Mail Stop 7010
September 14, 2005
Mr. Thomas Leitnaker
Chief Financial Officer
East Kansas Agri-Energy, LLC
P.O. Box 225
210 1/2 East 4th Ave.
Garnett, KS 66032
RE: Form 10-KSB for the fiscal year ended December 31, 2004
Forms 10-QSB for the quarters ended March 31 and June
30,
2005
File No. 333-96703
Dear Mr. Leitnaker:
We have reviewed the financial statements and MD&A in these
filings and have the following comments. If you disagree with a
comment, we will consider your explanation as to why our comment
is
inapplicable or a revision is unnecessary. Please be as detailed
as
necessary in your explanation. In some of our comments, we may
ask
you to provide us with information so we may better understand
your
disclosure. After reviewing this information, we may or may not
raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 2004
Item 8A - Controls and Procedures, page 46
1. You currently disclose in your Form 10-KSB, as well as your
Forms
10-QSB for the periods ended March 31, 2005 and June 30, 2005,
that
your principal executive officer and principal financial officer
have
concluded that your disclosure controls and procedures are
effective,
except for material weaknesses in your internal controls. Given
the
exceptions noted, it remains unclear whether your principal
executive
officer and your principal financial officer have concluded that
your
disclosure controls and procedures are effective. Please revise
your
disclosure to state, in clear and unqualified language, the
conclusions reached by your principal executive officer and your
principal financial officer on the effectiveness of your
disclosure
controls and procedures. Please confirm if your principal
executive
officer and principal financial officer have concluded that your
disclosure controls and procedures were effective as of December
31,
2004, March 31, 2005 and June 30, 2005. Otherwise, you should
amend
your Form 10-KSB and Forms 10-QSB to disclose that given the
identified matters, your disclosure controls and procedures are
not
effective.
FORM 10-QSB FOR THE PERIOD ENDED JUNE 30, 2005
Financial Statements
Note 1 - Summary of Significant Accounting Policies, page 8
2. In future filings, please disclose your revenue recognition
policy. In doing so, please also disclose whether your stated
shipping terms are FOB shipping point or FOB destination pursuant
to
your sales agreements with customers.
Note 2 - Incentive Receivable, page 9
3. You disclose that when it is uncertain that you will receive
full
allocation and payment due under the federal incentive program,
you
derive an estimate based on various factors including the most
recently used payment factor applied to the program. Given that
this
is the first quarter in which you have derived revenues, please
tell
us how you concluded that the estimated revenues due under the
federal incentive program were reasonably determinable, since you
have no historical experience to base your estimates on. See
paragraph 6.98 of the AICPA Audit and Accounting Guide for
Agricultural Producers and Agricultural Cooperatives. In
addition,
please tell us how much of the June 30, 2005 incentive receivable
has
been collected to date.
Note 3 - Property and Equipment, page 10
4. The range of useful lives for your property and equipment is
very
broad. In future filings, please separately disclose the range of
useful lives for each category of property and equipment presented
on
your balance sheet. For categories that still have very broad
useful
lives, you should separately discuss the types of assets that fall
in
each part of the range.
Note 11 - Commitments and Contingencies, page 14
5. Please tell us in a letter whether you had accrued the $300,000
settlement in your June 30, 2005 financial statements. Please
address
your compliance with SFAS 5.
* * * *
Please respond to these comments and file the requested
information within 10 business days, or tell us when you will
provide
us with a response. Please provide us with a response letter that
keys your responses to our comments and provides any requested
information. Detailed letters greatly facilitate our review.
Please
file your supplemental response on EDGAR as a correspondence file.
Please understand that we may have additional comments after
reviewing your responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information required under the
Securities Exchange Act of 1934 and that they have provided all
information investors require for an informed decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in their filings;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement has access to all information you provide to the staff
of
the Division of Corporation Finance in our review of your filing
or
in response to our comments on your filing.
If you have any questions regarding these comments, please
direct them to Jeffrey Gordon, Staff Accountant, at (202) 551-3866
or, in his absence, Al Pavot, Staff Accountant, at (202) 551-3738.
Sincerely,
Nilima Shah
Accounting Branch Chief
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Mr. Thomas Leitnaker
East Kansas Agri-Energy, LLC
September 14, 2005
Page 1 of 4
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-7010
DIVISION OF
CORPORATION FINANCE