Journey into the Maize - SWVC 5-1 R/S & TEN Billion Shares

Thomas Scozzafava, former CEO of GS Agrifuels, present CEO of SWVC sent out an interesting PR on Wednesday in which he said:

"I recently initiated efforts to secure the rights to the approximate 30% equity stake in GS AgriFuels, which in early 2008 merged into GreenShift Corporation. While the outcome of these efforts is yet to be determined, I will certainly pursue the maximum value owed to Seaway and its shareholders." http://www.businesswire.com/portal/site/google/?ndmViewId=news_view&newsId=20080723005683&newsLang=en

Two days later, on Friday the 25th of July, SWVC filed with the SEC a 5-1 R/S and an increase to 10 Billion Shares OS. 10 BILLION! Could the purpose of the PR be as simple as a need to give SWVC shareholders a head fake, two days before they get a reverse split? Is this more about SWVC than it is about GERS? Or is it more complex? http://www.sec.gov/Archives/edgar/data/884380/000129092908000063/seaway14cjul08.htm

The Skunk thought this 30% claim was interesting enough to query GERS. I received a prompt answer from Greenshift Investor Relations and posted it on the blog. It did not comment directly on the TS claim but it did reference appropriate filings. I will be the first to say I know little on this subject. After a bit of reading I still know very little. Luckily for you, that has never stopped me from telling you what I think. LOL

First, this is what I think: It seems that Thomas Scozzafava (TS) was the Vice President of Acquisitions and Investments for Greenshift Corp 2005 to Dec 2006. He received almost 400K shares of GS Agrifuels for this trouble. He next was the CEO of GS Agrifuels from December of 2006 to Dec 2007. During these times they picked up Next Gen Fuels, Sustainable Systems, the Zero Point Investment and the Corn Oil Extraction Systems***(see below). This is basically the majority of the stuff that gives value or short term potential to our present company. He claims to be a significant shareholder (30%) of GS AgriFuels Corporation. This is the part I do not yet understand. In June of '07 TS was supposed to get 378,653 series "C" preferred stock of GS Agrifuels. He could not get them since even the promise to get them was a breach of the debt agreement with YAGI. This was explained in the 10 Jan '08 document. TS left the company in mid December 2007. The company was then taken private and 50cents/share were paid out to the minority shareholders in early 2008. From what I understand the shares are held privately as collateral by the YAGI debt agreement. GERS and friends cannot buy, sell or give them away until that debt goes away. So these disputed series "C" shares appear to be the basis for the TS claim. He did borrow $250,000 to the company, but I hope that no one thinks that equates to 30% of GS Agrifuels. On December 28, 2006, GS AgriFuels issued to Seaway Valley Fund, LLC aconvertible debenture due December 28, 2008 with a face amount of $250,000 formonies received in January 2007 by GS AgriFuels from Seaway Valley in the amountof $250,000. This debenture and the accompanying accrued interest in the amountof $7,726 were paid in full during the nine months ended September 30, 2007. I would have hoped some sort of signed severance settlement had taken place when TS left to clear all this up. Any insight by a reader would be appreciated.

It is hard to prove the merits (or fallacy) of his claim. Here are some of my questions:

1. Why is the claim being made now? Is he claiming that GS Agrifuels is being taken public due to GERS default to YAGI? Or is he claiming that the entire Debt to YAGI has been paid? Those, I assume are the only two reasons for the private stock to be freed up.

2. Is he stirring the pot trying to entice investors to pick up his SWVC stock that is lingering sub-Penny? OR is he trying to stir up a cash settlement from GERS - threatening a legal battle over old claims? OR are his claims somehow legit and he is bringing it public to try and force the issue? I am not implying anything here, just looking for possible answers to my questions.

Second, here is the fact/time-line the Skunk found:

**TIMELINE of GS Agrifuels Investments:

From 2005 to about Dec 26, 2006, Mr. Scozzafava was employed by GreenShift Corporation as Vice President of Acquisitions and Investments. GS AgriFuels issued 399,792 shares of common stock to Mr.Scozzafava in compensation for those services. Here is the detail of his employment:

On July 6, 2007, GS AgriFuels signed an Employment Agreement with Tom Scozzafava with an effective date of January 1, 2007. Under the terms of this agreement,Tom Scozzafava has been employed by GS AgriFuels as its President and Chief Executive Officer. The agreement is for a term of five years and shall be automatically renewed for additional one-year terms until either party gives at least a sixty date written notice of termination. Under the terms of the agreement, Mr. Scozzafava shall be paid an annual salary of $150,000 and will be eligible to fully participate in all benefit plans maintained by GS AgriFuels. The salary will increase to $250,000 per year if GS AgriFuels completes an equity financing for $25,000,000 at a per share valuation of $3.00 or greater. In connection with the execution of the Employment Agreement, GreenShift Corporation assigned to Mr. Scozzafava 378,653 shares of GS AgriFuels' Series CPreferred Stock. The Company accrued $54,526 in consulting fees related to this transfer of shares. For the nine months ended September 30, 2007, Mr. Scozzafava received $104,531 as compensation for past services.

January 20, 2006 Kevin Kreisler first signs as CEO for Hugo International Telecom, Inc.

On May 18, 2006, Soon to be "GS Agrifuels" 1:1000 reverse stock split became effective.

On June 7, 2006, the Company acquired Mean Green BioFuels, Inc., a newly formed company, from GreenShift Corporation.

On July 27, 2006, the Company changed the name from Hugo International Telecom, Inc. to GS AgriFuels Corporation.

In August 2006, GS AgriFuels acquired an approximate 10% interest in ZeroPointClean Tech, Inc.

On October 31, 2006, GS AgriFuels purchased 100% of the outstanding capital stock of NextGen Fuel.

On December 21, 2006 the Board of Directors of GS AgriFuels appointed Tom Scozzafava to the positions of President and Chief Executive Officer. Mr.Scozzafava accepted the positions on December 26, 2006.

