
    
    
    (mgy)Wind Gap Farms
    
    Baconton, GA
    
    Brewery waste
    
    
    0.4Renova Energy
    
    Torrington, WY
    
    Corn
    
    
    5Xethanol BioFuels, LLC
    
    Blairstown, IA
    
    Corn
    
    
    5
    
    
    
    35Yuma Ethanol
    
    Yuma, CO
    
    Corn
    
    
    
    
    
    
    40Total Current Capacity at
114 ethanol biorefineries
    
    
    
    
    
    
    5,633.4Total Under Construction (80)/Expansions (7)
    
    
    
    
    
    
    
    
    
    
    6,394.9Total Capacity
    
    
    
    
    
    
    12,028.3
 
 *
    
    locally-ownedUpdated: March 13, 2007 Competition from Alternative Ethanol Production Methods
    Competition with Ethanol Imported from Other Countries
   13




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Competition from Alternative Fuels
    Distillers Grains Competition
  Research and Development
  Costs and Effects of Compliance with Environmental Laws
  14




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Employees
   # Full-TimePosition
    
    PersonnelGeneral Manager (Contract Personnel)
    
    
    1Plant Manager (Contract Personnel)
    
    
    1Chief Financial Officer
    
    
    1Commodities Manager
    
    
    1Accounting/Marketing
    
    
    1Lab Manager
    
    
    1Lab Technician
    
    
    1Administrative Assistant
    
    
    1Shift Supervisors
    
    
    4Material Handlers
    
    
    3Maintenance Manager
    
    
    1Maintenance Supervisor
    
    
    1Maintenance Craftsmen
    
    
    5Plant Operators
    
    
    16Operations Supervisor
    
    
    1Scale Operator
    
    
    1TOTAL
    
    
    40
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##### Table of Contents



ITEM 1A. RISK FACTORS.
 You should carefully read and consider the risks and uncertainties below and the other
information contained in this Report. The risks and uncertainties described below are not the only
ones we may face. The following risks, together with additional risks and uncertainties not
currently known to us or that we currently deem immaterial could impair our financial condition and
results of operation.
 Risks Relating to Our Business
 We have a limited operating history and our business may not be as successful as we
anticipate.
 
    
    effectively manage our business and operations;
    
    recruit and retain key personnel;
    
    successfully maintain our low-cost structure as we expand the
scale of our business;
    
    manage rapid growth in personnel and operations;
    
    develop new products that complement our existing business;
and
    
    successfully address the other risks described throughout
this Report.
  Our business is not diversified.
 Our financial performance is significantly dependent on corn and coal prices and generally we
cannot pass on increases in input prices to our customers.
  16




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##### Table of Contents



Item 1A. Risks Relating to Our Business  We engage in hedging transaction which involve risks
that can harm our business
   The spread between ethanol and corn prices can vary significantly and we do not expect the
spread to remain at recent high levels.
 Our revenues will be greatly affected by the price at which we can sell our ethanol and
distillers grains.
  We sell all of the ethanol we produce to Renewable Products Marketing Group (RPMG) in
accordance with an ethanol marketing agreement.
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We
currently buy all of our coal from General Industries,
Inc., d/b/a Center Coal Company
(Center Coal).
 We engage in hedging transactions, which involve risks that can harm our business.
    Operational difficulties at our Plant could negatively impact our sales volumes and could
cause us to incur substantial losses.
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Disruptions to infrastructure, or in the supply of fuel, coal or water, could materially and
adversely affect our business.
   Competition for qualified personnel in the ethanol industry is intense and we may not be able
to hire and retain qualified personnel to operate our Plant.
 Technological advances could significantly decrease the cost of producing ethanol or result in
the production of higher-quality ethanol, and if we are unable to adopt or incorporate
technological advances into our operations, our Plant could become uncompetitive or obsolete.
  19




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Risks Related to Conflicts of Interest
 Our governors have other business and management responsibilities, which may cause conflicts
of interest, including working with other ethanol plants and in the allocation of their time and
services to our project.
  We may have conflicting interests with GreenWay Consulting, LLC (GreenWay) that could cause
GreenWay to put its interests ahead of ours.
 Risks Related to Taxes
 Income Taxes .
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##### Table of Contents



North Dakota Fuel Tax Incentive Program .
   Risks Related to the Units
 No public trading market exists for our units and we do not anticipate the creation of such a
market, which means that it will be difficult for unit holders to liquidate their investment . .
 We have placed significant restrictions on transferability of the units, limiting a unit
holders ability to withdraw from Red Trail.
 
    
    Transfers by gift to the members descendants;
    
    Transfers upon the death of a member;
    
    Certain other transfers provided that for the applicable tax year, the transfers in the
aggregate do not exceed 2% of the total outstanding units; and
    
    Transfers that comply with the qualified matching service requirements, if any is established.
 There is no assurance that a unit holder will receive cash distributions, which could result
in a unit holder receiving little or no return on his or her investment .
 21




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##### Table of Contents



Our units were not valued based on any independent objective criteria, but rather by the
amount of funding required to build our Plant.
 Our governors and managers will not be liable for any breach of their fiduciary duty, except
as provided under North Dakota law.
 Risks Related to Ethanol Industry
 Overcapacity within the ethanol industry could cause an oversupply of ethanol and a decline in
ethanol prices.
 We expect to operate in a competitive industry and compete with larger, better-financed
entities, which could impact our ability to operate profitably.
 Competition from the advancement of alternative fuels may lessen the demand for ethanol.
 22




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Certain countries can export ethanol to the United States duty-free, which may undermine the
ethanol production industry in the United States .
  Consumer resistance to the use of ethanol based on the belief that ethanol is expensive, adds
to air pollution, harms engines and takes more energy to produce that it contributes may affect the
demand for ethanol.
 The expansion of domestic ethanol production in combination with state bans on MTBE and/or
state renewable fuels standards may place strains on related infrastructure such that our ethanol
cannot be marketed and shipped to blending terminals that would otherwise provide us the best cost
advantages.
 
    
    additional rail capacity to meet the expanding volume of
ethanol shipments;
    
    additional storage facilities for ethanol;
    
    increases in truck fleets capable of transporting ethanol
within localized markets;
    
    expansion of and/or improvements to refining and blending
facilities to handle ethanol instead of MTBE; and
    
    growth in the fleet of flexible fuel vehicles capable of
using E85 fuel.
  23




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Risks Related to Regulation and Governmental Action
 A change in government policies favorable to ethanol may cause demand for ethanol to decline.
 Loss of or ineligibility for favorable tax benefits for ethanol production could hinder our
ability to operate at a profit and reduce the value of your investment in us.
  Changes in environmental regulations or violations of the regulations could be expensive and
reduce our profitability.
 
