Tuesday, May 15, 2012

1Q is OUT!

SkunK Note:  The information above is a quote out of the 1Q.  If is Greenshift management's narrative of the 1st Quarter and specifically - their Plan of Operation.  I typically post that information first from any Q or K.  It gives Greenshift's perspective.  After all isn't that one of the reasons we read any information from the company - to get their perspective?  As investors our perspective is by definition different.  How different?  We will never know unless we start out by reading the company's perspective.  My comments are in blue and normally come later. 

Plan of Operations

We have entered into license agreements with ethanol producers corresponding to more than 2.3 billion gallons per year (“BGY”) of ethanol production at full production capacity. Revenue for the quarter ended March 31, 2012 was $3.0 million as compared to $2.7 million from the same period last year (net of the impact of non-recurring transactions in which we sold our remaining production facilities during the first quarter of 2011 (the “YA Corn Oil Transaction”)). We incurred a net loss during the first three months of 2012 of about $700,000, as compared to a net loss of about $522,000 in the first quarter of 2011 net of the impact of YA Corn Oil Transaction.

Approximately $1.7 million in expenses incurred during the first quarter of 2012 were non-cash and included about $580,000 in accrued interest expense, about $150,000 in expenses associated with the change in value of the Company’s conversion liabilities, and about $400,000 in accrued royalty expense incurred in connection with our increased corn oil production during the quarter. Another $600,000 of the non-cash expenses incurred during the first quarter of 2012 related to increased legal costs incurred mostly as a result of our ongoing litigation for patent infringement. We have entered into a modified contingency-based agreement with Cantor Colburn, LLP, our lead counsel in our infringement litigation, pursuant to which we are only required to pay $50,000 per month in cash. Accordingly, most of the increased legal costs incurred during the quarter were non-cash.

Moving forward, we will continue to work with our licensees to maximize the benefits and minimize the costs of recovering as much corn oil as possible. We will also remain focused on winning new business and increasing our licensed penetration. To do so, we will continue to provide exceptional services, the highest-performing systems packages available, and access to new technologies for further gains in licensee profitability and competitive advantage. We will continue to expand our patent portfolio. We have many additional patents pending and we will remain committed to developing new technologies to further enhance the profitability of our licensees. And, we will stay the course in our ongoing infringement litigation but plan to expand our efforts to aggressively prosecute any entity, manager or other person infringing or inducing infringement of our technologies – all with a view towards enhancing and protecting the significant competitive advantage of our licensees.

Our financial performance for the balance of 2012 and beyond can be expected to be most significantly impacted by the rate at which our existing and new licensees commence production, the amount of corn oil that our licensees produce, the market price for that corn oil, the extent to which we collect reasonable royalties, and the costs incurred in our ongoing litigation for infringement of our patents. In addition, future results may be improved by the impact of event-driven systems integration contracts as we continue to receive significant interest for our engineering and other services in connection with the design, construction, integration and modification of corn oil extraction systems and other new systems for existing and prospective licensees. We are currently party to a number of such agreements which can be expected to contribute to revenue during 2012.

We expect to continue incurring substantial costs in connection with our ongoing litigation for infringement of our patented corn oil extraction technologies. These costs increased during the second half of 2011 and are expected to continue to increase through 2012 in advance of trial, and as we expand our litigation to protect the competitive advantage of our licensees by prosecuting additional producers and other parties infringing our patents. These expenses may delay or otherwise adversely affect our ability to achieve our profitability and debt reduction goals. We hope to eventually eliminate our litigation expense, but we must and will take all necessary steps to bring infringement of our patents to an end. We have reserved cash for this purpose.

Here it is!

SkunK
As of May 15, 2012, there were 29,373,071 shares of common stock outstanding.

55 comments:

Anonymous said...

yep..here it is ...more dilution....about 10 million or 80% since latest reverse..

Anonymous said...

silly nieve children

Anonymous said...

what you expect with infringing going on?

nobody12378 said...

The fact that the revenues for 2011 Q4 and 2012 Q1 of GPRE by THEMSELVES times 20% are essentially the revenues reported by GERS in Q1 means that: 1) the royalties are not 20% (in fact the numeric conversion of Petal's estimations place it under 10%), or 2) GERS is cooking its books for some reason, or 3) the revenue is not all being paid to GERS, remember we only know that GPRE is paying a portion of its corn oil segment earnings to some entity, we do not know it is to GERS (other licensees could have similar arrangements). How can any one in their right mind purchase more stock or any GERS stock until this mystery is resolved and the bottom is truly defined?