As of December 31, 2006, the Company owned 13% of Sustainable System, Inc.

As of December 31, 2006, GS AgriFuels had no employees, but Thomas Scozzafava and Kevin Kreisler served on an "at will" basis as the Company's President and Chief Executive Officer, and Chairman and Chief Financial Officer, respectively. It is anticipated that in 2007 Mr. Scozzafava shall become a full-time employee of the Company. Thomas Scozzafava (TS) was the CEO of GS Agrifuels for about one year? - from Dec 2006 till Dec 2007.

Skunk note: On December 28, 2006, TS gave the company $250,000 and the Company issued him a Convertible Debenture due December 28, 2008 for $250,000 plus 8% interest. http://www.sec.gov/Archives/edgar/data/1120802/000126912707000052/gsa10k2006.txt A'06

March 2007, GSAgriFuels completed the acquisition of the remaining 87% of the outstanding capital stock of Sustainable Systems, Inc.

In June 2007, and subject to the satisfaction of GS AgriFuels' outstanding obligations to Lender, GS AgriFuels agreed to issue to GreenShift Corporation 1,000,000 shares of Series C Preferred Stock in GS AgriFuels (the "Preferred Shares"), from which GreenShift agreed to assign 378,653 shares Series C Preferred Stock in GS AgriFuels to a former officer (Skunk Note: this has to be TS) of GS AgriFuels subject to Lender's first priority security interest in all of the stock and assets of GS AgriFuels.

While none of the Preferred Shares were issued because issuance of the Preferred Shares would have constituted a material breach of GS AgriFuels' Debentures and Transaction Documents with Lender (collectively, the "Transaction Documents"), GS AgriFuels' agreement to issue and GreenShift's agreement to assign the Preferred Shares were made in contravention of both GS AgriFuels' Transaction Documents and GreenShift's various agreements with Lender.
http://www.sec.gov/Archives/edgar/data/1269127/000126912708000021/ex10g108.txt (this in a Jan 10th '08 document)

As of June 26, 2007, there were no shares of preferred stock issued and outstanding. This in a Form S-4 signed by both Mr. Scozzafava and Mr Kreisler.

http://www.sec.gov/Archives/edgar/data/1120802/000126912707000116/gsas4607.txt

In an 8K dtd 5 Oct 2007 Thomas Scozzafava was on the top of the employee list as Director, Chairman and CEO of GS Agrifuels.

http://www.sec.gov/Archives/edgar/data/1120802/000126912707000193/gsgf8k10507.txt

In an 8K/A dtd 9 Oct 2007 (4 days latter) Kevin Kreisler was on the top of the employee list as Director, Chairman and COO of GS Agrifuels.

http://www.sec.gov/Archives/edgar/data/1120802/000126912707000197/gsgf8ka10807.txt

Thomas Scozzafava as the CEO of GS Agrifuels on December 6, 2007 announced the Boards of Directors of GS AgriFuels Corporation and GS Energy Corporation agreed to abandon the merger - last? signature as CEO?http://www.sec.gov/Archives/edgar/data/1120802/000126912708000019/gsctgsgfyaagree.txt

December 20, 2007, Kevin Kreisler first signs as Chief Executive Officer for GS AgriFuels. Note Exhibits 1 & 3.

http://www.sec.gov/Archives/edgar/data/1120802/000126912707000263/gsaex31k06.txt','GS AGRIFUELS CORP

So we can tell from the signatures above Thomas Scozzafava left between Dec 6 - Dec 20 2007

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In the 1Q p.28 we find out how much we spent to take GS Agrifuels private:

In accordance with the completion of the GS AgriFuels Go-Private Transaction (see Note 13, Convertible Debentures), the Company recorded the related obligation to the former minority shareholders of GS AgriFuels of $1,265,762 at December 31, 2007. This obligation was reduced to $432,701 as of March 31, 2008, which amount the Company expects to either cancel or satisfy during the second quarter 2008.

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There are lots of things that could put GERS into default with YAGI here is a list of things that have recent deadlines.

GERS could be in default to Yagi if:

"7.1.16 June 30, 2008. The Borrower's affiliate, Sustainable Systems LLC, shall fail to have closed upon the purchase of the Title To Montana Property. "

"In the event that GS AgriFuels and/or any of its affiliates fails to pay Lender a minimum of $7,500,000 on or before July 1, 2008. . . . . GS CleanTech shall take GS AgriFuels public againas provided herein (the "Go Public Transaction")"

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2Q Report Deadlines

Thursday August 14th
Forms 13F and 10-Q for filers with quarters ending June 30, 2008 (45 days after period end).

Friday August 15th
Notification of Late Filing (NT 10-Q) for Form 10-Q/10QSB, if 10-Q/10QSB is not filed on time(Due on the business day after the 10-Q due date.)

Wednesday August 20th
Extended deadline for filing a Form 10-Q/10QSB after filing a NT 10-Q (Due 5 calendar days after original filing due date)

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Only True GERS affectionados beyond this point!

Still not had enough?? Are you someone who can read anything on this company? Well even the Skunk had trouble plodding through this story. It appears GERS somehow got mixed up in Canadian Liberal/Tory politics. Not by what it did, but rather by its name matching some new political catch phrase up in the Great White North, eh? or is it aye?

PS. Even the Skunk's blog got a mention in the post article comments. Thanks for the plug "sharonapple88".
http://redtory.wordpress.com/2008/07/09/shifty-business/

Hey you hoser, remember this? http://www.youtube.com/watch?v=R6tiFMVRMB4&NR=1
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FORECASTS

. . . in the next six months I expect this stock to have convincingly turned the corner. (Skunk 13 July 2008)
EOY 60 cents with 45 -75 trading range**

$4.91 Share Price in FEB 2010**

See past posts for details

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**Note: I am a shareholder - I do not work for, nor do I receive any direct or indirect payment from GERS or anyone associated with them. (But it would be Kapitalist Kool if I did) I will not intentionally mislead - but I can be wrong (ask Mrs. Skunk for specific frequencies) - so do your own due diligence - and take responsibility for your own financial decisions – (and your own life in general) good or bad. And some good garage logic luck to ya.

