INVENTORIES

From the recent 2009 Annual Report p35 we learn this about Inventories:

"Due to the long lead times to obtain some components, the Company’s GS COES (Yorkville I), LLC subsidiary maintains an inventory of centrifuges and related parts. Inventories are stated at the lower of cost or market, with cost being determined by the first-in, first-out (FIFO) method. Equipment inventories are stated at the lower of cost or market, with cost being determined by the first-in, first-out (FIFO) method. These inventories consist of equipment and component parts not yet assigned to projects."

Inventories at December 31, 2009 . . . consist of the following:  Equipment inventories $ 547,056
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Looking at the 1Q we see that Inventories have INCREASED by $2,248,302 to $2,795,358.  You can see this exact amount moved over from "Construction in Progress" to inventories in the end of Year report. 

The explanation on page10 1Q:

"On January 4, 2010, the Company announced its execution of an agreement with Global Ethanol, LLC (“Global”), pursuant to which the Company granted Global the right to use GreenShift’s patented corn oil extraction technologies at Global’s 100 million gallon ethanol plant in Lakota, Iowa. Under the terms of the agreement, Global directly built a facility based on the Company’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. As a result, during the three months ended March 31, 2010, the Lakota project that was on the books was cancelled and the $2,248,302 in related equipment from the Lakota project was transferred from construction in progress to inventory. This equipment will be used in subsequent projects."

So what does all this mean?  Well the SkunK's best guess is Global Ethanol bought and installed 2 centrifuges and related items on the open market for their 100mmgy plant.  This released GERS' two COES they had preordered for that purpose to inventory - so I suspect the main Centrifuge and related parts are on the books for about $1.124M each.  I suspect the 547K that was already in inventory represents a third system that has been depreciated on the books - but still unused and still worth the same to us non-accounting types.  So we basically have the nucleus of three systems in inventory and ready to go.
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Thoughts

Like a barn full of hay, this inventory is like money in the bank - and can be liquidated in an absolute emergency.  Its a bit of a BK buffer. The fact that they are not yet being liquidated (like some other non-patented COES) - seems to suggest that these "subsequent projects" may be close at hand?

SkunK