Anonymous said...

these guys are crooks.. lawsuit means nothing in the end because they will lose. and greenshift will be no more and another new compnay will spin up with the same scam..

Anonymous said...

the ineveitable slaughter

Anonymous said...

hurry,,average down dont miss the first 25% off the bottom ever again!...hahahah

Anonymous said...

gee my luck has run out

Anonymous said...

DW....A Storm is coming your way! Your a good man...take cover. The rest of you SELL what you own!

Anonymous said...

That's two quarters in a row with revenues of approximately $3 Million. There's no way the company will pull out of it's debt with those numbers. Dilution will only grow from here as the share price plummets. With regards to revenue...Show me the money! Where did the money from the $2.3 BGY of licensed capacity go?

nobody12378 said...

I think that the choir is changing its tune and volume, it is no longer the Hallelujah Choir chanting that KK can do no wrong. Perhaps now we can have real discussions about real issues instead of spending so much time contending with fantasies. Those are not the only important questions but they are a good start. Without greater transparency from the company or forensic accounting (i.e. a law suit) we will not know the answer to your last question. There is $117 million and counting of investor money at stake here.

I wonder how Slash will address these results and questions?

Anonymous said...

Nobody,

It seems to me you have been right all along. Very sorry for trashing you as I really thought you were a basher.

So dissappointed with this stock now and have lost hope.

nobody12378 said...

If their attorneys provide them any latitude, heck even if they do not, KK should address these issues in a shareholder letter tomorrow. If we, the simpletons, can see this revenue conundrum any other savvy investor can as well. KK knows these issues far better than we and must understand how disconcerting they are for the common shareholders who are truly responsible for keeping this company alive -- not YAGI. In my opinion no company response is the highest from of disrespect for the common shareholders.

nobody12378 said...

Don't lose hope, lets get on with more digging as well as attempts to contact the company for answers. We can start with a barrage of emails attempting to get an answer to the question, where are the revenues? Now more of us are seeing the reality and we can coalesce to form a movement for more answers from OUR company.

Anonymous said...

Thanks Nobody!!

Just really shocked here and I was beyond tough on you where you were right all along. Feel like an idiot.

Have a good week as I will need to some wine - lol

nobody12378 said...

Any one confused by these sequence of events?
NT10-Q 2:22 PM EDT yesterday
10-Q 4:29 PM EDT
10-Q/A 5:07 AM EDT today

Does this imply a lack of organization within the company and the possibility that several people can issue SEC filings without coordination. Do these events give the appearance of a smoothly administered company?

Anonymous said...

wheres the money we expected? maybe right here:

The ethanol industry increased production in the fourth quarter of 2011 to meet demand from ethanol blenders in order to take advantage of the Volumetric Ethanol Excise Tax Credit (“VEETC”), prior to its expiration on December 31, 2011. As a result, ethanol inventories at the end of 2011 exceeded normal market levels, which in turn caused ethanol margins to compress to near break-even levels since the end of 2011

Construction of corn oil extraction systems by our licensees is capital intensive and our licensees may not be able to access the capital they need to pay for the components, equipment and installation services needed to implement our technologies

hence, not all 2.3b gallons licenced is produced and those producing are squeezed.

Anonymous said...

gas has gone up every summer as far back as i can remember.

Anonymous said...

anybody wanna buy a truck?

nobody12378 said...

Keep you eye on just GPRE; their last quarter and this quarter. This simplifies the discussion. Both of those quarter's corn oil segment revenues times 0.2 (our royalty) were by themselves about the total revenue for GERS reported in 2011 Q4 and 2012 Q1. We do not need elaborate analyses to know that something is not adding up and that lag time can no longer be used as the explanation. I keep employing the GPRE example and people still want to go global in explanations. If you cannot explain GPRE you cannot explain the revenue question.

nobody12378 said...

