NEWS from GreenShift

After emailing some questions the SkunK has just gotten an Email response from Mr. Kreisler. The questions (green) and his responses (blue) are below. If you want to go to this next link, it is in a nice one page PDF format.

http://docs.google.com/gview?a=v&attid=0.1&thid=11f2f6add4555f80&mt=application%2Fpdf

1. DOE has invited applications for funding opportunities for a total of $200 Million for Pilot and
Demonstration Scale Biorefinery Projects. Is it something GreenShift might pursue for its pilot
bioreactor or other advanced technologies?

We are submitting an application for DOE funds based on a combination of technologies, including our extraction platform and our bioreactor technologies.

2. After the recent update of the company's web site, I no longer see references to biomass gasification technology or Zeropoint. Has GreenShift’s minority ownership or its exclusive rights to certain ZeroPoint CleanTech technologies changed?

No. However, we have developed exciting new technology that is more compatible
with our existing technologies and less capital and energy intensive as compared to gasification and other thermal technologies. We have modified our commercialization plans in the corn ethanol industry as follows:

Gen 1.0 Standard Corn Ethanol
Gen 1.1 Extraction (oil & other products)
Gen 1.2 Integral Biodiesel Refining
Gen 1.3 Integral New Technology (to be announced)
Gen 1.4 Integral Decarbonization

3. The ECCA Agreement provides that 70% of the membership units in GS NextDiesel will be issued to CleanBioenergy, and that the remaining 30% of the membership units will be issued to GS Adrian which is owned by GreenShift. Is control still maintained by the GreenShift Board of Directors?

Yes, we are the managing member of GS NextDiesel.

4. A number of ethanol producers have recently shut down or filed Chapter 11. How is this effecting GreenShift?

The biggest impact has been a fairly dramatic surge in sales interest. Since resolving steep first mover barriers to acceptance of our technology from invention through the end of 2007, we have only really had two constraints that have limited our penetration: (a) lack of financing sufficient to subsidize deployment of our backlog and (b) the length of our corn oil purchase rights. While many producers have resisted giving up ownership of the corn oil locked in their stillage, having long-term feedstock purchase rights at rates that are indexed to our off-take markets (and that nearly eliminate commodity risk) is a pre-requisite to financing. We consequently resigned ourselves to a penetration goal of 20% of the ethanol industry. This goal, however, may prove to be conservative. Corn and ethanol prices have negatively impacted the working capital of many producers and are projected to only slightly improve during 2009 and 2010. This, in turn, restricts access to debt and equity capital for many producers and, derivatively, the ability to subsidize new capital projects. Granting long-term purchase rights to GreenShift in return for increased cash flows and 100% financing has become more attractive to more producers under these conditions – and even more so considering the support of our pending new equity partner, GE Energy Financial Services. While our sales prospects are likely to improve even more if our patents are approved, the practicalities of the current financial and commodity markets have created increased opportunities for GreenShift to address the financial and environmental needs of an increased number of ethanol producers. We also need to be sensitive to increased counter-party risk. While we have the ability to remove our skid-mounted extraction facilities in the event of an ethanol plant closing, demobilization can cost as much as $500,000 per facility and take as long as 3-4 months – during which time we would lose production and profit. We manage our risks by monitoring the financial and operational health of our clients prior to and after commissioning our facilities.

5. The construction of third party biodiesel plants has suffered from the credit crunch and the high costs of feed stocks. Do you see either of these conditions improving soon?

No. Growth of the domestic biodiesel industry from here will mostly track the availability of new sources of feedstock. We are extractors – we target and extract by-product resources for beneficiation, refining and sale back into commerce. We can either extract feedstock for third parties to stimulate more one-time equipment sales and less annuities at higher risk, or we can extract feedstock for ourselves and produce more annuities at lower risk. We generally favor the latter. That said, we are eager to earn the business of any third party biodiesel producers and developers who have developed their own qualified feedstock model and are in need of refining expertise.

I would like to once again thank Mr. Kreisler for his time,

SkunK