An Interview with Kevin Kreisler, President and CEO of Greenshift

SKUNK NEWS FLASH
******************************
The Skunk has not yet had the pleasure of meeting anyone from the Greenshift Corporation. However this last week I emailed Kevin Kreisler - the CEO and Chairman of the Board of GERS. I took the opportunity to ask Mr. Kreisler if he would answer a few questions for the readers of this blog and here is his written responses to my questions:

1. The first quarter results for COES production revenues were disappointing to some investors. Did the upgrade to the Utica plant mentioned in the 1st Quarter Report use a significant amount of process time? Have any problems been fixed? Should we expect the COES to be running at 90% or more of nameplate capacity soon? Does the Company have a present goal of production vice nameplate capacity?

GreenShift’s Method I Corn Oil Extraction System (“MI COES”) has a nameplate capacity of about 1.5 million gallons per year (“MMGY”) and 3.0 gallons per minute (“GPM”) (the “Nameplate”). Due to capital cost and cash flow considerations, GreenShift has deployed its current MI COES facilities with about 70% of the equipment and infrastructure needed to operate at Nameplate, opting instead to commence operations and cash flow at lower initial throughputs and then to use those cash flows to deploy upgrades at each MI COES (the “Upgrade”). Our Oshkosh, Wisconsin and Medina, New York MI COES are currently operating at about 77% and 33% of Nameplate. These systems will operate at or in excess of Nameplate after installation of each Upgrade. The Utica Upgrade is nearly complete and is expected to be brought online in July 2008. The Western NY Upgrade is slated for commissioning in August 2008, the Central Indiana Upgrade will be commissioned in September 2008, and the Global Ethanol – Riga Upgrade will be commissioned with the Riga core MI COES in September 2008. This practice will be discontinued later this year due to the enhanced liquidity profile associated with multiple COES installations. Raw material and construction costs have increased during the past six months and lead times on several components integral to the function of each MI COES have been extended. As a result, our commissioning schedule has changed and we now expect to have a total of four MI COES operating at Nameplate on or before September 30, 2008 and a minimum of five more COES systems during Q4 2008.

2. We have 50M gallons/year of corn oil extraction under contract for ten years and that capacity is projected to come on line within about 18 months. Each of those gallons can be expected to bring about $2 of gross profit to the company with today's prices for bio-diesel. If we multiply (50M gallons) times ($2) times (10 years) - I get a "BILLION" dollars on my calculator - so why did we reach a new 52 week low this week?

My view has been and remains that the markets need to see the impact of what we have built in dollars, cents and earnings per share. Our market value will rationalize as we begin to post consistent and increasing quarterly earnings. The answer is not to invest in significant investor outreach and press talking about how great our potential is, but rather instead to only do so after we prove that potential.

3. Can we expect a PR this month? (Marion, IN?) Initially I believe the folks at Marion talked of having their own 5MMgy bio-diesel plant. Will the corn oil from Marion be converted to bio-diesel at Adrian or will they do it on site?

We expect Marion's commissioning to wrap up in July 2008. Our next planned disclosure is our second quarterly report, on or about August 15, 2008. We have the right to co-locate a 5MMGY biodiesel plant at Marion but we plan to simply ship all of Marion’s oil to Adrian for the foreseeable future.

4. The Company web site infers that the expansion in Montana is ongoing. In fact the 1st Quarter report says to expect lower results in Montana in the 2nd and 3rd Quarter due to the ongoing expansion. Does this mean we are expanding? Did we get financing? If so, why no PR? Since the Richardton, ND plant is only 186 miles from the Montana plant - but is about 650 miles to Lakota IA - does that mean the Culbertson, Montana plant expansion will include their own bio-diesel plant to process the Richardton ND plant's corn oil and their own surplus oils?? With ever increasing transportation costs, what cost per mile/per gallon of corn oil does the company use to determine when the distance is so great that it is no longer cost effective to ship corn oil for conversion to biodiesel?

The expansion is currently awaiting additional financing which we hope to close later in Q3 2008 in conjunction with the completion of an ongoing USDA guaranty approval process. The long term vision for Culbertson is to upgrade the plant into an Integrated Multi-Feedstock Biorefinery, but step 1 is to simply complete the crush expansion and scale the production of this asset up to its new Nameplate – 600TPD.

5. We read everywhere how tight the credit markets are and the slowdown of ethanol expansion due to the price of corn. Is this part of the problem achieving new financing with GERS?

The market dynamics in the ethanol, biodiesel, oil and financial markets have all moved in our favor. We used technology, process know-how, hard assets, financing and ownership of our downstream refining capabilities to create what appears to be the only truly hedged feedstock model in the biodiesel markets (certainly in the U.S.) while delivering significant value to our ethanol and financial partners.

6. On the issue of preferred shares. According to the '07 Annual report (p.101) you had under 55% control of the voting shares through your Series D preferred stock. With the employee stock programs and convertible debentures and now the stock purchase of NEXTDiesel, it appears your voting shares have dropped below 50%. Is this true or do you always automatically own 64% of the voting shares due to the basic provisions of the preferred shares? (1st Qtr Rpt p.16) Does YAGI still need to give its permission for this to happen?

We have constructed all relevant financing, acquisition and employment agreements to prevent any departure from the share amounts listed in the filings. YAGI’s permission, while technically required, is essentially a formality.

7. Dilution. Besides the various incentive plans spelled out in the Company filings, what is your best estimate of common share dilution going forward?

Those are the numbers.

8. We have heard that NEXTDiesel is now running two shifts to increase production. Have all the challenges to converting Extracted Corn Oil to Biodiesel been met - or does the company still face practical problems in that area?

We are on a 24/7 production schedule today. We are converting and selling corn oil today at NextDiesel’s nameplate capacity and at optimal yields.

9. Has the Company been thinking of ways to better open up the lines of communication with Investors?

In addition to our periodic filings and other disclosures we plan to schedule an open house for our shareholders to ask questions and to see our production assets in operation.

Thank you Mr. Kreisler for your time and we look forward to having you back anytime on the unofficial GERS-Greenshift site. I also look forward to the open house.



Skunk