 ITEM 2. PROPERTIES.
  
 ITEM 3. LEGAL PROCEEDINGS.
  24




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##### Table of Contents



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  
 PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED UNIT HOLDER MATTERS AND ISSUER PURCHASE OF
EQUITY SECURITIES.
 Market Information
    Unit Holders
  Distributions
 Item 7  Managements Discussion and Analysis
of Financial Condition and Results of Operations  Indebtedness.
 25




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ITEM 6. SELECTED FINANCIAL DATA.
  From InceptionJuly 16, 2003 toStatement of
    
    
    
    
    
    
    
    
    
    
    
    
    
    December 31,Operations Data
    
    2006
    
    2005
    
    2004
    
    2006 (Unaudited)Revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating Expenses
    
    
    3,747,730
    
    
    
    2,087,808
    
    
    
    433,345
    
    
    
    6,689,020Operating Loss
    
    
    (3,747,730
    )
    
    
    (2,087,808
    )
    
    
    (433,345
    )
    
    
    (6,689,020
    )Operating Income
    
    
    1,243,667
    
    
    
    360,204
    
    
    
    147,004
    
    
    
    1,750,875Net Income (Loss )
    
    $
    (2,504,063
    )
    
    $
    (1,727,604
    )
    
    $
    (286,341
    )
    
    $
    (4,938,145
    )Weighted Average
Units Outstanding
    
    
    39,625,843
    
    
    
    24,393,980
    
    
    
    3,591,180
    
    
    
    13,920,740Net Income (Loss)
Per Unit
    
    $
    (0.06
    )
    
    $
    (0.07
    )
    
    $
    (0.08
    )
    
    $
    (0.35
    )
 Balance Sheet Data
    
    2006
    
    
    2005Cash & Equivalents
    
    $
    421,722
    
    
    $
    19,043,811Total Current Assets
    
    
    4,761,974
    
    
    
    19,069,156Total Property & Equipment
    
    
    84,039,740
    
    
    
    16,948,185Total Assets
    
    $
    89,864,288
    
    
    $
    36,972,579Total Current Liabilities
    
    
    9,781,240
    
    
    
    8,258,885Other Liabilities
    
    
    275,000
    
    
    
    Long Term Debt
    
    
    46,878,960
    
    
    
    Members Equity
    
    
    32,929,088
    
    
    
    28,713,694Book Value
Per Weighted Average Unit
    
    $
    .83
    
    
    $
    1.18
 
 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
 Item 1A  Risk Factors
 Overview
  26




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Results of Operations
  27




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Comparison
of Fiscal Years Ended December 31, 2006, 2005 and 2004
  Fiscal Year Ended
    
    Fiscal Year Ended
    
    Fiscal Year EndedDecember 31, 2006
    

December
31, 2005
    
    December 31, 2004Amount
    
    %
    
    Amount
    
    %
    
    Amount
    
    %Revenues
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Costs of Sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gross Margin
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating Expenses
    
    
    3,747,730
    
    
    
    
    
    
    
    2,087,808
    
    
    
    
    
    
    
    433,345Operating Loss
    
    
    (3,747,730
    )
    
    
    
    
    
    
    (2,087,808
    )
    
    
    
    
    
    
    (433,345
    )Grant Income
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    
    
    
    
    
    100,000Unrealized loss on
corn derivatives
    
    
    851,290
    
    
    
    
    
    
    
    (277,592
    )
    
    
    
    
    
    
    Gain from
non-designated
hedging derivatives
    
    
    210,100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest Income
    
    
    182,277
    
    
    
    
    
    
    
    588,156
    
    
    
    
    
    
    
    47,004Net Loss
    
    $
    (2,504,063
    )
    
    
    
    
    
    $
    (1,727,604
    )
    
    
    
    
    
    $
    (286,341
    )
 Revenues
    Cost of Goods Sold
   28




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Operating Expenses
    Operating Income
  29




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Other Income and Expense
     Plant Operations
 Operations of Ethanol Plant
   Critical Accounting Estimates
  30




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Derivative Instruments
 Accounting for Derivative Instruments and Hedging Activities
  Inventory
  31




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Liquidity and Capital Resources
 Comparison of Fiscal Years ended December 31, 2006 and 2005
    FromInception JulyYear Ended
    
    Year Ended
    
    Year Ended
    
    16, 2003 toDecember 31,
    
    December 31,
    
    December 31,
    
    December 31,2006
    
    2005
    
    2004
    
    2006Statement of Cash Flow
    
    (Audited)
    
    (Audited)
    
    (Audited)
    
    (Audited)Cash Flows from Operating Activities
    
    
    (7,662,308
    )
    
    
    (57,980
    )
    
    
    (288,913
    )
    
    
    (8,215,209
    )Cash Flows from Investing Activities
    
    
    (66,903,860
    )
    
    
    (10,558,969
    )
    
    
    (313,821
    )
    
    
    (77,979,890
    )Cash Flows from Financing Activities
    
    
    55,944,079
    
    
    
    13,811,977
    
    
    
    15,642,024
    
    
    
    86,616,821
 Cash Flow From Operations
  32




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Cash Flow From Investing Activities
   Cash Flow From Financing Activities
  Indebtedness
 Short-Term Debt Sources
  Long-Term Debt Sources
       33




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
    
    Providing the bank with current and accurate financial statements;
    