Skunk

In the COE Old Days

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UPDATE to Mini SKUNK NEWS FLASH:

From GERS Investor Relations:




"The accurate disclosures pertaining to the capital structure of GS AgriFuels can be found in GreenShift's 1/25/08 Form 8K:

http://www.sec.gov/Archives/edgar/data/1269127/000126912708000021/0001269127-08-000021-index.htm

and, more specifically, in its Exhibits to that Form 8K:

http://www.sec.gov/Archives/edgar/data/1269127/000126912708000021/ex10g108.txt
http://www.sec.gov/Archives/edgar/data/1269127/000126912708000021/ex10c108.txt

Additional disclosures that are relevant to GS AgriFuels were provided in our Form 10K for the year ended 12/31/07 (see Note 31, Subsequent Events) and Form 10Q for the first quarter ended 3/31/08 (see Notes 13 and 18)."

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SKUNK mini NEWS FLASH





Thomas Scozzafava, former CEO of GS Agrifuels, present CEO of SWVC, claims to be making a play for 30% of the privately held GS Agrifuels stock.

He does not say "buy". He states he is already a significant shareholder of GS AgriFuels Corporation. He says "secure the rights to" those shares.

"I recently initiated efforts to secure the rights to the approximate 30% equity stake in GS AgriFuels, which in early 2008 merged into GreenShift Corporation. While the outcome of these efforts is yet to be determined, I will certainly pursue the maximum value owed to Seaway and its shareholders."

The news release is 23 July 2008.
http://www.businesswire.com/portal/site/google/?ndmViewId=news_view&newsId=20080723005683&newsLang=en

SKUNK PHOTO FLASH ************

Thanks to one of my readers - The Skunk is able to post this picture of something happening within the last month outside the GERS Manufacturing Plant in Van Wert, Ohio. It appears we may have broke through security (Not exactly Area 51 - this is more interesting) and gotten a first photo scoop of what is very hard to hide - My best guess is the Solar array for the Pilot Bioreactor. (PS to all readers - Next time you put on your meter reading outfit - tell them you have to go inside too!)

From the GERS website:
"The sunlight is then collected using efficient parabolic mirrors that transfer and filter the light to a series of light pipes. The light pipes channel the light into the bioreactor structure where it is distributed and radiated throughout the structure using light panels. The algae requires as little as 1.5% direct light which means that our collected light can be distributed over a substantial surface area."

Skunk Note: Lots of talk on the boards on how we only spent $601 on Research and Development in the 1Q. If you look under "Cash Flow From Investment Activities" you will see nearly 50K on "Project Development Costs". I don't know for sure, but that picture above looks like we were "developing quite a project" in the 1Q.

VIDEO http://www.greenshift.com/media/greenshift_bioreactor.wmv
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MINI Skunk NEWS FLASH
In the August '08 Edition of BioDiesel Magazine (p.70-75) Greenshift is highlighted. (p.73)
Brad Albin of Renewable Energy Group predicts that the few plants implementing corn oil extraction technology are only the beginning. Its only a matter of time and choosing which company's technology works best.

"Between now and the first portion of '09, that curve will be unbelievable," he says, "Its hard to talk to anyone who isn't in the process of making a selection."

The Skunk says GERS is in an "unbelievable", historic position. The stars have aligned to our advantage. In the next few quarters the Skunk expects to see a resurgence of our sales pipelines across the board.

http://mag1.olivesoftware.com/ActiveMagazine/getBookEnc.asp?Path=QkRNLzIwMDgvMDgvMDE=&BookCollection=BDM_AM&ReaderStyle=Normal&browserWindowWidth=1270&browserWindowHeight=974 **********************************
In the COE Old Days
This is an article excerpt from Ethanol Producer Magazine. What makes it special is that Dave Winsness and Dave Cantrell were then working for EORS (Ethanol Oil Recovery Systems), a company they developed to patent and commercialize the COES technology they invented along with Greg Barlage and John W. Davis. Here is a rare discussion about the technology and the equipment involved in terms even the Skunk can understand:

". . . extracting crude corn oil from the ethanol production process was developed by David Winsness and David Cantrell of EORS the company that developed and submitted the patent application on its corn oil extraction technology. Cantrell said that Alfa Laval also worked with EORS to hone this technology. Matt Janes, vice president of technology for VeraSun Energy, said the origin of this breakthrough resulted from the work by Cantrell and Winsness in the animal byproduct recovery business. Cantrell said the work he and Winsness did in the rendering arena could carry over to the ethanol business because, as he said, "The tail-end of the rendering process is very similar to the tail-end of the ethanol production process." He said it was good to see the same process of separation transfer over. "The ethanol industry is a young industry," Cantrell said. "We've got years in other industries, and things don't cross over usually." The workings of this technology revolve around the removal of crude corn oil extract from the syrup in the evaporation stage of the ethanol production process, before the syrup gets mixed with grains in the dryers. The oil is emulsified with various solids and liquids as the "waste product" from the fermentation and distillation processes. This whole stillage, as Winsness said, "is run through the decantering process to squeeze out the liquids at 4000 Gs. What you end up with is cake, or wet cake. In the ethanol process, this cake goes straight through to the dryers. The liquid portion is 92 percent water. This is the thin stillage, which gets boiled out in the evaporation process. The remaining product [after the evaporation process] is syrup." It is somewhere between the thin stillage and syrup stages of the evaporation process when the crude corn oil is extracted.

