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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 þ
    
    Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the fiscal quarter ended March 31, 2008
 o
    
    Transition report under Section 13 or 15(d) of the Exchange Act of 1934.
 Commission file number 333-142928
 MINNERGY, LLC
  Minnesota
    
    74-3176709(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer Identification No.)8 North Front Street NW, P.O. Box 86
Eyota, Minnesota
(Address of principal executive offices)
    
    55987-1500
(Zip Code)
 (507) 545-0197
 o þ
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
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MINNERGY, LLC
 INDEX
 PART 1. FINANCIAL INFORMATION
    
    
    1Item 1. Condensed Financial Statements
    
    
    1Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    9Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    20Item 4. Controls and Procedures
    
    
    20PART II   OTHER INFORMATION
    
    
    21Item 1. Legal Proceedings
    
    
    21Item 1a. Risk Factors
    
    
    21Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    21Item 3. Defaults Upon Senior Securities
    
    
    21Item 4. Submission of Matters to a Vote of Security Holders
    
    
    21Item 5. Other Information
    
    
    21Item 6. Exhibits
    
    
    22SIGNATURES
    
    
    22Exhibit 10.1Exhibit 10.2Exhibit 10.3Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
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PART 1. FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 MINNERGY, LLC
 
 March 31,
    
    
    December 31,2008
    
    
    2007(unaudited)Assets:Current assets:Cash and cash equivalents
    
    $
    74,040
    
    
    
    148,881Grant receivable
    
    
    17,851
    
    
    
    5,692Prepaids and other
    
    
    8,843
    
    
    
    14,172Total current assets
    
    
    100,734
    
    
    
    168,745Land options
    
    
    325,000
    
    
    
    325,000Property and equipment, net
    
    
    1,350,768
    
    
    
    1,210,606Deferred offering costs
    
    
    418,975
    
    
    
    358,458Total assets
    
    $
    2,195,477
    
    
    
    2,062,809Liabilities and Members Equity:Current liabilities:Accounts payable
    
    $
    282,492
    
    
    
    122,759Accrued expenses
    
    
    2,900
    
    
    
    3,985Total current liabilities
    
    
    285,392
    
    
    
    126,744Commitments and contingenciesMembers equity:Members contributions, 4,979,920 units
outstanding
    
    
    2,214,760
    
    
    
    2,214,760Deficit accumulated during development stage
    
    
    (304,675
    )
    
    
    (278,695
    )Total members equity
    
    
    1,910,085
    
    
    
    1,936,065Total liabilities and members equity
    
    $
    2,195,477
    
    
    
    2,062,809
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MINNERGY, LLC
 
 Period fromInception(March 31,Three months ended
    
    
    2006) toMarch 31,
    
    
    March 31,2008
    
    
    2007
    
    
    2008Net sales
    
    $
    
    
    
    
    
    
    
    
    Operating expenses:Professional fees
    
    
    5,044
    
    
    
    21,503
    
    
    
    138,595General and administrative expenses
    
    
    21,925
    
    
    
    9,632
    
    
    
    231,242Total operating expenses
    
    
    26,969
    
    
    
    31,135
    
    
    
    369,837Operating loss
    
    
    (26,969
    )
    
    
    (31,135
    )
    
    
    (369,837
    )Interest income
    
    
    989
    
    
    
    10,383
    
    
    
    65,162Net loss
    
    $
    (25,980
    )
    
    
    (20,752
    )
    
    
    (304,675
    )Basic and diluted loss per unit
    
    $
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.08
    )Basic and diluted weighted average units outstanding
    
    
    4,979,920
    
    
    
    3,499,920
    
    
    
    3,978,990
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MINNERGY, LLC
 
 Period fromInception(March 31,Three months ended
    
    
    2006) toMarch 31,
    
    
    March 31,2008
    
    
    2007
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (25,980
    )
    
    
    (20,752
    )
    
    
    (304,675
    )Adjustments to reconcile net loss to net cash
used in operating activities:Depreciation expense
    
    
    184
    
    
    
    
    
    
    
    459Changes in operating assets and liabilities:Grant receivable
    
    
    (12,159
    )
    
    
    
    
    
    
    (17,851
    )Prepaid and other
    
    
    5,329
    
    
    
    5,457
    
    
    
    (8,843
    )Accounts payable
    
    
    25,783
    
    
    
    (95,711
    )
    
    
    58,852Accrued expenses
    
    
    (1,085
    )
    
    
    
    
    
    
    2,900Net cash used in operating activities
    
    
    (7,928
    )
    
    
    (111,006
    )
    
    
    (269,158
    )Cash flows from investing activities:Payments for land options
    
    
    
    
    
    
    
    
    
    
    (325,000
    )Purchase of property and equipment
    
    
    (21,561
    )
    