    Maintaining certain financial ratios, minimum net worth, and working capital;
    
    Maintaining adequate insurance;
    
    Make, or allow to be made, any significant change in our business or tax structure; and
    
    Limiting our ability to make distributions to members.
  
    
    declaring all the debt owed to the bank immediately due and payable; and
    
    taking possession of all of our assets, including any contract rights.
  Interest Rate Swap Agreement
  Letters of Credit
  Subordinated Debt
  34




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Contractual Obligations and Commercial Commitments
  Contractual
    
    
    
    
    
    Less than
    
    
    
    
    
    
    
    
    
    More thanObligations
    
    Total
    
    1 Year
    
    1-3 Years
    
    3-5 Years
    
    5 YearsLong Term Debt
Obligations
    
    $
    89,980,759
    
    
    $
    6,360,699
    
    
    $
    23,858,980
    
    
    $
    59,761,080
    
    
    
    Capital Leases
    
    $
    236,667
    
    
    $
    61,701
    
    
    $
    173,050
    
    
    $
    1,916
    
    
    
    Operating Lease
Obligations
    
    $
    148,500
    
    
    $
    27,000
    
    
    $
    81,000
    
    
    $
    40,500
    
    
    
    Purchase
Obligations 
Fagen(1)
    
    $
    77,000,000
    
    
    $
    70,029,516
    
    
    
    
    
    
    
    
    
    
    
    Coal
    
    $
    28,728,000
    
    
    $
    2,394,000
    
    
    $
    7,182,000
    
    
    $
    7,182,000
    
    
    $
    11,970,000Water
    
    $
    6,625,100
    
    
    $
    662,600
    
    
    $
    1,987,500
    
    
    $
    1,987,500
    
    
    $
    1,987,500
 
 (1)
    
    Related to our contracts with Fagen, capital leases, operating leases, purchase commitments for
coal and water and our debt obligations. As of December 31, 2006, we have already paid
approximately $70,029,516 to Fagen. Grants
    Fuel Tax Incentive Program
  35




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##### Table of Contents



1.
    
    Corn Price:a.
    
    For every cent that the average quarterly price per bushel of corn exceeds $1.80, the
state shall add to the amounts payable under the program $.001 multiplied by the number of
gallons of ethanol produced by the facility during the quarter.b.
    
    If the average quarterly price per bushel of corn is exactly $1.80, the state shall not
add anything to the amount payable under the program.c.
    
    For every cent that the average quarterly price per bushel of corn is below $1.80, the
state shall subtract from the amounts payable under the program $.001 multiplied by the
number of gallons of ethanol produced by the facility during the quarter.2.
    
    Ethanol Price:a.
    
    For every cent that the average quarterly rack price per gallon of ethanol is above
$1.30, the state shall subtract from the amounts payable under the program $.002 multiplied
by the number of gallons of ethanol produced by the facility during the quarter.b.
    
    If the average quarterly price per gallon of ethanol is exactly $1.30, the state shall
not add anything to the amount payable under the program.c.
    
    For every cent that the average quarterly rack price per gallon of ethanol is below
$1.30, the state shall add to the amounts payable under the program $.002 multiplied by the
number of gallons of ethanol produced by the facility during the quarter.
  Tax Credit for Investors
   Off-Balance Sheet Arrangements
  
 ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
  36




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Accounting for
Derivative Instruments and Hedging Activities
 Interest Rate Risk
   Commodity Price Risk
     37




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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
  
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES.
  
 ITEM 9A. CONTROLS AND PROCEDURES.
   
 ITEM 9B. OTHER INFORMATION.
  38




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PART III
  39




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PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
  (1) Financial Statements
  (2) Financial Statement Schedules
  (3) Exhibits
 3.1
    
    Articles of Organization, as filed with the North Dakota Secretary
of State on July 16, 2003. Filed as Exhibit 3.1 to the
registrants registration statement on Form 10-12G (000-52033) and
incorporated by reference herein.3.2
    
    Operating Agreement of Red Trail Energy, LLC. Filed herewith.4.1
    
    Membership Unit Certificate Specimen. Filed as Exhibit 4.1 to the
registrants registration statement on Form 10-12G (000-52033) and
incorporated by reference herein.4.2
    
    Member Control Agreement of Red Trail Energy, LLC. Filed herewith.10.1
    
    The Burlington Northern and Santa Fe Railway Company Lease of Land
for Construction/ Rehabilitation of Track made as of May 12, 2003
by and between The Burlington Northern and Santa Fe Railway
Company and Red Trail Energy, LLC. Filed as Exhibit 10.1 to the
registrants registration statement on Form 10-12G (000-52033) and
incorporated by reference herein.10.2
    
    Management Agreement made and entered into as of December 17, 2003
by and between Red Trail Energy, LLC, and GreenWay Consulting,
LLC. Filed as Exhibit 10.2 to the registrants registration
statement on Form 10-12G (000-52033) and incorporated by reference
herein.10.3
    
    Development Services Agreement entered into as of December 17,
2003 by and between Red Trail Energy, LLC, and GreenWay
Consulting, LLC. Filed as Exhibit 10.3 to the registrants
registration statement on Form 10-12G (000-52033) and incorporated
by reference herein.10.4
    
    The Burlington Northern and Santa Fe Railway Company Real Estate
Purchase and Sale Agreement with Red Trail Energy, LLC, dated
January 14, 2004. Filed as Exhibit 10.4 to the registrants
registration statement on Form 10-12G (000-52033) and incorporated
by reference herein.10.5
    
    Distillers Grain Marketing Agreement entered into effective as of
March 1, 2004 by Red Trail Energy, LLC, and Commodity Specialist
Company. Filed as Exhibit 10.5 to the registrants registration
statement on Form 10-12G (000-52033) and incorporated by reference
herein.10.6
    
    Contract for Purchase of Coal made and entered into the
9th day of March, 2004 by and between Red Trail Energy,
LLC, and General Industries, Inc., d/b/a Center Coal Company.
Filed as Exhibit 10.6 to the registrants registration statement
on Form 10-12G (000-52033) and incorporated by reference herein.10.7
    