The point at which the crude oil is extracted during the evaporation process differs from plant to plant. "The plants that we find easiest to extract the oil from are the Fagen/ICM plants,"

"We use a specially modified disk-stack centrifuge as the heart of the extraction skid,” Janes said. “This high-speed centrifuge operates on a vertical plane, which is different from those used in ethanol plants that operate horizontally. It is similar to what's used in the separation of fat in milk processing."

The beauty of the technology lies in the "ready-to-go" extraction skids that retrofit into the existing dry mill evaporation process. Janes said, aside from the disk-stacked centrifuge unit, the extraction skid consists of heat exchangers, pumps, tanks and, most importantly, an EORS-developed control unit. Cantrell said once the unit is installed, "If something happens to the unit, that won't disrupt the ethanol process. We pull the oil out and send the syrup back."

The Skunk finds much interesting here. First the disk-stacked centrifuge caught my eye since I had once tried to figure what they called that big cream separator in the middle of every COES PR shot. Pulling 4000 G's - man that's spinning. Also, who is this wiseguy"Matt Janes" from Vera Sun Energy and why is he trying to Bogart the reporter's attention?




The most important thing I find here though is that these COES are not a cookie cutter installation. On each one they have to decide where to tap into the syrup to pull off the corn oil. Even at this early stage of the game they knew that the Fagen/ICM constructed Ethanol Plant were easier to develop than the others. Hmmm, we have a reason for uneven performance among the COES - even when the COES equipment is the same.

I see the initial Lakota IA plant was of the ICM type.

Lakota, IA The traditional dry-mill plant consists of two distinct production trains, the first commissioned in 2002 utilizing ICM technology with a name-plate capacity of 53 million gallons per year; and the second, Lurgi /Thermal Kinetics, commissioned in January 2006 with 45 million gallons of nameplate capacity each year.

http://www.globalethanolservices.com/Riga.html

From the Feb 2006 Issue of Biodiesel Magazine we have this:

"In 2005, we witnessed Ethanol Oil Recovery Systems (EORS) team up with ethanol producer VeraSun Energy, which is working to get several participant plants onboard with using EORS’ corn oil extraction skids. In late 2005, VeraSun said its plan was to get 14 ethanol plants (40 MMgy or larger) to agree to sell their corn oil extract to VeraSun. In turn, VeraSun said it would eventually establish a 50 MMgy biodiesel plant under the name VeraSun Biodiesel. Meanwhile, EORS’ founders have launched another company, Mean Green BioFuels Corp., which will install its corn oil extraction systems into client ethanol facilities on a turnkey basis for no up-front cost. Mean Green says it will customize the design of its system to meet the desired corn oil recovery objectives of participating facilities, and then purchase the extracted oil from the plants at a premium. In turn, Mean Green intends to build five 30 MMgy biodiesel plants over the next two years. The feedstock for these facilities will include corn oil, soybean oil and animal fats."

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A little COES history lesson here. We can track the COES technology by tracing the employment of Dave Winsness and Dave Cantrell - two of the main inventors.

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FIRST. In July 2005 Greenshift acquired a 15% share of EROS for $1.2M. EROS was a start up by the inventors to commercialize the invention. Under the terms of its agreement GreenShift acquired the 15% stake in EORS for about $1.2 million. At the same time, EORS agreed to transfer its technology to a new development partnership called SunSource BioEnergy, LLC, that was comprised of and managed by some of the ethanol industry's leading producers, including VeraSun Energy, Glacial Lakes Energy, KAAPA Ethanol, and Golden Grain Energy. EORS owned an 18% stake in the SunSource BioEnergy partnership. I do not know if any of this technology transfer took place.
http://www.enn.com/top_stories/article/16282

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SECOND. In August of 2005 INSEQ Corporation signed on to manufacture the systems that will be used by SunSource BioEnergy to extract corn oil. Under the terms of INSEQ’s manufacturing agreement with EORS, EORS granted INSEQ right of first refusal rights relating to the manufacture of the extraction systems and any other manufacturing needs relating to the extraction systems. EORS and INSEQ are respectively 15% and 70% owned by GreenShift Corporation.
http://www.greencarcongress.com/2005/08/inseq_to_manufa.html

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THIRD. In November of 2005 GreenShift now owns 49% of Mean Green, which is run by Dave Winsness and is the apparent direct descendant of EORS. We hear no more of SunSource BioEnergy or of EORS.
http://findarticles.com/p/articles/mi_m0EIN/is_2005_Nov_21/ai_n15862874

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FOURTH. In February of 2006, David Winsness is now the chief executive officer of Veridium's industrial design division. The COES system is now called "Veridium's Corn Oil Extraction System(TM)" even though Mean Grean is still around. Veridium at the time is about 65% owned by GreenShift Corporation.
http://findarticles.com/p/articles/mi_m0EIN/is_2006_Feb_21/ai_n16072681

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Fifth. Veridium became Clean Tech in July 2006 which became Greenshift Corporation (new) in Feb 2008.

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We first see that EORS seems to have "teamed up" with VeraSun for at least a time. I have heard that the Winsness/Barlage team may have sold some technology to VeraSun in these early days, although I am still looking for the terms of any contract. It seems apparent that if it did - it happened through SunSource BioEnergy LLC.

Well from this review of the 2005 plans we see that Greenshift won the battle for the COES technology. Effective December 15, 2007, the Company executed an Amended and Restated Technology Acquisition Agreement (the "TAA") with Mean Green Biodiesel of Georgia, LLC (f/k/a Cantrell Winsness Technologies, LLC), David F. Cantrell, David Winsness, Gregory P. Barlage and John W. Davis (the "Inventors"). The amendment changed the method of calculating the purchase price for the Company's corn oil extraction technology (the "Technology"). The TAA, as amended, provides for the payment to the Inventors of a one-time license fee of $150,000 per 1.5 million gallon per year system (a "System") built and commissioned based on the Technology plus an ongoing royalty of $0.10 per gallon of corn oil extracted with the Technology. The Company is required to sell, market, deploy or in any way cause the initiation of operations of a total of three Systems on or before December 31, 2008, a total of eight Systems on or before December 31, 2009, and an additional five Systems per year up to a total of eighteen Systems, at which point the Company has no continuing commercialization requirement. p.80 2007 Annual Report.

