PPS

I am not saying the road ahead couldn't be a little rough . . .

Our First Goal for this year:

"Execute new corn oil extraction license agreements during 2010 with ethanol producers with an aggregate capacity of at least 1 billion gallons per year of ethanol;"

Is this achievable? We are already 10% of the way there. The Global Ethanol deal expressed in the 4 Jan 2010 Press Release involved a +100M gallon capacity plant. Nine more deals like that and goal achieved!

"Under the terms of the agreement, Global will directly finance, build, own and operate a facility based on GreenShift’s patented corn oil extraction technologies designed to extract more than 2.2 million gallons per year of corn oil in return for an ongoing royalty payment to GreenShift equal to more than about 20 percent of the market price of the extracted corn oil at the time of shipment."

Using the Global Ethanol numbers, we could expect results to be ten times this deal or 20% of the more than 22M gallons of corn oil produced by the end of 2010. Using an average price of $1.75 per gallon of corn oil, we would therefore earn a commission of about $7.7 million. The SkunK figures this is enough to reach our second goal of profitability. It would also make our third goal of 30% debt reduction much easier.

What is this worth in pps? First, lets use a worst case scenario and max the OS out at 10B. Then lets use a relative tame PE of 20.

$7.7m/10B = (net income)/(TotalOS) = diluted EPS = .00077

(PE) X (Diluted EPS) = (PPS)

20 x .00077 = .0154pps

Using this model, reaching our goal should add at least a Penny and a half to the share price. With a Friday close of GERS 0.0004. - this represents a value 38.5 times the present pps.

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The Meter is running . . .

In the recent shareholder letter Greenshift:

. . . estimate that more than 35 ethanol plants are currently using part of our extraction technologies . . . to produce. . . corn oil worth more than $60 million per year. . . $12 million at a royalty rate of 20% of sales.

. . . we believe that we can increase the yield of currently unlicensed producers by an average of at least 20% . . .

Allow the SkunK to figure that federal patent laws are enforceable in the US State and Federal Court system. If that is the case, then royalties may be due to at least the date of the patents. The meter is running. If one concludes that royalties are accumulating whether or not they are presently being paid, then allow for a minute the assumption that they are accumulated debts that will be paid someday. Also figure the company estimates of current infringers are correct.

What is a royalty rate of $12M/year worth in market cap and pps?

A different perspective seems a bit more inviting . . .

12m/10B = (net income)/(TotalOS) = diluted EPS = .0012

(PE) X (Diluted EPS) = (PPS)
20 x .0012 = .024pps

Using this model, reaching successful enforcement of the patents could add nearly two Pennys and a half to the share price. With a Friday close of GERS 0.0004. - this represents a value 60 times the present pps.

I certainly do not suggest that you can add the two pps estimates together to get a total. Since the present unlicensed users may well be the most motivated new customers. There SHOULD be overlap in the two separate estimates. What I see here is a chance for a significant price rise over the coming year - if the assumptions that the estimates are based on are met - a rise of 50 times is not out of the question. So the SkunK takes a swag of 2 cents/pps for the end of the year - and more importantly - since we may see an OS cap revision - a market cap of $200M.

The SkunK has made GERS pps predictions in the past that have not been met. The stated assumptions upon which they were based did not come true. The entire biofuels industry did not meet its goals and many a good company across the economic landscape is now out of business. Please read my disclaimers below and make your own investment decisions.
You can look over my shoulder and take what you want from this here blog, but don't blame (or credit) the SkunK or anyone else for your investment decisions!
That said,
Good Luck!
SkunK