    
    (210,863
    )
    
    
    (1,184,390
    )Net cash used in investing activities
    
    
    (21,561
    )
    
    
    (210,863
    )
    
    
    (1,509,390
    )Cash flows from financing activities:Proceeds from sales of membership units
    
    
    
    
    
    
    
    
    
    
    2,214,760Payments of deferred offering costs
    
    
    (45,352
    )
    
    
    (27,168
    )
    
    
    (362,172
    )Net cash provided by (used in) financing activities
    
    
    (45,352
    )
    
    
    (27,168
    )
    
    
    1,852,588Net increase (decrease) in cash and cash equivalents
    
    
    (74,841
    )
    
    
    (349,037
    )
    
    
    74,040Cash and cash equivalents at beginning of period
    
    
    148,881
    
    
    
    1,012,989
    
    
    
    Cash and cash equivalents at end of period
    
    $
    74,040
    
    
    
    663,952
    
    
    
    74,040Supplemental disclosure of cash flow information:Deferred offering costs included in accounts
payable or accrued expenses
    
    $
    56,803
    
    
    
    
    
    
    
    56,803Property and equipment purchases included in
accounts payable or accrued expenses
    
    $
    166,837
    
    
    
    
    
    
    
    166,837
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MINNERGY, LLC
 
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MINNERGY, LLC
 
          5




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MINNERGY, LLC
 
   Design- build agreement
   Land contracts
    6




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MINNERGY, LLC
 
       Consulting contracts
   7




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MINNERGY, LLC
 
          8




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Forward Looking Statements
   
    
    Our ability to raise sufficient equity and close our equity offering;
    
    Our ability to obtain the debt financing necessary to construct and operate
our plant;
    
    Investors ability to pay the outstanding balances on promissory notes
after the closing of the offering;
    
    Changes in our business strategy, capital improvements or development plans;
    
    Increases in construction costs or delays or technical difficulties in
constructing or operating the plant;
    
    Changes in the environmental regulations that apply to our plant site and
operations;
    
    Changes in general economic conditions or the occurrence of certain events
causing an economic impact in the agriculture, oil or automobile
industries;
    
    Changes in the availability of and continued increase in the price of corn;
    
    Changes in the market for ethanol and distillers grains and changes in the
availability and price of natural gas;
    
    Lack of transport, storage and blending infrastructure preventing ethanol
from reaching available markets;
    
    Ethanol supply exceeding demand and corresponding ethanol price reductions;
    
    Changes and advances in ethanol production technology; and
    
    Competition from alternative fuel additives.
   9




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Overview
      Plan of Operations until Start-Up of Ethanol Plant
   
    
    June 2008- Commence equity drive
    
    Fall 2008  Negotiate and close debt financing
  10




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
    
    Winter 2008  Commence plant construction
    
    2008 to 2010  Manage plant construction
    
    2010  Plant completion and commencement of operations
  Project Financing
 Debt and Equity
    Interim Financing
    11




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Grants and Government Programs
   Site Acquisition and Development
 Site Acquisition
  Eyota
   12




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Utica
  Site Development
      13




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Rail
  Utilities
   Permitting and Regulatory Activities
      14




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Plant Construction and Start-up of Plant Operations
  Fagen Letter of Intent
     Fagen Phase I and Phase II Engineering Services Agreement
   15




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Employees
  Results of Operations for the Three Months Ended March 31, 2008
  Trends and Uncertainties Impacting the Ethanol Industry and Our Future Revenues
      16




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Trends and Uncertainties Impacting the Corn and Natural Gas Markets and Our Future Cost of Goods
Sold
    17




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Liquidity and Capital Resources
 Financial Results for our Fiscal Quarter Ended March 31, 2008
  Estimated Sources of Funds
  MaximumSources of
    
    89,000,000 UnitsFunds (1)
    
    Sold
    
    
    PercentOffering Proceeds
    
    $
    89,000,000
    
    
    
    66.92
    %Seed Capital Proceeds
    
    $
    2,239,960
    
    
    
    1.68
    %Senior Debt Financing
    
    $
    41,760,040
    
    
    
    31.40
    %Total Sources of Funds
    
    $
    133,000,000
    
    
    
    100.00
    %Sources of
    
    If 74,000,000Funds (1)
    
    Units Sold
    
    
    PercentOffering Proceeds
    
    $
    74,000,000
    
    
    
    55.64
    %Seed Capital Proceeds
    
    $
    2,239,960
    
    
    
    1.68
    %Senior Debt Financing
    
    $
    56,760,040
    
    
    
    42.68
    %Total Sources of Funds
    
    $
    133,000,000
    
    
    
    100.00
    %MinimumSources of
    
    58,000,000 UnitsFunds (1)
    