Just to make sure folks understand. GPRE has reported the following revenues from their corn oil segment: Q1-Q3 $30,350,000 and for the entire year $44,857,000 leaving $14,507,000 in revenue for Q4. The royalty should be $2,901,400. We did not see this in GERS 10K as revenue and people argued it was due to a lag time. GERS just reported $2,912,029 as revenue for the last quarter which is covered by the GPRE royalty alone and yet GPRE represents only 32 % of the gallons under license. Lag time can no longer be an issue, and if the GPRE license alone can account for the GERS reported revenue, where is the rest of the revenue? Comprende?

totaltruth said...

Gripzool, do you mind if I ask you a few questions sir? They may be deemed a little personal.

1. How long have you been trading for?

2. I know its not Icm but do you mind if I ask do you work for someone else?

3. If you read my first post right after the 10q you know I had this play figured out. My question here is that was your 130k short wasn't it.

4. How did you know about the 4+ mil shares that wasn't sold to yagi but rather someone else?

Anonymous said...

Chicken Little -

If Revenue (R) = ((LpEc)/Eb)ObOcPRr, where Lp is licensed production, Ec is percent ethanol capacity, Eb is gallons of ethanol per bushel, Ob is oil yield per bushel, Oc is percent oil capacity, P is the market price of corn oil, and Rr is the royalty rate. Then Share Price (Sp) should = ((R - C)/S)X, where C is total costs, S is shares outstanding, and X is the multiple.

Can somebody, or maybe just nobody, do this math for me? I keep getting a positive share price estimate based on the data in the 10Q and I need somebody (nobody) to set me straight.

Also, nobody or anybody - wouldn't there be more dilution if they put out more news? In other words, isn't less news good for us until they refinance YAGI as they said in the 10K/Q? Less news, less demand, less debt conversion, less dilution?

nobody12378 said...

NO! The higher the PPS the fewer shares required to meet debt payments. Anything which promotes the PPS will diminish the dilution. With the "apparent" revenues it may be difficult to obtain alternative financing so that could not be a goal either.

Anonymous said...

arent there two types of royalties, one gallons based and the other based on a reduced purchase price?

During 2011, some of our license agreements provided for royalties in the form of a discounted corn oil purchase price. In these cases, our royalty payments were equal to the gross profit realized upon sale of corn oil, or the difference between the market price of the corn oil produced and our discounted purchase price in each relevant license.

is a re-sale included in your "no-lag-time" calculation?

Anonymous said...

They sold all of their corn oil plants and no longer generate the second type of royalties.

Anonymous said...

this stock smells awfull like a skunk. R/S coming when they dillute all the way down to .0001
sad very sad. The theroy that they have to do this is false you make more money with higher share prices, so why does YAGI need to dump there shares you think they want a higher price as well. maybe they just want the pattens for them selves. Kvien is an Attorney correct? why is he paying 50K a month? seems alot if they are not in court everyday? the lawyers are in on it as well! just my take. such a good scam.. How does one get40M in debt.. Where did all that money go?

Anonymous said...

Has it dawned on all of you that GPRE is not paying the % you think they are? That is why your math doesn't work. The fact is they signed the deal for a 7% royality on all plants...not the 15 or 20% that you read about here.

This company is going down the tubes...sell why you have a chance!

Anonymous said...

PPS can never increase if YAGI smothers the stock with new debt conversions every time volume picks up.

Think about it. Look at the history of every company YAGI has invested in. News brings in new buying, increases demand and volume, which starts to increase price, then YAGI takes money off the table via debt conversions. Why should YAGI care about price? They get to convert at 90% of whatever the price is. They only care about VOLUME. More volume at any price gets them paid. A higher price with low volume prevents dilution. A low price with low volume prevents dilution. Every time they put news out, really solid stuff, the price went down. Increasing news will just burn through more shares and be like pissing into the wind until YAGI is refinanced or restructured to allow new buyers to come in and make money.

Anonymous said...

That makes sense. What happened to the 20% that skunk report on so many times. If 7% is the norm they will never get out of debit!

Anonymous said...

Skunk is talking about the 25% rule of thumb used by the courts that gers announced long ago (Jan 2010?). A friend is a patent atty and I had him look at all of this back then.

The 25% rule of thumb is based on the average royalties paid in tens of thousands of licensing agreements in every industry worldwide. It basically says that a 'standard royalty' is equal to 25% of the additional profit earned by the licensee using the tech.