VeraSun Energy, with I assume much better capitalization, seems to have come up very short on their plans, having failed to spin off even their first gallon of commercial corn oil. They may start later this year. According to the August Issue of Bio-Diesel cited in the mini news flash above, Vera Sun is gonna use a Hexane-based solvent extraction. SO MUCH FOR CLEAN ENERGY! The EPA has identified solvent extraction for vegetable oil production processes as major sources of a single hazardous air pollutant (HAP), n-hexane. The EPA does not consider n-hexane classifiable as a human carcinogen. However, short-term exposure to high levels of n-hexane is reported to cause reactions such as irritations, dizziness, headaches, and nausea. Long-term exposure can cause permanent nerve damage. So much for that competition.

Here is more from the same article:

"There are a number of current and evolving technologies for corn oil extraction. The two basic options are front-end removal, which removes the oil before processing the corn and the back-end process which removes the corn oil after fermentation and distillation. The front-end extraction process produces a cleaner corn oil and captures 50 percent more product. However, as one might expect, the cost is at least triple that of back-end extraction processes. So for the ethanol producer, it becomes a matter of analyzing the intended end use and the capital cost required for implementation."

http://biodieselmagazine.com/article.jsp?article_id=718

We see that the front end extraction is used for food grade extraction (i.e. corn oil in your grocery store and food additives) but its expense is 3 times that of back-end extraction. Back-end extraction can be added after construction, is cheaper, and does not affect the main goal of an ethanol plant - and that is to produce ethanol! So Back-end extraction works for its use - biodiesel.
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NO More Public Relations (Until we make money)

Before we cry for more PR's lets look at what happened the last time. On the 19th of Feb we were at 35C and had traded recently (15 Feb) as high as 40c. Then on the 19th the current shareholders letter was released. This was followed two days later by a deal to install BioDiesel lines at NextDiesel and 25th of Feb the COES commissioning at Western NY. All good news. From the start of this PR blitz on the 19th and over the next 23 trading days we had only 4 up days. We finished 20 March at 10.1 cents. Why pay to drive the price down? Going down on good news?? This is more fodder for the Skunk's idea that this was a turnaround stock on the downward stroke. Remember, good news driving the stock up is one of the keys I will be looking for telling us we have past the bottom.

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FORECASTS . . . in the next six months I expect this stock to have convincingly turned the corner. (Skunk 13 July 2008)

EOY 60 cents with 45 -75 trading range**

After having reviewed the interview and subsequent events as per my assumptions for the EOY forecast - I stay the course. I think the potential to reach our end of year capacity goals is the same. My confidence in EOY COES production % has increased. Confidence in Sustainable Systems running at 10MMgy production or at 16mmgy capacity decreased. Being able to move all or most of COES $2/gal gross profits to EBITDA decreased. Ability to be at a a number significantly less than 200M shares OS by EOY increased. I believe we should use a larger PE ratio (than 20) since the economics and open sources have pointed toward an explosion of interest in corn oil extraction in the ethanol industry. I think we may see a corresponding significant jump in both orders and contracts in the 2Q & 3Q reports. In conclusion, my confidence level in reaching the trading range of 45 - 75 cents by EOY is up. I will await more solid news - most likely in the 2Q Report - before I redo the math.

$4.91 Share Price in FEB 2010**

See past posts for details.

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Note: I am a shareholder - I do not work for, nor do I receive any direct or indirect payment from GERS or anyone associated with them. (But it would be Kapitalist Kool if I did) I will not intentionally mislead - but I can be wrong (ask Mrs. Skunk for specific frequencies) - so do your own due diligence - and take responsibility for your own financial decisions – (and your own life in general) good or bad. And some good garage logic luck to ya.

Skunk

The Musings of a Skunk

((WARNING: The Skunk is about to share HIS OPINION. If you occasionally suffer seizures reading opinions you do not agree with – then do not go past this point! I expect less that one in twenty will agree with me – BUT I can handle that - can you??))

What makes a Turnaround Stock?

TWO THINGS.

FIRST a stock has to be so oversold nobody wants it. People sell it on emotion. They don’t want to be associated with a “loser”. The price falls; because the price falls; because the price falls; because the price falls. It becomes a closed circuit with only one input. Investors are fixated on the share price and the falling price. They are oblivious to other indicators. The stock becomes grossly oversold.

The SECOND thing that makes a turnaround stock is rising value. Notice I did not say rising share price, since at this point share price is merely a measurement of emotion. First revenues rise; then losses slow; and thirdly profits take hold. There is earning per share and a shareholder value is assigned to each stock. The stock is now worth more than just its potential. It has actual earnings value as well as the potential to earn. Investors can now see, taste and feel the value. Investors can ignore and be blinded to almost everything – but they will not ignore earnings per share. At this point the share price rises. New investors notice the sustained rise of the share prices and scramble to get on board. Speculators become investors. Over a period of months or years the price builds and perhaps after a certain point the stock goes up; because the stock goes up; because the stock goes up. Now the pendulum may swing past the worth of the share to an overbought position – and the perfect speculator/high risk investor sells into a market top.

Now the million dollar (literally) question is, "Is GERS a turnaround stock?" And if it is, where in this time-line are we?

You have to decide for yourself if GERS is a turnaround stock, or just another “loser” stock on its way to BK. The Skunk came here thinking the COES technology would make this company a turnaround stock. He believes that today with more conviction than ever.

How dare the Skunk say "that" when we are hitting new lows?!?!?!?!?