    Grain Origination Contract effective April 1, 2004 between Red
Trail Energy, LLC, and New Vision Coop. Filed as Exhibit 10.7 to
the registrants registration statement on Form 10-12G (000-52033)
and incorporated by reference herein.10.8
    
    Warranty Deed made as of January 13, 2005 between Victor Tormaschy
and Lucille Tormaschy, Husband and Wife, as Grantors, and Red
Trail Energy, LLC, as Grantee. Filed as Exhibit 10.8 to the
registrants registration statement on Form 10-12G (000-52033) and
incorporated by reference herein.
 40




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##### Table of Contents



10.9
    
    Warranty Deed made as of July 11, 2005 between Neal C. Messer and
Bonnie M. Messer, Husband and Wife, as Grantors, and Red Trail
Energy, LLC, as Grantee. Filed as Exhibit 10.9 to the
registrants registration statement on Form 10-12G (000-52033) and
incorporated by reference herein.10.10
    
    Agreement for Electric Service made the 18th day of
August, 2005, by and between West Plains Electric Cooperative,
Inc. and Red Trail Energy, LLC. Filed as Exhibit 10.10 to the
registrants registration statement on Form 10-12G (000-52033) and
incorporated by reference herein.10.11
    
    Ethanol Fuel Marketing agreement entered into the 18th
day of August, 2005, by and between Renewable Products Marketing
Group, L.L.C. and Red Trail Energy, LLC. Filed as Exhibit 10.11
to the registrants registration statement on Form 10-12G
(000-52033) and incorporated by reference herein.10.12+
    
    Lump Sum Design-Build Agreement between Red Trail Energy, LLC, and
Fagen, Inc. dated August 29, 2005. Filed as Exhibit 10.12 to the
registrants registration statement on Form 10-12G/A-3 (000-52033)
and incorporated by reference herein.10.13
    
    Railroad Construction, Design and Repair Contract made as of
November 7, 2005, by and between R & R Contracting, Inc. and Red
Trail Energy, LLC. Filed as Exhibit 10.13 to the registrants
registration statement on Form 10-12G (000-52033) and incorporated
by reference herein.10.14
    
    Construction Loan Agreement dated as of the 16th day of
December by and between Red Trail Energy, LLC, and First National
Bank of Omaha. Filed as Exhibit 10.14 to the registrants
registration statement on Form 10-12G (000-52033) and incorporated
by reference herein.10.15
    
    Construction Note for $55,211,740.00 dated December 16, 2005,
between Red Trail Energy, LLC, as Borrower, and First National
Bank of Omaha, as Bank. Filed as Exhibit 10.15 to the
registrants registration statement on Form 10-12G (000-52033) and
incorporated by reference herein.10.16
    
    Revolving Promissory Note for $3,500,000.00, dated December 16,
2005, between Red Trail Energy, LLC, as Borrower, and First
National Bank of Omaha as Bank. Filed as Exhibit 10.16 to the
registrants registration statement on Form 10-12G (000-52033) and
incorporated by reference herein.10.17
    
    Promissory Note and Continuing Letter of Credit Agreement to First
National Bank from Red Trail Energy, LLC, signed December 16,
2005. Filed as Exhibit 10.17 to the registrants registration
statement on Form 10-12G (000-52033) and incorporated by reference
herein.10.18
    
    International Swap Dealers Association, Inc. Master Agreement
dated as of December 16, 2005, signed by First National Bank of
Omaha and Red Trial Energy, LLC. Filed as Exhibit 10.18 to the
registrants registration statement on Form 10-12G (000-52033) and
incorporated by reference herein.10.19
    
    Security Agreement and Deposit Account Control Agreement made
December 16, 2005, by and among First National Bank of Omaha, Red
Trail Energy, LLC, and Bank of North Dakota. Filed as Exhibit
10.19 to the registrants registration statement on Form 10-12G
(000-52033) and incorporated by reference herein.10.20
    
    Security Agreement given as of December 16, 2005, by Red Trail
Energy, LLC, to First National Bank of Omaha. Filed as Exhibit
10.20 to the registrants registration statement on Form 10-12G
(000-52033) and incorporated by reference herein.10.21
    
    Control Agreement Regarding Security Interest in Investment
Property, made as of December 16, 2005, by and between First
National Bank of Omaha, Red Trail Energy, LLC, and First National
Capital Markets, Inc. Filed as Exhibit 10.21 to the registrants
registration statement on Form 10-12G (000-52033) and incorporated
by reference herein.10.22
    
    Loan Agreement between GreenWay Consulting, LLC, and Red Trail
Energy, LLC, dated February 26, 2006. Filed as Exhibit 10.22 to
the registrants registration statement on Form 10-12G (000-52033)
and incorporated by reference herein.10.23
    
    Promissory Note for $1,525,000.00, dated February 28, 2006, given
by Red Trail Energy, LLC, to GreenWay Consulting, LLC. Filed as
Exhibit 10.23 to the registrants registration statement on Form
10-12G (000-52033) and incorporated by reference herein.10.24
    
    Loan Agreement between ICM Inc. and Red Trail Energy, LLC, dated
February 28, 2006. Filed as Exhibit 10.24 to the registrants
registration statement on Form 10-12G (000-52033) and incorporated
by reference herein.
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##### Table of Contents



10.25
    
    Promissory Note for $3,000,000.00, dated February 28, 2006, given
by Red Trail Energy, LLC, to ICM Inc. Filed as Exhibit 10.25 to
the registrants registration statement on Form 10-12G (000-52033)
and incorporated by reference herein.10.26
    
    Loan Agreement between Fagen, Inc. and Red Trail Energy, LLC,
dated February 28, 2006. Filed as Exhibit 10.26 to the
registrants registration statement on Form 10-12G (000-52033) and
incorporated by reference herein.10.27
    
    Promissory Note for $1,000,000.00, dated February 28, 2006, given
by Red Trail Energy, LLC, to Fagen, Inc. Filed as Exhibit 10.27
to the registrants registration statement on Form 10-12G
(000-52033) and incorporated by reference herein.10.28
    