In most cases, where the licensees addl costs of goods sold from using the tech are, for ex, about 80% of sales, the gross profit is only about 20% of sales. Thus, in this 'normal' example, 25% (rule of thumb royalty rate) times 20% of sales (gross profit) is 5% of sales.

Gers should do much better as a percent of sales with the same 25% of the added ethanol plant profit of using coes because there are very little added costs in gers case and the tech actually helps the plants to reduce costs per EPA. That means that the gross profit margin is much higher for gers licensees. I remember reading somewhere that it is 80%-90% plus in most cases (some plants like gpre report higher costs from lost ddg sales and chemicals).

So, 25% (rule of thumb royalty) times 80% of corn oil sales (est gross proft margin) is 20% of sales. That is the rate that everyone is talking about.

Now, i think here is the key point for gers and nobodys and everybodys revenue estimates, one of the goals of the 'rule of thumb' is to value intellectual property where the court needs to estimate the damages due to the patent holder for infringement.

For an infringing producer, the math should be easy - 25% times gross profit from coes, times treble damages, etc.

But gers are seeking damages from nonproducers like icm and gea.

For those infringers, the math should be as above for plants icm or gea caused to infringe ---- PLUS anything LESS than the standard 25% of gross profit that is PAID from all licensed plants because they somehow got a rate of less than 25% of gross profit due to ilegitmate icm, gea, etc infringement alternatives.

For nobody/everyone running the numbers of revenue, my guess is that we are just seeing the effect of the damages caused by the infringers on the rate gers is able to get everywhere else in the market. But, as i think gers has said, damages are accruing at alarming rates.

Anonymous said...

3% is normal for this type of patent. Good Luck To All!

Anonymous said...

Nobody double check my math

Revenue =
Licensed production - 2.3 bgy
Gallons of ethanol - 2.8/bushel
Oil yield per bushel - 0.5 pounds
Price of corn oil - $0.40/pound
Royalty rate - assume 10%, 15% and 20%

Revenue = (2,300,000,000/2.8)x 0.5 x $0.40 x royalty rate

= $16.4 million at 10%
= $24.6 million at 15%
= $32.8 million at 20%

Total costs should be about $7 million based on the md&a, but assume litigation costs stay high and their total costs (overhead, legal, royalty, interest) are $10 million per year based on last two Qs.

Pretax
= $6.4 million at 10%
= $14.6 million at 15%
= $22.8 million at 20%

I don't have the numbers for total common outstanding upon full conversion of all preferred and YAGI debt, but assume worst case to get YAGI paid off at TEN TIMES the current outstanding, then the estimated EPS is

= $0.02 million at 10%
= $0.05 million at 15%
= $0.08 million at 20%

What is our multiple here? 10x with YAGI refinanced and worst case of TEN TIMES the current outstanding? If so, then I estimate that the share price should be

= $0.21 per share at 10%
= $0.49 per share at 15%
= $0.76 per share at 20%

That leaves out new sales, new tech, interest elimination if they refi YAGI, legal settlement prospects, and possible higher multiples.

Nobody correct me if i am wrong, but I see this as the true cost of yagi.

The overhang and debt conversions smother the stock and prevent the price from going to where it should go, and the only thing gers can do is to score enough wins to raise cheaper non-convertible debt/equity to refi yagi. They have a lot on their plate but they need to get that done before we will see any real appreciation.

But, if I am correct, then the flip side here is that there is a big spread between 0.05 and 0.50 per share for those of us that like to gamble.

wayback said...

I like to gamble!

Anonymous said...

Then pony up because they are most certainly gambling with yours!

Anonymous said...

Well said!

nobody12378 said...

Anony, 1:09 PM yesterday,

To be fair I do not know which assumptions are valid, but I do appreciate the effort at objective evaluation. Whatever the true numbers, my point is that there is enough confusion and apparent inconsistencies that a fourth grader with a calculator could see them. Given that, my position is that GERS needs to acknowledge the obvious. A simple public letter stating that KK "is aware of the revenue issues, understands why they are disconcerting to the common shareholders but he is unable to comment further at this time", would do justice to the issue and the long suffering shareholders. Better, of course would be a detailed discussion, but ...

Anonymous said...

a lotta geniusssses here

nobody12378 said...

That's really helpful.

Anonymous said...

