eoy

EOY FORECAST
We are operating four COES as we speak and the 5th should be up this month. With each plant at capacity we should be operating EOY at an annualized rate of 7.3mmgy of corn oil. Producing at a realistic 65% of capacity would give us an annual rate of production at EOY @4.75mmgy. The SkunK's preliminary quarterly estimate of corn oil production for the 4Q with 4 COES producing at 65% of capacity will be 942,500.

Since we already had four COES up and running prior to the 4th Quarter, all our physical and human assets are focused now on Albion, Michigan. The SkunK feel secure that we will have that fifth COES up and in production within a few weeks. The most unsure portion of my equation above is my estimate of the rate of production over capacity. Based on my estimates of past production over capacity I feel secure that we will meet or exceed my 65% production to capacity ratio. I believe that there is a significant lag time between a COES coming on line and a high rate of production. The 4th quarter will be unique since we entered the quarter with 4 units commissioned. The iffy period between commission and full production is a factor that should be minimal. The SkunK's estimate is based on 4 units in production for the entire quarter. The unit coming up in December the SkunK believes to be coming on line too late to actually affect the 4Q production estimate. Therefore, since we are eliminating most of the coming up to speed time, the 4Q production will be the best indicator so far as to our actual production numbers.

1Q 08: 26% 152,787 gallons of corn oil
2Q 08: 40% 296,727 gallons of corn oil

3Q 08: 47%* 461,282 gallons of corn oil

4Q 08: 65%# 942,500 gallons of corn oil

4Q 08: On an annualized basis = 3.77mmgy

EOY 08 = 5COES @ 80% (7.3mmgy capacity)

5.84mmgy Annual production rate

*Corrected from 45% after rated capacity at Utica changed from 1.5 to 1.3mmgy

# Preliminary SkunK estimate

Note: The GERS 3Q states that 11.3mmgy (8 COES) are required to reach profitability. If the price of a barrel of oil continues to fall and the gallon of diesel follows, it may take more to achieve this. What we pay for our feedstock is tied to the diesel spot price. Yet as the price drops - so does our operating profit per gallon. Changes in government energy policy could temper this.

Previous PPS Estimates
My two previous EOY estimates were based on 15 mmgy of corn oil production - PPS 60 cents (.45-.75 trading range.) and then at 10mmgy of production the SkunK saw a PPS 24 cents (.18-.30 trading range). The first estimate had a ratio of 4 cents to the stock price for every million gallons of corn oil produced, while the second had a ratio of 2.4 cents/mmgy. [This was not used to come up with my figures (please see Blog archives) but it demonstrates that the pps will not rise on a 1 for 1 basis after profitability is demonstrated.] A higher percentage of revenues will move to the bottom line after base line costs are met. If we continue this shrinking ratio down we see some rough pps. The prices of 1 - 4.5 cents pps with 3 - 4.5 mmgy of production generally conforms to what we have recently seen with our own eyes in the market and thereby confirms these rough estimates. (BUT sKUNk! Those are just rough estimates! ) (I know, I just said that!)

If you maintain the ratios of the SkunK's original estimates you can pull it down from the future to the present. If you divide each numerator from left to right by 2.5 and multiply each denominator by .67 from right to left you get the estimated share price based on corn oil production!

Conclusion: Using the ratios already computed for the top end and the ratios observed to confirm the bottom, the SkunK is able to project a .058 EOY pps [When we get confirmation that the fifth COES is complete.] This is using a ratio of one from the table above. This is what I think it may be trading at when the 5th COES comes in. A close of .058 cents is 9 times our official low close of .062 traded on 10Oct. I maintain my previous predictions - but tied to corn oil production. When we reach 10mmgy and 15mmgy the SkunK expects to see a pps of 24 and 60 cents respectively. This prediction is based solely on corn oil production. We are in the worst credit crunch in modern times. GERS needs an infusion of public or private capital to survive and achieve profitability. #

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OTC BB ?

The two sentences below are important since they say where we are traded now and where we are traded in the future. They came out of the 3Q.

"Our common stock trades on the OTC Bulletin Board.

We will be quoted on the OTC Bulletin Board for the immediate future." p. 49, 3Q

Those two sentences are also in the 2Q, the 1Q and the Annual - so no change here.

http://pinksheets.com/edgar/GetFilingHtml?FilingID=6264079

The place you do not want to be is the PinK Sheets. (PK) All indicators seem to indicate we are not in the PinK Sheets. If we were we would be posted as GERS.PK - What I see is we are listed as GERS.OB. I have no idea why some see an occasional PK reference come up.

Here is some background as to what this all means:

OTC Markets

The pink sheets service is a loosely regulated over-the-counter, decentralized market. There are few requirements to being listed on this network, as companies do not have to file with the SEC nor keep updated financial information. The only major requirement to being listed is to have at least one market maker, who must be registered with the SEC and a member of the NASD. The market maker is responsible for quoting the latest trading price of the stock on the pink sheets network. This is a highly speculative and risky place to invest. Investors would be wise to only invest what they are willing to lose.
The other suffix for an over-the-counter market is .OB. It means securities are traded on the OTCBB. [Over-the-Counter Bulletin Board] This network is also one of high risk but is less risky than the pink sheets, as it is a regulated and has stricter listing requirements