    Southwest Pipeline Project Raw Water Service Contract, executed by
Red Trail Energy, LLC, on March 8, 2006, by the Secretary of the
North Dakota State Water Commission on March 31, 2006, and by the
Chairman of the Southwest Water Authority on April 2, 2006. Filed
as Exhibit 10.28 to the registrants registration statement on
Form 10-12G (000-52033) and incorporated by reference herein.10.29
    
    Contract dated April 26, 2006, by and between the North Dakota
Industrial Commission and Red Trail Energy, LLC. Filed as Exhibit
10.29 to the registrants registration statement on Form
10-12G/A-2 (000-52033) and incorporated by reference herein.10.30
    
    Subordination Agreement, dated May 16, 2006, among the State of
North Dakota, by and through its Industrial Commission, First
National Bank and Red Trail Energy, LLC. Filed as Exhibit 10.30
to the registrants registration statement on Form 10-12G/A-2
(000-52033) and incorporated by reference herein.10.31
    
    Firm Gas Service Extension Agreement, dated June 7, 2006, by and
between Montana-Dakota Utilities Co. and Red Trail Energy, LLC.
Filed as Exhibit 10.31 to the registrants registration statement
on Form 10-12G/A-2 (000-52033) and incorporated by reference
herein.10.32
    
    First Amendment to Construction Loan Agreement dated August 16,
2006 by and between Red Trail Energy, LLC and First National Bank
of Omaha. Filed herewith.10.33
    
    Revolving Promissory Note for $3,500,000, dated August 16, 2006
given by First National Bank of Omaha to Red Trail Energy, LLC.
Filed herewith.10.34
    
    Security Agreement and Deposit Account Control Agreement effective
August 16, 2006 by and among First National Bank of Omaha and Red
Trail Energy, LLC. Filed herewith.10.35
    
    Equity Grant Agreement dated September 8, 2006 by and between Red
Trail Energy, LLC and Mickey Miller. Filed herewith.10.36
    
    Option to Purchase 200,000 Class A Membership Units of Red Trail
Energy, LLC by Red Trail Energy, LLC from North Dakota Development
Fund and Stark County dated December 11, 2006. Filed herewith.10.37
    
    Audit Committee Charter adopted
April 9, 2007. Filed herewith.10.38
    
    Senior Financial Officer Code of
Conduct adopted March 28, 2007. Filed herewith.31.1
    
    Certification by Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002 (Rules 13a-14 and 15d-14 of the
Securities Exchange Act of 1934).31.2
    
    Certification by Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002 (Rules 13a-14 and 15d-14 of the
Securities Exchange Act of 1934).32.1
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
    
  42




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##### Table of Contents



SIGNATURES
  Date: April 17, 2007
    
    /s/ Mick J. Miller
Mick J. MillerPresident and Chief Financial Officer(Principal Executive Officer)
 Date: April 17, 2007
    
    /s/ Bonnie
Eckelberg
Bonnie G. EckelbergChief Financial Officer(Principal Financial and Accounting Officer)
 Date: April 17, 2007Ambrose R. Hoff, Chairman of the Board
 Date: April 17, 2007
    
    /s/ William A. PriceWilliam A. Price, Vice President and
Governor
 Date: April 17, 2007
    
    /s/ William N.
DuToit
William N. DuToit, Treasurer and
Governor
 Date: April 17, 2007
    
    /s/ Ron
Aberle
Ron Aberle, Secretary and Governor
 Date: April 17, 2007
    
    /s/
Mike AppertMike Appert, Governor
 Date: April 17, 2007
    
    /s/ Jody
Hoff
Jody Hoff, Governor
 Date: April 17, 2007    
    /s/ Grant
Hoovestol
Grant Hoovestol, Governor
 Date: April 17, 2007Troy Jangula, GovernorDate: April 17, 2007Tim Gross, GovernorDate: April 17, 2007    
    /s/ William Cornatzer, MD
William Cornatzer, GovernorDate: April 17, 2007    
    Kenny Meier, GovernorDate: April 17, 2007
    
    /s/ Marlyn RichterMarlyn Richter, GovernorDate: April 17, 2007    
    /s/ Fred Braun
Fred Braun, GovernorDate: April 17, 2007    
    /s/ Don Streifel
Don Streifel, GovernorDate: April 17, 2007    
    /s/ Duane Zent
Duane Zent, Governor
 43




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##### Table of Contents



Red Trail Energy, LLC








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##### Table of Contents



Red Trail Energy, LLC
  PageReport of Independent Registered Public Accounting Firm
    
    
    F-2Financial StatementsBalance Sheet
    
    
    F-3Statement of Operations
    
    
    F-4Statement of Changes in Members Equity
    
    
    F-5Statement in Cash Flows
    
    
    F-6Notes to Financial Statements
    
    
    F-8 - 17
 F-1




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##### Table of Contents



/s/
Boulay, Heutmaker, Zibell & Co. P.L.L.P.Certified Public Accountants 
 F-2




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##### Table of Contents



Red Trail Energy, LLC
 
  December 31, 2006
    
    
    December 31, 2005ASSETSCurrent AssetsCash and equivalents
    
    $
    421,722
    
    
    $
    19,043,811Derivative instruments
    
    
    320,341
    
    
    
    Prepaid expenses
    
    
    63,782
    
    
    
    25,345Inventory
    
    
    3,956,129
    
    
    
    Total current assets
    
    
    4,761,974
    
    
    
    19,069,156Property and EquipmentLand
    
    
    300,602
    
    
    
    300,602Office equipment
    
    
    151,851
    
    
    
    Building
    
    
    313,295
    
    
    
    Construction in progress
    
    
    83,290,008
    
    
    
    16,647,58384,055,756
    
    
    
    16,948,185Less accumulated depreciation
    
    
    16,016
    
    
    
    Total property and equipment
    
    
    84,039,740
    
    
    
    16,948,185Other AssetsDebt issuance costs, net of amortization
    
    
    982,574
    
    
    
    955,238Deposits
    
    
    80,000
    
    
    