Refinance? Why?
Sell 30% of the company for $30 million and be done with the waste.

That is, unless kk and the debt holders are chumier that we are suppose to expect,
or suspect.

Anonymous said...

my own fault...i was hustled by sales people sharper than me..it looked real and plausable on the surface

Anonymous said...

BBIGG TIP..load up BEFORE this does the next reverse split

Anonymous said...

looks like they bought a bunch of corn oil:

"Our costs of sales during 2011 accordingly included additional costs incurred in connection with our corn oil purchase rights under the relevant licenses as well as the ongoing maintenance of these systems."

anybody know in which quarter it was sold, or if it has even been sold yet?

Anonymous said...

purchase all the shares you can grab before those idiot institutional monies drive it to the moon!!!

Anonymous said...

just imagine when it finally gets on nasdaq..i will be rich...luv it

Anonymous said...

F you..i'm goanna be rich!

Anonymous said...

there is NOT going to be another R/S...with only 30 million shares trading this thing is worth at least 70 dollars...that would minimally fulfill sKunk projections at the scroll down of his blog site

REDMAN34990 said...

QUARTER SUC*ED.STOCK DOWN 80% AND KK LIED TO US ABOUT DILUTION. YET THEY ALL GET PAID GOOD.WHERE THE MONEY?

Anonymous said...

Take a close look at the series D stock worth 80% of the fully diluted number of common shares. As I said before, common shareholders only own 20% of the company. Oh, and guess who owns the series D shares. Viridus (KK), Ed Carrol (Go Figure), Acutus (Brother), MIF (Father). Is it not interesting this is being turned into a family business. When do you think the family will take it private (after all the debt is paid off with your 20% money).

Happy hunting!!!!!!

Anonymous said...

By the way, if you look into KK's background, he, his father and brother ran a recycle company together and milked it.

Anonymous said...

Expectations.

Forget about the 2.3 billion gallons of ethanol and the 150 million gallons of corn oil base numbers, at least for now (2.3b x .065 = 150m). That is "potential." That has not happened yet. And, by the time it does it will be more like 3 billion gallons of ethanol and 195 million gallons of corn oil. So forget about GPRE being 35% of present income as well.

All licensees are in various stages of deployment. Some have not installed while others have begin producing and all were under a 10% squeeze in Q1 from expiration of the tax credit which no doubt slowed or even suspended operations in some cases. Fortunately, things started picking back up in Q2.

The full production expected by the 3rd or 4th Quarter stated in the 10K was not reasserted in the Q1 and I think that means we got bumped a quarter in growth.

IMHO

Anonymous said...

GREENSHIFT GOES PRIVATE AFTER PAYING OF $40 MILLION OF DEBT WITH SHAREHOLDER'S MONEY! SHAREHOLDER'S CANNOT DO ANYTHING ABOUT IT BECAUSE 80% OF THE COMPANY IS OWNED BY FAMILY MEMBERS AND CLOSE ASSOCIATES THROUGH SERIES D NON-DILUTABLE STOCK HOLDINGS. DATED 6/30/2013.

HAVE FUN.

Anonymous said...

have to buy my shares.

STOP WHINING

Anonymous said...

Just forget the Qs, they are all shit. Sell GERS to death!!!

Anonymous said...

Yep, your only hope is to run to the top of the tallest building and jump. Wait, that isn't fast enough. Anything above the 4th floor will do as long as the ground is cement. Leave a note and tell your dependents to sell GERS!!!

WAIT!!!! Put the SELL ORDER in and then JUMP!!!

Panic posting is funny. Panic posting and then claiming you are only seeking the truth is really funny.

"Bankruptcy is best option" Hahahaha, shorts are funny! Fear and Greed. Your not looking for information, only to instill fear. Anyone with an ounce of testosterone can see that.

"SELL GERS to death!!!" HAhahahah

Fully a third of the posts above have one purpose and one purpose only. To cause panic selling. Now if you were really an investor who thought you wanted to get out of your position here, would you post panic postings? Would you really want to sell into panic? Why would you want to cause panic?

Why try to instill panic? Either you are selling it short or you want to add to your position at a discount are the only two logical conclusions.

A third illogical option exists: That is you are filled with hate and are a pathological KK stalker. Sorry to say that might just be the answer.

 
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