Well I don’t want to say that PPS does not matter – but in this discussion - “The PPS does not matter.” If it is a turnaround stock – then one should expect oversold lows. At this point in the time-line PPS is only a measurement of emotion. I hope not to trade or invest on my emotion. I will however, allow the emotion of others to benefit me. The question I hear over and over from other investors is "Why would anyone buy this stock? Its gone down so far!" The question I always ask myself is "Why would anyone buy any stock that was trading at or above its actual value??"

Skunk we are all ready for the stock to climb! Is it now?

Although a Nickel seems a good a spot as any, the Skunk is not calling the low today. In fact I think we are not quite ready for the climb up. We might have one, maybe two disappointments yet to suffer. We have certainly seen price decline. We have seen a lot of negative emotion. Some technicals made it appear we might have reached the bottom at a dime, but the reality on the ground was not ready to support that bottom. It was not to be and we have since darted down almost to a nickel. My best guess right now is that the bottom will be reached within the next sixty days.

What will trigger the bottom?

I now suspect that we may hit bottom after the release of the second quarter filings or perhaps in conjunction with some other unforeseen event. The reason I suspect the second quarter filings may produce the final low is not due so much to the lack of progress, but the failure to meet the high expectations of progress combined with investor fatigue. I see five reasons building for a final low after the second quarter release.

First we know that we only had only two COES producing about half? capacity in the second quarter.

Secondly, we know that the seed crushing plant may have slowed operations in anticipation of expansion and that their huge 1Q revenues were the result of a sell off of feedstock, something that cannot be duplicated. Even good numbers will pale in comparison to the 1Q revenue numbers.

Thirdly, we know that we did not take over NextDiesel until midway through the 2Q, too late for added value revenues to have much of an impact. These first three things point to lower revenues - or at least lower revenues than many may expect.

Fourthly, as of July 1st, GERS is contracted to start principle payments on the revolving credit for the COES. The greater of 100K or 30% EBITDA is due to YAGI at the beginning of every month. This added expense , combined with the 250K due on the debentures, may significantly increase our cash flow problem. Between the Annual and the 1Q report the only dilution was to purchase NextDiesel. If any has been sold since to pay these additional bills, it will be disclosed in the 2Q report. Stock dilution will apply short term selling pressure on the stock.

Lastly, we have not had a final technical washout. Sure we have had falling share prices, yet the volumes were very small. The price has moved up and down on small trades. In May we had a couple days above 500K shares sold. We have been below 300K since. We have had a few ol'investors sign off the message boards, but very few. I suspect before we can round the corner we may see a week with about three days above 500K shares selling into falling prices.

Skunk - You gave us some reasons for the stock price to drop after the 2Q release - but none as to why it will go up? Maybe it will just continue to go down?

Maybe, but I don't think so. I suspect that in the 60 days prior to the 3Q release enough good news will surface about the 9 revenue producing COES coming on line that the price will stabilize and slowly move off the bottom. I suspect during this time the share price will find support above a dime and below a quarter.

Skunk, you predicted a trading range of 45-75 cents and a 60 cent finish to the year. How do we get there?

The Third Quarter Report comes out midway through the fourth, about November 17. I suspect that enough timely good 4Q news will be included, that investors will be able to project that the company will be profitable or at least on the verge of positive net income in the ongoing 4Q. The share price will then break through the 10-25 cent trading range and move into the 45-75 cent range for the remaining six weeks of the year.

Have we seen signs of rising Revenue?

Yes. The 6.5M in revenues in the first quarter, after this company completely replaced its revenue sources from garbage sorting to alternative energy is a key fact that has gone mostly unnoticed by the very few investors who follow the stock. Most seem fixated on pre-clean energy company stock dilution and performance, personalities and most importantly: share price.

What are the signs of getting past the PPS bottom?

The only way I know to tell we are past the bottom is to look in the rear view mirror. We will only know we are past the bottom when we are past the bottom. Here are a few things the Skunk will be looking for:

1. Both monthly highs and monthly lows are higher than the previous month.

2. A secondary bottom develops at least 100% higher than the 52 week low.

3. A third bottom develops at least 50% higher than the secondary bottom.

4. The stock moves up on good news.

In conclusion, I am more concerned with financing and COES construction/production, than I am with today's PPS. If we have not seen it already, I expect to see our all time low within the next sixty days. I would not be surprised to see the 2Q report as the trigger for the final low. I expect us to move to between a dime and a quarter from mid September to mid November. I expect us to move in the 45-75 cent trading range in the final six weeks of the year.

Finally - no surprise to you regular readers - I am not a biblical prophet. If there is one covering Greenshift - somebody please send me his blog address! What I do is mostly let you look over my shoulder at any dd I scrape up. Today I tried to fill in the road between where we are today and where I think we will be at the end of the year. I am an optimist by nature, and that tends to affect how I see the future. Expect significant changes as the tires hit the road! In case you missed it - the biggest call I am making - and the only one that really matters - is that I am saying that in the next six months I expect this stock to have convincingly turned the corner.

FORECASTS
EOY 60 cents with 45 -75 trading range**
(using pre-interview assumptions)
$4.91 Share Price in FEB 2010**
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Note: I am a shareholder - I do not work for, nor do I receive any direct or indirect payment from GERS or anyone associated with them. (But it would be Kapitalist Kool if I did) I will not intentionally mislead - but I can be wrong (ask Mrs. Skunk for specific frequencies) - so do your own due diligence - and take responsibility for your own financial decisions – (and your own life in general) good or bad. And some good garage logic luck to ya.

Skunk

Thoughts on the Interview

Well that was sure exciting, wasn't it. The Skunk has held off on any commentary on the interview with Kevin Kreisler for a number of reasons. First as a courtesy to you, the readers of this blog, who deserve time to form your own first impressions based on what you read. Second, as a courtesy to the interviewee: Since Mr. Kreisler had the floor, it obviously would be presumptuous for me to stand behind him and tell you what he was saying as he was saying it. Lastly the Skunk needed a little time to shift through the answers (and at least try) to gleam more than the obvious.