    Total other assets
    
    
    1,062,574
    
    
    
    955,238Total Assets
    
    $
    89,864,288
    
    
    $
    36,972,579LIABILITIES AND MEMBERS EQUITYCurrent LiabilitiesCurrent maturities of long term debt
    
    $
    2,909,228
    
    
    $
    Accounts payable
    
    
    4,437,601
    
    
    
    7,971,436Accrued expenses
    
    
    2,323,476
    
    
    
    9,497Market value  interest rate swap
    
    
    110,935
    
    
    
    277,952Total current liabilities
    
    
    9,781,240
    
    
    
    8,258,885Other LiabilitiesContracts payable
    
    
    275,000
    
    
    
    Long-term Debt
    
    
    46,878,960
    
    
    
    Members Equity
    
    
    32,929,088
    
    
    
    28,713,694Total Liabilities and Members Equity
    
    $
    89,864,288
    
    
    $
    36,972,579
  F-3




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##### Table of Contents



Red Trail Energy, LLC
 
  From InceptionYear ended
    
    
    Year ended
    
    
    Year ended
    
    
    July 16, 2003 toDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2004
    
    
    2006Revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating Expenses
    
    
    3,747,730
    
    
    
    2,087,808
    
    
    
    433,345
    
    
    
    6,689,020Operating Loss
    
    
    (3,747,730
    )
    
    
    (2,087,808
    )
    
    
    (433,345
    )
    
    
    (6,689,020
    )Other Income (Expense)Grant income
    
    
    
    
    
    
    50,000
    
    
    
    100,000
    
    
    
    150,000Gain/(loss) from
non-designated hedging
    
    
    851,290
    
    
    
    (277,952
    )
    
    
    
    
    
    
    573,338Unrealized gain on hedging
    
    
    210,100
    
    
    
    
    
    
    
    
    
    
    
    210,100Interest income
    
    
    182,277
    
    
    
    588,156
    
    
    
    47,004
    
    
    
    817,437Total other income, net
    
    
    1,243,667
    
    
    
    360,204
    
    
    
    147,004
    
    
    
    1,750,875Net Loss
    
    $
    (2,504,063
    )
    
    $
    (1,727,604
    )
    
    $
    (286,341
    )
    
    $
    (4,938,145
    )Weighted Average Units
Outstanding
    
    
    39,625,843
    
    
    
    24,393,980
    
    
    
    3,591,180
    
    
    
    13,920,740Net Loss Per Unit, basic and
fully diluted
    
    $
    (0.06
    )
    
    $
    (0.07
    )
    
    $
    (0.08
    )
    
    
    (0.35
    )
  F-4




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##### Table of Contents



Red Trail Energy, LLC
 
  Additional
    
    
    
    
    
    
    
    
    
    
    
    TotalMember
    
    
    Member
    
    
    Paid in
    
    
    Units
    
    
    Unearned
    
    
    Accumulated
    
    
    MembersUnits

    
    
Contributions

    
    
    Capital
    
    
Subscribed

    
    
Compensation

    
    
Deficit

    
    
    EquityBalance  Inception, July 16,
2003
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Capital contributions -
3,600,000 units, $0.33 per
unit
September 2003 - December
2003, adjusted for 3 for 1
split in January 2004
    
    
    3,600,000
    
    
    
    1,200,000
    
    
    
    
    
    
    
    (33,550
    )
    
    
    
    
    
    
    
    
    
    
    1,166,450Unit options issued - 62,500
units, $0.10 per unit,
September 2003
    
    
    
    
    
    
    
    
    
    
    56,825
    
    
    
    
    
    
    
    (56,825
    )Amortization of unearned
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,313
    
    
    
    
    
    
    
    20,313Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (420,137
    )
    
    
    (420,137
    )Balance  December 31, 2003
    
    
    3,600,000
    
    
    
    1,200,000
    
    
    
    56,825
    
    
    
    (33,550
    )
    
    
    (36,512
    )
    
    
    (420,137
    )
    
    
    766,626Collection of subscribed units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,550
    
    
    
    
    
    
    
    
    
    
    
    33,550Amortization of unearned
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,512
    
    
    
    
    
    
    
    36,512Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (286,341
    )
    
    
    (286,341
    )Balance  December 31, 2004
    
    
    3,600,000
    
    
    
    1,200,000
    
    
    
    56,825
    
    
    
    
    
    
    
    
    
    
    
    (706,478
    )
    
    
    550,347Capital contributions -
25,983,452 units, $1.00 per
unit, April 6
    
    
    25,983,452
    
    
    
    25,983,452
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,983,452Capital contributions -
1,389,303 units, $1.00 per
unit, April 6 - June 30
    
    
    1,389,303
    
    
    
    1,389,303
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,389,303Capital contributions
2,080,555 units, $1.00 per
unit, July 1 - Sept 30
    
    
    2,080,555
    
    
    
    2,080,555
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,080,555Capital contributions -
544,956 units, $1.00 per
unit, Oct 1 - Dec 31
    
    
    544,956
    
    
    
    544,956
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    544,956Costs related to capital
contributions
    
    
    
    
    
    
    (107,315
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (107,315
    )Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,727,604
    )
    
    
    (1,727,604
    )Balance  December 31, 2005
    
    
    33,598,266
    
    
    
    31,090,951
    
    
    
    56,825
    
    
    
    
    
    
    
    
    
    
    
    (2,434,082
    )
    
    
    28,713,694Capital contributions -
6,713,207 units, $1.00 per
unit, Jan 1 - Mar 31
    
    
    6,713,207
    
    
    
    6,713,207
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,713,207Units issued under option
exercised - 62,500 units,
$0.10 per unit
    
    
    62,500
    
    
    
    6,250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,250Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,504,063
    )
    
    
    (2,054,063
    )Balance  December 31, 2006
    
    
    40,373,973
    
    
    
    37,810,408
    
    
    $
    56,825
    
    
    $
    
    
    
    $
    
    
    
    $
    (4,938,145
    )
    