    Sold
    
    
    PercentOffering Proceeds
    
    $
    58,000,000
    
    
    
    43.61
    %Seed Capital Proceeds
    
    $
    2,239,960
    
    
    
    1.68
    %Senior Debt Financing
    
    $
    72,760,040
    
    
    
    54.71
    %Total Sources of Funds
    
    $
    133,000,000
    
    
    
    100.00
    %
 (1)
    
    We may receive federal and state grants; however, to date we have only
entered into one agreement for a Value Added Producer Grant awarded by the Rural
Development-Cooperative Service of the USDA for up to $300,000 of matching funds.
Additionally, we may receive bond financing. For any grants or bond financing we
receive, we expect to reduce
the amount of equity proceeds or senior debt financing necessary for our capitalization
by the same or similar amount. Our sources of funds listed above are not reduced by
offering costs.  18




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Estimated Use of Proceeds
   PercentofUse of Proceeds
    
    Amount
    
    
    TotalPlant construction
    
    $
    83,400,000
    
    
    
    62.75
    %Material escalation clause
    
    
    4,170,000
    
    
    
    3.15
    %CCI contingency
    
    
    1,668,000
    
    
    
    1.25
    %Land costs
    
    
    3,675,000
    
    
    
    2.76
    %Site development costs
    
    
    2,682,000
    
    
    
    2.01
    %Natural gas pipeline (1)
    
    
    8,000,000
    
    
    
    6.02
    %Electrical service extension
    
    
    1,163,000
    
    
    
    0.88
    %Construction contingency
    
    
    1,305,000
    
    
    
    0.98
    %Construction performance bond
    
    
    500,000
    
    
    
    0.36
    %Construction insurance costs
    
    
    300,000
    
    
    
    0.23
    %Construction manager fee
    
    
    162,000
    
    
    
    0.12
    %Administrative building
    
    
    400,000
    
    
    
    0.30
    %Office equipment
    
    
    75,000
    
    
    
    0.05
    %Computers, software, network
    
    
    175,000
    
    
    
    0.13
    %Railroad
    
    
    6,000,000
    
    
    
    4.51
    %Rolling stock
    
    
    400,000
    
    
    
    0.30
    %Fire protection and water supply
    
    
    5,300,000
    
    
    
    3.98
    %Capitalized interest
    
    
    3,000,000
    
    
    
    2.26
    %Start up costs:Financing costs
    
    
    700,000
    
    
    
    0.53
    %Organization costs (2)
    
    
    1,375,000
    
    
    
    1.03
    %Pre-production period costs
    
    
    800,000
    
    
    
    0.60
    %Inventory  working capital
    
    
    3,750,000
    
    
    
    2.82
    %Inventory  corn
    
    
    1,100,000
    
    
    
    0.83
    %Corn hedging costs
    
    
    250,000
    
    
    
    0.19
    %Inventory  chemicals and ingredients
    
    
    400,000
    
    
    
    0.49
    %Inventory  ethanol
    
    
    1,250,000
    
    
    
    0.94
    %Inventory  DDGS
    
    
    500,000
    
    
    
    0.36
    %Spare parts  process equipment
    
    
    500,000
    
    
    
    0.36
    %Total
    
    $
    133,000,000
    
    
    
    100.00
    %
 (1)
    
    Represents a standby letter of credit.(2)
    
    Includes estimated offering costs of $710,000.  19




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Critical Accounting Policies and Estimates
    Off-Balance Sheet Arrangements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  
 Item 4. Controls and Procedures.
     20




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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
   21




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Item 6. Exhibits. The following exhibits are included herein:
 Exhibit No.
    
    Description10.1
    
    
    Farm Lease between MinnErgy, LLC and Hadar Farms Partnership dated April 16, 200810.2
    
    
    Loan agreement between MinnErgy, LLC and Winona National Bank dated June 6, 2008.10.3
    
    
    Amendment Number Three to Amended Letter of Intent by and between Fagen, Inc.
and MinnErgy, LLC dated June 18, 2008.31.1
    
    
    Certificate Pursuant to 17 CFR 240.15d-14(a).31.2
    
    
    Certificate Pursuant to 17 CFR 240.15d-14(a).32.1
    
    
    Certificate Pursuant to 18 U.S.C. § 1350.32.2
    
    
    Certificate Pursuant to 18 U.S.C. § 1350.
 
 SIGNATURES
  MINNERGY, LLCDate   June 20, 2008
    /s/ Ronald L. Scherbring(Ronald L. Scherbring, President)(Principal Executive Officer)Date   June 20, 2008
    /s/ Christopher L. Arnold(Christopher L. Arnold, Chief Financial Officer)(Principal Financial Officer)  22