THE REACTION

The blog got a lot of hits. The message boards had a lot of analysis and opinion. A lot of time and effort went into that and I think that's great for all investors who read the threads. I posted a few of the links that grabbed my attention although there were many more comments that deserve to be read. I don't agree with everyone (hard to, since they are all different!) but that doesn't mean I can't learn something from each.

The FORMAT

I submitted the questions. The CEO provided the answers. I posted those questions and answers. Now the obvious weakness here is there were no immediate follow up questions and free form discussion that might have flushed out more information. However that wish assumes o'l Skunk is some kinda financial Tim Russert reincarnate. He is not. My mind works like my '73 Vega. Sure, it will go almost anywhere, but I likely won't be the first one there. Like my friend Clint told me: "A man's gotta know his limitations." It also assumes any CEO would be willing to enter into an on-the-record free for all. I haven't seem much of that anywhere. So after a bit of time goes by, I suspect I will submit more questions and we will go from there.

The Skunk didn't have a license to ask questions - so if you got some questions - You should just go ahead and ask. You can post the answers on the investment boards - or if you want to - give Greenshift my email and ask them to info me a copy of the reply. That way you can keep your autonomy (if you wish), I will post it on the blog, and you might escape some bar stool quarterbacking on the boards. I would get the info e-mail directly from Greenshift so other readers can have some assurance it was from the source. Since I just though of this, Greenshift has no idea about it, but it seems "cricket" to share answers to our questions.

I would like to start by listing what information from the Interview the Skunk thinks is new.

1. COES - The schedule has changed.

2. Investor Relations - Expect no PRs. August 15 is next Filing. Open House.

3. Montana - expansion is on hold awaiting USDA guaranty/financing.

4. NEXTDiesel - is operating at 10MMgy (today).

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1. COES - the schedule has changed:

The new COES agreement does three main things. First, (a minus) it calls for 4 COES online and at 100% capacity by 30 Sept. This is a step back from the Eight that were originally planned for this time. Now we have an end of year deadline as well. We see five more are planned to be completed by the end of the year. Second, (a plus) this total of nine COES is one more than we originally had scheduled. If Lakota, IA and Fulton NY remain at stage two units with 3mmgy name plate and this new unit is at 1.5mmgy like the other six, then we are set to achieve 16.5mmgy COES capacity by years end, exceeding our 15mmgy goal. Third (a plus) we have a reason for the low production numbers in the 1Q Report. First, we were told on the boards that the production numbers were low. Then the Skunk tried to take everything into account and estimated that the COES production revenues should be about $800K. Next the 1stQ Report came in under half of my estimate. The lack of any explanation caused everyone to wonder: Was this company on firm ground - if its entire base was built on something that didn't work very good??? The only thread we had from the Filing was that the Utica plant was undergoing an upgrade and we already knew the Medina, NY plant had come up late in the first quarter. These problems were a part of the reason I reduced my long range forecast by half: from over $10 to under $5. When I see higher production in the COES, I will revisit these numbers. From the interview we learned that the low production numbers were part of a money decision to deploy basic versions to the field in order to increase immediate cash flow. Although I have nothing but a hunch, I suspect these bare-boned units may have also been the cause of any low quality extracted corn oil we have seen informally reported on the message boards. Hopefully any such existing problem will disappear completely as the new upgrades are installed. Investors could have absorbed this information better on the front side, rather than after the fact. In any case, having a reason for the low numbers and an ongoing fix in place is exactly what investors needed. In the Skunk's view - regardless of your position - this was the most important sentence of the Interview:

"These systems will operate at or in excess of Nameplate after installation of each Upgrade."

Investors were going by the build out schedule in the YAGI Debt agreement which was 5 COES installed by 30 June and total of 8 COES installed by 30 Sept. I do not remember the Company having pointed out those install dates to investors. Perhaps, because the Company knew all along: 1. those dates could be changed by mutual agreement without renegotiating the contract; 2. Our CEO certifies if they were "installed" on time; and 3. What the heck does "install" mean anyway?

This is typical of what the company has said to investors and this still holds true today(19 Feb shareholder letter):

We recently closed on sufficient financing to build an additional 12 million gallons per year of corn oil extraction capacity. These facilities are expected to become operational in a staggered fashion over the next nine months . . ."

And of course we have had a long standing Company goal of 15MMgy of extracted corn oil capacity by the end of this year, which may now be exceeded.

In any case the CEO has said the schedule has changed. So that tells the Skunk that YAGI and the company have changed the schedule. I think that I made a good argument in last weeks Blog that we were not in violation of the original agreement. That is now a moot point. The agreement has changed.

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2. Investor Relations - August 15 is next Filing. Open House

Until we make some money, don't expect to see any Public Relations. We have not seen any since the three releases in late February. We got the mandatory 8K during the NEXTDiesel close - but that was it. I think they realize they cannot talk about potential without being accused of pump. I think they have seen a negative return on public relations so they simply decided to halt it. Its not so much that press releases cost too much. Its that they simply do not work at this point. Expect no PRs - until the day GERS makes a quarterly profit - expect that to get the attention that it deserves. I do not tell you to buy or sell, but IF you are a buyer of this stock - get it done BEFORE the day they announce they have positive earnings per share. IF you are a seller of this stock and think GERS will never post a profit, you may be waiting the spike after a clever Public Relations statement. You might want to adjust your sell trigger. I expect profitability could happen as early as 4Q '08. Remember last week the Skunk concluded we could be profitable with 5 COES. In the 4th quarter we should have 4 COES going at full steam and with five more coming up at different times - together those five might contribute enough to put us over the edge. Since 4th Q information is not normally issued until the Annual Report comes out Mid-April, - we might see a Press Release as early as late January 2009 announcing profitability. That is the kind of information that this company will want to get out as soon as possibly. Once we have reached profitability, with the amount of COES in the pipeline, I do not expect a staggered start.