    $
    32,929,088
  F-5




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##### Table of Contents



RED TRAIL ENERGY, LLC
 
  From InceptionYear Ended
    
    
    Year Ended
    
    
    Year Ended
    
    
    July 16, 2003December 31,
    
    
    December 31,
    
    
    December 31,
    
    
    to December 312006
    
    
    2005
    
    
    2004
    
    
    2006Cash Flows from Operating ActivitiesNet income (loss)
    
    $
    (2,504,063
    )
    
    $
    (1,727,604
    )
    
    
    (286,341
    )
    
    $
    (4,938,145
    )Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:Depreciation
    
    
    16,016
    
    
    
    
    
    
    
    
    
    
    
    16,016Amortization of unearned compensation
    
    
    
    
    
    
    
    
    
    
    36,512
    
    
    
    56,825Unrealized gain/loss on derivative instrument
    
    
    (210,100
    )
    
    
    
    
    
    
    
    
    
    
    (210,100
    )Gain from non-designated hedging derivatives
    
    
    (167,017
    )
    
    
    277,952
    
    
    
    
    
    
    
    110,935Changes in assets and liabilitiesInventory
    
    
    (3,956,129
    )
    
    
    
    
    
    
    
    
    
    
    (3,956,129
    )Derivative instrument
    
    
    (110,241
    )
    
    
    
    
    
    
    
    
    
    
    (110,241
    )Prepaid expenses
    
    
    (38,437
    )
    
    
    (25,345
    )
    
    
    
    
    
    
    (63,782
    )Other assets  deposits
    
    
    (80,000
    )
    
    
    
    
    
    
    
    
    
    
    (80,000
    )Accounts payable
    
    
    (1,423,115
    )
    
    
    1,409,068
    
    
    
    (37,715
    )
    
    
    139,137Other liabilities
    
    
    275,000
    
    
    
    
    
    
    
    
    
    
    
    275,000Accrued expenses
    
    
    535,778
    
    
    
    7,949
    
    
    
    (1,369
    )
    
    
    545,275Net cash used in operating activities
    
    
    (7,662,308
    )
    
    
    (57,980
    )
    
    
    (288,913
    )
    
    
    (8,215,209
    )Cash Flows from Investing ActivitiesCapital expenditures
    
    
    (66,903,860
    )
    
    
    (10,558,969
    )
    
    
    (313,821
    )
    
    
    (77,979,890
    )Net cash used in investing activities
    
    
    (66,903,860
    )
    
    
    (10,558,969
    )
    
    
    (313,821
    )
    
    
    (77,979,890
    )Cash Flows from Financing ActivitiesPayments for deferred offering costs
    
    
    
    
    
    
    (3,353
    )
    
    
    (103,962
    )
    
    
    (107,315
    )Payments for debt issuance costs
    
    
    (563,566
    )
    
    
    (470,500
    )
    
    
    
    
    
    
    (981,775
    )Proceeds from long-term debt
    
    
    49,788,188
    
    
    
    
    
    
    
    
    
    
    
    49,788,188Proceeds for stock subscriptions held in escrow
    
    
    
    
    
    
    10,271,016
    
    
    
    15,712,436
    
    
    
    25,983,452Member contributions
    
    
    6,719,457
    
    
    
    4,014,814
    
    
    
    33,550
    
    
    
    11,934,271Net cash provided by financing activities
    
    
    55,944,079
    
    
    
    13,811,977
    
    
    
    15,642,024
    
    
    
    86,616,821Net Increase (Decrease) in Cash and Equivalents
    
    
    (18,622,089
    )
    
    
    3,195,028
    
    
    
    15,039,290
    
    
    
    421,722Cash and Equivalents  Beginning of Period
    
    
    19,043,811
    
    
    
    15,848,783
    
    
    
    809,493
    
    
    
    Cash and Equivalents  End of Period
    
    $
    421,722
    
    
    $
    19,043,811
    
    
    $
    15,848,783
    
    
    $
    421,722Supplemental Disclosure of Cash Flow InformationInterest
paid and capitalized in construction in process
    
    $
    1,474,638
    
    
    $
    
    
    
    $
    
    
    
    $
    1,474,638SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING
AND FINANCING ACTIVITIESDebt issuance costs included in accounts payable
    
    $
    799
    
    
    $
    484,738
    
    
    $
    
    
    
    $
    799Capital expenditures included in accounts payable
    
    $
    4,297,665
    
    
    $
    5,924,446
    
    
    $
    133,670
    
    
    $
    4,297,665Capital expenditures included in accrued liabilities
    
    $
    1,778,201
    
    
    $
    
    
    
    $
    
    
    
    $
    1,778,201Amortization of deferred offering costs capitalized
in construction in process
    
    $
    52,291
    
    
    $
    
    
    
    $
    
    
    
    $
    52,291Stock subscriptions held in escrow
converted to member contributions
    
    $
    
    
    
    $
    25,983,452
    
    
    $
    
    
    
    $
    25,983,452Member unit subscriptions
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    33,550Issuance of restricted shares
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    56,825
  F-6




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##### Table of Contents



Red Trail Energy, LLC
   1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Nature of Business
  Fiscal Reporting Period
  Accounting Estimates
  Cash
   Derivative Instruments
    Inventory
  Property and Equipment
   F-7




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##### Table of Contents



Red Trail Energy, LLC
     Debt Issuance Costs
  Deferred Offering Costs
  Fair Value of Financial Instruments
  Grants
   Income Taxes
   Organizational and Start Up Costs
  Advertising
  Equity-Based Compensation
  F-8




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##### Table of Contents



Red Trail Energy, LLC
      Earnings Per Share
  Environmental Liabilities
  Recently Issued Accounting Pronouncements
  2. DERIVATIVE INSTRUMENTS
   3. PROPERTY, PLANT AND EQUIPMENT
  December
31, 2006
    
    

December
31, 2005Construction costs
    
    $
    73,715,280
    
    
    $
    15,516,973Rain infrastructure and development
    
    
    3,391,214
    
    
    
    1,026,124Water wells
    
    
    558,327
    
    
    
    4,678Other costs
    
    
    5,625,187
    
    
    
    99,808$
    83,290,008
    
    
    $
    16,647,583
  F-9




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##### Table of Contents



Red Trail Energy, LLC
   Category
    

Cost
    
    

Average
LifeLand improvements
    
    $
    7,748,577
    
    
    20 yearsBuildings
    
    
    4,846,085
    
    
    40 yearsPlant equipment
    
    
    67,882,287
    
    
    7 to 15 yearsRailroad and rail equipment
    
    
    3,391,214
    
    
    20 yearsOffice equipment
    
    
    187,293
    
    
    5 to 7 years$
    84,055,456
 4. BANK FINANCING
  December 31, 2006Construction loan agreement payable to bank, see below
    
    $
    44,060,352Subordinated notes payable, see below
    
    
    5,525,000Capital lease obligations (Note 6)
    
    
    202,836Total
    
    $
    49,788,188Less amounts due within one year
    
    
    2,909,228Total
    
    $
    46,878,960
  2007
    
    $
    2,909,2282008
    
    
    4,130,8502009
    
    
    4,460,2132010
    
    
    4,787,3982011
    
    
    5,134,932Thereafter
    
    
    28,365,567Total Long-Term Liabilities
    
    $
    49,788,188
  Construction Loan
      F-10




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##### Table of Contents



Red Trail Energy, LLC
     Revolving Line of Credit
  Interest Rate Swap Agreement
   Letters of Credit
  Subordinated Debt
  5. LEASES
   December
31, 2006
    
    
    December
31, 2005Equipment
    
    $
    216,745
    
    
    $
    Accumulated
amortization
    
    
    598
    
    
    
    Totals
    
    $
    216,147
    
    
    $
    
 F-11




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##### Table of Contents



Red Trail Energy, LLC
    Operating Leases
    
    
    Capital Leases2007
    
    $
    27,000
    
    
    $
    61,7012008
    
    
    27,000
    
    
    
    61,7012009
    
    
    27,000
    
    
    
    61,7012010
    
    
    27,000
    
    
    
    49,6482011
    
    
    13,500
    
    
    
    1,916Total minimum lease commitments
    
    $
    121,500
    
    
    $
    236,667Less amount representing interest
    
    
    
    
    
    
    33,831Present value of minimum lease
commitments included in
the preceding long-term
liabilities
    
    
    
    
    
    $
    202,836
 6. MEMBERS EQUITY
        F-12




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##### Table of Contents



Red Trail Energy, LLC
    7. EQUITY-BASED COMPENSATION
 2006 Equity-Based Incentive Plan
  8. GRANTS
     9. COMMITMENTS AND CONTINGENCIES
 Design Build Contract
  Consulting Contracts
    F-13




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##### Table of Contents



Red Trail Energy, LLC
    Utility Agreements
    Marketing Agreements
   Coal Purchase Contract
  Chemical Consignment Purchase Contracts
  Chemical
Purchase Contract
  F-14




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##### Table of Contents



Red Trail Energy, LLC
   Grain Origination Contract
  Rail Track Design
  Leases
     10. RELATED PARTY TRANSACTIONS
  December
31, 2006
    
    December
31, 2005Accounts payable
    
    $
    46,281
    
    
    $
    Accrued
liabilities
    
    
    1,525,000
    
    
    
    Corn
Purchases during 2006
    
    
    172,176
    
    
    
    
 11. INCOME TAXES
  2006
    
    
    2005Financial statement basis of assets
    
    $
    89,864,288
    
    
    $
    36,972,579Plus: organization and start-up costs
    
    
    6,195,047
    
    
    
    2,941,290Plus: book to tax depreciation
    
    
    1,191
    
    
    
    Income tax basis of assets
    
    $
    96,060,526
    
    
    $
    39,913,869Financial statement basis of liabilities
    
    
    47,153,960
    
    
    
    8,258,952Less: interest rate swap
    
    
    110,935
    
    
    
    277,952Income tax basis of liabilities
    
    $
    47,043,025
    
    
    $
    7,980,933
 F-15




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##### Table of Contents



Red Trail Energy, LLC
   12. QUARTERLY FINANCIAL DATA (UNAUDITED)
   March 2006
    
    June 2006
    
    September 2006
    
    December 2006Revenues
    
    $
    0
    
    
    $
    0
    
    
    $
    
    
    
    $
    Operating expenses
    
    
    156,235
    
    
    
    246,524
    
    
    
    406,079
    
    
    
    2,938,892Operating loss
    
    
    (156,235
    )
    
    
    (246,524
    )
    
    
    (406,079
    )
    
    
    (2,938,892
    )Other income, net
    
    
    544,731
    
    
    
    340,744
    
    
    
    (622,571
    )
    
    
    980,763Net income (loss)
    
    
    388,496
    
    
    
    94,220
    
    
    
    (1,028,650
    )
    
    
    (1,958,129
    )Weighted average units
    
    
    37,340,846
    
    
    
    40,375,973
    
    
    
    40,375,973
    
    
    
    40,375,973Net income (loss) per unit
    
    
    0.01
    
    
    
    0.00
    
    
    
    (0.03
    )
    
    
    (0.05
    )
 March 2005
    
    June 2005
    
    September 2005
    
    December 2005Revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating expenses
    
    
    109,545
    
    
    
    97,260
    
    
    
    115,016
    
    
    
    1,765,987Operating loss
    
    
    (109,545
    )
    
    
    (97,260
    )
    
    
    (115,016
    )
    
    
    (1,765,987
    )Other income, net
    
    
    113,563
    
    
    
    94,094
    
    
    
    181,921
    
    
    
    (29,374
    )Net income (loss)
    
    
    4,018
    
    
    
    (3,166
    )
    
    
    66,905
    
    
    
    (1,795,361
    )Weighted average units
outstanding
    
    
    3,600,000
    
    
    
    290,126,070
    
    
    
    31,497,630
    
    
    
    33,246,647Net income (loss) per unit
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.00
    
    
    
    (0.05
    )
  13. SUBSEQUENT EVENTS
  F-16