I would encourage all investors and potential investors to try and visit any GERS open house. I would like to scheduled in various parts of the country, at different times, for investor convenience. A COES site in New York and the Middle West, the Adrian Plant, maybe even the Montana plant when the expansion is complete? What a great opportunity to see some machinery in action and your fellow posters. Some of us spend a lot of time writing about the effort the +100 Greenshift employees are making. It should be worth some time to see if our efforts have been wise.

The "B" Word

Yes Sir, the Skunk dropped the "B" word in the interview. I though it was very important to set up the official version of the company's potential versus the present value that the markets place on it. To me, this is the biggest story of GERS. How can a company that has the potential for a "B"illion dollars of gross profits (under contract over ten years), have a market cap last week of under $5M?

But the Skunk isn't the first to use the "B" word - here is an excerpt from the February Shareholder letter:

The potential size of this market opportunity to us is more than 1 billion gallons per year of oil. Our initial goal is to achieve 20% market share as quickly as possible. Importantly, we can do this almost entirely out of our cash flows after we finance and deploy the first 50 million gallons per year of corn oil extraction and biodiesel production capacity.

Notice, the billion gallons is the potential market/year. Skunk based his long range PPS estimate based on 5% market share or the 50M gallons which is contracted and a company goal for the end of 2009. So if you really want to "count your chickens before they hatch" - just set your sites four or five years out when we could have 20% market share - then multiple my long range forecast by 5-10. Just so you know, I have only called and made one 7 rail bank shot in a real pocket billiard game. And yes it was years ago, and no I wasn't sober. But yes it can happen. And no, I am not even going to do the math!

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3. Montana - expansion is on hold awaiting USDA guaranty/financing. After reading this answer a few times, I am not sure if the expansion was begun and stopped - or - did it never start? In either case it will not be completed until financing is finalized. The Montana Plant is in an area where you do not want to be working unsheltered or pouring concrete in January. Its not just suffering through the cold - its also the considerable added expense of heating the ground and the materials. Men will work when it is below zero. Unprotected, Uncured Concrete is ruined way before that temperature. If foundations are not poured by a date certain (about Thanksgiving in Kornfield Kounty) - then its wait until next spring - even if we have the money.

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4. NEXTDiesel - is operating at 10MMgy (today). Investors should be wary of the word "today" in descriptions of performance. It can literally mean "today." Hopefully "today" is representative of many days both past and future. We see the word twice in this answer:

"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."

Not sure what condition we found the NEXTDiesel Plant when we purchased it with stock. Since GERS had a contract to manage the biodiesel conversion I suspect the plant did not have the technical expertize on staff to make it happen. Like any piece of equipment it costs money to have it sit idle. It appears we converted the operation to 24/7 and full capacity runs. That is great news for revenues - (take 10M and multiple by the price of Diesel/gallon). Notice that just a single 10mmgy biodiesel line running at capacity has the potential to generate over 45 million dollars in revenues. One line can produce 150% of the entire company's revenues for all of last year. We hope to see word in the 2Q Report on that second 10mmgy line that was in the process of construction when we obtained the plant. A second line could be set to just process waste grease and tallow until we have enough COES on line next year to keep two lines busy. And of course we should tell by the numbers just how many "todays" where in the 2nd quarter and 3rd Quarters.

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Anticipating your Questions - the Skunk has done some research into the "upgrades" we have gone through with the COES. This from FEB 2006:

"The system is extracting corn oil from DDG at the rate of about 800,000 gallons per year. After upgrades, Veridium expects the production rate to increase to between 1.2 and 1.5 million gallons per year. "

So it appears that we have had (at least) a three step technology upgrade improvement along the way. But Skunk, it there a piece of compartmentalized equipment that may have been the section left out to save money? Looking . . , looking . found it!

An additional pretreatment step was recently added (Nov 2006) to the GS CleanTech Corn Oil Extraction System. The extra step helps to bump up yields for a 50 MMgy ethanol plant from 1 MMgy to 1.5 MMgy.

The Skunk suspects this was at least part of the section left out to hurry along cash flow. And he also suspects this may be the central part of the upgrade now being completed.

** ************************

GS EnviroServices SOLD

ITEM 2.01 COMPLETION OF DISPOSITION OF ASSETS
On June 20, 2008 GS EnviroServices completed the sale to Triumvirate Environmental, Inc.

At the closing on June 20, 2008, Triumvirate Environmental paid $5,000,000 for the assets. The cash proceeds were applied as follows:
- $2,092,092.75 was paid to YA Global Investments, LP to satisfy all of GS EnviroServices obligations to YA Global Investments, LP and obtain a release from any future obligations

From GERS Q1 P 17:

This letter agreement was amended during the second quarter 2008 in connection with the sale by GS EnviroServices of substantially all of its assets (see below) to provide for the payment of $1,200,000 to redeem the remaining 6,266,667 shares of GS EnviroServices held by the Company. This payment shall be made to YAGI in return for the reduction of the Company's convertible debt obligations to YAGI.

The Company expects that a successful closing of this transaction will result in the cash repayment of $1,200,000 of the Company's convertible debt due to YAGI.

GOODNEWS: So the Skunk thinks this went down as planned and another 1.2M in convertable debt has taken off the books with YAGI.

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FORECASTS

EOY 60 cents with 45 -75 trading range**

(using pre-interview assumptions)

$4.91 Share Price in FEB 2010**

***************************

Note: I am a shareholder - I do not work for, nor do I receive any direct or indirect payment from GERS or anyone associated with them. (But it would be Kapitalist Kool if I did) I will not intentionally mislead - but I can be wrong (ask Mrs. Skunk for specific frequencies) - so do your own due diligence - and take responsibility for your own financial decisions – (and your own life in general) good or bad. And some good garage logic luck to ya. Skunk

An Interview with Kevin Kreisler, President and CEO of Greenshift

SKUNK NEWS FLASH
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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